Northern Ireland

Stormont's £200m economic initiative is 'not new money'

The Stormont Executive has announced a "£200m economy and jobs initiative to support people, businesses and investment", but where has the money come from?

This package of measures is essentially the Executive's response to the dire economic circumstances faced by Northern Ireland that were brought into relief with the job losses announced at County Antrim engineering firm, FG Wilson, in September.

The revelation that more than 1,000 jobs were going at one of our major employers spurred the politicians into action.

In the absence of any definite news on the big economic measure they are chasing - devolution of corporation tax - this more scatter-gun approach is an attempt to put money where it will matter.

The £200m is not new money. It is money moved from one department to another or re-prioritised towards different projects.

Limited powers

It is money moved from next year to this year. A big chunk of it (£170m) will be the result of extra amounts that flow to Stormont each year as a result of increased spending in England.

So, it would be wrong to describe this as a "£200m boost to the local economy". The amount of public money going into the local economy is exactly the same as what it would have been had the Executive done nothing different.

However, the shift of some spending towards measures that might boost the economy - which is the Executive's stated priority - has been welcomed by various interest groups.

And, some of the measures will lever-in money from other sources - bank finance, European funding that could be described as additional.

In the absence of any power over big items - like corporation tax - Stormont appears relatively limited in what it can do. But some of the limitations are self-imposed.

Huge row

There is no serious discussion about cutting rates - the only real tax power Stormont has - because that would mean cutting services.

Nor is Stormont willing to entertain regional pay in the public sector. Lowering pay rates here, with Treasury agreement, would allow the Executive to save many millions that could be spent elsewhere, but it would provoke a huge row with public sector unions.

There is little appetite for funding public projects with private money - such as toll roads - because even though this would provide real extra money, the public would object to paying. And no-one even dares mention water charges.

The problem is not that Stormont is avoiding such measures, it is more that it is failing to even debate them.

The conclusion therefore is that, on the whole, Stormont will remain happy to take what it gets from Westminster and spend it accordingly.

That is the height of its economic influence.

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