By David McCann, Strategic Political Analyst, Brown O’Connor Public Affairs
With less than 2 per cent of the UK’s overall Gross Domestic Product, it is easy for us to be at the back of the queue when it comes to ideas about how to improve our local economy. A narrative that our economic story is one of just stagnation and subsidies does not help in trying to improve our lot.
However, we have the potential to truly build a vibrant and growing economy that can provide opportunities for all of those who want to live here. There is a real chance that, with the right policies and powers placed back in our hands, we can make emigration something that we read about in the history books.
The most positive aspect of this story is that we already have a roadmap for improving the Northern Ireland economy. In 2022, the Fiscal Commission published a report examining the issue of further fiscal devolution for Northern Ireland. The report highlighted the potential benefits that could result from further devolution of tax-raising powers in areas such as Income tax. Currently, less than £1 in every £20 of revenue in Northern Ireland is raised through rates.
Competitive Out There
There are critics of devolving more powers, particularly in the fiscal space, back to Northern Ireland. Arguments surrounding a lack of political maturity and the instability of Stormont are prevalent. However, we know the current economic set-up is not working and that simply doing the same thing over again is the definition of economic insanity. The world is not waiting for Northern Ireland, and neither are those with whom we are competing for investment.
Quite often, we hear the argument that Westminster does not often hear the voices of people in Northern Ireland when it makes decisions. If this is the case, then surely part of the answer is to give more powers back to the Executive, allowing local ministers to work with local sectors across our society to deliver long-lasting improvements for our economy.
Multi-Year Budgets…
When this Labour government came to office, it pledged to improve the working relationship between the UK and devolved governments. Now that it has established its new Council of the Nations and Regions, it has a real opportunity to demonstrate its commitment to a more fundamental rethink of how devolution operates across the UK, particularly in Northern Ireland. A good place to start would be progressing ahead with multi-year budgets for the devolved regions, so that local ministers can plan with certainty for the future.
The local economic challenges are well known, particularly in the areas of skills. A recent Northern Ireland Audit Office report highlights the detrimental impact that skills shortages are having on our local economy. Part of this broader devolution conversation must focus on the need for greater investment in our skills base and how we utilise our education system to ensure that we have the talent to fill the jobs of the future.
Underpinning all of this has to be a recognition of the need for flexibility. If Keir Starmer is to turn around the UK economy, he must acknowledge that achieving this requires few “one-size-fits-all” approaches. From immigration to the costs of doing business, each region of the UK has distinct needs.
His legacy, if he wants to seize it, could be the Prime Minister who turbo-charged devolution into the future. This would allow Belfast, Edinburgh, and Cardiff to “take back control” of the levers and powers they can use locally to improve living standards and remove blockages to growth.
Are there any risks associated with Northern Ireland embarking on this course? Undoubtedly, there are. Yet we often look at the Republic of Ireland and marvel at its success. We may want to ask ourselves how they achieve it. Flexibility in their economy, a focus on skills, and pro-growth policies are key factors. This is on our doorstep, and it is also what many businesses in Northern Ireland are competing with.