Instability risk pointing to no 'drastic' spend cuts in North
Published 03/06/2010 | 05:00
THE new British government will avoid "drastic" spending cuts in Northern Ireland for fear of de-stabilising the political and economic situation, the new Northern Secretary of State said yesterday.
But the present UK budget deficit was unsustainable and public services would have to be reformed and delivered at lower cost, Owen Paterson said.
"We can't be too drastic in Northern Ireland, but we can't do nothing. The UK is borrowing £300,000 (€359,000) a minute. That is completely and totally unsustainable.
"Go on like that, and the national credit card will break at some point," he told the Irish Independent on his first visit to Dublin since the UK coalition government took office.
Public spending is reckoned to make up three-quarters of the Northern Ireland economy. Mr Paterson said this will have to change, but it could take a generation to create a typical private-sector economy.
"I have been criticised for saying it could take 25 years, but we have to be realistic about the challenge of re-balancing the economy.
"Radical measures will be needed, which is why we have suggested making Northern Ireland an enterprise zone, and giving it a lower rate of corporation tax."
The coalition is to publish a document on the mechanics of giving Northern Ireland control of corporation tax. In opposition, Mr Paterson suggested the existing revenues be transferred to the Executive, which would then have the power to cut the rate to something like the Republic's 12.5pc and make up the initial loss in savings elsewhere.
"We got those ideas into the election manifesto, and now we have them in the programme for government.
"I am not saying it will be easy. But if we go on as we are, we will continue to have the same problems of low growth and productivity in Northern Ireland.
"The real problem is disaffected youth. As well as getting involved in illegal activities, as elsewhere, here they have the option of paramilitary groups as well.
"There are huge social gains to be made from an improved economy. Around one in four people in Northern Ireland is on some form of benefit.
" If that were reduced even to the UK average, it would amount to £75m a year."
A new investment conference aimed at US business is planned for the autumn. Mr Paterson said it was to keep the USA involved with Northern affairs.
There was a danger that dissident groups could damage the economic prospects but the levels of security co-operation against the threat were unprecedented.
"I have been really struck by the absolute determination of Justice Minister Dermot Ahern to combat the dissident threat ,and his obvious delight at recent Garda successes," Mr Paterson said.