The Assembly's Economic Powers

In her Ministerial Foreword, Arlene Foster writes approvingly that the Northern Ireland Economic Strategy “has been developed by locally elected politicians to meet the particular needs of our economy”.

This argument - that local representatives are best placed to promote local interests - is of course a central rationale for devolution.

However the ability of MLAs to shape the economy is limited. Under the Northern Ireland Act 1998, the Assembly essentially administers a block grant from the UK government and sets regional rates. Subsequently there have been piecemeal efforts to expand the Assembly’s financial powers. In 2002 it acquired a borrowing capacity of £200m per annum and it recently took control of air passenger duty on long-haul flights. There has also been a call for the devolution of corporation tax.

The legislatures in Wales and Scotland have adopted a more systematic approach, establishing Commissions to comprehensively review local economic powers. Following the reports of those Commissions, new financial arrangements for Wales are being negotiated, while the Scotland Act 2012 has already extended the fiscal autonomy of the Scottish Parliament.

In the absence of a similar process here, NICVA is commissioning a report that will examine the feasibility of expanding the Northern Ireland Assembly’s fiscal powers. It will set out which functions might be devolved, how they could operate (for example in relation to trade-offs with the block grant), but it will not prescribe how any additional levers should be used.

Whatever its findings, some will contend that our politicians lack the expertise to take on other economic functions. While it is fair to question the economic expertise of local parties, a lack of competence in this area is hardly unique to Northern Ireland’s political class. In the wake of the Great Recession the same charge could be directed towards the economic policy-making community internationally.

Greater responsibility might even encourage local parties to develop their competence in economic policy. Certainly, given that the status quo portends prolonged stagnation there is a need to at least explore the potential to provide more options and create more flexibility. Hopefully NICVA’s report will contribute to that important task.

The opinions, views or comments in this article do not necessarily reflect any views or policies of NICVA.

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