DUP POLICY PROPOSALS

RISING TO THE
CHALLENGE

< Details on how you can respond to these proposals can be found on the back page
DUP: RISING TO THE CHALLENGE [2]

RISING TO THE CHALLENGE

The Chancellor’s Spending Review proposals announced on 20 October
represent the most challenging financial settlement for Northern Ireland for
many years.
In the weeks ahead we will continue to press the Government to honour the
commitments that have previously been given in relation to the level of funding
for Northern Ireland arising out of previous political agreements. However, we
must also make plans to deliver the most effective and efficient administration
and ensure that front-line services are not adversely affected by the cuts. In the
area of current expenditure we believe that with imagination and by facing
difficult challenges this can be achieved.
The sensitive spending areas of Policing, Health and Education will remain the
most substantial elements of public expenditure for the Executive in the
Spending Review period.
DUP: RISING TO THE CHALLENGE [3]

In a multi-party coalition no party will be able to deliver its entire agenda. These
proposals are therefore offered as a further contribution to the ongoing debate
and in the spirit of seeking agreement. In the coming days we will positively
engage with other parties in the Executive to deliver a Budget which will be in
the interests of all the people of Northern Ireland.
We are satisfied that if the changes we have outlined are made we can balance
our budget and provide the same range of services, to the same high standards,
without the community feeling any appreciable level of pain.
We have been elected by the people of Northern Ireland to make choices and
take decisions. We look forward to an early draft Budget so that Departments
and other bodies can plan for the years ahead.
DUP: RISING TO THE CHALLENGE [4]

In the next four years the Block Grant will provide the following allocations.
£ million

2010-11 2011-12 2012-13 2013-14 2014-15

Current DEL (NI Spending Review Settlement) 9,886.7 9,836.7 9,858.9 9,927.1 9,985.4

Real terms % decrease on 2010-11 -2.4% -4.3% -6.1% -8.0%

Real terms £m decrease on 2010-11 -237.9 -447.4 -647.2 -863.7

Capital DEL (NI Spending Review Settlement) 1,222.9 903.4 858.9 780.6 803.8

Real terms % decrease on 2010-11 -27.5% -32.6% -40.3% -40.1%

Real terms £m decrease on 2010-11 -342.7 -415.9 -527.3 -538.2

This Budget will not just be about cuts but about doing things
differently to build a better Northern Ireland. We must ensure that
Northern Ireland emerges from the present difficulties stronger
than ever to face the future.
DUP: RISING TO THE CHALLENGE [5]

CURRENT EXPENDITURE
This is the expenditure that deals with the everyday spending of government including salaries for
public sector employees and the operation of public services such as health, education, policing and the
much needed drive to stimulate our economy.
Our priority in the Budget will be to grow the economy, protect the vulnerable and deliver the most
effective and efficient public services.
The Block Grant allocated from Westminster represents around 90% HOUSEHOLD BILLS
of the Northern Ireland Resource Departmental Expenditure Limit. In 2007 the Executive announced that it would freeze the domestic
This is augmented by the Domestic and Non Domestic Regional Rate Regional Rate in cash terms representing a real terms cut in
income and income generated from a range of charges as Household Bills. This followed many years of significant domestic
well as a borrowing facility of £200 million each year and Regional Rate increases – 19% in a single year on one occasion.
other miscellaneous funding. In light of the present reductions in the spending power available to
In this paper we will seek to address Executive issues which cut the Executive, and considering the level of local taxes paid in other
across all departments. In addition to these each department will be parts of the United Kingdom, it is difficult to justify continuing to
best placed to identify savings which are particular to their own cut the domestic Regional Rate in real terms. The domestic Regional Rate constitutes around 50% of the Rate Bill
departments. that householders receive with the balance being a domestic
However, we continue to believe that the first priority should be to District Rate set by each Local Government District Council.While
The savings which could be achieved in some of the areas listed may protect working families by delivering the most efficient value for the domestic Regional Rate was cut in real terms in each of the last
be difficult to estimate but we are confident that they can off-set money public services.That should come before the average three years the District Regional Rate has continued to rise - in a
the real terms cut in the current expenditure budget. householder is asked to contribute more. Efficiency savings must number of council areas the increases have been substantial. In the
come before tax increases. A 1% increase in the domestic present economic circumstances we believe that it is not defensible
Regional Rate raises only around £3.2 million per year and Rates will that an ever greater burden is being placed on householders
therefore only make a marginal impact to the problems that we face. through their domestic District Rates.
We would therefore propose that the domestic Regional We would therefore propose the Executive take powers to
Rate be increased only by the rate of inflation in each of the cap the level of domestic rates and would not expect to see
next four years. above inflation increases during the Spending Review
Any additional increases over this level could only be justified in period. Any council wanting to set a Domestic Rate above
relation to a specified area of spending and not merely in order to inflation would require authority from the DOE Minister
top up the Northern Ireland Block from Westminster. having given convincing reasons for such a rise.
DUP: RISING TO THE CHALLENGE
SALARY COSTS
During this period it is essential that we keep as many people in
employment.This not only makes economic sense but will help with
social stability.There is no evidence that the private sector is yet in a
position to engage any significant number of public sector
employees.
Until such a time as the private sector can take up the slack we
believe it is better to use resources to maintain jobs in the public
sector than it is to fund wage increases.These proposals are made in
light of the present economic circumstances and would not last any
longer than is necessary to deal with the present exceptional
circumstances.
We therefore propose that there should be a freeze in Civil
Service pay for the next two years for all those earning in
excess of £21,000.
A significant element of the annual increase in the Civil Service pay
bill is one step pay progression. This accounts for approximately half
of the annual increase in the wage bill.
We therefore propose at the earliest opportunity, in the
absence of agreement, to introduce legislation to end any
entitlement to one step pay progression.
Other than where a specific contractual entitlement exists
we do not believe that any performance bonuses (above a
de minis level) should be paid.
While, in practice we do not set pay policy for the entire public
sector in Northern Ireland, we would urge those responsible for
other pay settlements to follow our approach. In the absence of such
a common response being followed the Executive would want to
take steps to reduce the budgets of bodies or take other measures
to ensure a common approach.
MINISTERIAL SALARIES
While the amounts of money involved are not significant in the
context of the deficit we believe that it would be appropriate for
Ministers to voluntarily give up 5-10% of their Ministerial salaries as
an indication of the shared sacrifice involved in implementing this
Spending Review.We recommend a voluntary "giving" as to do
otherwise would be to breach the all-party agreement that
politicians would never again set their own pay and expenses. All
DUP Ministers are prepared to support this proposition.
We therefore propose that Ministers voluntarily return 5% -
10% of their Ministerial salaries.
USE OF CONSULTANTS
Every year the Northern Ireland Executive spends a significant
amount of money on external consultants. In 2008-09 it was over
£25 million and was even higher in earlier years.While much of this
is undoubtedly necessary we believe that departments should be
much slower to call upon external consultants and that targets
should be set for reducing consultancy costs each year.
We propose that each Minister take steps to reduce, by 25%
the cost of consultancy advice over the SR period. This can
be achieved by a greater role for Ministers in approving such
expenditure and a more rigorous approach to where
external consultants are required.
[6]
FINANCIAL MANAGEMENT
Better financial management of the resources available to the
Executive has also had a significant impact on our spending power.
Indeed, hundreds of millions of pounds extra have been spent
through this development alone than was the case under Direct
Rule.With the Coalition now abolishing End of Year Flexibility this
will become even more important.
RECRUITMENT
Due to the reduction in public expenditure it is inevitable that the
number of posts in the public sector will have to be reduced.
However, given the natural movement within the civil service and
the wider public service it is much better to reduce the level of
staffing through natural wastage when vacancies occur.
At this time rather than employing new people and making
others redundant we would propose a freeze in general civil
service recruitment and only in exceptional circumstances
would we recruit new staff. Steps would be taken in some
other parts of the public service to do the same.
While this is not a desirable situation, it is better than the option of
compulsory redundancies and the financial and social cost that such
a step entails.
It would be expected that in any year approximately 1000 posts would
be reduced by this process – 4,000 in the Spending Review period.
DUP: RISING TO THE CHALLENGE
QUANGOS
In Northern Ireland there are a considerable number of bodies
which are publicly funded but which are not directly controlled by
Government. They are often known as arms-length bodies or
Quangos.While some of these bodies perform a useful function
many have out-served their real value or provide services which
could be delivered in a better way. During Direct Rule Quangos
provided a local input into decision making but now with local
Ministers democratically accountable to the people in charge of
departments this is less necessary.
We propose that there should be a short term review of
every arms length body in Northern Ireland with proposals
as to how each should be treated. The options which should
be considered should include abolition, merger, sharing of
back office services, return to departmental control or
amendment. We believe that such a process could not only
save very significant sums of money but could also increase
public accountability of the services which these bodies
deliver.
BETTER ASSET UTILISATION
The Capital Asset Realisation Taskforce has done important work
over the last three years in this area and what is now needed is
implementation of many of the proposals tabled.The cost of land,
buildings and accommodation is the second most significant cost to
the Northern Ireland Executive each year. There is little doubt that
in this category very considerable savings could be made by better
usage of these assets. Such consideration could include a central
unit with private sector experience to negotiate and organise
property across the estate.
It should also be possible to incentivise better usage of government
accommodation and maximise the utility that can be gained from
each asset. Available assets should, where feasible, be accessible to
other public bodies, voluntary and community organisations. These
assets have been purchased from public funding and should be
made available for providing other public services. Such a step
obviates the need to provide alternative facilities.
We propose that urgent consideration be given to a review
of the operation of the present government estate with
proposals for the better usage of the assets that we own
or lease.
ABSENTEEISM
While there have been improvement in recent years, Northern
Ireland Departments have historically carried significant levels of
absenteeism.Where management was focused on reducing
absentee levels the statistics improved. There is ample evidence to
show that when Permanent Secretaries have signalled they will
seriously engage and deal with this matter significant
improvements resulted.
In order to incentivise better performance Budget
allocations should be amended to be in line with the agreed
absentee targets.
[7]
NUMBER OF MLAS
Northern Ireland has more MLAs per head of population than either
Scotland or Wales and significantly more than are needed for the
Assembly and its committees to function properly.
We propose that from 2015 the number of MLAs should be
reduced to 72 or 75 resulting in significant savings to the
Assembly budget.
NUMBER OF DEPARTMENTS
Before devolution Northern Ireland had only six departments
operated by Direct Rule Ministers along with the Northern Ireland
Office. The ten department model was created out of political
expediency by the first Assembly but does not deliver the most
efficient or effective form of government. By reducing the number of
departments we would not only create significant annual savings,
reduce considerable duplication but could also improve joined up
government with a more sensible distribution of functions.
We propose that the number of Northern Ireland Departments
be reduced from the present 12 to no more than 8.
Even a 1% saving through better organisation of departments
would save around £100 million a year in addition to the direct
savings of around £25 million through the removal of duplication.
This can be achieved though better financial management of larger
units, a better alignment of functions across departments and by
improving co-operation across service areas.
DUP: RISING TO THE CHALLENGE
PROCUREMENT
Procurement is another significant head of expenditure by the
Executive. It is essential that we maximise the return that we
achieve for every pound spent. Government reports have
highlighted weaknesses within the procurement process and it is
necessary that these are addressed.
Central Procurement Division and other Centres of Procurement
Excellence should ensure that small builders and suppliers have a
better opportunity to tender for small contracts rather than
bundling jobs and services or retaining a major contractor or
supplier. In many cases the small local provider will be more
competitive.This principle should also apply to other public bodies
including the NIHE and Health Trusts.
Government should seek to maximise value through the
procurement process and save money.
[8]
NORTH SOUTH AND EAST WEST RELATIONS DEPARTMENTAL EFFICIENCIES
Political relations between Northern Ireland and the Republic of In the last Comprehensive Spending Review Period Departments
Ireland have never been better. However the North South structures were asked to find efficiency savings of 3% cumulative each year.
should not be immune from delivering efficiency savings and
While undoubtedly it becomes progressively more
consideration must be given to what positive outcomes are
challenging to reach the target, we believe that a target of
delivered from the present spending. While we do support co-
2 or 3% per annum should be set for this Spending Review
operation with the Republic of Ireland where it is in our common
period. This is not a cut. The funds raised from the
interests some of the proposals in this area fail to appreciate the
efficiency process would provide expenditure to be
entirely different arrangements each side of the border.
allocated to new programmes to help the Executive deliver
Recent years have seen a significant improvement in bringing on its latest priorities. It may be necessary to take a lighter
balance to the East West axis as compared to that which has touch to some spending areas. Ministers would be charged
developed on the North South axis. While it is important to quickly with making efficiencies principally in areas of
establish the BIC Secretariat it must be done as efficiently as administration.
possible.
At both levels better use of video conferencing and
DEPARTMENTAL PRIORITIES
ad hoc contacts would cause substantial savings
At a departmental level consideration should be given to new
as opposed to formal high-level
methods to deliver public services at lower costs. It is not possible
meetings. This is not a political point.
to be specific about proposals in this regard but the focus must be
We recognise that continued use
on the delivery to the public.
should be made of the institutions
and our support for maintaining
good contact and relations is
unwavering but we must
recognise the economic
restraints and the same
reductions forced upon
us elsewhere should
apply to these
institutions and indeed
the Assembly as well.
DUP: RISING TO THE CHALLENGE
POTENTIAL NEW PUBLIC EXPENDITURE
PRESSURES
The UK Government is due to publish proposals to help the Northern
Ireland economy this autumn. While these are unlikely to come
before the publication of the draft Budget we believe that
consideration should be given to the potential impact of such
proposals on our spending plans over the next four years.
Should the power to set our own level of Corporation Tax be offered
to the Northern Ireland Executive, we would favour using this power
to reduce the rate of corporation tax in Northern Ireland subject to
the precise terms not placing an unacceptable burden on our
budget.
As there would likely be a lead in time for any such reduction we do
not believe that any provision needs to be made for the first two
years of the Spending Review period but we would anticipate a
reduction beginning in 2013-14.
We would also wish to negotiate with the Government how the
benefits from any increase in the revenue raised from Corporation
Tax through a significantly higher tax base being created would be
shared with the Northern Ireland Executive.
TACKLING DISADVANTAGE
Downturns and recessions predictably hurt those already in
disadvantage most and add to the ranks of those who need support
through the hard times. In order to tackle disadvantage in
communities in Northern Ireland provision should be made to
address a range of factors which would improve opportunities and
infrastructure.
An investment in these communities while representing a short
term cost on the Northern Ireland Executive should produce a long
term return in economic and social terms.
Our proposals range from projects that are tailored to assist those
living in areas of disadvantage and others which target individuals
who are living in hardship and poverty.
[9]
VOLUNTARY AND COMMUNITY SECTOR
Northern Ireland has the largest community and voluntary sector,
relative to all other regions of the UK.This sector provides support
right in the heart of communities working hand in hand with
statutory agencies and Government to deliver vital services and
facilities to those who need them most.
These organisations bring a number of important attributes
including innovation, prevention and early intervention work, and
tackling challenging issues often within hard to reach communities.
Many fear the third sector will be adversely affected by financial
challenges ahead, but we argue that it should actually be assisted to
do more at this time. Greater opportunities should be provided for
third sector organisations with a proven track record to deliver
services.
Department for Business, Enterprise and Regulatory Reform
research found there are clear benefits to both users and taxpayers,
with academic literature typically indicating cost savings from
tendering in health for example to be between 10 and 30%,
including when the in-house trust won the bid with no adverse
effect and sometimes an improvement in service quality. In an
increasingly stringent financial climate this approach can bring
huge savings, protect services and ensure any surplus is re-invested
in service provision.
We want to continue to work closely with the sector. As funding
opportunities become more restricted we want to provide help and
guidance where and when needed. We support the development
of a meaningful and constructive concordat between the
Government and the third sector in Northern Ireland that not only
recognises the value of the sector but also identifies how this
important relationship can be enhanced.
DUP: RISING TO THE CHALLENGE [ 10 ]

CAPITAL EXPENDITURE
Capital Expenditure is the money we spend on long term investment such as the provision of new
schools, hospitals and roads. It is key to our long term prosperity as a society and critical to the private
sector. In this light the significant reduction in the Capital Expenditure available through the Spending
Review presents a threat to the Northern Ireland economy. While we consider the Spending Review
settlement allocation a breach of past undertakings and therefore the subject of ongoing discussions it is
still essential that we find ways to augment the capital budget available to the Executive.
RESOURCE TO CAPITAL SWITCH ASSET DISPOSAL ENCOURAGE PRIVATE FUNDING AND DELIVERY
We believe that there should be a switch of some funds The Executive owns a very considerable stock of assets but many of OF PROJECTS
from the Resource Budget to the Capital Budget especially these do not meet our present priorities. Rather than having our In a context of constrained public expenditure the option of
in the early years of the Spending Review Period where resources tied up in under-performing assets we should sell partnering with the private sector should be reconsidered
there is limited opportunity to produce alternative funding surplus assets and use the proceeds to reinvest in new as a means of delivering on our investment strategy. New
streams. assets to meet our present needs. or innovative methods should be considered such as joint
We suggest the transfer of up to £100 million for each of the first Clearly given the state of the market, it would not be the ventures in order to deliver the best quality public services.
two years of the Spending Review period. appropriate environment in which to dispose of many of our assets
so it may be the latter part of the Spending Review Period before
SALE AND LEASEBACK OF PUBLIC SECTOR
significant receipts can be generated. Depending on the state of the
ASSETS
NEW REVENUE FOR INVESTMENT market in excess of £100 million could be generated in the latter
We believe that, subject to the necessary value for money
Any new revenue streams that are established by the years of the Spending Review Period.
assessments, consideration should be given to the sale and
Executive should be used to fund capital programmes.
We should also actively investigate how existing housing assets leaseback of certain existing assets in order to enable the
Considerations should also be given to how public bodies such as could be better used in order to maximise the resources available to Executive to continue to invest in new assets and to
the Port of Belfast can make a contribution to public investment in the Executive.While there are significant technical hurdles to stimulate the economy.
Northern Ireland, especially during this Spending period. Rather overcome, potentially hundreds of millions of pounds of additional
than privatising the port or selling port land we would prefer to spending power could be unlocked.
negotiate a dividend to be paid to the Executive. This could raise
tens of millions of pounds in the next four years.
DUP: RISING TO THE CHALLENGE [ 11 ]

GETTING NORTHERN IRELAND WORKING

In the current economic climate we believe that there needs to be a short-term focus placed on job
creation. Over the past 3 years Northern Ireland has experienced a significant increase in
unemployment. Whilst the level of unemployment is significantly below levels recorded in the 1980s it
has increased by 148% during the recession.
Most of the contraction in employment has been in the construction sector which accounts for 48% of
the decline in total employment. Over 70% of the decline in employment can be accounted by
construction related manufacturing sectors. The 2010 Spending Review settlement has the potential to
result in additional job losses in both the public sector and the construction sector though our approach
would minimise that outcome.
We believe that it is vital to provide a stimulus for job creation to ensure that people do not lose skills
due to long periods of unemployment and becoming detached from the labour market.
We believe that by prioritising funds towards job creation in the short term thousands of jobs can be
created through encouraging new business start-ups, promoting new contact centres, creating
additional jobs in the food processing sector and working with the social economy sector. Over the next
3 years over 7000 new jobs could be created at a cost of approximately £18.8 million. This package of
measures will be additional to work currently being carried out by Invest NI and other Government
agencies.
DUP: RISING TO THE CHALLENGE
EXAMPLES OF MEASURES TO PROMOTE JOBS
Business starts
In the current climate, people who are not able to find employment
may wish to start a new business. We believe that 1500 jobs could
be created in neighbourhood renewal areas by supporting business
starts. We believe that the provision of £1,000 per business will give
the financial support required to encourage new business starts.
Total cost of programme- £1.5 million.
Targeting contact centre FDI projects
While this proposition does not easily fit with our PfG strategy of
targeting high-end jobs we contend that the circumstances merit a
limited change to the strategy.There is scope to encourage bringing
contact centre jobs to Northern Ireland.These centres could be
geographically spread throughout Northern Ireland and would provide
an estimated 1800 jobs. Total cost of programme- £6.6 million.
Job promotion activity in the agri-food sector
The agri-food sector is a significant and important part of the
economy and accounts for more than a quarter of all manufacturing
jobs in Northern Ireland. We believe that 700 jobs could be created
in this sector by offering grant assistance to companies wishing to
expand and create more jobs. This measure would result in greater
exports from the sector to GB and Europe. Total cost of programme -
£2.45 million.
[ 12 ]
Extension of Propel Programme
The Propel Programme is a two phased programme for
entrepreneurs in Northern Ireland. The entrepreneurs must have a
business idea that is innovative and has the potential to generate
employment and revenue for the Northern Ireland economy. The
extension of the Propel Programme would focus on entrepreneurial
companies that have scalability potential and the potential to
generate employment and revenue for the Northern Ireland economy.
The programme would create 150 jobs and cost £1.5 million.
Increased support for social enterprise Implementation of the Green New Deal
This proposal would be adding to the current social enterprise By implementing the Green New Deal up to 2300 jobs could be
programme and would help build the social economy sector. This created in the construction and renewable energy sector improving
programme would look at a number of ways in which the sector the energy efficiency of homes. This will also have the added
could be developed including looking at best practice, obtaining benefit of improving fuel poverty.
funding for the sector and developing procurement opportunities
for the sector. We believe that 340 jobs could be created by
investing £0.65 million in the sector.
Targeting of knowledge processing FDI
Northern Ireland is a viable alternative to places like Eastern Europe
and India to carry out high-end out-sourcing work including legal
work. We have a large well skilled talent pool in a cost competitive
location. Following work carried out by DETI, DEL and Invest NI we
are confident that over the next 4 years we could create 600 jobs at
a cost of £3.75 million.
Enhanced enterprise support to Disadvantaged
Young People
By providing specific financial support for disadvantaged young
people 280 jobs could be created. This programme would work
alongside the NEETS (not in employment, education or training)
framework for action. Cost of programme - £0.45 million.
DUP: RISING TO THE CHALLENGE [ 13 ]

Much of the public discussion over recent months has been concentrated on where the axe will
fall on public expenditure.
This strategy does not simply focus on making the cuts forced upon us by the Conservative-led
coalition. It sets out a plan to apply those cuts as painlessly as possible while energetically taking
the essential steps to grow our economy. Moreover, the DUP recognises that at the same time we
need to provide additional resources and programmes to help those who will suffer most during
this period of austerity. In short it is a three-pronged strategy - apply the cuts where they will
cause the least long term damage; provide aid to those people and areas needing it most and
generating momentum to stimulate our economy and increase jobs.
This document contains a wide range of proposals to help grow our economy and allow us to
address the difficult fiscal conditions which the Executive will face in the next few years. The
present economic problems will give the Executive the opportunity to demonstrate that by
working together we can make a real difference to the lives of people in Northern Ireland.
No party will have a monopoly of ideas but all must be prepared to consider new and innovative
ideas. It is through this process that we can deliver a Budget which meets the needs of all the
people of Northern Ireland.
RISING TO THE
CHALLENGE
The DUP values the views of members of the public.
We are keen to hear your opinions. If you have any views on
our proposals that you would like to contribute as we develop
our strategy further, please email consultation@dup.org.uk
or write to: DUP Policy Unit, 91 Dundela Avenue, Belfast BT4 3BU.

www.dup.org.uk
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