Reasons to be optimistic – a profile of Nigel Dodds: Public Finance

Posted on September 19, 2008 · Posted in Public Finance

The sun was, for once, shining on Stormont Parliament at the end of a very wet Northern Irish summer. The omens seemed good for the crisis meeting between First Minister Peter Robinson, Deputy First Minister Martin McGuinness and their leading colleagues in the Democratic Unionist and Sinn Fein parties, as they attempted to resolve an impasse that had stalled ministerial decision-making for nearly three months.

 

Recently appointed finance minister Nigel Dodds was to meet Public Finance directly afterwards, but arrived late back at Stormont, when the talks – encouragingly, perhaps – over-ran. But then the portents turned bad. The room in which Public Finance was waiting turned black with smoke as civil servants’ lunches were burnt, the fire alarms rang out and the offices evacuated. The minister was introduced in the unconventional setting of a car park, before we retreated to Dodds’ offices within Stormont Parliament.

 

Nigel Dodds seemed amused rather than irritated by the eventful start to his day, apparently buoyed by his meeting with Sinn Fein and a belief that politics will soon be back to normal – whatever ‘normal’ means in Northern Ireland. Differences between the two main parties concern a timetable for devolution of policing and justice, the future of selective secondary education, support for the Irish language and what use should be made of the old Maze prison site. Although none of these matters fall within Dodds’ ministerial brief, he is involved in all as deputy leader of the Democratic Unionist Party, as well as the most senior departmental minister.

 

“When there are very tricky, contentious issues, then it is going to be difficult to work our way through this,” admits Dodds. “But at least those are being worked through in a political process where people are sitting down engaging in discussion and talks, rather than what we had for decades, of people out on the streets killing and murdering each other. So we have come a long, long way.”

 

The initial euphoria about devolution led to unrealistic expectations that it marked the end of political difficulties, suggests Dodds. Now people must come to terms with the reality that what the unionist parties call a ‘mandatory coalition’ inevitably comes with serious disagreements that have to be negotiated through.

 

Dodds seems optimistic that the next Executive meeting, scheduled for 18th September, will take place – unlike all those planned since mid-June. “Well I hope so,” he says. “I see absolutely no reason it shouldn’t. There’s a whole list of things we need to deal with.” Dodds argues that the Executive must meet if political differences are to be resolved – but then adds that the main dividing issue, devolution of policing and justice, remains a matter for bi-partisan negotiation with Sinn Fein outside the Executive, because it is not as yet a devolved responsibility.

 

As far as his own new ministerial brief is concerned, Dodds says there will be little change from the approach of predecessor Robinson, whom he replaced in May when the latter succeeded Ian Paisley as First Minister. “We have put the economy at centre stage,” he says, believing that with peace, strong economic growth will follow. “We have reasons to be optimistic in Northern Ireland,” he suggests.

 

Dodds admits, though, that amidst the global economic crisis, this is a difficult time for any government, including a devolved one. So can the Budget – and an investment programme of £19bn to £20bn over 10 years, overseen by Northern Ireland’s Strategic Investment Board – survive unaffected? “We set the Budget last year on the basis of certain projections in terms of realisation of some capital assets, and so on, and there is no doubt that given the downturn in the property market that is not going to be as healthy in terms of income as we expected,” concedes Dodds.

 

“But we are working very, very hard along with the Strategic Investment Board and all the departments to ensure that we maximise what we can, taking account that we must be prudent and careful and sensible about not disposing of things that aren’t going to realise what they should realise. But I believe we will be able to work this through.” He adds: “Having a devolved government means that we are more flexible in how we can react.”

 

The public sector efficiency and productivity programme initiated by Robinson now takes even greater significance. “That was a very important part of the Budget anyway,” says Dodds. “The Executive was very committed to public sector reform and modernisation, making the administration of public service work more effectively for the people, delivered with as little bureaucracy and red tape as we can, without damaging services. I think we are making good progress on that.” There are no plans, at present, to set even more challenging targets to make up any shortfalls of income.

 

While Dodds watches Scotland’s proposals on a local income tax, he seems uninterested in copying it in place of Northern Ireland’s contested rates system. Dodds is keener to vary the corporation tax rate, enabling Northern Ireland to compete more effectively with the low tax Irish Republic for inward investment. But a report commissioned by Gordon Brown and written by a former head of HM Revenue & Customs, David Varney, strongly rejected that option.

 

The Executive was “disappointed” with Varney’s report, says Dodds. A follow-up report by Varney argued that public sector employment and spending levels in Northern Ireland should be cut heavily, so that it accounts for a similar proportion of GDP to that in the rest of the UK – potentially generating nearly 70,000 job losses. It is a line of argument that Dodds firmly rejects.

 

“It’s the fact the private sector is so relatively small that is a problem,” says the minister. “If you look at the public sector around the rest of the UK, we are not that out of kilter.” He adds: “You can’t do it just by slashing the public sector.”

 

Another threat to Northern Ireland’s public sector is raised by the Institute for Public Policy Research, which this summer recommended abandoning the Barnett Formula. Barnett is the system adopted since the 1970s by the Treasury to distribute central government grant to the devolved nations, based on uprating grant to the nations in proportion to extra spending in England. This not only gives the devolved nations more money per head to spend than England, but offers, says the IPPR, the prospect of growing tension between England and the three devolved nations. Dodds is upbeat, saying that there is no indication that the Treasury is thinking about this.

 

“Barnett has been there so long now, primarily because nobody has a replacement: finding an acceptable replacement which would find consensus is so difficult,” says Dodds. “There is no indication from the Treasury that they intend to change that.” The danger for the Treasury, Dodds suggests, is that any replacement could end up costing more. “We believe it will stay,” he explains.

 

Judging by his cv, Nigel Dodds is a dedicated politician. He is an MP and Belfast city councillor, a minister, a member of the Assembly and a former assistant to Ian Paisley at the European Parliament. His wife, Diane, was an Assembly member until she narrowly lost in the last elections and remains a Belfast city councillor. “At times you say what life outside politics,” laughs Dodds, but then insists that his family – he has a young daughter and son – come first. “My life revolves around home life, family life,” he says. “I like to travel a bit, to see our countryside, the UK as a whole, Europe, our heritage.” He enjoyed travelling the west coast of France with his family this summer. But he re-emphasises that “home life and church life” is very important to him.

 

Yet the former barrister has no hesitation in saying that he enjoys being a minister. “Yes, I do,” he says. “If you are not a minister you don’t have influence – you are lobbying, you are arguing, you are presenting cases. If you are actually in a position to do something, to take action, it is very rewarding, very stimulating.”