Author Archives: Ultonia Communications

The Chancellor giveth… and the Chancellor taketh away?

There seems to be some confusion over what the Chancellor’s announcement of £2 billion extra for the Health Service across the UK would mean for Northern Ireland. All are agreed that it would mean an uplift in Northern Ireland’s budget, but how much and where?

The system is in fact fairly simple. “Territorially identifiable expenditure” is established for each financial year in the Budget, the Comprehensive Spending Review and in other announcements. Population estimates are used for each country of the UK to establish how much money in “territorially identifiable expenditure” must be spent in each country for every £100 spent in England – currently this is £3.45 for Northern Ireland (and £10.03 for Scotland, as that’s currently in the news). This means for every £100 added to spending on Health, or roads, or education in England, £3.45 must be added for Northern Ireland.

From this, we reported initially a figure of (just under) £70 million for Northern Ireland, on an original understanding that the £2 billion figure was going to be announced for England. If the £2 billion figure applies to the whole UK, however, that reduces the Northern Ireland figure, by our calculations, to just under £60 million. BBC NI is reporting £41 million – we don’t know where this figure comes from, but perhaps it is based on a lower overall figure – we will see when the Autumn Statement takes place.

However, money allocated to devolved authorities is in fact allocated to that country’s Secretary of State, who passes it to the relevant Department of Finance in the devolved Executive (or Government). That Department may choose to allocate the extra money wherever it wishes. There is no obligation, therefore, for Northern Ireland to spend all the extra on Health. In fact, it could spend all of it on something else if it wished. It was ever so, and indeed it has frequently happened – of “territorially identifiable expenditure” Health already accounts for 22% in England but less than 19% in Scotland and Northern Ireland, precisely because Scotland and Northern Ireland have generally chosen to spent part of the money allocated from rising Health spending in England on things other than Health in Scotland and Northern Ireland.

There is a big catch. When, for example, Scotland chose to move away from Tuition Fees altogether and Northern Ireland chose to retain them at previous levels as England tripled its, the reverse happened – money was removed from university education in England, and thus taken from Scotland and Northern Ireland. The assumption is always that Scotland and Northern Ireland (we are leaving Wales out of it because it is a little different) will do the same as England – if they don’t in the case of a reduction in spending in England, they have to find the money to cover that reduction elsewhere.

Here is the warning for Northern Ireland. An pre-election give-away uplift in Health spending (and perhaps also in other areas) will see anything from £41 million (by our calculations, from £59 million) added to the Northern Ireland Departmental budget now. However, all sides are agreed that post-election, the reverse will happen – further spending reductions will be implemented and that means in effect that Scotland and Northern Ireland will have to implement them too (although they could choose to close the gap by raising taxation/rates/charges if they wished). Those of us operating in Scotland and Northern Ireland need to be keenly aware that what the pre-election Chancellor giveth, the post-election Chancellor probably taketh away…

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Notes on Smith Commission on Scottish Devolution

The Smith Commission’s report on Scottish devolution will prove a momentous change in the UK’s constitutional history. Unfortunately it defies the relatively simple headlines put forward by the media in this age of sound bytes; it deserves more scrutiny not just about what is in it, but about what it may mean including beyond Scotland.

Parliamentary Sovereignty

The momentous change is essentially the proposal that the Scottish Government and Parliament be made permanent in legislation – in other words that absolute Parliamentary sovereignty be ended and that, in the case of Scotland, national sovereignty effectively be pooled between Westminster and Holyrood. This constitutes a clear shift towards federalism, which may soon be matched in Wales (it is effectively already the case in Northern Ireland but in a different manner, as its devolved institutions are formed under an international agreement).

Tax/welfare structures

Structures under a Memorandum of Understanding are required to manage differential tax and welfare systems. Their establishment sets a precedent which could then be repeated in Northern Ireland and Wales.

Tax devolution

Income tax (on earned income, not dividends or savings), aggregates levy and air duty are fully devolved in the report. The latter of these was already the case in Northern Ireland, but Scotland may now compete. Income tax is not as dramatic as it first seems – it accounts for only about a quarter of all UK tax receipts and the likelihood is Scotland will not differentiate significantly (it hadn’t used its 3% option either way).

VAT and Corporation Tax, which had drawn attention in Northern Ireland, are not devolved. An announcement on the latter will follow next week, but it remains hard to see Corporation Tax being reduced in Northern Ireland without Scotland demanding and getting the same right soon after (as has happened with air duty).

However, the first ten points of VAT are assigned to the Scottish budget, which has the effect of raising the Scottish budget in the case of raised VAT receipts in Scotland comparative to the rest of the UK, and vice-versa – a similar system operates in Germany.

The National Minimum Wage remains reserved, so common UK-wide. This limits potential for “Living Wage” campaigns in any particular part of the UK.

Notably, Scotland takes full responsibility for any differential in administrative costs from applying different tax rates. That is a precedent which will be noted in Northern Ireland and Wales.

Welfare devolution

Scotland gets almost every individual aspect of working-age welfare devolved except the biggest, namely Universal Credit. It is entitled, even with Universal Credit, to use its housing powers and to vary the timing of payments. This is effectively the same as Northern Ireland, except Universal Credit is devolved there too in theory, right through to the requirement that Scotland meet any additional costs (administrative or otherwise) of doing things differently, although the concept of “parity” (making Scotland pay for its entire system if it does things differently) would not in effect apply.

Pensions and benefits to do with children/parenting are not devolved in the report. They are devolved to Northern Ireland but it is a convention (albeit one challenged by some Unions) that those powers are not applied and that pan-UK arrangements are maintained.

Scotland has discretion to introduce extra welfare payments in devolved areas with no prior consent necessary. A similar idea has been proposed using Northern Ireland’s powers to break the current welfare deadlock.

European Union

Other than pooled sovereignty, perhaps the most significant move in the report is the consultation with devolved Ministers on European issues and potentially even the representation of UK interests by devolved Ministers (thus access to the Council of Ministers). This applies to Northern Ireland (and, where appropriate, to Wales) just as to Scotland.

Super-majority

Most of the administration of the Scottish Parliament itself and of elections to it (and Scottish Councils) is fully devolved, but notably changes to some electoral arrangements (e.g. the number of MSPs) require a two-thirds super-majority to pass. That same super-majority has been proposed by some to replace “cross-community” (designation) votes in Northern Ireland.

Cross-border working

The role of the Joint Ministerial Committee is enhanced and a joint Parliamentary body is proposed. Are there lessons to be learned from the North-South Ministerial Council on the island of Ireland, which does something similar?

Election dates

The holding of Scottish Parliamentary elections in the same day as UK General elections (or any other elections) is prohibited. This is not the case in Wales or Northern Ireland, and indeed Northern Ireland Assembly Elections and Council Elections were held on the same day in 2011.

Consultative Roles

Scottish Ministers gain a consultative role in areas of broadcasting and regulation. These are markedly different across the UK. Regulation is devolved in Northern Ireland in some cases (Ofcom operates there but Ofgem does not; in the case of electricity, regulation is carried out on an all-Ireland basis in effect); S4C is a unique arrangement in broadcasting in Wales.

Comsumer advice and protection and certain aspects of supplier obligations with regard to energy efficiency are devolved to Scotland in the report. These are already devolved to Northern Ireland (often in the case of energy with a cross-border aspect).

Equality

Most aspects of employment are effectively devolved to Scotland in the report, but Equality is not. There is a view that abortion should be devolved to Scotland. Equality and abortion are both devolved to Northern Ireland.

Transport

Speed limits are proposed for devolution to Scotland in the report. They were already devolved to Northern Ireland.

Conclusion

The report is fairly comprehensive and sets some very interesting precedents. It is also notable for some omissions. It does set the scene for a Federal UK, yet significant powers remain reserved. Although the focus is on income tax, that may prove one of the least interesting aspects of how the new powers are devolved and used in practice.

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Analysis of NI Executive Draft Budget under consideration

Earlier this month, the Northern Ireland Executive ran out of money. Over-spending left it with a shortfall of £100 million (around 1% of the overall budget). To cover this, the UK Treasury allocated it a loan, on condition that the Executive agree its 2015/16 budget by the end of the month.

It is noteworthy, first of all, that the Executive does have some revenue-raising powers. It could:

  • raise the Regional Rate paid by households and/or businesses (a 19% rise, as implemented on one occasion under Direct Rule, would raise almost exactly the £100m shortfall) and/or remove the Regional Rate Cap (whereby rates are not assessed on property value above £400,000);
  • introduce separate Water Charges paid by households (depending on exemptions, this would eventually raise £150m-£250m annually, although it would likely be phased in so would raise less than half immediately); and/or
  • introduce other charges, such as for Prescriptions (raising £7m-£31m depending on the charge itself and exemptions) or motorway tolls (as in the Republic of Ireland, potentially raising £30m annually although there would be set-up costs).

The largest party, the DUP, is against all of these except Prescription Charges (the Finance Minister noted that, in any case, the full advantage to the public purse would not be felt immediately). The second largest party, Sinn Fein, is against Prescription Charges (and seemingly everything else except removing the Regional Rate cap). The outcome, therefore, is that revenue-raising options will be ignored.

That means that any shortfall in the 2015/16 budget – estimated at around £762 million plus repayment of the £100 million loan – has to be met purely through spending reductions. In practice, although Health and Education remain priorities, absolute protection of their budgets becomes impossible when looking at an effective 8-9% reduction across the board, not least as these are the biggest two Departments.

The Draft which will be put to the Executive is as follows:

Department

Draft Outcome (£ million)

Change

Share

Agriculture

187.3

-5.2%

1.9%

Culture

87.1

-12.8%

0.9%

Education

1849.3

-1.0%

18.5%

Employment

659.4

-12.8%

6.6%

Environment

101.7

-12.8%

1.0%

Enterprise

194.0

+5.3%

1.9%

Finance

139.0

-10.9%

1.4%

Health

4693.1

+3.3%

46.9%

Justice

1024.0

-6.0

10.2%

Regional Dev.

322.0

-4.0

3.2%

Social Dev.

589.1

-9.9

5.9%

OFMDFM

65.4

-0.6

0.7%

Assembly

42.5

Nil

0.4%

Sundries

38.5

-6.8%

0.4%

Some smaller parties have difficulties with this, particularly in the area of Education. There may be some minor changes there, but it is hard to see any significant difference emerging from the above, assuming any deal is done at all.

It is worth noting also that the above budgets refer only to expenditure falling under what is known as Departmental Expenditure Limits – in other words spending on public services. It does not include areas such as benefits and pensions, which fall under Annually Managed Expenditure (as strictly speaking they can be estimated but not precisely budgeted for).

New Course!

A new single-day course (or morning/afternoon if you wish to select two of the four modules) is available from Ultonia Communications after successful trials!

The UK is changing dramatically. This short course is the essential guide to understanding how devolution works, how you can negotiate it to best advantage, and how we can reasonably predict how this is likely to change in the next few years.

Where are the decisions which affect you made?

Find out how to predict where decisions are made and, more importantly influenced, both now and in future.

How does the UK differ from elsewhere?

Learn the key areas where local decision making differs in the UK from elsewhere – both politically and legally.

How does public finance restrict decision making?

Become informed about how the UK’s public finances work, how this differs from business/household budgeting, and the key differences between public spending at UK and devolved level.

What is the future?

Recognise which aspects of the public debate on the future of the UK are for political show, and which aspects are real.

Courses on Advocacy Skills already delivered to or via:
• Chartered Institute for Public Finance Accountants;
• Government Knowledge;
• NI Council for Voluntary Action;
• Parkinson’s UK;
• Queen’s University, Belfast;
• Stratagem NI.

Morning session: £395
Full day: £595

You can’t find the right answers if you don’t ask the right questions – this short course will ensure you ask the right questions and gain a real influence on public decision making!

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Scottish Referendum Sentiment Analysis

As referenced earlier in the week, we have carried out a sentiment analysis, combining what we see in the social media from specific parts of Scotland to determine the likely outcome of the referendum.

HEALTH WARNING: This is not a perfected science – yet! This is a trial.

What we have done is run the sentiment through our bespoke software tool, and add expert analysis based on past, similar events. That is even trickier than it was in May in Northern Ireland, where we were roughly as close to the outcome of European and Local Elections as reputable posters and bookies. So we cannot emphasise enough that these outcomes are to be treated with caution – we publish them just to test what we have with the actual results, due over the coming 10-12 hours.

Our sentiment analysis shows:

1. Dundee has returned the highest “Yes” vote (excluding Clackmannanshire and the islands, which are too small to be sure). 

2. Dundee, Clackmannanshire, Angus, West Dunbartonshire and most notably Glasgow have returned a majority “Yes” vote. 

3. North Ayrshire, Falkirk, Moray, Perth/Kinross and West Lothian are too close to call. 

4. 20 remaining mainland Councils have returned a majority “No” vote (all on the mainland plus Orkney; we assume so has Shetland, but not Na h-Eileanan Siar). 

5. Scottish Borders has probably returned the highest “No” vote, although it is very closely followed by Dumfries/Galloway (excluding the Islands, which are too small to be sure).

6. The overall “Yes” vote is around 43%

Not least given that our figure is well out of line with the polls, let us repeat the Health Warning! This is one way of doing it; polling is another; research (of the type used by bookmakers) is another. Ours is an innovation still itself being researched, analysed and tested.

Guide to watching Scottish Referendum

Coverage of the Scottish referendum on Thursday evening/Friday morning will be widespread of course, so it may be worth a quick note on what we are looking for through the night (all times UK).

Note the times are necessarily mere estimates, and perhaps slightly optimistic ones. Delays in transferring boxes, queries over verifications or any recounts (which may only be requested at the local venue) could delay them.

2200: Polls close (although those still queuing may still vote). The broadcast networks are not conducting an Exit Poll, so in fact we will know little at this stage.

Ultonia Communications will at this stage tweet a final call based on social media ‘sentiment analysis’ – note, however, that this is a trial and is far from perfected, and has in testing thus far proved marginally less accurate that the average poll. 

Follow @UltoniaComms for this.

Votes will be counted by each of the 32 local authorities

Votes will be counted by each of the 32 local authorities

0200: Key declaration: North Lanarkshire.

With over 6% of the electorate, both Lanarkshires are areas “Yes” should win (albeit narrowly) if it is to win overall. Smaller declarations (in descending order of likely yes” vote) are also due to come over the hour from Clackmannanshire, Perth/Kinross and Moray with a likely majority for “Yes” (although the latter two have wild variations in polling); Inverclyde, which is a toss-up if it’s close; and East Lothian and Orkney for “No”. Depending on the weather, we may also have a declaration from the Western Isles (Na h-Eileanan Siar) at any time, for “yes”.

0300: Key declarations: South Lanarkshire and Aberdeenshire.

Similar to the above, South Lanarkshire should be a win for “Yes” if it is to win overall. The same probably applies to the slightly smaller Aberdeenshire, although with regional discrepancies a “Yes” win here is not essential provided it is scoring well in the West. Smaller declarations over this half-hour are likely from Angus, Dundee, Falkirk and Stirling for “Yes”; Renfrewshire and East Ayrshire which are toss-ups if it’s close; and East Renfrewshire for “No”.

0330: Another raft of smaller declarations due around this time from Midlothian and West Lothian which should be just for “Yes” if it’s close; and Argyll/Bute, South Ayrshire, East Dunbartonshire and Shetland for “No”.

“Yes” should be ahead at this stage if it is to win.

0400: Key declaration: Fife.

Fife at over 7% of the electorate is really a toss-up. Highland is also a large declaration likely at this time just for “No”, and North Ayrshire should follow soon after as a toss-up (really “Yes” would want to win it if it’s close).

“Yes” should still be ahead at this stage if it is to win.

0500: Key declarations: Glasgow and Edinburgh.

With over a fifth of the electorate between them, Scotland’s two largest cities and their margins could be critical if it is still close, and they will likely come towards the end. For “No” to win, it will need to win Edinburgh relatively comfortably. For obvious reasons, both sides need to be at least close in Glasgow. Scottish Borders should also declare for “No” around this time.

It is possible the winner will now be declared.

0600: Key declaration: Aberdeen.

Aberdeen with over 4% of the population could decide it right at the end if it is a cliffhanger! It should narrowly favour “No” all other things being equal – but remember the rules are very simple, all that matters is the overall score across Scotland, so if it is close “No” may need to win by a particular margin.

Unless it is incredibly close, the winner should now be declared.

0700: All being well, we will have the final result by this time, probably from Dumfries/Galloway for “No”. If it is incredibly close, “No” could expect just over 60% here if it needs it.

Thanks to BBC Scotland, Number Cruncher UK and Credit Suisse for estimates, and ScotCen for further information

Advocacy / Media Skills Course – Register Interest & Sign Up

NEW: SIGN UP FOR THE COURSE ONLINE HERE!

Time

Every Tuesday from 7pm-9pm for 10 weeks from 30 September, 2014.

Venue

Queen’s University, Belfast.

Objective

To deliver a practical awareness of what devolution means and how it works, and how you can monitor and influence it.

Outcome

Awareness of:
• how devolved institutions are financed and what the limitations of this are (both on public policy development and on application of devolved powers);
• what policy areas are devolved (both in practice and in theory);
• how devolution developed – the structure and culture of devolved institutions and how they came to develop this way;
• the future of devolution – including some comparison with similar situations elsewhere (notably Germany, Spain and the United States);
• public understanding of and attitudes towards devolution;
• lobbyists’ understand of and attitudes towards devolution; and
• the distinction between good and bad advocacy in a devolved setting.

The actual mechanics of devolution (e.g. how legislation is passed) will be noted, but do not form a fundamental part of the course (as they will usual be covered in other political or legal modules).

Method

Rather than a dry series of lectures about the theory of how policy and legislation is debated in devolved legislatures (and committees), the aim is to develop an interactive course from which students will derive a practical understanding (largely in fields of their own interest) of the challenges presented by devolution – both to those operating it and those seeking to influence it.

Delivery

The course will be delivered by Ian Parsley and Stephen Herron (see Team for bios).

Register

Register an interest here:

OR SIMPLY SIGN UP FOR THE COURSE ONLINE HERE!

Queen’s University adopts Ultonia Advocacy Training

Russell Group member Queen’s University, Belfast has adopted Ultonia’s Advocacy and Media Skills course after a five-week trial.

The ten-week course will start in late September, with potential for it to be run twice concurrently aimed both at students and at professionals.

Pensions/Welfare: what is “parity”?

The Public Sector Pensions Bill is currently making its way through Stormont.

This is essentially parallel legislation with the 2013 Act which has already gone through Westminster. As it falls under welfare, it is subject to a process known as “parity”. This has led to a lot of misunderstanding (some of it, frankly, intentional).

“Parity” was a deal brought in at the time of the beginning of the Welfare system between the UK Treasury and the Government of Northern Ireland. The basic principle is that everyone in the UK should be subject to the same welfare provisions (including pensions); the deal itself is that, although welfare (including pensions, out-of-work benefits and so on) is devolved to Northern Ireland, the UK Treasury will make up any shortfall in the funding of it provided Northern Ireland enacts the same policies.

This is entirely separate from the “Barnett Formula”, which dates from the Callaghan Government. That was a formula, meant to be used on a temporary basis, whereby funding (i.e. public spending allocated to what are now devolved institutions) for Scotland, Wales and Northern Ireland would go up or down proportionately depending on how it goes up and down in England in a way devised to ensure everyone in the UK enjoys the same standard of living (on average in each country). So, for example, if health spending rises in England, it rises by the equivalent amount in Northern Ireland – however, for example, Northern Ireland could choose not to allocate this to health, but to education or transport or whatever. Likewise, if spending decreases in England, it decreases by the equivalent amount proportionately in Northern Ireland.

Because pensions fall under welfare and thus under “parity” (not “Barnett”), the deal is simple: Northern Ireland enacts the same legislation as the UK Government has and the UK Government will make up the shortfall (roughly ₤250 million per year). However, if Northern Ireland does not enact the same legislation, the UK Government will not make up the shortfall – Northern Ireland would therefore have to find extra money to pay for the pensions under the current arrangements and additionally make up the shortfall itself from existing budgets in other departments, effectively taking ₤250 million each year from health, education, transport, justice, business support and so on.

Some parties are making great play of “standing up for public sector pensions” and that is their right; however, they also have to explain to the rest of Northern Ireland where they are going to take the money from firstly to pay for the existing system (which is unaffordable under current arrangements) and secondly to cut ₤250 million from other public services delivered by Stormont. Those are the facts of the matter.

Ultonia now offering recruitment/training

Ultonia Communications is now assisting other consultancies and educational institutions with recruitment assessment and training people.

Core to this is assessment of ability, including offering lay assessment at interviews and training events.

If we can use this experience to help you, simply let us know by commenting here or emailing info@ultonia.com!