Published: 2nd Jul 2016

peace wall picBelfast’s economy is too dependent on a large public sector. Can a loosening of government control stimulate greater partnership working across the city?

In early May a new generation of young northern Irish people went to the polls for the first time. Born in the same year in which their country’s historic peace deal was signed – 1998 – they have become known as the ‘Good Friday Agreement generation’.

Having grown up and come of age as their country progressed towards relative peace and a devolved administration at Stormont, for these young people the Troubles are the stuff of history books. But with relative peace in their country has not yet come prosperity for all.

The Northern Irish economy, which saw a decade of growth to 2007, followed by the bursting of its property bubble, is now struggling, and its young people are voting with their feet. The ‘peace kids’ are rapidly becoming the ‘missing generation’, as they leave the country of their birth to seek jobs elsewhere.

No country that has been through conflict moves on quickly, and Northern Ireland’s economic problems are a legacy of its past. Since the 1970s public money poured into the country, firstly to abate violence and then to facilitate peace. Now one in three jobs there are funded by the public sector and many more through the supply and spend of public sector workers. Levels of enterprise and entrepreneurship are low; small businesses tend to stay small.

‘Current local economic strategy relies too heavily

on showpieces and on foreign direct investment’

The new administration voted into Stormont this month – and the new line-up of councillors at Belfast Council – have a huge job on their hands to rebalance and revive the local and national economy as public sector largesse comes to an end.

‘A substantive bureaucracy that focuses on maintaining itself’

Plans to shrink the country’s public sector bureaucracy have begun. Recent re-organisation has seen Northern Ireland – a population of 1.8m – consolidate from 26 councils to 11. Stormont now has nine government departments – down from 12 – with local government taking back powers over local planning and some aspects of economic development and regeneration.

This step change will allow Belfast and other local authorities to steer their own destiny in partnership with other public, commercial and social partners, and could act as a fillip to building an alternative approach to local economics in the city.

Titanic_Belfast
Tourism in Belfast has been boosted by developments such as the Titanic Quarter

At the 9th Activating Alternative Local Economies event in Belfast in April, a group of people from the public sector, the Stormont government and the local social sector met to discuss how deeper partnership working could transform the city’s economy.

For one delegate the deep problems in Belfast and in the broader northern Irish economy will not be solved with the usual routes. ‘You can’t address the problems in Northern Ireland with conventional mechanistic measures,’ he said.

The lack of an enterprise culture and a skewed public sector are paralyzing the city, one delegate said, with the economy driven by a ‘substantive bureaucracy that focuses on maintaining itself’. Overbearing government is not helped by a forced coalition at Stormont which, while seen as a post conflict necessity, too often suppresses vibrant alternative ideas.

Traditional economic development levers are being pulled in a bid to expand the country’s private sector. Belfast city centre has been buoyed by public investment, which has levered in private investment. Foreign direct investment is decent, tourism is growing, and, from 2018, Northern Ireland will reduce its corporation tax rate to 12.5% to compete with its southern neighbour.

But what’s lacking is a deeper questioning as to how far conventional economic development can alleviate the wicked problems found in Belfast and the broader region, and how much the country’s ‘overbearing bureaucracy’ is holding progress back.