Category Archives: Economy

Attwood shows SDLP spiralling out of control

Northern Ireland’s answer to Natalie Bennett last week was Alex Attwood.

Early last week he stated clearly and without doubt that it was time to stop investment in south and east Belfast and shift it all to north and west.

Within hours he was contrite, going on the media to correct himself.

Firstly, but less relevantly, this showed what a mess the SDLP has become. One of its own leaders decided to go out on a limb without even contemplating the consequences for his colleagues. Demanding no more investment in one of your Westminster seats, when you only hold three, is the height of selfishness if nothing else.

Secondly, and more worryingly, it is total garbage. If Mr Attwood thinks he can direct innovative global firms with turnovers many times that of the entire Northern Ireland devolved budget specifically to invest in north and west Belfast, he has simply lost the run of himself. Besides, Belfast is in total just 100 square kilometres – it’s not exactly unknown for people to make the mammoth twenty-minute commute from one part of it to another and there are these wonderful things called buses and trains to help where necessary!

One thing which damages investment anywhere, in fact, is such ludicrous public representatives promoting such a ludicrous silo mentality. Until we forget these daft silos and promote Greater Belfast and all its people as a whole, we will never enable it to reach its full economic potential and create the jobs and wealth we need.

Just because something is unpalatable, doesn’t make it untrue

“Just because something is unpalatable, doesn’t make it untrue”. So said former world record triple jumper Jonathan Edwards about losing his faith, as it happens. However, the phrase has sprung to mind very often since I first read it, not least when looking at the local and global economy we live in.

As they got out the begging bowl to the UK Government in the Stormont Castle Agreement in mid-December, the DUP, Sinn Fein, SDLP and Ulster Unionists all put their name to a document which states:

  • “Structural level social divisions create inefficiency” (Paragraph 44)
  • “Additional costs have been driven by duplicating services” (Paragraph 44)
  • “Division tends to impact disproportionately on those who experience poverty” (Paragraph 45)
  • “Initiatives which would assist…[would include] acceleration of integrated and shared education” (Paragraph 47)
  • “[Shared education will] bring about future savings in the Budget” (Paragraph 48)

It’s magnificent stuff – go and read it yourself.

Of course, one obvious thing you would need to do to address “societal divisions” is ensure teachers in schools are themselves well acquainted with the diverse society in which we live. Another obvious thing to do would be to stop the inefficiency of small teacher training colleges which require subsidies (leaving quite aside the fact they train too many students anyway). No doubt, we would particularly want to do this because of the particular penalty paid for those divisions by those experiencing poverty, say, in places like West Belfast. Naturally, to maximise the investment in “integrated and shared education” you will want teachers who themselves were trained in integrated and shared settings. And it goes without saying that merging, say, teacher training into a single University campus would not just deliver all the above benefits, but also future savings to the budget.

Here’s an odd thing though – when the Employment Minister specifically set out a reform programme of teacher training to achieve all of these things, exactly as the other four parties wanted in an Agreement they all supported, the other four parties went out of their way within two months to block him doing so. Just because something’s (electorally) unpalatable…

I mean, anyone would think those four parties aren’t serious about tackling the costs of division and the inevitable inefficiencies and poverty that goes with them! But that couldn’t be, could it…?

 

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NI’s public sector is too big, and pay gap is too large

That Northern Ireland’s public sector is too big is taken as read by most people. Lots of things which are “taken as read” are not actually true. However, this one is.

I have a friend who did not go into the public sector. Instead, he was one of four people who set up a haulage firm which now employs almost 200 people – 50 people each – in addition to other employed indirectly because of its existence.

Had he gone into the public sector, it is possible that he would have earned well; conceivably, in cash terms, maybe even better than he has. Yet he would not have added those jobs. He would have been fine, but tens more would have had to find employment elsewhere – and, quite possibly, they would have struggled.

This letter denying the public sector is too large completely misses the point. It claims that the public sector is large because, basically, we are poorer; actually, we are poorer because too few of us create wealth, which can only be done in the private sector. It also claims that public sector pay cannot be compared to private sector pay because of the “make-up” of each sector. Well, precisely – if the public sector wasn’t the obvious place to go for a decent living here, more people would try their luck in the private sector. That is how a market economy works!

There is not a single jurisdiction in the world which relies as much on the public sector as Northern Ireland, and there is a reason for that. You cannot go on simply adding jobs out of thin air. Eventually you have to create wealth – and you do that through private-sector companies innovating and exporting, not through bureaucrats telling you they can’t send you the logo you need to put on your event form because that’s someone else’s job and they’re off today.

Even more important than this, of course, is the daft equation between “public sector jobs” on one hand and “public services” on the other. The example in the previous paragraph is actually from real life. There would be literally no disadvantage to public services if the person sending it simply were not employed. There would be no disadvantage either if all the NI Executive Departments’ finance functions were merged into one unit; no disadvantage if each Department had one press officer (instead of eleven or so earning more on average than the average journalist); no disadvantage if OFMDFM had 300 fewer staff as it never does achieve anything anyway; as well as no disadvantage of course if we had a total of ten Special Advisers (not 18), nine Permanent Secretaries (not 14), and 90 MLAs (not 108). Oh, and, by the way, we could probably manage with around half the 117 “quangos” we currently have for a population of under 2 million; not to mention one Teacher Training College merged into a University training 400 students per year rather than two independent training 580 each at a premium…

During the “Troubles”, it literally became the purpose of the public sector in Northern Ireland to provide employment, not just deliver public services. As we approach two decades of “peace”, however, we no longer get that by-ball. Like most normal societies, it is now for the public sector to deliver public services efficiently within budget we are as rate- and taxpayers prepared to pay; and for the rest of us to create jobs and employment through entrepreneurship and investment.

Welcome the Real World, kids.

New expressway can transform Larne

Construction of the A8 Ballynure Bypass was completed yesterday as part of the overall new expressway linking Newtownabbey (and northern Greater Belfast) to the outskirts of Larne.

Ballynure Bypass in November [Credit: Noel O'Rawe]

Ballynure Bypass in November [Credit: Noel O’Rawe]

Coming in at over £100 million, there has rightly been some debate about whether this particular road project offers real value for money (rightly, in the sense that good, open debate is healthy).

There is the argument, which in fact I personally would endorse in theory, that there were other more deserving projects – the A6 at Moneynick (between Randalstown and Toome) being the most obvious. However, what happened simply was that during the Celtic Tiger the Irish Government suggested it would fund half (not least in its own interests, as a main freight link from Dublin to Scotland) and thus preparation work was prioritised on that assumption. The money will never be forthcoming now, of course, but the NI Executive decided to proceed anyway given that the project was ready to go sooner than others, having been so prioritised. Politics is, after all, the art of the possible.

Then there is the argument that £100 million should not be spent on such projects at all, most commonly presented as “£100 million to save just five minutes’ journey time”. Let us look at that:
– the time alone is on average in good traffic five minutes; that is, five minutes each way; and that may mount up over a period of time (a commuter from Mallusk to Larne over one year thus saves around 32 hours – two full waking days – a year).
– that time also assumes good traffic; but a new dual carriageway also assists (and accounts for a much vaster time saving) in the case of delays and accidents, both in that they become rarer (dual carriageways with barriers are safer roads) and in that minor accidents or breakdowns do not block the entire carriageway.
– the issue is not just “time”, but also stress; studies have shown definitively that driving on dual carriageways and particularly expressways (we’ll come to that) consumes less concentration, and thus less mental energy (and thus cause less stress, not least to freight drivers).

In much of Continental Europe, "expressways" or "semi-motorways" have their own specific sign

In much of Continental Europe, “expressways” or “semi-motorways” have their own specific sign

Expressways (officially known as “Category 6″ or “Category 7″ dual carriageways), sometimes known as “semi-motorways” in the UK (Continental travellers may be familiar with “voie express” as opposed to “autoroute” in France or “autovia” as opposed to “autopista” in Spain), bring all the benefits of the dual carriageways but make them more pronounced. They allow entrance and exit only to the left (known as “limited access”) with junctions which then all take the form of overpasses or underpasses (known as “grade-separated junctions”), thus prioritising forward movement at all times and not allowing any traffic to cross the carriageway. This makes them hugely safer (as there can be no head-on collisions of any time) and a lot easier to navigate (as it is simply a matter of knowing which junction to leave at).

Expressways have the arguable further benefit of being a cheaper option than motorways because they do not automatically prohibit low-power vehicles and thus do not need a specific alternative route; therefore, they can largely be built “online” (i.e. by dualling an existing road and reconstructing its junctions) rather than as an entirely new road. Category 6 expressways do not have an emergency lane (“hard shoulder”) either. This does, however, bring with it the limitation that not all traffic is kept separate from high-speed vehicles – tractors and even bicycles may be left to compete for space on the same carriageway as cars at 70mph passing lorries at 50mph. Nevertheless, on a relatively low-volume route (as this is, with around 17,000 vehicles per day, although that number will now rise), this can be a reasonable compromise (and restrictions on type of traffic may be placed on expressways, as they are on the A12 Westlink in Belfast; they are just not automatic as they are with motorways).

One further specific benefit of expressways is that, because junctions are dotted out as with motorways, they tend not to suffer “planning creep” as they are not easily accessible. They are designed specifically to move traffic from one large location to another (rather than allowing them access at every hole in the hedge). This is distinct even from non-expressway dual carriageways, which by nature allow new developments and commercial centres to spring up at all points alongside them, soon rendering them hopeless for long-distance traffic while also leading to unsustainable communities of detached shops and houses with no real centre or hub.

Therefore, I would argue strongly that the A8 expressway will bring very significant benefits to the Larne area and the Belfast-Larne corridor and few disadvantages. It will protect the countryside between Newtownabbey and Larne from encroachment while making Larne Town itself (and its hinterland):
– more viable as a commuter town, thus increasing its potential as a residential option;
– more easily accessible (not just in terms of speed, note above); and
– more attractive for freight, ultimately enhancing trade from across the island of Ireland with Scotland in particular.

I’d say that’s £100 million (only £25 million a year for each year of construction on average) very well spent.

Corporation Tax Bill designed for Scotland, not Northern Ireland

My company Ultonia Communications’ analysis of the Corporation Tax Bill appears here

The Corporation Tax (Northern Ireland) Bill was published last week, outlining the transfer of powers to the Northern Ireland Assembly for the setting of a Northern Ireland Rate of profits tax in some circumstances.

For such a vast and important change, it has received scant media attention. Being a serious economic and political matter, there has been almost no independent commentary on the issue at all and, insofar as there has, it has consisted of the standard Unions versus Businesses debate.

There are a number of essential points which should by now have been clarified:

  • the Bill does not set the Northern Ireland Rate of Corporation Tax at 12.5% (or anything else), it merely transfers the power to do so to the Northern Ireland Assembly (which could even set it at nil, if it wished);
  • the Bill is absolutely not about “tax cuts for big business” (its predominant focus is SMEs); and
  • any reduced rate would apply only to profits attributable to people employed and work carried out in Northern Ireland.

However, the biggest failing in the analysis so far has been on the overall politics of the Bill – and not just as it applies to Northern Ireland. Indeed, I would go so far as to say the Bill is clearly written for Scotland, not Northern Ireland.

The most obvious hint of this is in the list of “excluded industries” (also referred to as “non-qualifying”), i.e. the industries which would not qualify to pay the (presumably reduced) Northern Ireland rate. The list is fairly long but can be summarised broadly as just two – finance and oil/gas. These just happen to be Scotland’s two biggest industries.

The intention is clear. The first objective is to limit the prospect of Scotland wanting the same powers as Northern Ireland by ensuring Northern Ireland does not get an advantage in Scotland’s key industries. The second is to ensure that, if the politics force the same arrangement to be made for Scotland, finance and oil revenues to the UK Treasury nevertheless remain secure.

Implicit to the Bill, therefore, is that it accepts the risk that Scotland may want and get the same powers soon. This risk must also be applied to the economic models of the benefit of reducing the Northern Ireland Rate of Profits Tax within the terms of the Bill. This essential point must not be missed, as discussion of the Bill is close to pointless without it.

Greens’ Basic Income is actually a good idea

I have written many times before that a universal Living Wage is a really bad idea, primarily because it would cause inflation which would render it pointless (that is not to say that applying it in specific areas – for example requiring companies qualifying for lower Corporation Tax in Northern Ireland to pay it – is not worth considering).

The Greens in England and Wales have instead put forward the idea of a “Basic Income”. Their Leader, Natalie Bennett, was somewhat embarrassed on the subject when she was unable to come up with anything approaching the means to pay for it on the BBC’s Sunday Politics programme, but that does not make it a bad idea. In fact, a Basic Income is a much better idea than a Living Wage (no doubt the Greens would support both, but let’s just leave it as an “either/or” for now).

My old friend Sam Bowman explains how it could work. Essentially, it is a “negative income tax”, ensuring that everyone earns the Basic Income but also that anyone who earns above it receives more income for so doing. It would also render out-of-work benefits and income support unnecessary, as the Basic Income would already cover them. As Sam says, the exact rate at which you would set it and the type of additional welfare for people with disabilities or long-term conditions would have to be considered. However, fundamentally the idea is sound – and actually affordable. Not for the first time, the Greens have a good idea in theory that they struggle with in practice – but there is time yet before 7 May!

Greek vote cannot be ignored

The reaction in Brussels and Berlin to the outcome of the Greek General Election, whose result came as no surprise, looked alarmingly like the usual one. “The people have spoken, but they don’t really understand so we’ll ignore them”.

To be clear, I am not an opponent of calling for countries to get their public finances in order (what some falsely like to call “austerity”), even if that means reducing incomes from an artificially inflated or subsidised state. I am not an opponent of ensuring this even more urgently in the case of a shared trading bloc. I am absolutely not an opponent of demanding it outright in the case of a shared currency.

To be clear, I am not someone who justifies what Greece did during the “boom” years – namely develop a grossly inflated and corrupt public sector entirely unfit to manage a country in currency union with hundreds of millions of other people.

To be clear, I do not think the answer to this is to pretend that Greece can go back to the bad old days. I do not believe that half of Greece’s debts can be written off, nor do I think it would be good for Greece if they were (after all, no one would ever lend to it again). I do not believe it is a good idea for Greece to leave the Eurozone, again because it is not in its own interests (any “new drachma” would be inherently unstable and would make it almost impossible for Greece to trade meaningfully).

In other words, I do not support Syriza. I do not think its policies are wise. Most of all, I do not think it is remotely competent enough to deliver any of them. That Sinn Fein is a fellow traveller is probably enough explanation. Sinn Fein was also a fellow traveller of Presidents Chavez and Maduro in Venezuela, who have left the country (in terms of resources the wealthiest in Latin America) in such a mess that its own citizens cannot even return to it because it is so indebted to airlines that they refuse to fly there. That’s what you get for not paying your way, and it’s the kind of outcome likely in Greece if Syriza remains in power for any length of time.

However, I do support democracy. And although I believe in countries paying their own way and reforming their systems when it turns out they are not, I do support those who suggest that the terms imposed on Greece were too severe. Whether they brought them upon themselves is not the point, or at least it is not the point as much as Germany suggests. Had the UK adopted the same level of public spending reductions as Greece, public spending would be less than three quarters of what it is. To localise that, the NI Executive would have to get by on £7.5 billion of Current Resource Spending rather than the £10.2 billion it is already struggling with. It is unimaginable and no surprise, therefore, that the Greeks have comprehensively rejected it.

The Germans make a subtle but important error when dealing with these things, and now is the time to correct it. They believe, fundamentally, that it is the role of the government to run a surplus – i.e. to raise more in revenue (taxes, duties etc) than it spends on public services (and welfare). Germany itself typically achieves this, but it is almost unique in the Western World in doing so.

In fact, it is the role of the government to pay off its debts to a significant enough degree that people are always willing to lend it money (at reasonable rates). That does not require it to run a surplus; it just has to ensure the overall debt does not get out of control. As was noted in the news over Christmas, some of the debts the UK is currently paying off date back to the 18th century!

Indeed the UK, for its many financial sins, is a good example of what is required now. The new Coalition Government, coming to power in 2010, was so determined to clear the UK’s deficit that, perversely, people lined up to lend it money (in good faith that the new government would be serious about paying it back). So numerous were these people, that the UK ended up being able to borrow at rates even lower than Germany – which runs a surplus. That is the fundamental reason that the UK has not, in fact, cleared the deficit (and indeed would have been foolish to do so, as it was able to borrow money at lower rates than some of the debts it was paying off).

The same arrangement is required for Greece. Rather than forcing it to try to run a surplus, a plan has to be put in place to enable it to borrow money at reasonable rates – a plan which will require creditors to be safe in the knowledge that government is being competently enough run that they will get their money back. In Jean-Claude Juncker’s technocratic world, Greece has to honour its obligations; however, in the Greek people’s real world, those obligations as currently cast are crippling. It is nonsensical for the Greeks to demand everyone else bail them out without repaying their debts; but it is equally nonsensical to insist Greeks stay on a path which is crippling, and which fundamentally has not worked (Greek national debt has, after all, increased as a share of GDP since 2010, not decreased).

It shouldn’t take a populist leftie to point out that democrats should listen to the people ahead of the technocrats and be seen to listen to the people ahead of the technocrats, even if they cannot offer everything they want. Yes, the Greeks deserve to be challenged for their past excesses – but they also deserve to be heard for their current pain.

The real reason for the Financial Crisis

The Greens in England and Wales are campaigning on the basis that a failure in banking regulation led to the financial crisis and to (what they call) “austerity”. This is comprehensively wrong.

The marginal buyer of Swiss luxury goods nowadays is more likely to be in Beijing or Shanghai than Frankfurt or Paris”. So said Kit Juckes of the Societe Generale to explain why Switzerland has stopped pegging the Swiss Franc against the Euro (or, more precisely, has stopped intervening to stop it falling below a certain value). That statement alone explains the real origin of the financial crisis – even if populists, on left and right, do not care to admit it.

I outlined the long story last year, but the short story is simple. We are not as rich as we were. By “rich”, I really mean that we are not providing goods and services to the value, compared to the rest of the world, that we (in the West) once did. This has partly to do with the rise of the East, as it becomes more efficient, diligent and knowledgeable; and it has partly to do with the decline of the West, which has become inefficient, lazy and ignorant. It is this which has caused the West to become indebted, as its people seek to maintain a standard of living – modern gadgets, owned homes, wide-ranging welfare etc – which they have not actually earned.

Lax banking regulation was a symptom of the problem, not the cause. It came about because Westerners increasingly sought to borrow money – in companies for gadgets, in households for mortgages, in governments for welfare and public sector wages – which could only be lent through ever more complex “financial products”. These “products” existed because of the demand for them, not the other way around. Or, put another way, if the borrowing had not been allowed due to lax banking regulation, the economy would not have boomed in the first place – because we would have consumed less; rented more; and had fewer public services and welfare provisions. Public expenditure (but also consumer spending and business borrowing) only reached the level it did because no one asked too many questions about where the money came from (hence governments’ generosity to the banks and other financial institutions). In other words, in the alternate universe where banks were properly regulated and thus borrowing was restricted, public spending would be much lower anyway as it would be harder for governments to borrow and the economy would have grown more slowly due to lower consumer spending and less trade.

The crux of the problem is that populists – again, on left and right – are suggesting that somehow 2007 was the “norm” for the UK (and broad Western World) economy. 2007 was the blip, on the back of a crazed binge. Anyone who suggests otherwise should not be entrusted with the stewardship of the economy, because they refuse to understand the global context. Meanwhile, we should get rid of all those graphs which compare today with the situation in 2007 – 2007 was the ideal world; we are now in the real world.

Removal of Capital funding a crushing blow for NI road network

A slightly overlooked part of the Stormont House Agreement was that it removed, in effect, £450-564 million from the overall Capital budget over the next four year period. Thankfully, this is a total figure, not an annual one, but it nevertheless constitutes a significant chunk of spending.

To be clear, the Agreement actually sees the Executive borrow another £350 million for Capital. However, the Agreement also enables the Executive to pay for the Civil Service voluntary exit programme (£700 million) and repay this year’s loan (£100 million) from Capital funding. It also allows this year’s welfare reduction (for breaching “parity”, up to £114 million depending on how quickly Welfare Reform is implemented) to be paid out of Capital. The overall effective loss to actual Capital projects is, therefore, as above.

Capital is essentially infrastructure, although this includes non-transport infrastructure (from hospitals to water pipes). Typically Capital accounts for £1.2 billion of Executive spending (versus almost exactly £10 billion Current Resource spending; £5-£7 billion “Annually Managed Expenditure”, i.e. welfare including pensions; and around another £5 billion estimated to be spent by the UK Government in or for the benefit of Northern Ireland).

The Stormont House Agreement thus sees around 8-11% removed from actual Capital spending (and then another 8% or so spent but borrowed, to be subsequently repaid). The easiest place for that axe to fall is on road projects – it is hard to see those being prioritised over schools and health centres (and probably justifiably).

Nevertheless, in an era where cars are becoming ever cleaner, proper transport infrastructure is a prerequisite to a modern economy and Northern Ireland can no longer claim that its primary road network is in any way exceptional. It is perhaps briefly worth looking at the current priority projects and where they stand.

To be completed this year:

  • A8 Belfast (Mossley) – Larne (Antiville), expressway, under construction for completion May 2015 (c. £120m); and
  • A2 Belfast (Jordanstown) – Carrickfergus (Trooperslane), dual carriageway, under construction for completion June 2015 (c. £60m).

To be commenced this year:

  • A26 Glarryford – A44 (for Ballycastle), expressway, contractor appointed for completion April 2017 (c. £70m); and
  • A31 Magherafelt Bypass (eastern), 2×1 road, contractor to be appointed Spring 2015 for completion Winter 2016 (c. £40m).

This leaves a number of projects in the pipeline, many of which have drawn significant public interest.

  • A5 Derry (Newbuildings) – Aughnacloy, expressway, announced 2008 (c. £850m)
  • A6 Randalstown – Derry (Gransha), expressway, announced 2004 (Derry-Dungiven c. £400m; Randalstown-Castledawson c. £120m)
  • A12 Belfast (north/east), flyover (M2/M3/A12), route chosen 2013 (c. £110m)
  • A1 Hillsborough – Loughbrickland, junction upgrades, in preparation 2014 (c. £40m)
  • A4 Enniskillen Bypass (southern), road type and route announcement due 2015 (c. £30m)

Of these, the A5 and A6 could be considered to consist of several separate projects (although this is contested – some argue that it is all or nothing to gain maximum benefit).

In rough priority order, the A5 project would be split into six sections: Ballygawley-Omagh, Derry-Strabane, Strabane-Omagh, Strabane Bypass, Omagh Bypass, Ballygawley-Aughnacloy. The latter of these has already been all but dropped.

In rough priority order, the A6 project has formally been split into four sections: Randalstown-Castledawson, Dungiven Bypass, Dungiven-Derry, Castledawson-Dungiven. Again, no one seriously considers the latter of these priority and it is not a current proposal. Additionally, the first and third can be split in two (either side of Toome; and either side of Drumahoe).

Something immediately jumps out, of course. The A5 project costs more than all the other projects about to be under construction, and seriously proposed as priority put together!

We may usefully consider the current real priority list to be:

  • A5 Ballygawley – Omagh, expressway, perhaps £150m (but with potential £50m contribution from Republic)
  • A6 Randalstown – Castledawson, expressway, £120m
  • A12 Belfast (north/east), flyover (M2/M3/A12), £110m
  • A6 Dungiven Bypass, expressway, perhaps £70m
  • A1 Hillsborough – Loughbrickland, junction upgrades, £40m
  • A4 Enniskillen Bypass (southern), £30m

Even then, we can see how daft the prioritisation of any stretch of the A5 is, as the priority still comes out most expensive – more so than any other project under construction or envisaged as priority. However, with the potential finance from the Irish Government, it has to be on the list (it is unclear whether that finance would still be forthcoming for just one section).

After that, it seems to be that if you mix daily traffic slow, safety issues and pollution, the projects are in priority order (I personally would have Ballygawley-Omagh after the Dungiven Bypass). The point, however, is that with so much money removed from the Capital Budget, it may be that the cheapest projects go first – good news for those stuck in traffic in Enniskillen, not so good for those at York Street!

It is unfortunate, because completion of the above priority projects and a few more bypasses (notably in County Down) would see Northern Ireland’s primary network raised to perhaps the best in the UK, even if it remains somewhat behind the Republic’s (no shame in that, as the Republic’s is the best anywhere now). However, this is a consequence of the odd financial deal struck on 23 December.

Do visit Wesley Johnston’s excellent site.

Sinn Féin’s fantasy finance costing Northern Ireland dear

Looking at Northern Ireland’s road network objectively, only a crazed observer would pick the A5 as the next road requiring an upgrade – and, if they did, there is no way even a crazed observer would suggest it should be effectively replaced by a new motorway. Advertised as the “main Derry-Dublin road”, in fact it really links Derry to a few towns in West Tyrone. Even the Republic of Ireland, which now enjoys the finest expressway network in the world, has not bothered to build its equivalent road to a similar status as far as the border coming the other way.

That the road still receives any coverage is pure Nationalist fantasy, led by Sinn Féin. The problem is, such fantasies cost serious money – they result in allocations of money to projects which will never materialise, and therefore away from where it is really needed.

The most serious recent example was welfare reform. In the words of commentator Deirdre Heenan, Sinn Féin has now “capitulated”, agreeing to implement welfare reform provided £90 million is set aside for “mitigation” for “vulnerable people”. Sinn Féin has no idea what “mitigation” means, nor who these “vulnerable people” are, but that is not the worst of it – the worst of it is the same deal would have been agreed two years ago if Sinn Féin has asked for it, but its grandstanding has resulted in £200 million which could have been used for “mitigation” for “vulnerable people” in this part of Ireland instead heading back over the water to Britain.

In some ways, the same applies to Corporation Tax reduction, an issue on which Sinn Féin tosses away its left-wing ideology to pursue an all-island rate regardless of whether or not it is appropriate. It can be argued whether reducing Corporation Tax is a good thing or not, but to do it purely because it was done in the Republic of Ireland (with its less generous income tax bands, higher VAT and new public sector levies that no one in the North cares to mention…) is the height of madness.

So it is with the A5. At the height of the Celtic Tiger, the Irish Finance Department was throwing money about left and right, offering half the funding for the A8 upgrade from Belfast to Larne and the A5 upgrade from Derry to Aughnacloy, theoretically on the grounds they would assist Southern Irish traffic (heading for Scotland or Donegal). The funding never seriously materialised, but the offer skewed road priorities in Northern Ireland so that the Belfast-Larne (A8) and Derry-border (A5) routes suddenly, and for no good reason other than the money on offer, became more important than Belfast-Derry (A6). The A8 expressway is due for completion in May but was in practice a much smaller project than the 80-kilometre A5, which has not even commenced on the ground. Neither project should really have been higher priority than the outright dangerous bottle neck through Moneynick on the A6 (between Randalstown and Toome) and even the Dungiven Bypass. Yet again, however, in the Stormont House Agreement the A5 appears, with the Irish Government offering a paltry further £50 million (probably not even 5% of the funding actually required and not enough even to commence work on the ground) and Sinn Féin suggesting that this offer means somehow the A5 should continue to be prioritised despite the absolute lack of evidence for so doing.

It would be useful of course if Sinn Féin had a serious opponent in the form of a party prepared to say that fantasy projects – whether cross-border or not – cost us all in the long run. Unfortunately, the SDLP in its current guise is every bit as populist as Sinn Féin on such matters.

Put simply, Nationalists want to spend £800 million on a single road for which there is no budget – double the amount to achieve the same outcome on the Derry-Belfast route, six times the most we have ever spent on a road project here, and roughly equivalent to the entire annual spending of our Economy departments! Oh dear. Unfortunately for Northern Ireland’s collective interests, we are therefore doomed to dealing with those who believe in fantasy finance for the foreseeable future.

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