(HMRC) and £650 million (DFP) for the total amount of corporation tax collected per annum. These may be under-estimates to the extent that corporations with HQs in Britain may extract profits in Northern Ireland but book them in Britain.
A cut in this tax could cost well over £100 million per annum. It will be difficult to regulate and account for gaming behaviour where corporations shift their profits and try to avail of lower taxes in Northern Ireland.
As shown in a previous Blog, Northern Ireland public agencies (the Executive and the District Councils) have very limited discretion and control over local revenue (In total it is estimated at around 91% of total government revenue collected in Northern Ireland).
Claims that a large public sector ‘crowds out’ private sector job growth are misplaced. Evidence considered by the Sheffield Political Economy Research Institute (SPERI) shows that UK regions such as North-East England and the South-West with a high proportion of public sector jobs experienced the greatest fall in employment in the public service since 2008.
Future cuts in public sector employment will have a disproportionate impact on Northern Ireland as a whole where public sector employment is around 27% of the total workforce [215,000 out of a total of 790,000 employees in 2014 – see ONS data here 
Tables 6 and 7]. However, it will also impact disproportionately on young people because of the traditional route into public sector employment for many young people. In the case of higher education graduates it is estimated that around 35% of Northern Ireland graduates enter the public service (including education and health) after graduating. Jonathan Wright of the UK Work Foundation has commented:
The ‘clustering’ of talented people has many local economic benefits. Places that have more talented people experience more innovation and higher economic growth. Even the lower skilled benefit from the presence of highly skilled individuals as they create more jobs for the local economy. Graduate retention is therefore very important. If those places that have experienced a growing share of young graduates in recent years lose them to other cities and regions, regional disparities will continue to grow in the UK.
Using ONS estimates, total public sector employment, in Northern Ireland has fallen from 29% of the total employee workforce in 2008 to 27% in 2014. A planned net reduction of 20,000 in the workforce would represent a cut of 9.3% on the current level. This would be very roughly equivalent to the percentage reduction that took place, in the Republic of Ireland’s public sector between the final quarter of 2008 and the final quarter of 2014 (when there was a 9.6% reduction).
No analysis of the local economic impact (let alone social and political) of such a reduction has been undertaken. My colleague, Paul MacFlynn, in a recent NERI Research InBrief (“Public Sector Employment in Northern Ireland”) has drawn attention to UK research which indicates a high local multiplier effect. He also cites Office of National Statistics ONS) data which shows concentrations of public sector employment (as percentage of total employment) in Belfast (not surprising) and in West Tyrone and West Derry (surprising perhaps). The local economic impacts are likely to be very significant and difficult to predict. By way of comparison, a reduction of 10% in public sector employment in a town such as Castlebar in the West of Ireland is likely to have a very different impact to a reduction of 10% in public sector employment in Strabane where the local constituency area proportion of public sector jobs is 35% (compared to 21% in the neighbouring constituency area of Mid-Ulster). Refer to ONS/DETI data here .
A little commented aspect of public sector employment in Northern Ireland is the very unusual gender pay gap. Almost everywhere in the world women’s pay is lower than that of men. However, female pay in the Northern Ireland public sector is higher that than of men. This reflects the composition of the workforce in the public sector as well as the mix of skills and occupations especially in sectors such as health and education. As Paul MacFlynn shows in the NERI Research InBrief the pay gap in the private sector, in Northern Ireland is very much in favour of men. There is a high concentration of women workers in (i) poorly paid jobs in the private sector (especially accommodation, food services and retail) as well as (ii) relatively better paid jobs in the public sector (especially health and education). Large shifts in the level and regional distribution of public sector employment in Northern Ireland will have significant impacts not only regionally but in relation to female employment and conditions where the pressure of ‘welfare reform’ and reduction in public services is likely to impact disproportionately on women.
In the maelstrom of political uncertainty, the fall-out from continuing UK austerity (as mirrored in the Stormont House Agreement of last December) and the impact of European stagnation fresh thinking and creative policy initiatives are required. This is an opportune time for activists and researchers to explore how an enterprise economy can be created in Northern Ireland. There is a case for a stronger and better equipped public sector to lead on, and work with the private sector, when it comes to housing, transport, social economy, research, innovation, renewable energy and many other areas. Instead of draining more blood out of the Northern Ireland public sector in the vain hope that it will transfer over into renewed private sector body growth, policy makers and their masters would be advised to give a blood transfusion to both bodies working together. Austerity whether in Strabane or in the Strangford Lough area will not help businesses, shops and communities in those areas.