The decay of political settlement in the north has been marked by a series of agreements designed to overcome recurring crises at Stormont.  As this process of crisis management has progressed the agreements reached have become ever more threadbare and reactionary.   Last year’s Stormont’s House Agreement – which included benefit cuts and the further entrenchment of sectarianism - was bad, and the latest Fresh Start Agreement is even worse.   

This is particularly the case with the economic elements of the agreement.  Indeed, what is notable about Fresh Start is that it concentrates almost entirely on finance.  Issues such as dealing with the past, flags and emblems and parading – which previously would have been the substantive issues – remain unresolved.   This contrasts with the comprehensive package of measures on welfare and the economy that will see the Stormont parties fully embrace (and even go beyond) the austerity programme of the British Conservatives.

Welfare 

The Fresh Start agreement will see the full introduction of the welfare reforms enacted by the previous Coalition Government at Westminster.  This will mean real terms cuts to all working age benefits including Job Seekers Allowance, Housing Benefit and even Employment and Support Allowance.   Also, the Disability Living Allowance (DLA) will be replaced by the Personal Independence Payment (PIP).  It is estimated that this will result in a quarter of current DLA claimants losing their payment completely while a further third will have their award reduced.  The reforms will also introduce stricter eligibility criteria and a harsher sanctions regime for those deemed not to be in compliance. 

Mitigations

One of the claims made for the Fresh Start agreement is that it will soften the blow of those reforms.   However, when the proposed mitigation schemes are examined, it is found to offer very limited relief.   It is actually less than that offered by the previous Stormont House Agreement (SHA).  That would have seen funds transferred from the Executive’s Block Grant to mitigation schemes that would distribute £564million over a six year period.   The biggest element of this was £413m to deal with the transition from DLA to PIP while the balance was to assist those impacted by charges to other benefits, such as the disability premium and the benefits cap.  At the time Sinn Fein claimed that “by standing firm against the London-Dublin Tory axis” it had “achieved a welfare system better than the one in Britain, by an average of £94m per year.”  When Sinn Fein subsequently withdrew support from the SHA over welfare it claimed that a further £200m was needed “to protect the most vulnerable in our society”.  

The Fresh Start agreement allocates £585m towards welfare mitigation schemes. In terms of a headline figure this is more than was in the SHA.  However, when we examine how it is to operate, it actually works out as less.   The main reason for this is that the mitigation scheme now has to cover a wider range of benefits - not only those devolved to Stormont but also universal credit cuts which are the responsibility of Westminster.  In latest package £345m is allocated for mitigations to welfare changes, while the remaining £240m will be spent on measures to help families who will lose out on tax credits – now postponed to enter as universal credit.   In another change from the SHA the mitigation schemes will run over four years rather than six.   Under Fresh Start the £345m allocated to mitigating welfare cuts amounts to £86.25m per year.  This compares to the £94m per year under the SHA scheme that Sinn Fein had previously declared as insufficient.  It can be said that in relation to benefits that are responsibility of Stormont the the level of relief offered by Fresh Start (in comparison to the SHA) is lower and runs for a shorter period of time.   Moreover, the transfer of devolved welfare powers to Westminster gives the Conservative government a free hand to make even further cuts in those areas.    

No new money 

One of the claims for Fresh  Start is that it delivers £500m of additional funds for the Executive.  However, further examination reveals that  this headline figure is not as it appears.   The biggest element of it (£188m) is security related spending, with the PSNI getting £160m over the next five years to tackle organised crime and paramilitarism.  That the main focus of this effort will be on  cross border activity is a clear signal that it will be primarily directed against republicans rather than loyalists.  The creation of a £60m fund for “community” projects points to further pay offs for the loyalists.  

The other main element of the funding package is the allocation of £125m for the Social Security Agency to tackle fraud and error.  The calculation is that this will enable the Agency to detect up to £300m of additional fraud and error over the next five years.  Given that in the last financial year the Agency detected a total of £51.9m in fraud and error such a target would the rate of detection  to increase by more than 100% per year.    This seems completely unrealistic.  Even if it were achieved, under the terms of the agreement, half of the money  would be returned to Westminster.  But irrespective of the dubious financial calculations it will certainly mean a ramping up of the pressure on benefit claimants. 

In reality Fresh Start’s financial package is much smaller that the headline £500m.  It is more than offset by the £585m removed from departmental spending for welfare mitigation.  Even this isn’t what it appears as we learn that the current welfare relief fund, paying out around £80m a year, is being rolled into the new mitigation scheme.  The reality is that there is no new money attached to the Fresh Start agreement and that all its elements will be financed from existing budgets.  

Privatisation drive 

Another aspect of the agreement is the ramping up of privatisation.  It is implied in references to the  reform and restructuring of public services.  More explicitly it calls for the sale of public assets such as Belfast Port.  The agreement also reaffirms the loan of £700m to the Executive  to finance a redundancy scheme that will see 20,000 jobs stripped out of the public sector.   The overall objective is to significantly reduce the state sector and increase the role of private companies in the delivery of public services.  We got a indication of this in the monitoring round in wake of the  agreement when it was announced that £48m would be allocated to the department of health in order to reduce waiting lists.  This is to be used to pay for procedures not through the NHS, but through private healthcare providers. 

Corporation tax 

One of the most heralded elements of Fresh Start was the lowering of corporation tax in the north to 12.5%.  This is put forward as the “game changer” to lift the local economy.  However, the claims for this have always been rather dubious.  There is no evidence that multi-national companies would choose to invest in the north solely on the basis of tax rates.   Indeed, none of the recent announcements of substantial job losses at some of the north’s top end manufacturing companies (including the total closure of Michelin) cited taxation as a factor.   

While the benefits of a reduction in corporate tax are largely speculative the costs are more certain.  It will mean a further £240m coming out of the budget.  In the context of the finances of Stormont - which depend on the block grant - this will involve a direct transfer of resources from the poorest people in the north of Ireland to some of the richest in the world!

Embedded

The Fresh Start agreement also seeks to permanently embed austerity policies within Stormont structures through the creation of a Fiscal Council that will guide the Executive’s economic policies.  Given that the membership of the Council has to be approved by the British government there is little doubt over the class interests  that it will represent  or the polices it will be pushing.   

Stormont 

One of the claims made for Stormont, put most strongly  by Sinn Fein in recent weeks, is that it is shielding people in the north from the worst aspects of austerity.  However, what the Fresh Start agreement has laid bare is that in its essentials Stormont austerity is no different from British Tory austerity.     More than that, the very survival of Stormont is completely bound  up with the  implementation of austerity.   What follows from this is that an effective opposition to austerity must also be opposition to Stormont itself. 

Updated 

Sinn Fein made the claim that it had to sign up to Fresh Start because of the plans by the British chancellor to cut tax credits.  This is despite the fact that they were never a developed matter and that the plans to cut them had been thrown into doubt after their rejection by the House of Lords.   The subsequent withdrawal of plans to cut tax credits  in the recent Spending Review has therefore removed one of Sinn Fein’s main justifications.  However, this has not prompted any calls for a revision of the agreement.  It is also notable that Sinn Fein has not made any suggestions on how the £240m to cover tax credit cuts should be reallocated.   There is certainly no suggestion that it should be used to enhance welfare mitigations.   

This should come as no surprise as the overriding motivation behind Fresh Start , as for all the other agreements, has been the preservation of the political structures at  Stormont and the system of sectarian patronage that underpins them.  Concerns over welfare and public services are just a fig leaf for the parties. 

Another consequence of the Spending Review is a 5% real terms cut to the Executive’s budget over the next five years which will necessitate a ratcheting up of the austerity drive even further.    

We can see absolute misery ahead for many working people in the north, already by far the most deprived section of the British economy. In the face of this threat what is remarkable is the lack of protest. Even the mildest of reformist movements, as exemplified by the local sections of the union movement, run up against a brick wall when faced with the reality of Stormont as a colonial façade operating to share out sectarian privilege. Opposition would lead to the fall of the corrupt institutions and for those committed to gradual reform such a scenario is unthinkable.

Working class opposition will arise despite the obfuscations of existing leaderships. In that context a series of protests by UNITE trade union’s community branch are very welcome and received a great deal of public support. The task now is to broaden and deepen the opposition, to link up with existing movements in the 26 counties and to seek solidarity from British movements.