Not British cuts, Stormont cuts!

11 November 2014

The parties in the Stormont executive have been criticised for their failure to agree on a range of issues and for engaging in endless talks which never come to a conclusion.  However, when it comes to their own self preservation there is no discord or delay.  This is certainly the impression created by the swiftness that agreement was reached on a draft budget to cover the year 2015/16. 

The clock was set running when the British Treasury advanced a £100 million emergency loan to the executive in early October which was conditional on the parties agreeing a draft budget by the end of that month.  Despite scepticism, particularly around Sinn Fein’s willingness to endorse a package of draconian cuts, agreement was reached by the deadline.  Martin McGuinness justified his party’s support for budget by claiming that failure to agree would have resulted in the collapse of the political institutions. 

Draft budget

In the weeks leading up the budget deadline there was much speculation over the level of cuts that would be imposed with figures in the range of £750m to £850m appearing in various media outlets, so when they didn’t turn out to as high the draft budget could be presented as not being as bad as expected.  However, when we examine the draft budget - cutting through the political spin and accountancy tricks - we find that the actual level of cuts is only marginally lower than the supposedly worst case scenario. 

One of the tricks is in how cuts are classified.  The draft budget only identifies the 1.6% reduction in the block grant as a cut, and this accounts for only £160m. But in addition to this amount are what are termed "inescapable pressures" which account for a further reduction of £272m.  Add to that the £100m that must be paid back to the Treasury and the scheduled £114m in welfare fines and for the year 2015/16 you have a total cuts package of £646m.  This comes after a four period over which public spending has fallen in by £1bn in real terms and ahead of a three year period (2016-19) in which spending is projected to fall by a further 13% (£1.3bn).  So over eight years public spending in the north will have fallen by almost £3bn.  Moreover, the cuts are deepening and accelerating as time passes.  Rather than the worst being over it is actually yet to come!  Despite claims that Stormont has shielded people in the north from so called “Tory cuts” the reality is that the broad spending plans of the Executive mirror completely those of the Conservative led government in Britain.  The draft budget is confirmation of this. 

Job cuts

Given that labour accounts for 90 per cent of the costs of public services, cuts in spending translate almost directly into wage reductions and job cuts.  This is why the draft budget statement made reference to a "workforce restructuring plan" for the public sector which would “embrace all possible personnel interventions, including a recruitment freeze, suppressing vacancies, use of temporary staff, pay restraint and a voluntary mechanism to reduce workforce numbers."  Indeed, the prospect of redundancies had been already raised by the DUP during the budget talks, with the party leader suggesting a scheme that would make savings of £160m per year - a figure that equates to 6,000 job losses.  Yet, this is a just fraction of the savings that the executive has committed itself to.  If these are to be achieved through a reduction in the number of public sector jobs then that figure could rise to around 50,000 - about a quarter of the current public sector workforce.  Of course that does not equate to 50,000 redundancies (retirement, staff turnover and recruitment freezes will account for some of that) but the global figure gives a clear indication of the extent to which public sector employment and public services could be diminished. 

Though not made explicit in the draft budget another means of reducing public sector jobs would be through privatisation.  Whole areas of work in the public sector could be outsourced to private companies - removing thousands of workers off the state balance sheet.  The claim that this would be less costly rests on the assumption that there would be less workers, lower wages and worse conditions.  While only the former DUP finance minister Sammy Wilson has made such arguments publicly the course the executive has set itself on makes the adoption of privatisation inevitable. 

DUP dominance

Throughout the whole process of agreeing a draft budget it has been the DUP that has made the running.  It was Peter Robinson and the DUP finance minster Simon Hamilton who arranged the loan from the British Treasury that created the deadline for agreement on a budget. It was also the DUP that proposed a redundancy programme for public sector workers.  And it doesn’t stop there.  In a leaked submission to the broader political talks the DUP proposes forcing a resolution to the dispute over welfare reform by bringing a Welfare Bill to the Assembly which would transfer the welfare powers branch to British if voted down.  This Bill would bring the north into line with the changes that have taken place in Britain but would be cushioned by the creation of a £70m hardship fund.  The DUP has also proposed an additional £400m cut in public spending to allow for a reduction in corporation tax. 

There is no opposition within the Executive to this neo-liberal agenda. Sinn Fein, despite their claim to be protecting the vulnerable, have already signed off on much of this.  They agreed to the 2011 budget which reduced spending by £1bn. They have agreed the draft budget which takes out over £600m in just one year.  They support the reduction of corporation tax, and they did an initial deal with the DUP on welfare which was very similar to the one now being proposed.  On economic policy there is broad agreement between the parties.  But even if there wasn’t Sinn Fein’s determination to preserve the political institutions means that they would be compelled to go along with these policies in any case.  This overriding priority doesn’t allow for any real opposition. It is also a strong indication that the unionist drive to re-write the St. Andrews agreement and increase their level of sectarian privilege will be successful.

Patronage 

Alongside this desire for self preservation goes patronage.  The peace process and the creation of local political institutions has been accompanied by massive patronage.  This is not just the feather bedding of politicians (though there has been plenty of that) but involves payouts to whole sections of the community, in particular the base of unionism.  The biggest element has gone towards former state security force members, with almost £1bn being paid out in the form of redundancy and compensation.  If this wasn’t enough some of these people were rehired by the PSNI at a cost of £100m!  There has also been a massive expansion of the community sector which has absorbed many of the people associated with the Provisional movement and the loyalists.  For example, within the Office of First and Deputy First Minister, there is a £80m fund (the Social Investment Fund) that can be distributed to “community groups” at the discretion of the ministers.  Over the years this has been activated in the wake of loyalist orchestrated violence at interface areas. No element of this network of patronage is facing cuts. 
 
Sectarianism

One of biggest costs of all in the north is the maintenance of sectarianism. Because it is so ingrained and accepted this barely registers.  Yet the financial costs of sectarianism - the costs of accommodating (and policing) division in public services and property that should be shared - run to £1.5bn per year.  This is very obvious in the education sector which has four different bodies running it.  An attempt by the Executive to rationalise this structure totally failed and ended up with a system in which sectarian interests were more entrenched that ever.  The trade unions share with the political parties a hugely expensive policy of integrating education. This actually the opposite of integrated education and involves building different confessional schools on the same site in the hope that there would be some levels of co-operation – assuring that confessional schools will continue to infinity.  As well as the structural costs there has also increasingly been direct sponsorship of sectarianism.  That has meant that loyalist parades, bonfires, flag flying and murals have all been in receipt of public money. Under the guise of supporting “culture” sectarian routines that were on the wane are being artificiality preserved by the state and even extended through failed attempts to set up Orangefest to promote Orange demonstrations and the massive grants to an imaginary Ulster-Scots language.  Again none of this is facing cuts. 

Opposition

The draft budget represents an all out assault on workers in the north.  It reveals the idea (activity propagated by the trade unions) that the local institutions could be a shield against austerity to be an illusion.  The reality is that austerity and anti labour polices are part and parcel of the political and sectarian set up in the north.  None of the parties who enjoy the patronage of that system are going to be persuaded to alter course.   That is why the opposition to austerity must be political and put as its central demands the abolition of the Stormont system and the abolition of sectarianism.  Those are the cuts that would bring about a real benefit. It would also start to break the working class out of a reliance on lobbying, clientelism and patronage and an understanding that it is only when they organise as the working class on their own behalf and around their own programme that they will be able to defend themselves from the Stormont vultures.