The finances of New Decade, New Approach
9 March 2020
Over the years there have been numerous agreements and declarations that have attempted to revive or stabilise the faltering peace settlement in the north, from the Good Friday Agreement to St Andrews through to Stormont House and Fresh Start. However, the most recent of these - New Decade, New Approach (NDNA) – must take the record for the shortest duration of time from the announcement of a political breakthrough to the point where it starts to fall apart. Only a matter of days after its endorsement by local parties and the restoration of the devolved institutions the durability of the latest deal is already in doubt. This has arisen from the chasm that has opened up between the commitments made in NDNA and the financial support that will be provided to the Executive to deliver them. What were initially presented as concrete proposals have rapidly been reduced to the level of aspirations.
New Deal New Approach commitments
The NDNA contained a number
of commitments in the areas of health, education, infrastructure other
priorities that require a substantial increase in public spending.
Most of the commitments fall into the category of those that require a
once off increase to reform services or to make good an historic deficit.
It is also significant that the financial commitments in NDNA are heavily skewed towards capital spending which tends to favour private business interests. Commitments that require day to day or recurrent spending do not feature as prominently. However, it is estimated that to meet rising pressures on this spending - which includes health service pay, welfare reform mitigation, schools and universities - would require the annual current budget of the Stormont departments to expand from £10bn by a further half billion (or 5%).
The estimates of what is required for public services and infrastructure just to be brought up to standard and maintained stand in stark contrast to the financial package that accompanied NDNA. This contained only £2bn, half of which would would have been heading to Northern Ireland anyway under planned spending increases. Even the additional £1bn wasn’t what is appeared with some £240 million of this being money previously committed under the Conservative/DUP Confidence and Supply Agreement. This leaves £760million of new funding potentially spread over 5 years. This figure - which on average equates to £152 million per year - really illustrates the threadbare nature of Stormont’s finances and also the emptiness of the commitments endorsed by the local parties in NDNA.
The response by Stormont politicians has been the usual mixture of feigned outrage and pleading. Finance minister Conor Murphy appealed to the British government to “honour their pledge and provide the funding needed to deliver” while First Minister Arlene Foster called on the “prime minister to step up to the plate in relation to financial resources." These pleas were slapped down immediately with the SoS praising the generous financial package and calling on the Executive to “get on with it”. As far as the British government is concerned its primary objective of the restoration of the devolved institutions has been achieved.
One of the striking aspects of New Decade New Approach is the degree of supervision and oversight that the finances of the Executive will be subjected to going forward. So the funding on offer is not automatic but dependent on adherence to “stringent conditions" on implementation of reforms to public services. And this does not just apply to that portion of the budget that is additional. All of Stormont’s finances will be placed under sustainability conditions in order to ensure a "greater level of accountability for public spending" and the balancing of departmental budgets.
At an institutional level this will see the establishment of a local Fiscal Council to advise ministers and - above this – a UK Government-Northern Ireland Executive joint board (chaired by the SoS) that will hold quarterly reviews of spending and reform. The consequence of this will be a northern administration implementing a programme determined by the UK government and shaped by the priorities of the British Conservative party. Such developments put the lie to claims that, in the wake of Brexit, Britain is disengaging from the north or preparing ground for a united Ireland. Rather it shows that after a period of drift the British government is asserting itself - proving once again the old adage that power devolved is power retained.
While the Stormont Assembly and Executive have been restored their existence remains precarious due to the unresolved nature of the contradictions at the heart of the settlement and the fact that the latest fix is an imposition by the British rather than an agreement between the parties. The threadbare nature of the financial package only adds to the inherent instability of this. Any honeymoon period for the restored Stormont will be short-lived and any notions that it can offer a defence to northern workers will soon dissipate. The “settlement” of the health workers pay dispute – limited and temporary relief within a broader framework of collapsing public services – gives an indication of what is likely to unfold in the next period. Overshadowing this is the prospect of a hard Brexit that will seriously depress the northern economy.
All of this will feed into worsening conditions for the working class. At the same time there are also stirrings of discontent – such as the health service strikes – that point to a present and near future of intensifying class struggle. Based on this perspective workers should not fall into either pessimism or complacency but rather organise themselves - in both their communities and workplaces – in preparation for the battles ahead.
The dire financial position
of the Executive has been highlighted by recent warnings from various government
departments and statutory bodies over the sustainability of public services
at their current level.
All of this highlights the weakness of the financial foundations underpinning the recently restored political institutions. As it stands there are not enough resources to maintain the status quo in terms of public services let alone the additional commitments in New Decade, New Approach. Moreover, even the partial funding promised by the British government in relation to these is in doubt.
Just months on from its formation the Executive is facing into a serious financial crisis. The likelihood is that this will be used as justification for “reforms” (such as those proposed for health by the Bengoa Report) whose main thrust will be cuts and privatisation. These have been ongoing their intensity will be significantly ramped up over the coming period as the living standards of workers – as both employees and users of public services – come under assault. The illusion (most heavily propagated by the trade union leadership) that the Assembly will shield the working class against austerity will be quickly dispelled.