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Stormont budget: Carving up the sectarian spoils

Mainstream commentary often identifies the failure of the parties to agree on “welfare reform” as the main reason for the growing financial and political crisis at Stormont. Every spending cut and deterioration of public services is put down to the resistance of Sinn Fein to benefit cuts and the resulting punitive fines imposed by Westminster. This view has been actively promoted by unionist leaders and ministers as they conjure up all sorts of scare stories - ranging from mass redundancies in the state sector to hikes in prescription charges to the turning off street lighting. It has even been suggested that the welfare reform could be the issue to collapse the political institutions with DUP leader Peter Robinson warning of possible “nuclear options”.

To really understand what is going on we have to cut through a lot of propaganda. While it is true there have been cuts they have not (up to this point) been due to failure of the Stormont Executive to sign up to welfare reform. Deductions from the Northern Ireland budget by the British Treasury (estimated to be £87m in the first year), which are directly related to welfare reform, are not due to take effect until October.

2011 budget

The cuts that are happening currently are rather the result of the four year budget set in March 2011 which entailed a £4 billion reduction over the period. While the amount of money being spent has not been reduced in cash terms, when adjusted for inflation, it amounts to a real term eight per cent cut over the four years. As that period has progressed savings have been harder to find and the cumulative impact of cuts has been become more severe.

This came to a head in July of this year when the Executive agreed an emergency budget which imposed immediate cuts of £78m (around 2% of its budget). Much of confusion surrounding these cuts arises out of a deliberate attempt by unionists and sections of the media to roll the cuts associated with the Stormont budget into the impending Treasury imposed fines. This allows them to minimise the role that the Executive itself has played in implementing cuts and also to divert attention from the more significant political reasons for the unravelling of the settlement.

Sinn Fein opposition?

One of the least believable elements in the scenario painted by the media is the supposed opposition of Sinn Fein to public spending cuts. The fact that they agreed to a budget that has produced real term cuts much greater than the proposed welfare related “fines” shows that they are not a serious opposition. The evidence is that they had actually made an initial agreement with the DUP over welfare reform last year, only for it to be rejected by its southern membership, also suggests otherwise. With Sinn Fein presenting themselves as an anti-austerity party ahead of a general election in the South there is an element of posturing and flank covering going on around its stance on welfare reform in the north.

Despite the claims by Gerry Adams that his party “is politically and ideologically opposed to austerity” the experience of the period of the peace process, during which the party shed the much stronger ideological positions that defined it as Irish Republican, and also the role it has played in the Stormont Executive suggests otherwise. It’s commitment to anti-austerity is unlikely to overcome its desire to be part of an Irish Government.

British intervention?

The unionist strategy for avoiding responsibility for welfare reform, even though they are in agreement with them, is to have the powers over social security transferred back to London as part of broader re-negotiation of the political settlement. In some ways it would also suit Sinn Fein for the British Government rather than themselves to have been seen to carry out the dirty work of benefit cuts. The problem is this would expose the fraudulent nature of devolution. Also, given the growth of the unionist far right - which is opposed to even the most minimal form of power sharing - it would be very difficult to revive the institutions after a period of suspension. So while welfare reform could indeed be the technical issue that collapses the political settlement the cause will certainly be old fashioned sectarianism.

Savage cuts

Of course all of this political manoeuvring does not minimise the threat of welfare reform to working class people. Given the high level of welfare dependency in the north the impact of the changes will be severe. It has been estimated that welfare reform will take around £750m out of the local economy – that represents a reduction of £650 a year to average reductions of £650 a year for every adult of working age in Northern Ireland (compared to £470 across Britain).

Neither the unionist nor Sinn Fein approach to welfare reform will stop cuts. Even if welfare reforms are avoided there will still be cuts. If there is a dispute it is only over where the cuts will fall. They may claim that there is little room for manoeuvre but even within the existing framework measures could have been put in place that would have cushioned the impact of cuts and mitigated the worst elements of welfare reform. The cost of eliminating the notorious “bedroom tax” would only have been £17m a year - a small fraction of the overall budget. While the DUP claim that “flexibilities” had been won on housing benefit these were designed more for the protection of private landlords than tenants. Also, because the Executive failed to plan for cuts they are all crashing in at the same time maximising their impact. The one policy that all the parties do agree on - the reduction of corporation tax to 12.5% (which in under the north’s funding arrangements would mean a straight transfer of resources from the poorest to the richest in society) would layer on even more cuts.

Despite claims made for the Executive and Assembly by bodies such as ICTU they have shown themselves to be completely incapable of providing even the most minimal protections for workers in the north. More and more they reveal themselves as mechanisms for the distribution of sectarianism patronage and the implementation of austerity. And as resources reduce the sectarian fight intensifies.


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