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British government unveils Stormont austerity budget

Jon Morris

1 May 2023

Striking teachers and civil servants protest in Belfast City Centre.

Last Thursday (27/04/23) the Northern Ireland Secretary Chris Heaton-Harris published a draft budget for the various Stormont departments.  There was a long lead into this announcement with predictions that it would usher in severe and immediate cuts to public spending and services.  It was even being referred to as a “punishment” budget implying a punitive motive behind it.  As it turned out the budget was bad, though not as bad as the direst predictions.  The main reason for this was the inclusion of a “flexibility” clause that allows an overspend of nearly £300 million to be repaid to the Treasury over a two-year period rather than one.

“Flat cash” budget

Despite this mitigation the budget still represents a significant reduction in funding and will necessarily lead to cuts in public services.  On paper the reduction in funding does not look that severe with the cash totals provided to each department being similar to those provided in the previous financial year.  This is why it has been described as a “flat cash” budget.  However, when inflation is factored in the picture is quite different with day-to-day spending (which includes wages) forecast to fall on average by eight percent (see table at foot of article).  While there is some variation across departments the most savage reductions in absolute terms will be in the biggest spending departments - Health and Education. While the Health Department’s budget has nominally increased, this is more than offset by inflation, turning a small cash increase of 0.3% into a reduction of 8%.  We get a sense of how severe this is when we consider that due to demographic pressures and some costs unique to healthcare, the department needs an annual increase of 6% to stand still.  The budget of the Education Department faces real terms cut of 10.5%.  There have already been cuts to a number of schemes aimed especially at pupils from low-income backgrounds to save money.  The 'holiday hunger' payments for families of over 96,000 children entitled to free school meals have been axed; funding for a mental health and counselling programme for children in primary schools called Happy Healthy Minds has ended; while funding for a scheme which employed extra teachers to help children with their learning post-pandemic called Engage has also been cut.

Another stipulation of the budget is that any additional funds allocated to Northern Ireland by the British Government through the Barnett system process can only be used for debt repayment.   This rules out any new pay offers to local public workers that might have been expected to follow the settlement of industrial disputes involving their counterparts in GB.  Wage parity between public sector workers in the north of Ireland and other regions of the UK was broken years ago and this is just another step in that duration.  Notably, the Stormont executive, when it was in operation, made no attempt to restore parity.

Civil servants at Stormont have already been handed some extra powers to take decisions usually reserved for ministers and Chris Heaton-Harris has now introduced legislation that will extend those powers beyond their current expiration date of 5 June.  Under this legislation senior civil servants operate under the guidance of British ministers and the overriding imperative to stay within budget. With very little no room for manoeuvre this is really just a form of direct rule that nationalist parties claimed we could never return to.

Scare tactics?

A mistaken response to the budget is to dismiss it as a tactic to force the DUP back into the institutions.  Firstly, the economy or the poor state of public services are not the reasons the DUP are not in Stormont.  Over the years the party has been quite indifferent to economic hardship.  The reason the DUP is not in the Executive is because a significant section of the unionist population has rejected power sharing; maybe not a majority but enough to hold sway.  The rise of the TUV in the last Assembly election is proof of this.  In its deliberations over the Windsor Framework and whether to return to Stormont the overriding priority for the DUP will be to avoid a damaging split within unionism. The various carrots and sticks deployed by the British government will not alter this dynamic.

Secondly, the measures outlined in the budget, are the authentic programme of the British government for transforming Northern Ireland’s economy and society.  It wants to reduce the size of the public sector; regionalise wages; advance privatisation; and increase the portion of revenue raised through local taxes and charges.  Moreover, this is also the position of the local parties. They all support this programme even though they may baulk at the unpopularity associated with implementing it.  Though never stated publicly they would not be averse to the British pressing ahead with it.  Indeed, there is precedent for such a move.   In 2015, Sinn Fein and the DUP, who were leading the Executive at the time, agreed to transfer powers back to Westminster so that the British government could implement “welfare reform”.  As compensation the Executive funded a conditional and time limited mitigation scheme for anyone adversely affected by the changes.  Of course, as time has progressed, mitigations have fallen away and most welfare claimants are now covered by the new rules.  A similar approach could be taken in the future to cover the introduction of water charges or an increase in university tuition fees.  Would any of the local parties seriously object?

Trade unions

The trade union response to the budget was condemnation set alongside a call for the restoration of the Stormont executive as a solution.  There is a glaring contradiction here.  It was on full display at the Belfast May Day parade which followed a few days on from the budget announcement. The speakers raged at the prospect of further public service cuts and at the cuts that were already ongoing including to the value of wages.  However, it was the address by UNISON’s regional secretary Patricia McKeown that highlighted the dilemma facing the trade union movement.  She made reference to the fact that it was the 25th anniversary of the Good Friday Agreement and the various events featuring the great and the good to mark this milestone.  But she also noted that missing from these events was the voice of workers.  The clear implication was that the working class were being excluded and had not benefited from the much-heralded economic peace dividend. Yet this was immediately followed by a call for the Stormont institutions to be restored as if this was an answer to the issues set out by her and the other speakers.  The phrase used by McKeown to make this demand was also illuminating.  She told the crowd that workers would return to work if the DUP also returned to work.  This was a direct reference to the ongoing industrial action by trade union members around pay.  Does that mean that the restoration of Stormont in itself would be enough to end the industrial action?  Perhaps not, but there is an underlying assumption that the Executive would offer better terms.

The problem is that there is no reason to believe this.  In the periods when it was operating, Stormont had a very poor record when it came to defending workers and public services.  Moreover, a future Executive would be locked into a budget that explicitly rules out any concessions on public sector wages.  In this scenario workers would be in dispute with local ministers rather than the British government.  We know that this is an appalling prospect for a trade union leadership who want to construct a version of social partnership in the north.  Faced with a similar situation in 2015 ICTU backed the Fresh Start Agreement and its attached austerity programme rather than mount any form of opposition.  The maintenance of the institutions took priority over the interest of workers.    This is still the position of trade union leaders.   It has been evident in the current “Workers Demand Better” campaign which has emphasised the need for mitigations rather than for wages to keep pace with prices.

Working class movement

However, the austerity budget combined with high inflation, make it harder to maintain illusions in Stormont.  Whether the institutions return or not, workers in the north are likely to find themselves in increasing conflict with employers and the government.  There has already been a significant upturn in industrial action and this is likely to be prolonged.   Such rising class sentiment and class struggle needs to be channelled into the creation of an independent working-class movement that can break from the restraints of the Good Friday Agreement and social partnership.


Northern Ireland budget 2023/24*
Budget in cash terms 
Percentage change from previous financial year
  Percentage change adjusted for inflation
Executive Office
*Figures exclude ring fenced items such as Farm/Fisheries payment funding, welfare reform mitigations, housing benefit, transformation funding, security funding and funding for Historical Institutional Abuse/Victims/Truth Recovery. As ring fenced funding can change from year to year excluding these items gives a more direct comparison of day-to-day spending within departments.

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