Published in An Phoblacht on October 1, 2010
The likely impact of the British Government’s public spending cuts on the North’s economy, the need for a united campaign of resistance against these cuts, and the need for control of the economy to be devolved to the Assembly have been outlined to An Phoblacht’s Emma Clancy by Sinn Féin Economy spokesperson Mitchel McLaughlin.
THE BRITISH Conservative/Liberal Democrat Coalition Government is due to announce its austerity Budget on October 20th, following the Emergency Budget in June that made £6billion of cuts to public spending. The October Budget is expected to make unprecedented cuts to spending, with British Government departments’ budgets being slashed by up to 40%.
In the June Budget, the North’s Executive was told to cut a further £128million from spending this year, on top of the £393million savings it already had to make. This has taken half a billion pounds from the block grant to the Executive, which is about £12billion annually. It has been reported that the block grant will be cut by £1.5billion to £2billion in the looming spending review in October.
“The Tories’ agenda of cuts is rooted in the party’s traditional, conservative ideology and will actually threaten, rather than support, the economic recovery,” Mitchel McLaughlin told An Phoblacht.
“Devolution adds complexity to the impact of – and resistance against – the public spending cuts in the North. Devolution gives ministers in the Six Counties responsibility for many issues but ministers have very little power to affect the economic situation.
“The Assembly and Executive basically have no power to address the recession and its effects, such as the rise in unemployment. The Executive has no power to raise revenue or reprioritise public spending. The spending profile is determined by the British Treasury.”
The Sinn Féin MLA said that the devolution of fiscal autonomy would empower the Executive to alter this situation and to address historic inequalities.
“Westminster has used what’s known as ‘The Barnett Formula’ to determine the block grant, which has proved inappropriate and inadequate. It is a population statistic-based formula rather than an approach based on meeting objective need or addressing legacy issues such as discrimination, conflict and under-investment.
“The Barnett formula is ostensibly aimed at achieving ‘parity’ with other regional economies but this has not been achieved. Real parity would mean that communities and individuals have access to the same quality of life and services as those who pay the same rates of taxation. On average, people in the North have about 80% access to services and quality of life as people in south-east England.
“All of the Executive departments are already functioning at a deficit in terms of their Programme for Government commitments. Now the British Government is going to take more from these already-overstretched budgets in the October Budget.
“The Executive took the decision to ring-fence education and health budgets this year. It is unlikely that these departments will remain immune from spending cuts and there are efficiencies that can be made but it establishes the principle that defending the delivery of vital services such as health and education is the key priority for the Executive.”
Public sector vital
McLaughlin said that decisions are made in Westminster on the basis of what is ‘best’ for London and south-east England – completely detached from the specific needs of the North’s economy.
“So long as economic sovereignty over the Six Counties is exercised by the British Government it will not be possible for the North to reach its full economic and developmental potential,” he said.
The weak private sector in the Six Counties means that the public sector accounts for more than 70% of GDP and employs one-third of the workforce. There is also a higher dependency on benefit payments here than in Britain, another key target of the ConDem coalition.
“So, disproportionately in the North, there are people and whole communities that are absolutely dependent on public services. In challenging the cuts, we need to bear in mind that we are dealing with a government that has always demonstrated a willingness to attack the public service,” McLaughlin said.
He pointed out that both economies in Ireland, North and South, are under-performing as a result of partition.
“The North’s private sector is under-developed in terms of competitiveness and productivity,” he said.
On September 22nd, the Confederation of British Industry released a report calling for the “radical” overhaul of the North’s public sector, including job cuts, a pay freeze and pensions review. It also proposes privatisation and the introduction of water charges. The report has been slammed by trade unions as an attempt by profiteers to use the economic downturn as an excuse to sell off the North’s public infrastructure.
McLaughlin said that some of the other parties in the Assembly share the Tories’ conservative ideological outlook and are happy to push for the privatisation of public services, for the introduction of water charges and other service charges, such as road tolls.
“The British Government has announced it will also be publishing a White Paper on ‘rebalancing the economy’ in the North this autumn – which will inevitably promote the Tory agenda of privatising the public sector and cutting spending,” he said.
“We agree that the weakness in the private sector should be addressed – but using measures that don’t raid the public sector. We agree that there are efficiencies and improvements that can be made to the public sector – but it’s very important to note that the line pushed by the Tories and other parties within the Executive that the public sector here is ‘over-sized and bloated’ is a myth.
“The North’s public sector is not too big. It is only ‘over-sized’ in comparison to the private sector which is under-developed and cuts to the public sector will certainly not lead to growth in the private sector, but rather to its decline.”
Invest in jobs
The Sinn Féin MLA explained that the expansion in private sector employment in the North since 2006-07 was not matched in a rise in wages or living conditions.
“The employment rise was largely driven by an increase in call centres. The North was marketed internationally as a low-wage economy and it still is,” he said.
“These newly-created jobs are forecast to halve over the next period.”
Figures from August show the number of people claiming unemployment benefits in the Six Counties rose to 57,800. The Irish Congress of Trade Unions warned in August that, if implemented, the coalition’s cuts to the public sector might result in up to 40,000 further job losses in the North across the public and private sectors.
Derry has the highest unemployment rate in the North, at 7.6% in August, closely followed by Limavady at 7.1%.
“The legacy of failed economic policy and under-investment by previous administrations is still being felt west of the Bann and needs to be urgently addressed,” McLaughlin said.
“The Coalition’s cuts are a recipe for mass unemployment but there is an alternative – it’s strategic public investment into job retention and creation.
“Our focus in the Executive should be on encouraging local manufacturers, small businesses and social economy enterprises to invest in Research and Development, invest in the growing renewable energy sector and seek export markets.”
McLaughlin said Sinn Féin is determined to ensure that fighting inequality is at the top of the Executive’s agenda as well as the key priority of the party’s ministers in the Department of Regional Development (DRD), the Education Department and the Department of Agriculture and Rural Development.
“The regional disparity that has developed and been entrenched over the past 90 years is going to take time to dismantle.
“Our ministers in the departments we run are working daily to break down inequality and to improve the well-being of everyone in the community.
“In the DRD, we have halted the process of the privatisation of our water and sewerage services and begun to reverse it, and we intend to extend public ownership and control over NI Water.
“Agriculture Minister Michelle Gildernew is promoting the rights of small farmers and developing basic services and transport for rural communities – whereas the agriculture department in the past was very much focused on big farmers.
“Our Education Minister, Caitríona Ruane, is battling powerful vested interests on the 11-Plus, which has huge ramifications for equality, having stratified our society and entrenched class inequality for many decades. It’s a difficult project but we are advancing on it and we will deliver it.
“When we talk about the equality agenda, it is not mere rhetoric or aspiration. In the North, the equality agenda is codified in law through the Good Friday Agreement. Sinn Féin is the only party that consistently and seriously addresses this.
“There are those in the senior civil service who view equality in cost terms – when actually it is about us as a society defending and advancing the rights of disadvantaged individuals and communities. So it’s a battle a day to change this approach.
“Sinn Féin ensured that the Executive’s last Comprehensive Spending Review budgetary process was subjected equality screening and the party is determined that this will be built upon in 2011 with a core equality impact assessment procedure central to the process.
“But the current situation is extremely challenging – if the Westminster Coalition Government proceeds with major cuts to public services and a big reduction to the block grant then it may tip the balance and result in a significant crisis,” he said.
“The most rigorous approach must be developed to prioritising frontline delivery of vital public services and ensuring that they suffer as little impact as is possible. This, too, will be a battle a day.”
“As a party we are looking to build an alliance with the trade union movement and the community and voluntary sector to resist the cuts and to defend frontline services,” Mitchel said. “The public sector did not create the economic crisis – it was the private sector.
“We should not accept the inevitability of cuts. We should focus our minds on challenging them. All parties should agree a common approach in all of this.
“We need to enter into a negotiation with the British Government to resist cuts and secure proper control of the economic levers which will allow us to map a way out of the current recession and to protect the most vulnerable and those experiencing disadvantage at the same time.
“We need to plan to grow the economy and all options must be on the table. This includes the development and harmonisation of the all-island economy. The existence of two currencies, two different tax and social welfare regimes, two health services, and so on, all restrict our ability to effectively tackle the effects of the recession.
“We need to end needless duplication and develop efficient systems that benefit everyone on this island.