The Stormont Deal: who benefits?
The Stormont House Agreement means misery and job losses for workers while maintaining social division, so who actually benefits, asks Justin O’Hagan
The Stormont House Agreement of December 2014, was heralded by the Northern Ireland Executive parties, as well as the British and Irish governments as a major breakthrough that once again “saved the peace process.” In reality it is an economic deal which further copperfastens the economic segregation of Northern Irish society.
The ‘Deal’ commits the Stormont Executive to overseeing swingeing cuts to welfare provision which are meant to be offset by a wholly inadequate welfare ‘hardship fund’ of £70 million. On top of this, there will be cuts to Stormont Departmental budgets, which the Northern Ireland Committee of the Irish Congress of Trade Unions (NIC-ICTU) states “will reduce resource expenditure in Northern Ireland by up to £160 million in real terms.” Northern Ireland Finance Minister Stephen Parry of the Alliance Party, has heralded these cuts by stating they will “reduce the public- sector workforce in Northern Ireland by 20,000 posts over the next four years through a combination of measures such as a Voluntary Exit Scheme and recruitment freezes.”
The Executive proposes to borrow £700 million from the Westminster Government to fund this voluntary exit scheme. Business magazine AgendaNI notes that “Sinn Féin has accepted that welfare reform will begin from April 2015. In return, the Government plans to devolve corporation tax powers by April 2017.” The Stormont Executive parties are committed to lower corporation tax, which will mean hundreds of millions of pounds in lost revenue. The Budget document notes that power to lower corporation tax “once transferred, will provide the Executive with a significant additional lever to transform the Northern Ireland economy”, although the question of who will benefit from this transformation is not raised.
Given the coming UK General Election, it is telling that the budget debate in Stormont included a spat between the SDLP’s Alex Atwood and the DUP’s Peter Robinson, speaking as a constituency representative rather than First Minister, over how much hypothetical Foreign Direct Investment should be granted to West and East Belfast. Electoral consid- erations have also put off the establish- ment of a Commission on Flags, Identity, Culture and Tradition until June 2015. The value of this quango, which will allow automatic vetoes for Sinn Féin and the DUP, is open to question. Irish Congress of Trade Unions spokesman, John O’Farrell, said: “All of the stuff which has retarded progress in recent years is still unresolved. Take away the quadruple whammy of neoliberal nostrums – welfare reform, tax cuts for the wealthy ‘balanced’ by job cuts for the middling, and the sale of public assets – and there is no agreement whatsoever on anything substantial in relation to ‘legacy issues’ – basically the sectarian division of society.”
While these sectarian differences remain unresolved, the Stormont Budget document tells us that “the Executive is committed to the tough but necessary step of restructuring our public sector and this Budget allocates resources to begin that.”
In response, the trade unions and other progressive forces have made clear their opposition to the neo-liberal clauses in the Stormont House Agreement. A series of public meetings has been convened across Northern Ireland by the NIC-ICTU in order to explain why working people should be opposed to the Agreement. Union activists have also been going door-to-door in working class communities explaining its disastrous implications. NIC-ICTU argues that “there is an absolute certainty that thousands of jobs and millions of pounds will be taken from the economy in both the public and private sectors – thousands will join the dole queues. Many thousands of public servants who have been made redundant as well as thousands of private sector workers who will lose their jobs as a consequence, will have to endure the everyday humiliations which are a growing feature of the cruel Tory ‘vision’ of welfare”. These job losses will come on top of the 40,000 jobs which have been lost since 2008, particularly in the retail and construction sectors.
There are two pillars which underlie the pro-austerity politics of the Agreement. First, there is the assumption by some in Sinn Féin that they must accept the cuts because they must remain in government no matter what is forced upon them. (Others in Sinn Féin are already inclined towards economic conservatism).
Secondly, there is the belief that austerity politics must be enacted in order to lessen the deficit. Thus the Budget document describes as if self- evidently true, how, “the Chancellor of the Exchequer has made it clear that the wider UK economy must control its debt and that any tax gains from economic growth will be used to target the national deficit. This means the Northern Ireland public sector will continue to face a sustained period of budget constraint”.
However, Oxford Professor of Economics, Simon Wren-Lewis, argues that the economic direction being steered by the Conservative led UK coalition Government is on its face a failure: “It is as if Osborne’s real priority was and still is to cut all forms of government spending, and as if the deficit was, and he hopes will remain, a convenient pretext to achieve that goal. It will be some time before economists settle on a number for the total cost of the austerity mistake, but a conservative estimate would be that, in total, resources worth around 5% of GDP will have been lost for ever by delaying the recovery. That’s about £100 billion, or £1,500 for each adult and child in the country.”
More than 20 years ago establishment economist, Sir Alan Budd was asked if the monetarist economic theories which underpin much of the austerity drive of the UK Government, and by implication the Stormont House Agreement, were used during the period of the Thatcher governments to disguise political policies that would have otherwise been very difficult to implement. Budd replied that, “the nightmare I sometimes have, about this whole experience, runs as follows. I was involved in making a number of proposals which were partly at least adopted by the government and put in play by the government. Now, my worry is… that there may have been people making the actual policy decisions… who never believed for a moment that this was the correct way to bring down inflation [the supposed central concern of monetarist theory].
“They did, however, see that it would be a very, very good way to raise un- employment, and raising unemployment was an extremely desirable way of reducing the strength of the working classes – if you like, that what was engineered there in Marxist terms was a crisis of capitalism which re-created a reserve army of labour and has allowed the capitalists to make high profits ever since”.
It may be argued that reserve armies of the unemployed exist in all capitalist societies, but there is little doubt that this latest bout of austerity contained in the Stormont House Agreement constitutes a political attack on working people and what remains of public provision disguised as economic necessity. No matter what spin they may put on it, the Stormont Executive parties of all stripes are planning to deepen this attack on workers in Northern Ireland.