A recent paper on the public spending of
the Stormont Executive confirms that cuts are on the way, which will hit
jobs and services. How will this affect the delicate political balance set up
by the Good Friday Agreement?
Sammy Wilson, the DUP Finance Minister in
the Stormont Assembly has inadvertently let slip the size of the spending cuts
that the Executive are likely to call for. In a leaked confidential memo to
Executive members he announced that £370 million of cuts are on the cards.
According to a recent
BBC report, he admitted that “cuts of £200m were required from current
expenditure, as well as £172m from capital spending – such as roads, hospitals
and schools.” The paper makes it clear that ministers “cannot go on trying to
ease financial pressures by looking for unspent funds throughout the budget
across the year” and calls for "early action" and "difficult
decisions". “Deferring water charges in 2011 could cost up to £420m,” the
Initially the British government had made
some concessions in terms of delaying cuts and new taxes. They provided some
financial help and also delayed the introduction of the new water tax. These
were clearly measures to help the new administration establish itself. None of
the parties that make up the Executive were keen on having to go immediately to
their own electorate, whether Catholic or Protestant, and present simply a list
Now that capitalism has entered a serious
crisis – and the government in London
has massively increased debt to bail out the banks – the pressure is on to cut
public spending and this includes the spending of the Stormont Executive.
For Northern Ireland, this means
substantial cuts over and above the “efficiency savings” already identified by
the British Government. Wilson
is reported as saying that:
"I told the
Executive at the last meeting that I would be bringing to them a paper
indicating the consequences of a decision that we made and all signed up to –
every party – that we would defer water charges," he said.
of that is that if we don’t find the money from charges, then we find it from
"This is giving
early warning to ministers that here are the consequences for your budget of a
continuation of this policy."
He said, according to
the BBC, that there needed to be forward planning to ensure there was a
"seamless move into next year’s spending" and that it was not
"an emergency budget".
The truth is that the effects of the crisis
are starting to bite in the north. What is particularly important is that the
public sector makes up 63% of the economy in the north. This, combined with largely
accidental factors such as a substantial increase in cross border shopping
expeditions (due to the advantageous exchange rate), has delayed the onset of the
worst effects of the slump.
As 4NI reported recently: “There has been a prediction that cross-border shopper
spending will hit a total of €700m this year. There’s no stopping the flow of
trade north as – despite the recession – the shopping exodus continues. Experts
now also say that it will cost the Irish
Republic’s Exchequer up
to €143m in lost VAT, excise duty and corporation taxes. The Central Statistics
Office (CSO) report for the Department of Finance revealed that shopping across
the border will increase by some €150m to €700m in 2009.”
The extent of the planned cuts and the fact
that the north will also be affected by any further cuts that are determined in
London over the
next period – and these are likely to be draconian – means that inevitably the
Executive will be forced into conflict with the trade unions. The effects of
the cuts will also prove to be dramatic in terms of services on a local basis,
affecting, as usual, the poor, the vulnerable and the old.
Meanwhile the effect of the housing crash
has had a big effect on the construction industry, a situation which will get
far worse if the Executive starts slashing public sector capital funding.
According to a report in the Belfast Telegraph:
industry is expecting the jobs situation to remain tough into the new year,
despite signs that the house building industry is improving.
Employers’ Federation (CEF) managing director John Armstrong told the Belfast
Telegraph that higher sales from house builders are beginning to be reported,
albeit against a very low base following the 35-40% drop in house prices.
‘However, he added
that the flow of infrastructure projects on roads, schools and hospitals is not
sufficient to keep the industry moving in the right direction. He continued:
“The workload that
was anticipated from the public sector, primarily through the (Executive’s)
investment strategy has been very very slow to come to the market.
“We estimate that
over the last couple of years we’ve lost 28,000 jobs in the industry, that’s a
combination of the 14,000 that are claiming benefit and approximately 14,000
who were self employed.
“Our concern is that
most of our companies’ workloads have decreased significantly beyond the end of
the year. Most of them are saying to us that they will be making significant
comment in the media is more upbeat, that we seem to be coming out of the
recession, I fear with regard to the construction industry in Northern Ireland we may not have
seen the end of it at all. Early next year we could see significantly increased
The combination of deep cuts and economic
crisis in the private sector will have important political repercussions in the
north, not least because none of the political organisations represented in the
Assembly offer any real alternative to working people, whether catholic or
protestant. There is a huge political vacuum in the north. The danger is that
without the development of a clear class alternative, the situation could
become further polarised along sectarian lines.
The Good Friday Agreement, while solving
none of the real underlying social and economic problems, was patched together
and kept trundling along thanks fundamentally to the decade of economic boom
that followed. This allowed for more jobs to be created. This was at the base
of the apparent “solution” to the sectarian strife.
Now that boom is well and truly over and Ireland as a
whole is feeling the effects in a big way. Jobs are now being destroyed and
spending is being cut. In these conditions the trade unions and political
parties will come under enormous pressure. This is particularly the case in
respect of Sinn Féin, who are intimately tied up with the Northern Ireland
Recent events in Lurgan and other such
events over the past period illustrate some of this tension. But for the
working class the response of the trade unions is of vital importance. How will
the movement react to the cuts? The experience south of the border has been that
there is no middle ground, it is ultimately a question of fight back or watch
jobs, wages and conditions float away.
For the genuine socialists, Marxists and
trade unionists in the north the task is clear: to create within the labour
movement a clear political alternative, a party that voices the needs of working
people on both sides of the sectarian divide.
In the recent years, within the Republican
movement there has been a differentiation between those who have thrown their
lot totally into Stormont and attempting to apply and keep to the Good Friday
Agreement, and those who have started to draw the lessons of the past and move
in the direction of class struggle as opposed to sectarian strife. Years of
sectarian conflict have shown that down that road there is no solution to the
problems of the north of Ireland.
In opposing the Good Friday Agreement, the
task is not to turn back to the failed methods of the past, but to move forward
to revolutionary class struggle. In the new conditions that are opening up the
demands must be: