A Budget against workers and the poor

The Budget is a declaration of war – on one side lies the Tories / Lib Dems and their obedient supporters in the Assembly who have committed themselves to implementing savage cuts. On the other side is the workers, elderly, children, students and the unemployed who face being made pay for an economic crisis not made by them but by the powerful super-rich speculators, stock market gamblers and greedy bankers who have been bailed out to the tune of billions. What a cruel irony it is that the very same gangsters who have shipwrecked the economy and destroyed so many jobs find themselves being bailed out with our money and awarding themselves with higher profits and huge bonuses.  These very same top bankers who have sacked thousands of bank workers are about to pay themselves £7billion in bonuses on top of their fat salaries. Barclays chief executive Bob Diamond is set to be paid £8million in bonuses this year – on top of his basic salary of £1.35million!

A Budget for the rich

The rich in Northern Ireland are also celebrating. ALL the parties in the Assembly Executive have agreed to increase household rates by at least 8% over the next four years – but not for all. While most of us will be expected to pay higher rates for worse services, see our wages come under attack and struggle with increased VAT – the rich in the North who live in properties valued above £400,000 will see no increase in rates! In fact, the Stormont parties are to draw up legislation in order to protect the well-heeled from rates rises. Big business is also partying as a result of the Budget – manufacturing companies have been told they only need to pay 30% of their rates!

Fight the cuts

The fact that it took the parties so long to reveal the details of the Draft Budget is proof that they are not confident. We can defeat these cuts if people get organised in our communities, workplaces, schools and colleges. The trade union movement has a crucial role to play in fighting the cuts. The Assembly’s cuts can be defeated if decisive action is taken. The Socialist Party has consistently called on the trade union leaders to co-ordinate ballots and set a date for a one-day public sector strike before the local and Assembly election in May. This should be the start of a serious mass resistance to cuts, which should also be co-ordinated with workers across Britain and workers in the South who are fighting the same battle against cuts. The Stop the Cuts Alliance, which the Socialist Party helped launch, is linking up campaigners across Northern Ireland in a united movement to resist all cuts. Meetings are to be held to prepare to fight the cuts and will develop democratic means to build a mass movement. There is now more than ever before a burning need for a political opposition to the cuts of the main parties. The trade unions must begin to support the creation of a new political party to represent the united interests of working class and young people. The Socialist Party will be fighting in the elections to put an alternative to the cuts agenda of the main parties in May. We appeal to all readers to join us and fight the cuts!

Draft Budget – Assembly parties agree Tory cuts

By Owen McCracken

The draft budget for Northern Ireland agreed by the five main parties outlines a cut in total public spending of 8% between April 2011 and March 2015, in addition to slashing capital investment by 40% over the same period. It has been estimated that tens of thousands of jobs will be lost from both the public and private sectors as a result of this £4billion package of cuts and privatisation combined with the £1billion cuts in benefits being carried out by the Tories.

With the Assembly and local elections in May, the document itself is deliberately vague and short on detail. As we go to print most Departments have not published their draft saving delivery plans that would provide more detail on exactly where the cuts will be administered. This has rendered the “consultation” period a farce.

The Department of the Environment’s draft proposals, for example, contain an additional 150 job losses to the 150 previously announced. Considering caseloads for planning staff already average more than the 150 per officer recommended by the Addison Report, it is a clear indication of what workers can expect when the other Departments publish their plans. The Draft Budget does specify that all civil service workers earning more than £21,000 will face a pay freeze (an 8% cut in real terms when adjusted for projected inflation) and the recruitment freeze will undoubtedly impact on workloads as thousands of jobs are lost due to “natural wastage”. Workers in the civil service earning below £21,000 will receive a lump sum payment of £250 annually. Given the rise in regional rates and the increase in VAT, this represents a pay cut for lower paid civil service workers.

Budget cuts will hit services

The parties in the Assembly have clearly put a lot of thought into where they think they can get away with introducing cuts. Predictable soft targets include the Department of Culture, Arts and Leisure which faces a 9% cut over the budget period. Even the sacred cow of the Department of Health however faces in real terms a cut of 1.8% over the next two years despite the politicians attempting to imply it has been ring-fenced. With resources stretched to the limit, the head of the Health and Social Services board, John Compton, has warned that the Budget means the health service will effectively be bankrupt by next year and forced to shed between 3,000 and 4,000 jobs.

The 40% cut in capital spending will mean many longstanding investment plans will have to be abandoned or postponed. Capital spending in education, for example, at £169 million this year, will fall to £127 million next year, and drop to around £100 million for the following two years. With a significant backlog of schools already waiting on much needed new buildings this will mean most will loose out. The departmental plans published thus far state existing PFI/PPP contracts with big private companies are safeguarded.

Rates rises for us, subsidies for the rich

The Executive has accounted for £840m to be raised from “new income streams”. The majority (£540 million) is to be raised by selling off land, forestry, buildings, government-owned car parks and other public assets. In addition, £150 million will be obtained from a rise in household regional rates. But not everyone will see a rise in rates. The Executive has agreed that manufacturing companies should only pay 30% rates and that people living in properties worth at least £400,000 will not see any increase in rates at all. In effect the Stormont politicians have decided that working and middle class people should subsidise big business and the rich to the tune of millions in unpaid rates!

Other measures will see Housing Associations instructed to contribute £80m over the next four years with no guaranteed protection to vulnerable tenants, £4 million from a regressive 15p levy on plastic bags and the Harbour Commissioners facing a minimum £35 million levy on their reserves, with the possibility of £125 million to be raised from the part-privatisation of Belfast Harbour.

Fight all redundancies

There is a real question mark though over the reliability of these figures and the projections on which they are based. There are clear indications this Draft Budget simply won’t add up. Already, the Department of the Environment has raised concerns in its document about how it will finance the plastic bag levy and the Department of Education and Learning’s budget plans highlight an “unresolved deficit in funding of some £40m in 2011-12 and £31m in 2012-1”. Indeed, there are many possible pitfalls. Given the high unemployment rate and lack of jobs, Ministers may impose compulsory redundancies if there is little uptake of the voluntary packages. The Department of Finance and Personnel, for example, has set a target of shedding 500 of its 3,313 staff (15%). Based on“normal staff turnover” levels from previous years, they expect redundancies will account  for only 91 of this total – in reality a serious underestimation. There is also uncertainty about the reliability of the £540 million valuation of assets earmarked for privatisation given the slump in the property market. Ultimately, a black hole in finances could yet be plugged by introducing a more severe budget further down the line that would include additional cuts, privatisation and other possible revenue raising measures including, for example, water charges.

This Budget will have devastating consequences for the local economy. The document itself admits this, recognising “The public expenditure reductions from the UK Spending Review will have a negative impact on economic prospects going forward. In addition, the impact of these public expenditure cuts will be felt more severely in Northern Ireland given our relatively higher dependence on the public sector and … much of the private sector is also dependent on public sector spending”.

Despite this, the proposals were hailed as “first class” by First Minister Peter Robinson, with Finance Minister, Sammy Wilson describing the budget as “a good Christmas present to the people of Northern Ireland”. The Draft Budget had cross party support with no Minister voting against it. Instead of fighting the Tory agenda, the parties remain wedded to the strategy of securing a dramatic cut in corporation tax and would be prepared to take substantial additional cuts from the Tories in order to realise this. They wrongly believe a reduction in corporation tax will attract significant foreign direct investment and deliver export-led economic growth. They point to the “Celtic Tiger” boom in the South which happened under entirely different economic conditions. The relatively low level of corporation tax was only one factor attracting investment amongst several particular to the Southern state in the 1990’s. The spectacular subsequent collapse of the Southern economy underlines the fanciful nature of this neo-liberal dogma today.

Parroting of the Tory’s ideological agenda is in clear evidence throughout the document. It states on a number of occasions that “the UK Coalition Government has made a commitment to rebalance the economy towards the private sector” and that “The challenge for the Northern Ireland Executive therefore is to both rebuild the economy in the aftermath of the recession and to rebalance it towards the private sector in the context of the constrained public expenditure position”.  That the “growth of a dynamic, innovative economy.. can only [our emphasis] be achieved by improving the capabilities of the private sector with the public sector’s role being to ensure that the conditions to support such private sector growth are in place” . Speaking about reducing the state deficit, the parties in the Assembly have aped the Tories propaganda by stating “In order to achieve this, the UK Coalition Government has given focus to reducing welfare costs and wasteful public sector spending”.

It is no surprise the document was warmly welcomed by representatives of big business. Joanne Stuart, who chairs the Institute of Directors in Northern Ireland, commented “By comparison to recent private sector experience, the pain for public sector workers is mild”. Likewise, Nigel Smyth of the CBI argued “If they can get pay restraint here, given the size of the public sector, that can go a long way to achieve the savings”. The trade union movement must respond with strike action. Massive resources must be spent now and with urgency to build for a co-ordinated one day public sector strike. The public sector unions must set a date for action before the May elections. All the parties in the Assembly are preparing for an all-out attack on workers. The leadership of trade union movement must stop pretending that the politicians in the Assembly are friends of workers and take steps now to launch a new party to represent all working class people.