or ‘more’ devolution, the preferred position of the three main unionist parties.
The Scottish elections, together with those in Wales and Northern Ireland will provide the irst real and substantive opportunity for voters, at least some of them, to show what they think of UK Government policies too. Devolved parliament elections are not isolated from UK wide issues. The SNP terms the cuts ‘London Cuts’ while the Scottish Labour Party attacks the SNP for implementing ‘Tory cuts’! As in other parts of the UK, in the meantime across Scotland anti-cuts groups have been established, trades unions, service user and campaigning groups are mobilising in opposition to UK Government policies. While the banks and inancial institutions of Edinburgh and elsewhere, a world far removed from the disadvantaged communities of Scotland, continue to generate wealth for a few. ‘All in this together’? Hardly!
anywhere in the UK. In Glasgow over one- third of households have no member in paid work and with a high proportion of the population dependent on social welfare, Glasgow’s council leader has called the impending cuts ‘social vandalism’.
That Scotland is ‘in this together’, both in terms of impacts and resistance, is a myth – but a potent and powerful myth at that, and one that it sure to be given considerable play in the run up to the next Scottish parliament elections due for May 2011. It is expected that the elections will be a straight two way ight between the Labour Party (which has strengthened its position as the most popular party in the past year) and the SNP with the Liberal Democrats expected to fair badly – and the Tories struggling to hold on to the limited vote and number of seats it already has, thanks primarily to the system of proportional representation that elects the parliament. And the main political fault line is, as in 2007, likely to revolve around
Implicationations for Speciic Group and Polices
June 2010 emergency budget resulted in a reduction of £128 million. Some of the consequences of this can be identiied, for example, the number of civil servants between 2005 and 2010 has reduced by 3,258. Treasury statistical analysis shows that health expenditure per head in Northern Ireland fell compared to the rest of the UK. Thus for 2009-10 the igures per head were Northern Ireland £1,891; Scotland £2,066 Wales £1,956 and England £1,896 (HM Treasury, 2010b). The other part of the eficiency drive was relected in a policy of creating very large or totally centralised quangos. Health and social care trusts are among the largest health related bodies in the UK and the proposed single Education and Skills Authority was described as the largest local education authority in Europe. Economic savings arising from such restructuring were calculated but issues of local responsiveness, value for money, service modernisation, and public participation were rarely considered.
PARTY DISAGREEMENT OVER NEW BUDGET
While the outcome of the CSR in terms of the recurrent budget was better than anticipated it has still proved dificult for the parties in Northern Ireland’s mandatory coalition to reach agreement. In December 2010 the Northern Ireland Executive published a draft budget for the period 2011-2015 but this did not contain detailed departmental spending plans (DFP, 2010). There has been a particular impasse between the two main parties - the Democratic Unionist Party (DUP) and Sinn Fein. Sinn Fein’s public position has been that ‘Tory cuts should be opposed’. A number of departmental ministers, including those for health and education have not drawn up a list of cuts. The DUP First Minister, Mr Peter Robinson, has expressed the view that the cuts are going too far too fast and taking such an amount out of capital spending would be a barrier to economic recovery (Robinson, 2010). The DUP inance minister has taken the view that there is no alternative to accepting the cuts (Wilson, 2010). Impasses in decision- making by the Northern Ireland Executive are not new or unusual. The Executive is not bound by the principle of collective responsibility and there is also a cross- party veto mechanism. Consequently
it has experienced great dificulty in reaching decisions on key social policy topics including the implementation of the anti-poverty strategy, a new community relations strategy, academic selection and transfer to secondary school, a new equality bill, a human rights bill and an early years strategy.
NATURE OF THE DEBATE
The prolonged debate on the response to the cuts has centred around four areas. Firstly, the primary focus of the Programme for Government 2008-2011 is on growing the private economy and supporting new businesses. This approach is relected in views expressed by the Finance Minister that investment in the economic infrastructure must have priority over investment in the social infrastructure. This focus can be said to misunderstand the nature of devolution where social policy makes up the main powers devolved, represents some 75 per cent of devolved expenditure and makes up the majority of the devolved legislative output. Economic policy, iscal policy, and income tax are all the responsibility of the UK Government. This includes corporation tax around which there has been a major campaign by business bodies and some economists for NI to have a lower rate to increase competitiveness with the Republic of Ireland. However, such a reduction would lead the Treasury to reduce Northern Ireland’s block grant with immediate adverse consequences for expenditure on social services.
Secondly, there has been an agenda aimed at reducing public sector provision whether by outsourcing more services to the private sector, reducing services or advocating more means-testing. This campaign has been directed at some of the provisions introduced by the devolved administration, such as free prescriptions and free travel for the over sixties. Not all politicians are sympathetic with this campaign, but in general Northern Ireland has not introduced major policy innovations such as the free personal care, abolition of tuition fees and more comprehensive early years provision introduced by the Scottish Executive. Thirdly, there is a debate about new sources of income to boost public expenditure. This has focused
Implicationations for Speciic Group and Polices
olds are not in employment, education or training (NI Assembly, 2009).This set of circumstances means that the Coalition Government’s plans to reduce the cost of social security by a series of measures to get more people into work, reducing entitlement to beneit and reducing beneit levels will have an adverse impact. The problem of lack of jobs and the number of poor quality jobs will be exacerbated by anticipated additional cuts in public sector employment. PriceWaterhouse Coopers (2010) estimate that jobs losses in NI as a result of the Spending Review will be in the region of 35,000 – 6 per cent of total jobs in the region. The SDLP Minister for Social Development has stated that the price of responding to the CSR will be ‘up front beneit cuts’ and has voiced his objection to many of the proposals (UTV 2010). If the proposals in the DWP White Paper on Social Security (DWP, 2010b) are implemented in Northern Ireland, the failure of the Executive to agree and implement a childcare strategy means that parents will be subject to the harsher conditionality without the structural support in place in the rest of the UK. Childcare is on average scarcer than elsewhere in the UK. The Labour Government’s Extended Schools policy with wrap-around childcare was not rolled out in Northern Ireland and there is no strategy for extended schools. The recent consultative document on a new Early Years Strategy for Northern Ireland does not consider childcare (Department of Education, 2010). The measures in the latest social security changes, such as the reduction in the childcare element of Working Tax Credit from 80 per cent to 70 per cent of costs, will impact heavily on families already struggling to pay for childcare.
The social care system in Northern Ireland is already under considerable pressure. Much of NI’s spending on social care continues to be on institutional care and there has been a failure to develop suficient capacity in the domiciliary care sector. The personalisation agenda, which has been at the core of social care developments in Britain for a number of years, has not been progressed or invested in and the social care sector faces being further squeezed as the CSR is implemented. There is now evidence that the availability of nursing on the major devolved source of income,
local taxes, i.e. rates in Northern Ireland and the continuation of a partial freeze on domestic and non-domestic rates, plus the possible introduction of speciic water charges or taxation. Fourthly, it has been argued that the Northern Ireland allocation should take into account the peace process and the continuing needs of post-conlict reconstruction. Practically this means the prioritisation of expenditure towards maintaining security, addressing higher levels of social need, promoting regeneration, taking account of the high dependency on the public sector, coping with community divisions and encouraging political participation and inclusion – in effect all the ‘glue’ that holds together the peace process and political settlement.
MEETING NEED IN THE CONTEXT OF THE CSR
The failure of the Executive to take decisions on key areas of policy and slow progress on others means that the context in which cuts will be implemented is very different in NI. In relation to a number of policy areas including early years, childcare, social care and poverty reduction NI lags behind the rest of the UK. Cuts to the welfare budget and radical changes to entitlement and conditionality have particular implications for the most marginalized individuals, who faced considerable challenges even when the economy was growing. The increasing precariousness of employment only adds to a range of long standing and well evidenced obstacles to labour market participation (Gray and Horgan, 2009). These include low pay, poor quality jobs, low levels of educational qualiications and skills among the unemployed, the lack of structural support such as childcare and public transport and high levels of disability and limiting long term illness. The most recent labour market report (DETI, 2010) shows that NI’s employment rate remains well below the UK average and is the lowest of the twelve UK regions. In the past year the Northern Ireland claimant count increased by nine per cent compared to a fall of ten per cent across the UK. Over 45 per cent of those unemployed have been so for a year or more. Of the 24,000 newly unemployed in Northern Ireland last year over 37 per cent were aged between 18 and 24 and 19 per cent of 16-24 year
Implicationations for Speciic Group and Polices
homes places is becoming increasingly limited as a result of funding issues (BBC Northern Ireland, 2010).
WHAT SHOULD HAPPEN
Decisions need to be made about what the core services are for the devolved administration and which areas are priorities in terms of need. There is evidence of some new debates emerging. For example, tuition fees for higher education have been in line with those in England. However, there appears to be a reluctance to copy the latest policy on tuition fees proposed in England, although some increase is likely. There are major dangers in focusing on costs alone without considering quality of provision, modernisation of services and delivery mechanisms. The Barnett Formula is a further guide to what action should be followed. The Barnett consequentials explain the details of planned expenditure increases in England which convert into the Barnett allocations. The reason why NI has more money than expected through the Barnett Formula is the ring-fencing of health, and increased expenditure on education and adult social care in England. Northern Ireland should broadly follow this guideline. Although the devolved administrations have discretion over expenditure, the Barnett Formula has an underlying principle that maintains expenditure roughly proportional between the four countries of the UK. More eficient
delivery and administrative systems could be introduced in NI through applying the principles relating to ‘it for purpose’ in devolved governance, with more joined up government at the centre, between devolved departments, the very large quango sector and local government. Welfare to work requires work. The igures above highlight the reality of the Northern Ireland labour market. The geographical concentration of economic inactivity and long term sickness and disability correlates strongly with areas most affected by the conlict. There is little prospect of measures proposed by DWP in the November White Paper (DWP, 2010d) having a positive impact. The devolved powers allow for divergent policy in NI and there is precedent for this (for example, the payment of childcare expenses to family members for lone parents on statutory employment programmes). The question is whether NI ministers are prepared to take such an approach.
In practice the likely outcome in NI will be a negotiated position between the two main political parties which may identify a few priority areas, for example part of health but not social care, but also largely relect a ‘salami’ slicing approach whereby all 12 government departments receive a similar cut. Ultimately, politicians will have to justify departure from the Barnett consequentials and the resulting implications of this.
Towards an Alternative
Towards an alTernaTive
banking sector to comply with both the letter and the spirit of the law and not to engage in or promote tax avoidance.
(Inland Revenue, 2010: 30)
This is a very softly-softly approach, particularly when compared with the Government’s hard line policies towards those on beneit, where people who do not take up job offers could lose their beneits for up to three years.
HARD RHETORIC, SOFT POLICY
The CSR also conirmed that the Government would not be continuing with Labour’s one-off bonus tax but would, instead, introduce a banking levy. Few concrete details were provided but the CSR suggested that the levy would generate around £2.5 billion per year, rather less than the £3.5 billion raised by the bonus tax last year. Bankers’ bonuses in Britain in 2009 were £7.3 billion and expected to also be about £7 billion in 2010, signiicantly lower than the £11 billion paid out at the height of the boom in 2007 (BBC, 2010b) but still a considerable sum of money going to a relative handful of people at a time of major welfare cuts. Nick Clegg, leader of the Liberal Democrats and Deputy Prime Minister said, at the Liberal Democrat conference in September 2010, that the Government would introduce a super- tax if bankers failed to show restraint on bonuses (Guardian, 2010b).
But, as with tax avoidance, the rhetoric may be hard but the policy content is soft. While the CSR said relatively little about wealth and the wealthy, the emergency budget in June 2010 was a perfect
T
he Comprehensive Spending Review(CSR) in October 2010 announced major cuts in public expenditure which look set to hit the poorest hardest. With the exception of students there was little immediate resistance to the announced cuts but a fair degree of fatalism about their ‘inevitability’. But there is an alternative. The last thirty years have been extremely good ones for the wealthiest in our society and if we are ‘all in it together’ then there is deinitely much more scope to ask wealthier groups to make more of a contribution. Britain is one of the wealthiest countries in the world but this wealth is very unevenly distributed. The top ten per cent of the population received a greater share of total income than the whole of the bottom half in 2002-3 (Hills, 2004). And the top 10 per cent owned 100 times more in terms of personal wealth than the bottom 10 per cent in 2006-8 (Hills, 2010). There is a particular concentration of income and wealth at the very top with the richest 1 per cent of the population receiving about 13 per cent of all income and about 23 per cent of all wealth (Paxton and Taylor, 2002; Atkinson and Salverda, 2003). Wealthy groups beneitted greatly from tax cuts in the 1980s and it is now time to ask them to contribute a fairer share towards a welfare state which they themselves beneit from, along with others in society.
But the CSR had relatively little to say about wealth and the wealthy. One of the rare exceptions to this was a reference to reducing tax avoidance in the banking sector: The CSR said that:
The Government will continue to monitor tax receipts from the banking sector. As part of this, the Government expects the