From The Socialist, No. 26, November 2006.
Copied with thanks from the Socialist Party Website.
Marked up by Einde O’Callaghan for the Encyclopaedia of Trotskyism On-Line (ETOL).
The Devil, they say, is in the detail. And it is the lack of agreement on any of the details that puts a large question mark over whether the 26 March deadline for the return of the Assembly will be met. But in one area there is agreement – right down to the fine detail – between all the main parties. That is on economic policy.
Sinn Fein and the DUP may not be on speaking terms on issues like parades and policing, but when it comes to the central question of how they would handle the economy, they speak and act in unison. Behind them, the UUP, SDLP and Alliance add their voices to the overall consensus.
The economic agenda on which they all so readily agree can be summed up in one phrase – nakedly pro-business. Of course they don’t put it quite like this in their election manifestos and their public statements. Rather they promise that, if they were in power, they would develop public services and oppose water charges.
These were the assurances they were giving in public as they trooped off to meet Gordon Brown to ask for an extra £1 billion a year for the next five years to financially underpin a deal.
The reality of what they were seeking, and of the economic priorities they had set, were somewhat different. The proposals they put to Brown came from a report produced by a sub committee of the Assembly’s Programme For Government Committee on which each of the five main parties had two representatives.
The report starts out from the premise that the problem with the Northern Ireland economy is a disproportionately large public sector. (35% of jobs are in the public sector which is responsible for 71% of economic output).
To “correct” this, the Assembly report swallows the arguments of the various business interests who lobbied it, groups like the Business Alliance, that there must be a “transition to a private sector-led economy”.
To achieve this “transition” it proposes a series of bribes and inducements to encourage the private sector. Top of the list is the proposal to cut corporation tax to the 12.5% level that applies in the South: the main demand they put to Gordon Brown.
In raising this as a panacea for growth, the parties ignore the fact that since 2001 FDI in the South, despite the 12.5% tax rate, has fallen dramatically and 300,000 manufacturing jobs have been lost.
A cut in corportation tax to 12.5% would cost around £330 million per year – a third of the £1 billion annual economic package the parties were asking for. Add in the other incentives to business they were seeking – more grants, R&D credits and fuel subsidies – and there would be precious little left for services that would benefit people in working class communities.
But then the parties were not even asking for more money for public services. The report merely says public spending should be maintained for a “transitional period”. Any proposed spending on infrastructure is to be geared to the private sector. Even education it says should “be better integrated with the needs of business” in order “to create an enterprise culture in schools, including the primary sector”. Public sector “reform”, i.e. privatisation is to continue while it supports “the call for a leaner government machine”, i.e. for public service job cuts.
Much of the report is academic anyway as the politicians came away from Gordon Brown empty handed. His claim to offer a £50 billion package was nothing more than smoke and mirrors. On closer examination economists have whittled this down to £2.5 billion extra spending – and even this figure doesn’t stand up to close scrutiny.
£2 billion of this is in an extra allocation for a capital spending strategy – up from £16 billion to £18 billion – but the period this is to cover has been extended two years to 2017, so it is spending that might have been made anyway.
Higher local taxes including water charges are part of the package and have been quietly accepted by the local parties. This means more revenue for Brown and needs to be offset against his “additional” spending.
Then there are the cuts that are already in train. Brown’s Comprehensive Spending Review demands savings of £700,000 in public services by 2010–11. Administration costs are to be reduced by 5% in real terms, meaning jobs must go.
The real revenue earner offered to the Assembly – and clearly accepted by the parties – is through the sell off of public service assets. Brown has suggested this should raise £1 billion. This does not just mean selling off old army bases – top of the list is the lucrative land in the Belfast Harbour estate which the government wants to privatise.
So a new Assembly, if it comes, will be more of the same – privatisation, low wages, job cuts, water charges alongside huge handouts to private business. Sinn Fein and the DUP have already shaken hands on this. That is why we need a new party to defend our public services, resist water charges and represent the interests of the working class.
Last updated: 5.7.2012