Time to call Sinn Fein’s bluff over welfare

John Simpson, an economist who deserves to be trusted, dismissed the Great Welfare  Crisis as essentially bogus months  ago – yet his analysis seems to have failed to pass into political  debate and comment from the Business pages.   It might help if  critics of Sinn Fein’s grandstanding spoke on the basis  of an agreed analysis.

OFFICIAL Treasury figures show that spending on welfare-related topics in Northern Ireland is still increasing and, significantly, will continue to increase in the immediate years ahead.

That contrasts with a document purporting to show a reduction in welfare-related spending, published by the Northern Ireland Council for Voluntary Action (NICVA) and prepared by senior academics at Sheffield Hallam University.

Its headline conclusions were that reform in the main areas would reduce welfare spending in NI by £750m pa and cost the average working age adult £650 pa.

More careful analysis of the impact of welfare reform in NI confirms that the NICVA publication is, at best, misleading but essentially, is flawed.

Welfare reform may ultimately reduce some personal benefits. However, there is no credible justification to claim a cost of £750m pa or anything approaching that level. The figures in the NICVA document need to be re-examined.

First, NICVA has included as welfare costs, changes in taxation that have already been implemented by Westminster. Changes in tax credits, the 1% up-rating of benefits and the reduction in child benefits have all been introduced and are possibly already implicitly deducting £335m from the block grant.

Second, it is known that the NI Executive has negotiated a possible compromise on amendments to the changes in housing benefit.

These would moderate the possible reduction in housing benefit budgets which NICVA controversially estimate might amount to £88m. The official estimate is that the housing benefit changes might cost £17m pa.

That leaves another £335m which Sheffield Hallam say could be the impact of changes in incapacity benefits and disability living allowances (DLA). Again, the official response points to important corrections. The changes from reassessments for incapacity benefits in Northern Ireland have been completed and are now in operation.

In an interview with UTV’s  Ken Reid  this evening  David Cameron once again gave no ground.

 He urged Northern Ireland’s main parties “even if they can’t do all of welfare reform to do some welfare reform”. “I think we’ve demonstrated in the rest of the United Kingdom that welfare reform really works,” he said. “We’ve got half a million fewer people across our United Kingdom out of work benefits because we’ve made welfare reforms.”

The Prime Minister was explicit that extra resources for the region are not available.

“Northern Ireland is funded generously, they do have to make decisions.”

The Executive is faced with the task of finding £200m in cuts – almost £90m of which is from the fines imposed because of the disagreement over welfare reform.

DUP Finance Minister Simon Hamilton has warned that the Assembly could face further penalties or the Treasury stepping in if action is not taken soon.

In talks about the future of UK devolution as a whole it would help  to reduce the incentives for party grandstanding if the elements of  what Westminster pays  in the block grant and social security payments were made transparent and what the Executive has to fund out of  savings.

P.S.  The Institute for Fiscal Studies report on the introduction of Universal  Credit  in  Northern Ireland and recommends changes to the benefits structure and reaches these conclusions:

As incomes are relatively low in Northern Ireland, any reform to means-tested benefits will have greater effects there than in the UK as a whole. There are therefore both more winners, and more losers from the introduction of Universal Credit in Northern Ireland than when we examine the UK as a whole.

This is for two reasons. First, the higher prevalence of worklessness in Northern Ireland increases the number of losers as workless families lose out slightly on average from Universal Credit’s introduction. Second, Northern Ireland has an unusually large number of claimants of Disability Living Allowance compared with the UK as a whole, and single claimants of the middle and higher rates of the care component of DLA will significantly lose out from reforms to support for those with disabilities being introduced alongside Universal Credit. However, single-earner couples with children in Northern Ireland gain more from the introduction of Universal Credit than their counterparts in the UK as a whole.”

 

 

 

 

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  • Michael Henry

    David over a barrel Cameron -” even if they can’t do all of welfare reform to do some of welfare reform “-

    Cameron is looking a bone threw at him- he said Implement Welfare Reform- Sinn Fein says that was not going to happen- now Cameron begs for just some of welfare reform to be implemented – it ain’t going to happen Tory boy – you have changed your position- now change it again- No to Tory and Unionist Welfare cuts-

  • Morpheus

    And NICVA reject John Simpson’s analysis. In fact as recently as today said they stand by the figures:
    http://www.belfasttelegraph.co.uk/business/news/criticism-of-welfare-report-inaccurate-30225288.html

    IFS has child poverty rising to 33% by 2020.

    We any the wiser?

    Where’s the analysis of Simon Hamilton btw?

  • barnshee

    absolutely fine -now find the money for the system from the rest of the block grant

  • Brian Walker

    The real questions are whether the cuts per person are accurate and what Stormont can do to alleviate them. The IFS study makes a few suggestions for reorganising benefits. But where’s the debate? Simple defiance is just posturing, And isn’t it time to bring domestic rates into line? This is the is a tax raising power they have. And don’t say there’s an election round the corner. There always is.

  • Bryan Magee

    Is it possible to have direct rule in the area of welfare only?

  • AndyB

    Before I start, I want to make it clear that I oppose Welfare Reform, and I think it is bad for the people of Northern Ireland. However, we have been well and truly stitched up by the Coalition Government.

    The problem, and it is being highlighted with increasing frequency, is that the Treasury doesn’t have to do anything, and it knows it. There is nothing that the NI Executive can do to change its mind, except ask their MPs to arrange a vote of no confidence in the House of Commons – which is not going to happen, and certainly not to the increased standard required since 2010.

    In short, as long as we are governed from Westminster, the Treasury and its ministers will decide how much is given to the NI Executive, and if they decide to give less, there is nothing we can do about it.

    I cannot help with how the block grant is built up other than to say that the Barnett formula is applied to each element of spending in GB, ie £xbn is spent on pensions and benefits in GB therefore we will give NI the funding it needs to provide similar. All the hypothecated sums get added up into a single figure which is the block grant. DFP takes this single sum and distributes it among the various departments in whatever proportions it pleases.

    This is the point where the Treasury has us over a barrel. It is funding us for welfare at the rate that it provides funding in GB, pro rata according to the Barnett Formula, and that appears to be entirely consistent with its approach over the years.

    If the NI Executive can’t implement Welfare Reform, it will have to find the additional resources to run the more expensive system by either diverting bits of the block grant from other areas, or increasing the Regional rate.

    Bryan, the answer is it could, but the Northern Ireland Acts would have to be amended to make it an additional reserved matter, and for all we know (not being a lawyer), the Assembly might even have to give permission before Westminster could introduce such a Bill to the Houses of Parliament.

  • Michael Henry

    You mean the money that the Tory’s are stealing from the Assembly in the form of fines-

  • SeaanUiNeill

    Forgive my confusion in this matter, Michael H, but where is the money the “Torys” are “stealing” actually coming from?

    Until we are being bailed out to the tune of 70% of incomes from the Dáil, I’d thought that these fund were coming from Westminster? The first factor anyone who truly wants independence will have to face is a considerable period of real austerity when such subsidies have been entirely withdrawn. I know that this subsidy system and the emasculation of our capacity to create local wealth is something that has been created under previous direct rule and its aftermath, but as “he who pays the piper calls the tune”, the way I see it is a choise of independence and dire poverty or of subsidised control from Westminster. Its not really a pick and mix bin. And so long as you require Westminster to fund you, there’s no real arguement that can honestly use the term “stealing.”

  • Comrade Stalin

    The Assembly has to pass a consent motion to return powers back to Westminster. That won’t happen (petition of concern) as it’s effectively the same as the assembly voting to implement the cuts.

    Correct me if I’m wrong but .. I don’t think welfare spending is handled through Barnett. It is currently allocated separately, for good reasons – the British government doesn’t want a set of independent and divergent welfare systems throughout the UK that could lead to welfare tourism.

    My understanding is that if welfare funding were calculated as part of the Barnett equation the overall amount of money we get would be substantially less than it currently is.

  • Jag

    “Northern Ireland is funded generously, they do have to make decisions” says Dave.

    Spoken like a true sex-trafficking pimp.

    Surprised he does tell us we owe him GBP 1,000 for the condoms and packet of tampons he gave is last week.

    “Why the long faces, Northern Ireland? Am I not good to you, protect you and provide you with a roof over your heads”

    Yes, Dave, you do. But now, we want to get an accurate accounting of our economy.

  • sean treacy

    John Simpson always tows the establishment line not unlike certain journalists that frequent this site.

  • Croiteir

    Two birds with one stone. Call both bluffs, Robinson’s over viability of Stormont and Adams over Welfare Bill. Let Stormont fall, it can only help the nationalist case.

  • AndyB

    Mightn’t be the Barnett formula, but I’d say Annual Managed Expenditure comes under the same principles – “Here is the money you need to run the GB system or similar in NI. If you want to do your own thing, it’s up to you to find the extra cash.” There is also something in the back of my head that AME has been lumped in with Departmental Expenditure Levels (DEL) for some reason.

    Even if we only implement Welfare Reform in part, I wouldn’t expect the money given to us for welfare to be increased. I think the Treasury will dig their heels in, because nobody can force them to do otherwise.