We’re just managing poverty (and those who experience it) rather than tackling and overcoming it

This is my response to an article on Slugger O’Toole describing welfare reform as the “horror show“. The article itself was excellent, in the sense that it gave an entirely fair commentary of many of the opinions held on welfare reform (albeit limited to a particular, often unrepresentative sector). However, most of these are based on scaremongering, if not pure fantasy. It is worth noting that this applies to all sides of the “debate”.

A few of the myths, therefore…

The ‘mitigating measures’ agreed for NI had not previously been laid out

In fact, they had often been discussed in the Assembly – both in Committee and plenary (particularly during questions).

The previous Minister Nelson McCausland had clearly stated a preference for covering the cost of not implementing “Bedroom Tax”, and estimating this cost at £17 million. Some thought had also been given to implementing “Split Payments” (i.e. fortnightly Universal Credit payments) at £24 million, although the issue there was that they do not actually put more money in people’s pockets (so there was more wariness). There was also an acceptance that childcare is different in Northern Ireland and thus different arrangements would not necessarily be penalised.

This was all on the record – to those with a keen interest in the subject, it really shouldn’t have been news! It is a matter of concern that some professing deep interest or even expertise in the subject had not been following the debate on it in the Assembly.

Households will lose £6,000 in a ‘welfare disaster’

The article left it unclear, however, why people would lose £6,000. I have checked with those present who confirm that this was not established. We do have to ask why absolutely no one in attendance sought to establish the precise facts around this figure, and merely took it as read. It is indicative that stances on welfare reform had already become entrenched, and there is no willingness to explore it in meaningful detail.

There is a serious issue in all policy areas with debates around welfare which focus on random figures being raised without explanation. Speaking of which…

Welfare Reform will take £750 million out of the NI economy

Most of this was actually already accounted for under Labour’s reforms; we don’t actually know how much welfare will cost under the new arrangements (by definition it is designed to meet a defined need, it is not a budgeted expenditure); and actually that figure did not account for large aspects of the reform likely to work out positively (not least because they make access to benefits more straightforward and limit bureaucracy). Even NICVA now accepts the figure is nowhere near that, and that it cannot be precise about what it is.

What is more, the “research” upon which the figure is based looked solely at the public money spent on welfare and not, for example, at the positive outcomes of people entering or returning to the workplace – outcomes which go well beyond income (now enhanced by the rise in personal allowance meaning you can work part-time on just short of the NI average wage and pay no income tax at all) and include improved social networks, improved self-esteem and thus improved health, improved educational opportunities, perhaps even further job creation.

Therein lies the problem. Anyone with a predetermined political viewpoint can shape statistics to suit their own case. Frankly, academics can be more likely than anyone to do this. Worse still, they sought to turn the debate into one purely about financial allocations rather than about people’s qualify of life and the serious scourge of entire communities trapped in poverty. That is scandalous.

Welfare Reform has the reverse effect from that intended

It would be foolish to dismiss this possibility. However, it does not look likely.

The suggestion is that welfare reform in Warrington led to increased indebtedness, abuse and food bank use.

Yet in fact, levels of indebtedness have grown faster in Northern Ireland than anywhere else in the UK since 2010 (see Julian O’Neill’s recent BBC report for more). Charities have had to set up food banks even in supposedly “prosperous” South Belfast. The evidence is indeed that indebtedness, abuse and food bank use are increasing – but they are increasing right across the UK and, if anything, more so in Northern Ireland where welfare reform has not been implemented (and, in fact, nor have significant public sector spending reductions).

The UK was in fact 16% poorer in 2013/14 than it expected to be in 2007/8. This dip is about twice the rate of average industrialised countries – in fact beaten only by Ireland, which has a particular effect in Northern Ireland given the importance of cross-border trade.

In other words, the negative effects which are being put down to welfare reform (and indeed “austerity”) are actually down to the general negative effects of the Great Recession. This was something which was in the end broadly accepted at the NICVA conference, but not given enough exposure. The fact that the Great Recession proved so calamitous for people at the bottom end is if anything yet more evidence that the previous welfare system wasn’t working – and, in Northern Ireland, still isn’t.

The 1% rise in working-age benefits is particularly harmful

Actually the 1% rise in working-age benefits is particularly harmful – but that is not part of Welfare Reform, but rather a later populist financial decision taken by the Chancellor.

The Chancellor’s justification was that people on benefits should not see their income rise faster than people in work. This is a false parallel, as any real supporter of Welfare Reform would point out. Welfare Reform is about helping people into work precisely because once you are in work your options and flexibility for earning income increase.

Put another way, I am self-employed and if my income decreases (which it most certainly did during the Great Recession) I can use my past professional experience and flexibility to take on more, or different, or varied work to cover at least some of that decrease. Someone on benefits (even if not entirely dependent on them, in fact) is restricted in their potential to do this – particularly pre-reform where in many cases, outrageously, taking work can actually mean financial loss rather than gain to the individual. Thus the parallel between fixed benefits income and flexible work income is false. Proponents of Welfare Reform fully accept this – which is why they (with me among them) spoke out against the 1% cap.

Why introduce something that’s not working?

Welfare Reform is a generational thing. Just like Beveridge in the first place, it is about establishing a system to stand the test of time for at least a generation. Since most of it has not been put in place in Great Britain, and none in Northern Ireland, we simply cannot yet say whether or not it’s working.

What we can say, definitively, is that the old system inherited by the Coalition in 2010 absolutely does not work. It simply does not do what the system is supposed to do – provide a buffer for those who fall on hard times. It does do what it is not supposed to do – trap people and even entire communities in poverty.

NICVA had no right organising a conference

NICVA has every right to organise a conference, but I cannot help but think it organised the wrong conference – and not just because the gathering had no proponents of Welfare Reform present, to the extent that no one was even prepared to question the detail of claims made from the floor.

One of the core problems with what passed for “debate” on tackling poverty (which is ultimately what this is about) is that it focuses on tackling the short-term symptoms rather than the long-term causes.

It is easy to quote a few people likely to face significant difficulty – after all, by quoting the idea of an old woman living on her own in a big house she inherited, rich people were able to mount a campaign which means people in mansions pay a third of the rates comparatively that the rest of us pay (due to the rates cap) – something which appeared reasonable when presented with a short-term symptom, but is actually a long-term political, social and financial outrage!

Many voluntary organisations do exist to help such people, particularly during transitions, but they need to understand that is a case for short-term action and intervention on specific issues, not broad long-term policy making. For recommendations to deal with longer-term causes of poverty, including the role in it of the welfare system, we really need evidence-based think tanks who take a broader view. We are sadly short of these, which is why so much policy “debate” proves unsatisfactory and ends up a competition of interests rather than ideas.

In other words, conferences like this are ultimately all about managing poverty (and those who experience it) rather than tackling and overcoming it. The latter is a long-term objective – and, by necessity, Welfare Reform is a long-term solution.

  • barnshee

    Mummy has cut the apron strings –you are big boys (and girls) now
    As they say “Youse are gettin what youse are gettin” There is no more
    Cut your cloth accordingly –Man up !

  • Morpheus

    “Even NICVA now accepts the figure is nowhere near that, and that it cannot be precise about what it is.”

    The analysis from Professors Fothergill and Beatty estimated that £490m of cuts PER YEAR have already been implemented from Westminster through changes in incapacity benefit, tax credits, housing benefit. They estimated the cuts from The Welfare Reform Bill, when approved, at an additional £268m PER YEAR and will make further cuts to incapacity benefit, DLA etc. Therefore when the entire programme of proposed Welfare Reform is complete they estimate £758m PER YEAR of cuts when compared against no reform. Or a direct quote from them:

    “In simple terms, without welfare reform there would be an extra £750m on top of the welfare budget.

    http://www.nicva.org/article/welfare-reform-explained

    And none of that takes into consideration the possibility of removing other benefits from under 25s as per the Tory proposals:

    “David Cameron on Wednesday signalled a major overhaul in benefits for 18- to 24-year-olds when he announced plans to withdraw housing benefit and jobseeker’s allowance from many of the 1 million youngsters currently not in work, education or training.”

    tinyurl.com/npolavz

    As for ‘cannot be precise’ then I would appreciate it if you could show me figures that are. These are estimates but rather than rubbishing the Professor’s analysis as myth surely the figures are as good a place to start as any when assessing the impact on the people and economy of Northern Ireland.

  • Morpheus

    “The evidence is indeed that indebtedness, abuse and food bank use are increasing – but they are increasing right across the UK and, if anything, more so in Northern Ireland where welfare reform has not been implemented (and, in fact, nor have significant public sector spending reductions).”

    But you said in your paragraph entitled Welfare Reform will take £750 million out of the NI economy: “Most of this was actually already accounted for under Labour’s reforms.”

    Which is it, most of the £750m was taken out of the Northern Ireland economy under Labour’s reforms or ‘welfare reform has not been implemented here?” It can’t be both.

    I think you mean that the Welfare Reform Bill has not been implemented here and if so you’d be right. The rest of the cuts – by your own admission – have already happened so maybe this is why “indebtedness, abuse and food bank use are increasing…more so in Northern Ireland”

  • Morpheus

    NICVA had no right organising a conference”

    I think you misunderstood what the conference was for. The purpose was to look at the reality of welfare reform in England and Scotland, highlight learning for Northern Ireland and discuss how the Northern Ireland Executive can secure the best deal possible for people here. It was not a debate on tackling poverty.

  • Ian James Parsley

    That is true, and we should have planned for it.

    However, it is still an argument about financial allocations, rather than about political decisions and social interventions which can affect quality of life.

    Not just in Northern Ireland we have to start asking not just how much is spent, but how wisely it is spent. Too often, we just assume doing things the way they’ve always been done is acceptable and it’s just a matter of “more resources”. What about *different* resources, or the same resources used differently?

  • Ian James Parsley

    We cannot be sure because we simply don’t know, for example, how PIP assessments will go.

    We can estimate. DSD’s estimates are wildly different from the Sheffield Hallam researchers’. I’d say it’s best to go with the practitioners, not the Ivory tower.

  • Morpheus

    The DSD’s estimates for the impact of The Welfare Reform Bill are wildly different from Sheffield Hallam’s researchers’ but when we are trying to gauge the overall impact on the people and economy of Northern Ireland the cuts implemented from Westminster, regardless of whether or not they were implemented by Labour, must also be taken into consideration. That is what the NICVA commissioned report has done ie.
    Welfare Reform = Cuts implemented from Westminster (£490m p.a.) + Welfare Reform Bill (£268m p.a.)

    By focussing on The Welfare Reform Bill in isolation it takes away from the cuts already implemented from Westminster and as a result, the overall impact.

  • Surveyor

    A breakdown of Welfare spending was published last week and it showed
    that the State Pension was by far the biggest drain on the Welfare
    budget. The Tory politicians would have you believe a nefarious bunch of
    ne’er do wells who never work are solely responsible for the tax
    deducted from workers wages. They’re always a handy scapegoat to deflect
    attention from awkward questions that may arise or whenever the big
    stick is taken out by the government to show how tough they are on the
    “scroungers”.

    As for relieving poverty a good start would be if
    companies paid people a living wage instead of relying on tax credits to
    top up their employee’s wages. In effect tax payers are subsidising
    businesses that rake in profits but pay their workers inadequate wages.

  • Surveyor

    Believe it or not barnshee Northern Ireland does pay tax to the British Exchequer, heck you could even argue the unemployed do as well in the form of VAT whenever they buy something.

  • SeaanUiNeill

    Yes, but it is not only the tax citizens pay that is a consideration here. The UK do not collect a big pot of tax and then simply dole it out to the needy. They develop plans of public spending, look at tax income, look at debt repayments to highly influential funding sources, and assess what they must borrow to meet the enormous shortfalls between spending requirements and income. It is a lot more complex than that, but that is the idiots guide.

    For our lifetimes the UK, and every other country, have been run on massive, unsustainable public debt. The tax the unemployed “pay” in the UK is generated from public debt that has been as recycled almost as much as London water.

    As Grandma in “Heimat” says about the Nazi prosperity of the 1930s that made Adolf so popular, “All on tick.”

  • Ian James Parsley

    That’s pretty much the point of the article.

    It makes no sense to discuss welfare reform in isolation.

    You have to begin by discussing what you need to do to tackle poverty. (To do that, first of all you need to define your terms, of course).

    When you actually do begin by assessing what you need to do to tackle poverty, you soon find you come up with early years interventions in education, prioritised programmes to tackle debt and addiction, and something not that different from welfare reform…

  • Old Mortality

    I think we can safely assume the unemployed (and unemployable) are receiving more in benefit than they’re paying in VAT.

  • Old Mortality

    Seean
    Unless you can clarify the following, it certainly is ‘the idiot’s guide’.
    ‘For our lifetimes the UK, and every other country, have been run on massive, unsustainable public debt. The tax the unemployed “pay” in the UK is generated from public debt that has been as recycled almost as much as London water.’

  • Morpheus

    With respect, if that is the point of your article then I suggest a rewording in places because it comes across as an attempt to discredit the only organisation who has bothered to do any sort of substantial analysis into the whole issue of welfare reform and the potential impact on the people of Northern Ireland.

    To this day it makes my blood boil to think that the First Minister had the audacity to say that we should just go ahead and cut with no idea of the impact on the people he was elected to represent. The idea that the plan for Northern Ireland PLC is nothing more than ‘ack sure we’ll cut and see what happens’ is beyond the pale (or maybe it is typical of what we should expect). Simon Hamilton – hands down the best MLA in my opinion – should be able to reassure the NI public that the NICVA analysis is incorrect, provide his estimates, tell us the potential impact of the cuts and what we are doing to mitigate the loss. At a minimum.

    What is the point of The Welfare Reform Bill anyway? It doesn’t matter what our elected officials say or do, it will be implemented anyway otherwise we get fines – substantial fines. When cutting the £490m per year from Westminster why didn’t they go the whole hog and implement the other £268m worth of cuts as well? Why do they need our permission for the last bit? Could it be that the last bit – the ‘enabling’ legislation – allows the Government to implement whatever cuts they want in the future, for example the cuts to benefits for U25s.

    I totally agree that we need a root and branch analysis into the causes of poverty and come up with feasible solutions so we as a society can move forward together. All I see now is the government reaching into the pockets of those who can least afford it instead of closing the loopholes which allow big business to avoid paying approximately £70b a year in taxes:

    http://www.newstatesman.com/blogs/the-staggers/2011/11/tax-avoidance-justice-network

    If both were done in conjunction then we could try to argue that we are sharing the pain but as you say food bank use is going through the roof – working families with children being the hardest hit by these welfare reform – all the while there were over 44,000 extra millionaires made in the UK in 2014 alone. The rich and are going one way and the poor are going the other – that is not a fair and equitable society and will lead to disastrous consequences further down the line.

  • SeaanUiNeill

    Good grief, Old Mortality, you realise (yes, you do) that a real answer would take about 120,000 words with graphs and an index, but here goes, “idiots guide mark II”!!!

    Right,

    1. The UK runs on massive deficit.

    2. To meet this gap between income and outgoings they take out loans

    3.They need to pay the loans back with compounding interest to big powerful concerns.

    4. Tax raised does not even begin to meet this

    5. They take out more loans from the big boys.

    6. They need to meet public commitments such as social welfare and the NHS (both good, necessary things) bribe an electorate with goodies

    7. They take out even more loans to do this.

    8. They pay welfare from these loans (you might argue some percentage is tax, but hey, the bigger portion will always be loans nowadays.

    9. Those on welfare pay VAT, etc.

    10. The money they are paying is broadly traceable back to the loans, ergo, to say its simply tax is a bit “high”. It’s starting even here with money dropped in from loans, taxed as income from those employed directly and indirectly by the state, and recycled within the system of massive public debt.

    This is where I’m coming from, and of course its a highly simplified outline. You know and I know that to show the relationships properly for, say, a PhD, would require references and such like, also a great deal of careful unpacking, and Slugger would be overburdened with this if I posted it as an answer six months after the posting I’m replying to.

    But I hope this outline unpacks a bit what was a point answering Surveyors ” heck you could even argue the unemployed do as well in the form of VAT whenever they buy something” as a starting point.

  • Ian James Parsley

    It’s plain nonsense to suggest it is the “only” such organisation.

    Its figures have been thoroughly discredited from the outset, to the extent NICVA itself had to distance itself.

  • Morpheus

    Again, no they haven’t

    http://www.nicva.org/article/welfare-reform-explained

    What analysis are you using?

  • Ian James Parsley

    I think it is worth putting two things in context here.

    1. NICVA has failed to provide a balanced debate on the subject by: a) quoting a figure of £750m which was utter garbage; b) attempting to close down opposing views (its Chair, Bob Stronge, once told me in the public domain that I should not write a blog expressing any right-wing views); and c) running an event where yet again statements were made and figures quoted without challenge. It has its own reasons for taking the positions it has, but it has established itself as far from an objective observer. It has now accepted a) was garbage; we await the apology for b); and I am happy to help organise a proper event on welfare reform with it if it so wishes. By the way, the very term “benefits cut” is inaccurate and slanted. We are discussing “welfare reform”…

    2. … which just shows too much of this decade concerns allocations of money. Hardly any of it concerns whether the taxpayer gets value for that money; even less of it concerns *doing things differently*.

    Most commenters this far have quite rightly raised the issue that there is less money than there was. We can run events sticking our heads in the sand pretending that’s not true and that just maintaining the status quo will some day magically reduce inequality when in fact for decades it has increased it; or we can reform that system into one which gets real value for money spent and focuses on targeted interventions to tackle poverty rather than random spending to manage it. That’s the choice – and that should be the debate.

  • Morpheus

    NICVA have failed to provide a balanced debate you say? Where’s yours? Where is your analysis which proves that their analysis is incorrect? Surely to be in a position to say that their figure is…what’s the word….”garbage” you must be in a position to tell us the real figure after your own analysis. I’ll be right here on the edge of my seat.

    As highlighted several times on this thread now NICVA have not accepted that the analysis of Professors Fothergill and Beatty is….what’s the word…”garbage”

    http://www.nicva.org/article/welfare-reform-explained

    What do you think they should apologise for exactly?

    Maybe we should have had these’debates’you are talking about a few years ago BEFORE deciding where to cut eh?

    Tell the working families with children – the group who will be hit hardest by these reforms – that when they have less money coming in that it’s not a cut, it’s reform. You think they’ll agree with you?

    Cutting expenditure to get the deficit down to acceptable levels is fine as long as we’re all taking the hit – evidently not the case- but let’s not even try to pretend that this welfare reform is about addressing poverty

  • barnshee

    “Northern Ireland does pay tax to the British ”

    This has been “bate to death” elsewhere on slugger if you care to hit the archives- the problem being– it fails to pay enough to fund its expenditure

  • Old Mortality

    Seean

    1. Yes, at present although it was in surplus as recently as a decade ago.

    2.Yes, but strictly speaking they issue bonds rather than ‘take out loans’.

    3. Yes, not to do so would result in default.

    The deficit is mainly financed by bonds with maturities of up to 30 years. They carry a fixed interest payment which also must be met to avoid default. It is not rolled-up and ‘compounded’ as you describe it.

    The ‘big powerful concerns’ are pension funds and life assurance companies which hold the bonds in order to provide a secure income stream in the future.

    4. No. Tax revenue is more than adequate to meet interest payments.

    5. No, for the reason above.

    6. They don’t need to make them. They do so for political reasons. Few politicians have the courage to tell the electorate that the NHS cannot continue to grow at the present rate indefinitely.

    7.Yes. But only to the extent that tax revenue is insufficient.

    8. Complete nonsense. In this financial year, out of current expenditure of nearly £600bn, approximately £80bn has to be borrowed. That’s about 13%.

    9. Yes, unless they spend their money only on zero-rated items like food and children’s clothing.

    10. This is completely incomprehensible.

  • Brian Walker

    Ian,

    It would be wonderful would it not, if someone would set out a
    budget analysis including welfare without undue spin. The Sheffield Hallam analysis Hitting the Poorest Places Hardest was received with respect in GB but received controversially re NI ( the FT incidentally in a special supplement on the study left NI out entirely).
    Why the disparity in accounting additionally what was already included? The NICVA alone shouldn’t bear the brunt of criticism over interpretation.This is something that government should have pounced on to correct or reinterpret.
    Where stands Welfare re Barnett and the block grant, being legally devolved only in NI’s case but managed by parity and therefore
    subject to a different type of negotiation?

    Who can best clarify? The ERINI was scrapped in 2011 after only seven years and seemed in any case academically hidebound. Derek Birrell or another numerate academic? The IFS? IPPR North? The apparently catatonic civil servants who (by Whitehall custom at any rate ) may correct political abuses of state information?
    The Office of Budgetary Responsibility?

    Trouble is, there is no referee that extends to devolved government standards . This is a black hole that needs to be filled in the current UK wide ferment. Meanwhile Northern Ireland remains vulnerable to incompetence
    which extends well beyond sectarian motives.

  • Surveyor

    Maybe but the unemployed tend to spend all their money in the local economy instead of stockpiling it like the super rich do.

  • Ian James Parsley

    Very well put as ever, Brian, and I entirely take your point that NICVA does not bear full responsibility.

    I think I have had reason to discuss (with dismay) the abolition of ERINI more in the past month than the entire period since its abolition before that. Not that even it was perfect; but it was at least knowledgeable and impartial.

    We do desperately need an independent institute which has the ability to assess and explain.

  • Ian James Parsley

    1. No, it wasn’t quite in surplus (including all public expenditure including debt repayments). It hasn’t been in surplus since the 1960s. The UK’s *balance of trade* was arguably in surplus in 1999/2000, for just one year, but has been an average of 2.2% in deficit for the last 40 years. There’s no chance for surplus for any extended time while the balance of payments is negative.

    That said, I’m not entirely sure where the two of you disagree. Politicians who try to tell the truth about what’s viable don’t get elected.

  • Old Mortality

    Surveyor
    To follow the logic of your argument, welfare payments should be increased on the grounds that it will be spent in the local economy so boosting the fortunes of retailers. More people then decide they’re better off not in work so unemployment (or more likely ‘inactivity’) soars but were all better off thanks to the spending habits of the better off poor. And they’ll never spend a penny outside NI, never buy giant TVs manufactured in the Far East, or eat Chinese takeaways.

  • SeaanUiNeill

    Oh dear, Old Mortality, I did mention it was the simple version, for those possibly confused by government bonds, etc!

    And (8) is only “Complete nonsense ” if you are a mouse and live but a single year! These “13%” are year after year after year after year and accordingly need to be taken into account in their entirety, ie, “compound.” Its called the national debt, you may have heard about it somewhere. It was £14,480,385,000,000 last time I checked, or about £40,000 for each taxpayer. Unquestionably we are living well beyond our means, along with the rest of the world.

  • Brian Walker

    I suggest wrangling
    over NICVA is largely beside the point. I can have an informed debate about finance
    and budget in Scotland, Wales and UK as a whole – (and even the EU- see Osborne
    spin row today) – but less so for England (no devo) and NI (with devo). The
    issue is far broader and goes to the heart of the Executive system which lacks the
    sort of central authority that proper collective responsibility provides. Until
    or unless this evolves , we will have ineffective regional government – a situation
    of divide, and fail to rule.

  • Surveyor

    Well according to the European Committee of Social Rights the UK was in breach of the European Social Charter because Job Seeker’s Allowance, Incapacity Benefits and the State Pension are all “manifestly inadequate”. Job Seeker’s allowance is £67 a week, Incapacity Benefit is £71 a week and the State Pension is £102 a week. The committee said the payments are below 40 per cent of the median income of European states.

    They also said that the conclusions were legally binding in the same way that judgements relating to the European Convention on Human Rights had to be applied by member states.

  • Old Mortality

    Seean

    If 87% of current spending (not capital spending which should be financed by borrowing in any case) is covered by taxation, how can you write this: “They pay welfare from these loans (you might argue some percentage is tax, but hey, the bigger portion will always be loans nowadays.”

    I think the problem is that you don’t properly understand what ‘compounding’ means. If the state repeatedly fails to meet current expenditure from taxation, the deficit increases and the amount of interest payments rise accordingly but this is not compounding which would occur if the government failed to meet interest payments and the bond holders agreed to add the interest to the outstanding principal. Or to put it more simply, you agree to borrow £1,000 for a year at 5%. After a year you can’t pay the interest so the lender adds it to the loan which increases to £1,050 and the interest required a year later will be £52.50 instead of £50.
    I think you’re a bit out of your depth here but well done for not running away from the subject like most
    commentators from your political milieu when anything economic comes up.

  • Old Mortality

    Surveyor
    I didn’t know that but that’s probably because I couldn’t care less what some Euro-hack thinks should be the correct level of benefit payments. Nor does our government, thankfully.
    But you haven’t dealt with the question of whether it would be good for the NI economy to raise benefit payments and whether there is a point where it might be become bad for the economy to raise them any further.

  • Comrade Stalin

    Well, let’s talk about this British taxpayer thing.

    Like the rest of the UK, Northern Ireland taxpayers, especially rich ones, have benefited from cuts to income tax, corporation tax cuts, and other incentives introduced by the coalition since 2010. Quite a few senior civil servants and public sector managers in Northern Ireland will have benefited from the abolition of the 50% rate (Chief executives and other senior board members of organizations such as Translink and NI Water are typically on salaries upwards of £250,000 plus generous pension provisions). The only significant tax increase that has come from London is VAT. The one tax that hits poorer people disproportionately hard.

    In fact, to introduce a personal dimension to this, some share options of mine recently became exercisable resulting in a very pleasant windful roughly equivalent to half of my year’s gross salary. Unlike my salary, I won’t have to pay tax at 40% on this windfall, but I will have to pay capital gains tax. Thanks to the friendly Finance Act 2008 (Labour) and corporation tax cuts (Conservative/coalition) I will pay significantly less than I would have earlier in the 2000s. The Entrepreneur Relief provisions mean that I will pay something like 10% tax on roughly half of the windfall. In other words, basically a modest sliver.

    Meanwhile, I’m benefiting from Coalition policies to re-inflate the property market, causing an increase in the value of my home, reducing my loan-to-value ratio allowing me to benefit from a much better rate of interest at the bank without me having to hand over a single extra penny, all the while making it more difficult for younger and poorer people to get on the property ladder.

    Back here at home, Sinn Féin and the DUP willingly oblige by continuing to subsidize my rates and water bills, and implementing unnecessarily complex and, sometimes, duplicated IT systems that keep me and my IT contractor pals in work earning large splodges of cash. My friends from university who work in the civil service are having their generous pension provisions, sick absence rules and other perks not available to those on low incomes protected. NHS waiting lists may get longer, but to many of us that won’t matter as employers are increasingly providing tax-avoiding private health insurance schemes, allowing us to book in for treatment at fancy joints like Three Five Two, while the worse off, who have decades of National Insurance contributions to their names, queue up sometimes for years.

    This is wrong. If there was a protest calling for people with unnecessary surplus income to pay more tax, I’d attend it. I want to pay for water charges. I should be paying increased rates. I should be paying road tolls. This is because a stable society needs good public services which need to be properly funded.

    So if you’re going to trot out the line that the UK government needs to support UK taxpayers in Northern Ireland, please remember the above. The UK government has been very good to quite a few of us. The Northern Ireland government is afraid to claim a slice of that back. It is the local administration that is actively subsidizing the middle class with whom you have a bone to pick.

  • Zeno3

    ” I want to pay for water charges. I should be paying increased rates. I should be paying road tolls. ”

    Really, I mean it’s not as if the government will be guaranteed to spend the money for the benefit of society. Your donations will probably go where they have always gone, bailing out bankers, giving themselves even bigger pensions and and expenses and tax cuts for the wealthy. They will probably just waste the rest.

  • Comrade Stalin

    An immature and ignorant contribution on your part.

  • Zeno3

    Cheers Comrade I hope it didn’t take you too long to think up that response. There are a lot more sensible things to do with your spare money than give it away to the government. Use your imagination. Give it to a food bank or a homeless person or if you’re not that way inclined, just flush it down the toilet.

  • SeaanUiNeill

    Thank you for the detailed clarification. Although the government will always calculate its finances on a cash basis of actual outgoings and income as you have done here, I was attempting to think of it on a broad basis of accrual accounting, where the national debt is not the discrete amount of a given year, but the acquired indebtedness we are all living in the shadow of. This is how any serious business must consider its long term viability, and I honestly cannot see how it is different for something simply bigger, such as a national entity.

    And yes, my attempt to draw a very simple outline for those uninvolved in finance was pretty crude. But I stand over the general point I was attempting to make that the finance raised outside of taxation to cover the outgoings of any government in any year add to a great mountain of indebtedness.

  • Comrade Stalin

    It took me nearly as long as it must have done to talk about the usual clichés about bank bailouts and starting wars (both of which, cumulatively, are in cash terms a fraction of a single year’s UK government expenditure).

    The point is that people are complaining about underinvestment in public services but nobody is standing up to point out that this is a natural and necessary consequence of allowing taxpayers, especially the better-off, to keep more of their money in the hope that it will trickle down when they spend it on hiring poor people to clean their bathroom floors with toothbrushes.

  • barnshee

    to plagiarise Joe Stalin “how many divisions dos the ECHR have”

  • Ian James Parsley

    The UK Government spends 40% merely servicing debt interest than its does on Defence in its entirety.

    So Comrade‘s right. Let’s get the scale of these things right and recognise that, frankly, rich people need to make a contribution and a lot more of us are rich than care to admit it!

  • Ian James Parsley

    I don’t think anyone is in any doubt about the scale of welfare taken up by pensions. But the NI Assembly put through a Pensions Bill to tackle at least some of that burden. Now it needs to put through a Welfare Bill to do likewise.

    A general “Living Wage” would be a disaster, causing inflation as businesses passed on the cost and other workers demanded higher wages; as well as even more youth unemployment as they simply automate roles which don’t really need a human (been to a supermarket or corner shop checkout recently?!)

    Indeed, only today I was speaking a salon owner who pays minimum wage plus a share of the custom each worker actually retains. There is no way he could afford to risk this from living wage up. At current levels, he can afford to give people a chance; raise it, and he won’t.

    Too often we hear of these “magic bullets” without thinking through the real consequences.

    If we want to talk about “Low Wages and Youth Unemployment”, let’s do so. But there is no point in narrowing it down to one idea whose unforeseen consequences would make matters worse.

    The fundamental problem isn’t the wage level but the skills level. If we don’t educate the bulk of the people so they have skills that make them worth at least £8/hour, then there’s the problem!

    That said, I have proposed reducing Corporation Tax only for businesses paying the Living Wage – there’s a thought…

  • Ian James Parsley

    I’m fairly sure there are some responses I’ve missed – apologies.

    1. I am increasingly frustrated, through no fault of commenters here, in talking about welfare reform (or indeed any other issue) based solely on “figures”. Welfare reform isn’t (or, at least, shouldn’t be) about “figures”. It is about quality of life. The current system fails people – it traps them in poverty; it marks them out and isolates them socially; a senior health professional this week was saying how the current system actually reinforces mental health problems because too many people are left unmotivated. One life spent trapped in a benefits dependency cycle is one life too many – yet that is what the current system does. That is why it must be changed – now! It’s nothing to do with “figures”, it is to do with quality of life and self-esteem.

    2. The £750 million figure was total rubbish for a whole heap of reasons. Firstly, it was cited without context. Secondly, it mostly applies to reforms already in place. Thirdly, it misses the core part of the welfare reform programme, which is likely to benefit NI. Fourthly and most notably, the very term “taking £750 million out of the NI economy” is totally and disgracefully misleading – it is the taxpayer who puts that £750 million there (not that it is £750 million), and the taxpayer deserves better than to put it into a system which fundamentally does not work and actually hinders people from living fruitful lives.

    For all that, the £250-£300 million which will have to be taken out of NI current Departmental Expenditure annually if we do not meet the requirements of “parity” will also have an effect on quality of life – a negative effect. Most of it will be felt by the voluntary sector, whose programmes are the easiest to cut. It is increasingly noted that representatives of the voluntary sector should have thought of that before banding around alarmist and illegitimate figures and scaring us from the proper “quality of life” debate we should have been having.

  • Morpheus

    What is frustrating is self-professed experts writing off the research from Professors Fothergill and Beatty with absolutely nothing – repeat nothing – to back up their disrespectful assertions that the research is ‘rubbish’, ‘myth’ and ‘garbage’. As previously requested, if you have better research by all means produce it.

    The context in the report couldn’t be clearer – the Professors estimated that £490m of cuts PER YEAR have already been implemented from Westminster through changes in incapacity benefit, tax credits, housing benefit. They estimated the cuts from The Welfare Reform Bill, when approved, at an additional £268m PER YEAR and will make further cuts to incapacity benefit, DLA etc. Therefore when the entire programme of proposed Welfare Reform is complete they estimate £758m PER YEAR of cuts when compared against no reform.

    If you have issue with the estimate of £490m per year of cuts implemented from Westminster then what are your issues based on and what are the correct figures? If you have issue with the estimates of £268m per year of cuts as a result of The Welfare Reform Bill then what are your issues based on and what are the correct figures? I honestly am all ears, any reduction on the Professors’ estimates will be great news.

    Welfare Reform is absolutely about the figures. The working families with children will have less money coming in for food, clothes and other essentials so their “quality of life” will be reduced. It’s as simple as that. Telling them that it’s about reforming the system will have little comfort. It’s no coincidence that Westminster have introduced massive cuts at the same time food bank usage has gone through the roof.

    If Welfare Reform is about getting people back go work then yet again I ask, what work? Over 55k unemployed with approximately 3k jobs on offer – do the math for goodness sake. There are obviously those who take advantage of the system and see it as a lifestyle choice but that is because the system is not robust enough to prevent it. We should invest in making the system more robust so only those who need help get help.

    Welfare Reform is not about reducing poverty or helping the most vulnerable in society, it’s about making sure the deficit is reduced by taking away from those who can least afford it while those who can afford it are allowed to avoid approximately £100b a year in taxes.

  • Ian James Parsley

    Morpheus

    You submitted a long response about which I was notified on email but which I can no longer find – my apologies. I think my Slugger email works, perhaps, and I could answer there?

    Brian

    Sorry I’m just seeing an additional post of yours while looking for the above.

    I think the crux of John McCallister’s proposals is not actually “Opposition”, but his attempt to enforce “collective Cabinet responsibility” – the former derives from the latter, not the other way around.

    With “collective responsibility” you simply couldn’t have this nonsense of parties which oppose the Budget remaining in the Executive to oversee its allocation. Instead, they would be forced out of the Executive and on to Opposition benches where they would have to explain themselves – what exactly would they do differently?

    That would encourage, I think, the sort of debate you’re after.

    It may also put other debates, such as welfare reform and corporation tax, in context too – rather than just being lazily dismissed or supported with no real evidence even considered either way (as, at least, seems to be the case currently).