Truth or Consequences: the potential impact of un-devolving welfare

One of the more idiosyncratic aspects of life in Northern Ireland is that the sort of constitutional crisis that would leave most countries in a spate of ear-to-the-radio, markets-tumbling panic, barely passes as newsworthy. The threat of dissolution of the Assembly and the end of the power-sharing Executive is regarded with the same complete lack of interest that, say, Louis Walsh threatening to leave the X Factor again might be.

Indeed, such is the widely perceived ineptitude of the devolved institutions that many people are beginning to reminisce fondly about direct rule, a halcyon era when the hospitals were only moderately worse than their equivalents in Great Britain, and the political class tended to spend more time in London and Brussels, where they could more easily be ignored. Say what you like about Peter Mandelson, but at least he made the trains run on time.

Due to a petition of concern signed by Sinn Féin, the SDLP, and the Green Party, the contentious welfare reform bill has been blocked from passing. Whether this will lead to the collapse of the current Executive and Assembly remains to be seen, but at the very least it is looking as though responsibility for welfare could be passed back to the Government in Westminster.

Welfare reform has been making the headlines in Britain as well recently, albeit for different reasons. The Conservatives had promised to cut £12bn from the welfare budget, possibly expecting that this pledge would have been watered down in the event of another Conservative-Lib Dem coalition. The Government are now looking to implement these cuts in full, with Work and Pensions secretary Iain Duncan Smith reportedly fighting a rearguard action to protect key schemes.

The Conservatives did not, for the most part, specify where the axe was to fall on welfare spending in their manifesto, although they did rule out any change to pensions. They did announce some areas where there would be cuts. This article from the Telegraph does outline some of these cuts, which including freezing working age benefits for two years, lowering the benefit cap from £26,000 to £23,000, and ending housing benefit for 18-21 year olds on Job Seeker’s Allowance.

However the cuts that they specified only sum to £1.5bn, which means that there is a significant shortfall. However, then Chief Secretary to the Treasury Danny Alexander did leak some of the proposals before the election. I have outlined these below, together with the impact may be on Northern Ireland if, as looks possible, welfare once again becomes the responsibility of the central UK government. These should all, of course, be considered as rough, “back of the envelope” estimates.

Limiting Child Benefit to two children only

One proposal under consideration is to limit Child Benefit to two children only. The financial impact of this change to Northern Ireland would, at current CB rates, be £44.5m. I have broken this down by assembly area below.

Child Benefit

Eliminating Housing Benefit for the Under 25s

Another potential cut being considered is the complete removal of housing benefit for the under 25s. I couldn’t find exact figures for under 25s claiming housing benefit, or the total child benefit paid to under 25s. However, in Great Britain the under 25s comprise roughly a quarter of the numbers under 35 claiming the benefit, so I used this to estimate the number of under 25s claiming the benefit in Northern Ireland, and multiplied this by the average Housing Benefit paid to under 25s in GB to derive a guess for what the number might be in Northern Ireland. As a rough guess, I reckon that this cut could be worth around £55.7m.

Housing Benefit

Abolition of Carer’s Allowance

One of the potential items on the agenda could be the abolition of Carer’s Allowance in its entirety. Were this change to be enacted, at current rates the financial impact on Northern Ireland would be around £209m.

Carers Allowance

Abolition of contributory JSA and PIP

Another potential reform of the welfare system could be the abolition of contributory Job Seeker’s Allowance and Personal Independence Payments, meaning all benefits would be means tested. Across the UK, implementing this change would reduce the combined bill for these benefits by £1.3bn. Very roughly, the impact of bringing in these changes in Northern Ireland would be to reduce JSA by around 10%, over and above the already planned changes in JSA (tougher sanctions), and the fact that the new PIP regime will be tougher than the existing DLA regime. I have reused the figures that I worked out when I did a previous post on welfare reform in February.

PIPs:

PIPs

JSA:

JSA

And so on and so forth. Whilst these estimates of the impact of extending these welfare cuts are rough, back-of-the-envelope approximations of cuts that have not even been agreed yet, there are two virtual certainties as to what the outcome will be if the cuts are implemented in line with the Government’s policy to reduce overall spending by £12bn. Firstly, the impact of the cuts in Northern Ireland will be in the order of hundreds of millions of pounds. Secondly, the cuts will impact the poorest areas of Northern Ireland the most. The cumulative effect, by Assembly Area, of the various measures discussed here can be found in the table below.

All Benefits

Of course, if these cuts are implemented, then the SDLP, Sinn Féin and the Green Party will be able to argue that they argued against these cuts, and will be able to denounce the hated “Tory cuts” to their hearts’ content. Whether they may have served their constituents better by accepting an element of compromise, taking the deal on the table and being in a position to mitigate against the worst of the cuts, is left as an exercise to the voter.

, ,

  • Pete

    I don’t understand how the position of Sinn Fein, the SDLP, and the Greens is in any way defensible. Westminster aren’t going to hand us more money.

    But as long as they trot out the line “protecting the most vulnerable in society” (whilst we get hit with fines for lack of implementation), I’m sure some of their supporters will continue to lap it up…

  • Robin Keogh

    I am sure their supporters will agree with their stance. Why should they fall in line with the inferiority complex unionism has when it comes to dealing with London. The fines fiasco is a joke, an unmandated foreign governemnt with unionist consent stealing money from an underdeveloped deprived region that is supposed to resemble Finchleybut is treated like a 19th century colony.

  • Mister_Joe

    It seems to me at a distance that most people couldn’t care less whether or not the Assembly continues to exist. Is that a good thing or a bad thing?

  • notimetoshine

    Ideological stand points are all well and good but be realistic.

    NI parties have very little influence at Westminster, NI is not a central priority in London any more, we have nothing to bargain with.

    All we can do is try and mitigate as best we can with the resources we have.

    There is no alternative at present. I have yet to see a firm alternative policy from SF or the SDLP that works within their limited range and influence they hold with the national purse keepers.

  • ronanpeter

    Ideological standpoints are essential in this debate. The cuts are coming from a purely ideological position, crisis or disaster capitalism: http://www.theguardian.com/commentisfree/2006/aug/30/comment.hurricanekatrina

    The Conservatives have engaged in just this sort of activity since taking Westminster from Labour. Its a well worn path where high debt levels have been used as justification for implementing neo-liberal economic reforms http://laspi.net/codigo_nogoya/Publicaciones%20Web/The%20nineties%20-%20Latin%20America%20and%20the%20Washington%20Consensus.pdf

  • chrisjones2

    Its called living within your means and welfare recipients in the North will still be better off than those in Ireland wont they Robin

  • chrisjones2

    “an unmandated foreign government ”

    It was elected and you seem to ignore the GFA and referendum.You live in Ireland so its foreign to you. This is part of the UK

  • Gopher

    Most people want the Assembly to fall, its cost is out of whack with results and the voting public cant get rid of them through the ballot box. The Stalemate wrought on social and economic evolution, its inability to deal with errant ministers by the perversion of the petition of concern means only collapse can reform it. The public understand this now. The Westminister election put into sharp focus how useless the assembly is.

  • chrisjones2

    “an underdeveloped deprived region that is supposed to resemble Finchley but is treated like a 19th century colony”

    not so much underdeveloped as hollowed out by 30 years of bombing by those your Party represents. Then there was the kidnap and murder of industrialists by Republicans ….great way to encourage inward investment wasn’t it. Now we have an ideologically driven Education Department that damages the life chances of our best kids in the name of equality – and in a way that hits hardest at those from its own heartland communities

    As for Finchley you argument couldn’t be more wrong . Its precisely because we are treated bthe same way that teh Assembly has to reform welfare.

    I hope that in your degree coursework you are able to be a bit more analytic in your thinking but hey its politics isnt it so ideological purity probably counts for a lot more

  • chrisjones2

    The guardian link you post is 10 years old and is about the role of US firms in proving support after disasters . I assume you even object to them proving drinking water – one of the issues raised in the article. Far better that the Government just sprinkle pixie dust over those affected and hope it will make them better but in any case utterly unconnected to this issue

    The second paper you refer to is on economic development in Latin America in the 1970s. It is dated, and irrelevant to your arguments as its relates to the US foreign relations with Latin American countries.

    It also ignores the impact on those states of left wing revolutionary movements – in their case part funded by Russia – that ruined their economies in the 1980s and early 1990s. Those are the only parallels I see to the situation in NI

  • notimetoshine

    Look in an NI context we are stuck. Ideological reactions to the cuts are all well and good but the reality remains the same. We get out money from Westminster. Our politicians have little influence there. We had a deal that lessened the impact of welfare cuts. Now we don’t. There is no new money. We have no bargaining position. We either do what we can and compromise (ie the welfare plan agreed) or we don’t and get royally screwed.

    So yes approach it from your own political viewpoint but accept the realities and limitations of the scenario. Meet in the middle. I think the welfare agreement reached previously was the best we could do. If there are better alternatives, I haven’t heard them.

  • Reader

    ronanpeter: The cuts are coming…
    I cut off your sentence at the point where, realistically, you could have cut it off too. All this thrashing around is pointless and damaging, local ideologies are powerless – here is the real issue:
    Rain falls, the wind blows, the cuts are coming – how should the Assembly deal with the money that is actually available to it?
    The answer is – set a budget.

  • murdockp

    And no mention of cutting fraud, the elephant in the room in NI. I am sick of the sight of fraudsters n thier free DLA cars living it up. One in five of the population in Belfast. ..come on.

    Bring back direct rule on this matter but get rid of this shower while you are it it.

  • murdockp

    I wonder if Tim cook apples gay chief executive will ever invest in a backward hole run by religious bigots / faniitics from both sides ….not a chance. Most of Northern Irelands problems are all of its own making.

  • Jag

    Stop the Press! SF is now expressing concern at being fined for not implementing external policy.

    “To add insult to injury it now appears that a considerable amount of public monies could be spent on litigation and financial penalties rather than on much needed resources for our hospitals.” say SF in a statement this morning urging the implementation of the external policy.

    They’re not talking about Westminster fining us £2m a week for not implementing welfare cuts/reform, they’re talking about the Republic not adopting EU rules on working hours.

    http://www.sinnfein.ie/contents/35031

  • Jag

    And let’s not be naive, a considerable number of people in Northern Ireland don’t want devolution because it weakens the control/linkage from and with GB, and somehow makes them less British.

  • Jag

    “I am particularly ‘impressed’ by Sinn Fein’s latest ruse that the low local vote for the Conservatives leaves the Government with no mandate”

    I have to agree with you there. Three weeks ago, SF won 273 votes in North Down, compared with 17,689 for Sylvia Hermon. You don’t hear Syl banging on about how SF don’t have any mandate on her patch, do you?

  • T.E.Lawrence

    West and North Belfast looked F****** !

  • the rich get richer

    England should Ask For Independence.

    Its the Only way.

    When a family can’t get on then the Adults should go and get their Own House.

    Its Time for England to” Grow a Pair ” and plead down on their bending knees with a bit of old fashioned Cloth Hat Doffing for The Freedom Of England.

  • ronanpeter

    Fair point. The links are somewhat confusing. I simply wanted to point to ideological explanations of the cuts we are seeing – the links were not supposed comment specifically on NI but rather provide some historical background to the ideology underpinning these cuts (crisis capitalism and neo liberal economics), given that notimetoshine states none exists but that the cuts are instead based on tough, rational, economic, sensible policy making.

    The ideology? The financial crisis was a manifestation of the system itself, our prescribed medicine has been to up the dosage i.e. Neoliberal Economic policy (reduction of the state, privatisation, FDI, less regulation etc.). Further the privatisation of profit, and the socialisation of loss.

    And a point…the Latin American economies were ruined by Russia funding revolutionaries? The history of the Chicago School should tell you that economic policy in that part of the world at that time was heavily influenced by the US/Wall Street. The Pink Tide came in the late 1990s early 2000s when there was large scale reactions to their extreme free market philosophy.

  • ronanpeter

    Ideology is important because by ever being the pragmatist you eventually become complicit in the act. you have to draw a line somewhere surely. David Ford has said vulnerable people cannot be protected from the cuts. Would you be willing to sign off?

  • ronanpeter

    If you fundamentally disagree with the cuts as you believe your vulnerable constituents will be in a worse position, do you simply bow to pressure, sign off then play politics to shift the blame?

  • Dan

    I see their fellow anti-austerity warrior Bumper Graham has escaped censure for his rather questionable demand that all Conservative voters be kicked out of Northern Ireland and over to England.

  • whatif1984true

    It seems churlish to mention it, after so much work to do the above, but is there any way of comparing the above estimates to what would be the figures if the previously agreed Welfare agreement (and its additional monies) was in place?

  • notimetoshine

    If it’s the best or the most realistic option then yes. We were never going to come out of this austerity cycle unscathed. All we can do is mitigate the effects as best we can. What are the other options? Its a negotiation and NI doesn’t have anything to negotiate with.

  • the rich get richer

    Are the politicians protected from the cuts.

    Well off people handing out financial cuts to the worst off in our society ? ! ? !

  • Zeno

    “The fines fiasco is a joke, an unmandated foreign governemnt with unionist consent stealing money”

    Do you mean reducing the amount of money we get from the Block Grant? Stealing their own money back from us?

  • Intriguing. North Down – NI’s wealthiest area suffers the lowest level of cuts & West Belfast suffers the worst. Proof if proof were needed that austerity is nothing more than a gigantic ponzi scheme of robbing the poor to give to the rich.

  • chrisjones2

    then don’t do it but don’t expect to be paid for not taking decisions

  • Sergiogiorgio

    LOUIS WALSH IS LEAVING THE X FACTOR!!!!!

  • Zeno

    Jeez…………… now that is a crisis!!!

  • Zeno

    I can’t imagine many wealthy people are actually on welfare, so it will have no effect on them at all.

  • Zeno

    I don’t want it for a different reason. The Tories are bad, but at least they are not as thick as short planks. Monkeys flipping coins could do a better job than Stormont.

  • Pasty2012

    On the issue of cuts it has to be remembered that if a person buys a house they repay the loan over the course of 25years in order that they still have money to pay for food, clothing, rates and other living expenses. Those people who earn a fair bit more than their mortgage repayments chose to pay extra amounts each month in order to reduce the capital loan and thus their interest payments and get their overall mortgage paid off quicker. Just like this the Labour Party had intended to repay the countries loans over some 12 to 15 years in order that the overall standard of living enjoyed by all did not have to fall so harshly. The Lib Dems had intended to increase the repayment and repay the loan quicker but not that quick that it would have really hurt peoples living standards to the point that many would be having to suffer and scrape around like 18th century Oliver Twists. The Tory’s however are intent on the repayment of the loan over 3-4 years, and just like the mortgage repayment scenario whilst those better off can afford to increase their payments without overly affecting their life style and living standards the people at the bottom do not have that luxury.
    The outcome will be worse in the North due to the lower income levels to start with, except for Unionist politicians and their families who are guaranteed wage increases from their MP and MLA expense increases each year. The ordinary Unionist who voted for the DUP and UUP who are hell bent on delivering the Benefit reductions will of course be glad to know the Union is safe – even though it wasn’t an issue the electorate were really voting for.
    For 90 years the Unionist people have been fed one line at every election in order to vote in right wing conservatives and that has been that should they not vote for the UUP and latterly the DUP then the Union will be under threat and stop them from voting on where is the bread for the table coming from. There will be no shortage of bread in the Robinson, Dodds or Donaldson houses because even in these times of austerity and benefit cuts their pay is going up by more than inflation.
    Unfortunately in order to get the loan repaid so fast the people at the bottom may well be pushed to crime in order to receive custodial sentences to ensure that they will be able to get a meal.

  • whatif1984true

    The previously agreed Welfare agreement had as one of its clauses that claimants who falsify claims are NOT to be prosecuted. Who says crime does not pay.

  • Reader

    … whether they live in West Belfast or North Down.

  • Reader

    ronanpeter: …do you simply bow to pressure, sign off then play politics to shift the blame?
    Their alternatives are (a) set a budget or (b) don’t set a budget and have the decisions taken out of their hands.
    Unless you can describe a plan (c) then it looks like you and SF and SDLP have gone for plan (b), plus, of course “…play politics to shift the blame

  • Korhomme

    Mortgages are limited to 25 years or so in order that we can repay them before our inevitable demise. Governments are almost ‘eternal’, their loans can be paid out over many decades. The loans for the South Sea Bubble, 300 years ago, were only recently paid off. The need for rapid repayment of the deficit today is an illusion, designed to promote the ‘need’ for austerity, but in reality is a politically motivated ‘neo-liberal’ reduction in the size and competencies of the state.

  • ronanpeter

    I have a feeling ‘the plan’ will show itself soon – whether it is on paper or not. As you are at pains to repeat, the cuts are here and will be implemented from London above the heads of the majority of our elected officials and the people they impact.

    If this is the case, ‘the Plan’ will be anti-austerity protests beyond the confines of Stormont. Those politicians who refuse the welfare plan will have no choice but to resign, engage in this protest and see it through. They surely have considered this. Unless they see more bargaining to be done, which seems unlikely.

  • Disdain

    If you want a demonstration of how austerity is a political narrative, look no further – http://www.theguardian.com/business/ng-interactive/2015/apr/29/the-austerity-delusion

  • Reader

    SF are messing up things for North Down too. That’s the way things are, right now.

  • SeaanUiNeill

    There have long been other subtler forms of “outdoor relief” for the needy professional classes who may be obliged to wait for marble top kitchens and that essential fourth holiday a year.

  • Old Mortality

    ‘The need for rapid repayment of the deficit today is an illusion, designed to promote the ‘need’ for austerity, but in reality is a politically motivated ‘neo-liberal’ reduction in the size and competencies of the state.’

    You’re right, Korhomme. The Tories recognise the long-term consequences for them of an ever-expanding state. It would be a recipe for inevitable financial catastrophe if parties could only get elected by promising more public expenditure. So what the Tories are doing is essential for the preservation of an effective democracy.

  • SeaanUiNeill

    On the subject of “monkeys flipping coins”, Zeno, Edward Lutyens visited Simla in 1912 and was appalled at the
    terrible architecture. He exclaimed, “If one was told that it was built by monkeys all one could say was, ‘What wonderful monkeys!’ But they must be shot if they try to do it again.”

    I’ve been waiting for months to repeat that story. I wonder why the “if they try and do it again” seems pertinent in this context…………..

  • Nimn

    And in resigning and joining the anti austerity ranks demand an election on an anti austerity ticket (no orange and green whataboutery). Perhaps that is what SF want. It may deliver a SF First Minister by taking a swathe of votes from the weak SDLP. Unionism on a pro reform ticket would shred their vote.

  • barnshee

    North Down also has the lowest family sizes with bottom position in each cohort (3 4 5- children)? Go figure

  • Gopher

    I’m not so sure, I think people are more pragmatic than you give them credit for. I get the impression both buisness and social crusaders believe direct rule would have them in a happier place. Me I agree until Stormont is reformed its a no brainer its not even a a question of “Britishness” its about effieciency getting the hospitality sector sorted out getting the social legislation and getting the infrastructure we need. Everyone knows Stormont is incapable. John Lewis, City Airport, the road improvement west of the Bann, Windsor, Casement. Its just a catologue of failure. Direct rule all would have been sorted out.

  • Zeno

    Brilliant, now I’m stuck with trying to find an opportunity to tell that story.

  • Deke Thornton
  • eiregain

    Whilst it’s definitely cuts, it’s debatable whether it’s truly reform. I would argue that reform requires improvments to be made. With a contrived topic such as welfare the improvement must be made across the board and change the structure for the better. This seems to be blanket cuts with a hint of reform.

    Let’s reform the banking system the same way see how that pans out.

  • aquifer

    Sinn Fein could not really dump on the thousands of people their advice centres got signed up for extra benefits. And it is quite decent of them not to insist that their brothers in the DUP take the rap for imposing the benefit cuts, or ‘rebalancing of incentives’ if that is your take. Much better to have the English toffs or ‘Brits’ do it. At least in terms of the National(ist) Project. Did the DUP see this coming, or were they having too much fun being rude to their OFMDFM colleagues? Answers on a postcard please while you can still afford a stamp.

  • disqus_JmCoqa6yB8

    SF has been exposed over its grandstanding on welfare reform. They were convinced Labour we’re going to be elected now they are scrapping the barrel whilst their left wing rhetoric is exposed yet again as crude populism.