Despite the mockery that greeted it, Arlene Foster’s “phantom budget” has, in the now familiar phrase of financial crises, “kicked the can down the road,” even as Robinson and McGuinness have been ramping up the rhetoric in the game of chicken. This has bought time. However, it’s now clear that quite a big road block awaits the battered can in the form of the UK emergency budget – the real budget, George Osborne’s – in three weeks’ time and the Whitehall spending review in the autumn.
In an article for The Sunday Times (£), the chancellor and the work and pensions secretary today pledge to tackle the “damaging culture of welfare dependency”, warning it will take “a decade” or more to return the welfare budget to “sanity”.
They say they will outline their plans for “significant” cuts to “working-age benefits” in the budget on July 8 and the Whitehall spending review in the autumn. Treasury analysis reveals that spending on working-age benefits has soared from 8% of public spending in 1980 to 13% today.
..It is a “matter of fairness” that the maximum a family can claim per year is reduced to £23,000.
The details of which benefits will be hit are known to only a handful of people but cuts to housing benefit and tax credits are expected to account for the bulk of the savings.
David Cameron has ruled out cutting pensioners’ benefits and any further raid on child benefit. He is also said to be “queasy” about freezing or taxing disability benefits, one proposal that has been considered by the work and pensions department.
In their article, Osborne and Duncan Smith make repeated references to “protecting the vulnerable”.
Targeted savings that have been discussed in Whitehall and are expected to be introduced include banning the under-25s from claiming housing benefit and restricting child tax credits to a couple’s first two children.
The devil will be in the detail. The “mitigation” gap in the Stormont House Agreement welfare deal is small compared with the substantive cuts in the ongoing budget process. Today in the Sunday Times George Osborne and Iain Duncan Smith strongly defend the welfare cuts, arguing that the last parliament’s quite limited austerity programme did not deepen recession. Nor they claim, will the next tranche.
Despite the predictions of the doom-mongers who opposed us, we saw more than 1,000 new jobs taken up for every day of the last parliament. Just last week the latest figures showed that another 400,000 people have this year gained the security of a job and workers have enjoyed the biggest rise in real pay packets since before the recession.
Having cut corporation tax and taken other steps to make sure Britain is once again open for business, it is good to see companies’ successes being passed through to workers in terms of these wage increases — something that will help us to reduce welfare spending further and that we want to see continue.
The trouble is too little of this applies to Northern Ireland. Rebalancing the economy is for the long haul with without the devolution of corporation tax. The UU Economic Policy Centre’s Spring Outlook forecasts a steeper decline in the rate of growth for NI than the UK average. Spending per head is still highest in the UK at almost 11k per person although reduced by about £500 per head over the past four years. Clearly, the £2 billion “cushion “of the Stormont House Agreement is badly needed, even with £25 million or so short of “mitigation.” It would as well not to exaggerate the scale of the cuts as to minimise them. Northern Ireland will still be comparatively well served.
It’s not that Sinn Fein have no kind of point at all. The trouble lies with their political judgment. The consequence of the peace process is that they lack the leverage of old. Welcome to democracy, guys. Will Sinn Fein’s Syriza – like strategy impress the voters, north or south? When the think about it hard, they must have strong doubts. Perhaps the louder rhetoric is a smokescreen for preparing to back down. While the two “crises” do not begin to compare, their political options seem even tighter than Syriza’s in Greece. Sinn Fein only seem able to think in terms of political brinkmanship in the north while adopting a more flexible critique in the south. Conor Murphy’s objection to in-year cuts might hint at an acceptance of a limited cuts deferment, such as has been offered to the SNP in Scotland.
Unless it was fought on the basis of reverting to the SHA, a snap election would solve nothing. Neither does huffing and puffing about bringing the house down. It is futile to argue that the Tories have no mandate in Northern Ireland while demanding more, more money from them at the same time. The other option is to begin to accept the responsibilities of government and raise local taxes – but not until after the Stormont elections in May of course.