How to get Martin McGuinness off the hook

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.

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  • Chris Jones

    “The trouble is too little of this applies to Northern Ireland.”

    I don’t know that that is true Brian.

    Unemployment here is down to around 6% – 7% . If you strip out those in transit between jobs and the say 2% who are genuinely actively seeking work you come down to the hard core 3% to 4% who simply will not work under any circumstances. They have been trained by a lifetime of welfare to not do a hands turn and get far more on benefits that they can ever earn as they have no qualifications. What is more no sane employer will take them on – they are disruptive, litigious and dangerous to themselves and their fellow workers. Noone will want them or want to work with them

    The only way is to literally force them out to change their behaviors and seek jobs and develop skills. I doubt that they will do that under any circumstances.

    And here is the rub – these are all the voters whom SF the SDLP and the DUP in particular actively court. So why would the main parties ever agree to cut their benefits?

    The bottom line is that its not just the claimants who are welfare junkies. Its the main parties as well.

  • the rich get richer

    If we struck Gold or Oil would that be any help ?

    Well you can be sure the Guys at the top would get their share or more.

    Funnily the guys at the bottom probably wouldn’t be any better off regardless.

  • Ian James Parsley

    Just as a side point, but an important one: the average spend per head may have declined by £500 pa; but the average income tax payer now pays £500 less pa, thanks to the raising of the income tax allowance (effectively the zero rate).

    It is of course Conservative ideology to put more money in people’s pocket – they openly accept the correlation that the government will then have less.

    Which brings us back to our own glorious legislators. If they disagree with the Conservatives, the same correlation factually applies the other way – if they want higher public spending, they need to introduce higher household taxes. Simple. But let’s at least be honest about it.

  • hugh mccloy

    How many people are working idle with wages not meeting even basic need, this figure a;so includes step to work and on where people are not even getting paid for a weeks labour.

  • hugh mccloy

    we have struck gold, the assembly let it all be mined and shipped to canada to be claimed as sovereign Canadian gold

  • chrisjones2

    Honest? You gotta be kidding

  • chrisjones2

    Steps to work was abolished

    The issue is getting them back to work. Frankly it often didn’t work because they were so bad employers wouldn’t even take them for free. Their output in work has to exceed the costs of employing them or the firm goes bust

  • Ian James Parsley

    That last point is essential but is completely missing from our discourse.

    Clearly, if your output doesn’t exceed the cost of employing you, you will not *and should not* be employed for long (of course there are some short-term exceptions for people learning new skills etc).

    And that includes by the State.

  • Ian James Parsley

    Sadly your cynicism is well placed.

  • Thomas Girvan

    You know the way that our disproportionate number of people claiming DLA is due to a legacy of the troubles.
    Well, I have lived in NI throughout the troubles, and I have had my house wrecked in a bomb a lot of years ago.
    So I reckon I have a good chance of qualifying for DLA.
    Has anyone any advice as to what illness would be best to put on my application form?

  • Surveyor

    What exactly is it that you do Ian and who pays you if you don’t mind me asking.

  • chrisjones2

    Put down anything and ask your DUP or SF MLA to countersign it for you

  • Ian James Parsley

    Not at all. I run a management consultancy. My clients (in all three main sectors, as it happens) pay me.

    Now, back to the topic…

  • 23×7

    “It is of course Conservative ideology to put more money in people’s pocket”. This is quite clearly nonsense. If it was true they would never have opposed the minimum wage and they would support a living wage. The raising of the income tax allowance was a lib dem policy not tory.

  • Ian James Parsley

    On the contrary, because it is true they opposed the minimum wage because that shifts money from private businesses to people artificially by state intervention.

    Likewise, a living wage would shift money artificially, not on the basis of actual contribution but artificial state intervention, from private businesses.

    The fundamental core of Conservative ideology is that people (and businesses) should keep their own money; but that of course leaves the State with less.

    If people here want more money for government (for welfare and public services), we will have to raise it ourselves. The alternative is not to waste so much of it – one man’s “austerity” is another man’s “pointless waste”.

  • kensei

    Wages are tied directly to contribution? That is an interesting view.

  • 23×7

    The conservative ideology may be that individuals and businesses should keep their own money but they only pay lip service to it protecting their own interests as well as any other govt. Pensioners, big railway projects etc. We live in an imperfect market, state intervention is thus inevitable. People can’t educate themselves or make themselves better. At the moment we have the state shifting money to private business in the form of employee tax credits. A living wage would address this ludicrous situation.

  • 23×7

    “Clearly, if your output doesn’t exceed the cost of employing you, you will not *and should not* be employed for long”

    Again quite clearly untrue, you are on quite a roll today. Do you really think Fred Goodwin (or other baking execs) was 1000s of times more productive than other members of RBS? The link between productivity and re-numeration does not exist in today’s western capitalist economies.

  • Kevin Breslin

    Ian, Ian, Ian … you know as well as I do the Conservatives U-turned on the minimum wage because they got information from the Fiscal Responsibility group, from variously other research groups that the minimum wage alone has zero effect on job creation and may increase productivity. Labour itself is a contribution to private industry, and many workers end up throwing their money back into the companies they work for anyway, by buying products or services on-site. That’s not to say that worker’s wages aren’t an issue, but minimum wage levels of worker’s pay packet has had negligible effect. Many companies like the stability of a set wage, and fear the removal of the wage would trigger a race to the bottom, or unattractive sticky wages that wouldn’t even pay the costs to get to work or a decently washed worker.

    The Republic’s experiment at lowering the minimum wage during the onslaught of the financial crisis by Fianna Fáil was quickly reversed by the Fine Gael-Labour government. The other thing is that a company could spend more money through their own devices employing armies of illegal low cost workers than paying an employee a minimum wage who has some degree of a wage incentive and autonomy.

    In comparison to things like VAT or income tax, I don’t think the minimum wage artificially determines the trend of money straight to private. Without labour a company is merely an idea. You are inferring that at its greatest extreme the state is paying for daycare by giving people the opportunity to volunteer for 40 hours of work, and low paid labour for companies is a right.

  • Chris Jones

    Utter nonsense.
    In the long run it must do or they fail

  • Chris Jones

    what do you do?

  • 23×7

    I’ll keep it simple for you. If productivity and remuneration were properly linked we would not have the rampant social inequality we see today.

  • Ian James Parsley

    Neither interesting nor innovative. The norm in many places, though seemingly we’re not big fans in the UK and Ireland.

    It’s called “performance pay”, of course.

  • Zeno

    “It’s not that Sinn Fein have no kind of point at all. The trouble lies with their political judgment.”

    Indeed , they didn’t believe Cameroon would win the election and had no back up plan when that happened. Someone said they lost some top people a while back and since then they have just kept making stupid decisions and keep having to backtrack on them.
    Keep him on the hook.

  • Skibo

    CJ2 steps to work was just a system that some employers used to get free labour. All they have to do is state there is possibly a job at the end of it, then say they were not suitable and request another body to “try out ” for free!

  • Skibo

    So you don’t actually make anything but live off others who do!

  • Ian James Parsley

    Not at all. If I didn’t help them, they wouldn’t pay me; I am part of the team – of the wealth-creating process or the service provision, whichever applies.

    And see? Performance pay. I don’t deliver value, I don’t get paid. The way it should be.

    (By the way, what’s this obsession with “making things”. People can “deliver services” or indeed, in the case of one client, “provide support” [to poorly people]).