Last week, Sinn Féin’s Stormont Finance Minister Caoimhe Archibald published the Executive’s draft budget for the fiscal year 2024-2025. It may have been late in coming but it was every bit as bad as has been forecast by Militant Left. The draft budget confirms that the Stormont parties, lead by Sinn Féin, are content to administrate brutal austerity on public services in the north of Ireland by working within the fiscal framework set out by the Tory party in London.
The Executive was only re-established in February of this year as a result of the colossal social pressures generated on the parties by the wave of strike action taken by public sector workers fighting for a cost of living pay increase. Given a wider political context, which includes the current crisis in the DUP resulting from their party leader being charged with historic allegations of rape and sexual assault, the imposition of such a brutal budget raises the possibility that the Executive will be destabilised within months of re-establishment.
The Barnett formula squeeze of public finances
At root, the difficulty facing the Executive parties is driven by the inadequacy of the money allocated to the north by the Treasury to meet the costs of public services here. The funding provided is determined through the ‘Barnett formula’ which is designed to over time reduce per capita spending in Scotland, Wales and Northern Ireland to the per capita rate in England. The negotiations which led to the re-establishment of Stormont saw a commitment from the Westminster government that in future the Barnett formula would include a minimum floor for additional funding for Northern Ireland to be provided at a per-capita rate 24% above that in England. This was provided in order to reflect the higher objective social need existing in Northern Ireland and was accepted by all the parties.
The problem for the Stormont Executive is that the application of this ‘needs-based’ funding formula only affects new and additional funds and the any benefit will only be felt in future years. A second difficulty is that the floor is not backdated which means that the Executive inherits a debt of more than half a billion from budget overruns resulting from being underfunded for the last two years. A third issue is that the Executive argues – although this is contended by the Treasury – that the true measure of social need in the region should be 27 cent higher than England. While that 3% difference doesn’t seem much – if it was adopted, it would make a huge impact to the current budget – worth more than half a billion pounds a year.
In the meantime however there is a large gap in the budget but as a further sweetener to return to power-sharing institutions, the Tories provided an additional funding package worth £3.3 billion to the Executive. This was one-off money and included money for public sector pay in 2023-2024 as well as a write-off of outstanding debt on condition that the Executive parties raise £113 million extra through ‘revenue raising’ measures i.e. taxes or charges equivalent to a 15% rates increase.
While the parties moved quickly to extend the pay parity increase for public sector workers, they have refused to introduce ‘revenue raising’ measures either through a rates hike or imposing a distinct water charge – primarily from fear of a reaction from the public.
Budget pressures
The one-off money provided by the Tories was only enough to provide public sector workers in the north the same meagre increases received by workers in England and Wales. Indeed, the need to consolidate these increases into departmental budgets in the future was a key factor in determining the budget.
Ahead of the budget the Finance Minister stated that after pre-committed funding was allocated, there was only £1 billion free whereas the total ‘bids’ for extra money from the departments totalled £3 billion. One
billion extra was sought by the Department of Health – half of that to cover the cost of consolidating the last year’s pay increase with the remainder to pay for additional services to meet increasing demand as well as initiatives to reduce the ballooning waiting lists.
The Ulster Unionist Health Minister Robin Swann indicated that while he had requested a billion pounds extra, his department could get by if it received £800 million. In the event health received only £500 million
extra – an outcome that resulted in the Minister voting against the budget in a public protest – an unprecedented move within the Executive, which is meant to adopt collective responsibility for administering neoliberal budgets.
Socialist trade union leaders have called on Minister Swann to run a ‘needs-based’ budget and breach the budget – a course that would bring to a head the chronic underfunding of health services but it is unclear whether such advice will be taken. One alternative is that the UUP will withdraw from the Executive and join the SDLP in opposition.
Overall the bulk of the budget appears to have allocated to consolidate the cost of the last year’s public sector pay increase for the future. This is the only course open to avoid legal contractual liabilities but implies that there is virtually nothing left for a pay increase in the coming year for public sector workers. The logic of the budget is therefore that public sector workers will have to accept a pay freeze and absorb this year’s inflation in the cost of living.
Potential for industrial disputes
It is far from clear that public sector workers – who have only recently felt their own power in forcing the re-establishment of a functioning Executive – will meekly accept such a pay freeze.
Indeed, there are still outstanding pay disputes from last year which have not been resolved in particular in public transport and among non-teaching education workers.
Recent leaks carried in the bourgeois press signal that the publicly-owned but arms-length public transport company for Northern Ireland Translink may be finding ways to resolve the outstanding pay dispute with public transport workers through using its own reserves to fund an additional increase. The same certainly does not apply in education where the prospect is of mounting industrial action.
While teaching workers in education voted to accept a 12.4% increase after three years of a pay freeze – no money was provided in either the February Stormont pay settlement or in the latest budget for the six-year overdue pay and grading review for school support staff. The four trade unions representing those workers responded to the latest failure with indignation and a number signalled industrial action was back on the cards.
While there are already moves within the Stormont Executive to seek Treasury authorisation to reprofile the extra £3.3 billion to address this outstanding claim unless this is forthcoming, industrial action in schools and on school transport appears unavoidable.
Any industrial action would have to occur before the end of the current school term to be effective but that would mean it coincides with the politically sensitive exam period; a timing guaranteed to result in considerable anger among students and parents, anger which is just as likely to be directed the Stormont political parties as the low-paid school support workers fighting for basic pay and respect.
There is considerable potential for industrial disputes involving other groups of public sector workers seeking increased pay – not least of which are the low paid Housing Executive workers in Unite who took an unsuccessful nine-month strike in the absence of Stormont. In all cases, the budget includes next to nothing to resolve such disputes.
Cuts to public services
If the budget primarily went to consolidate last year’s pay increases, it left virtually nothing to expand desperately overstretched public services. Given that virtually every public service is at or beyond breaking point, it is inevitable that the north will suffer continued public service crisis.
Nowhere is this more true that in health; the Health Minister responded to his inadequate budget allocation by immediately ending the waiting list initiative which saw his department spending millions on private sector providers to reduce waiting times. The ending of such a scandalous waste of public funds pump-priming the private medicine sector is to be welcomed but in the context of failing NHS services, will mean that waiting lists in the north – already the worst in the UK – will extend even further.
In Education, the situation is the same; budgets for schools, school services and childcare are already woefully inadequate – partially as a result of the huge costs of sustaining the north’s sectarian and class-divided education system but also reflecting decades of underinvestment. On childcare where costs are so high that increasing numbers of workers are leaving employment to look after children, the extra £25 million committed is nowhere near what is needed to deliver a comprehensive strategy; and there is certainly no money to restore the holiday hunger programme or the primary school counselling programme (both of which were cut last year).
The same story applies across all public services – including even the state’s police and justice system. The cross-community, bourgeois-liberal Alliance party Justice Minister Naomi Long stated that the £95 million extra her department received (she sought £446 million) was not even enough to cover courts or prison costs or the civil claims arising from cases including PSNI data leaks. It is not surprising given the potential for instability and opposition to brutal austerity, it has been suggested that what little extra money has been provided to the Justice department will largely go to police recruitment!
It goes without saying that the savage budget allows nothing for environmental measures needed, for example to upgrade Victorian era waste water infrastructure or the ongoing pollution of Lough Neagh.
The workers’ challenge
Stormont faces a daunting prospect of a direct confrontation with workers – with the parties caught implementing a budget on behalf of an anti-worker Tory government in Westminster.
The political parties appear very alive to this danger and are seeking to use any influence they have in the trade unions to cut across potential industrial action while at the same time using its prospect as a threat to better secure money from the Treasury. It is unclear whether this will generate anything extra from a Tory government with other priorities – including looming decimation in a general election. That said, if the British state considers that mounting industrial disputes or even social or environmental campaigns risk destabilising the power-sharing institutions in the north – something might be provided.
In the meantime, the risk that that the political parties may seek to divert attention away from the pressing social, economic and environmental disaster that will result from continued austerity by a turn to the politics of division. This would amount to a volte-face from the initial ‘gesture politics’ of both Sinn Féin and the DUP who were seeking to win the centre ground.
In particular, there is a strong likelihood that Sinn Féin – who face particular pressures as they seek to position themselves as a genuine, albeit reformist, political alternative in the south ahead of an election there. There is an obvious opportunity for them to use Tory austerity as a foil to raise the need for Irish reunification as a solution with a narrative that the north is an economic basket case.
This poses particular challenges to socialists who seek to build class unity in struggle. Such a narrative partially reflects the true imperialist relationship of the north with Britain but Sinn Féin will have no interest in developing a working-class or socialist politics in challenge to that. Instead they will seek to raise illusions as to the benefits of a capitalist united Ireland a politics which offers nothing to workers – and particularly Protestant workers – but which will act to deflect criticism from their own working-class support base.
Furthermore, such a narrative is capable of securing at least the tacit support of nationalist trade union leaders – and play into the logic of cutting across strike action by public sector workers.
It is more necessary than ever that socialists provide a working-class political alternative to austerity policies – regardless of whether they are implemented directly by Tories in Westminster or indirectly by the
Stormont parties. Only such a policy can unite working class people and build momentum for a new type of politics which will cut across both sectarian division and offer a road away from neoliberal economics and
to defeat imperialism.
