Towards a real welfare debate

From Scope NI

The biggest problem with the “welfare debate” in Northern Ireland is that we are not having one – at least, not in any reasonable public sphere.

What we are having is a clash, based purely on labels, between those who simply don’t trust the Tories on one hand, and those who believe all those on benefits are scroungers on the other. If we are serious about a welfare system which works, we need to challenge ourselves to move beyond pre-existing political partisanship.

To promote a useful debate, we need first of all to ask the basic question of what a welfare system is for; then we need to ask how the challenge of achieving that may have changed over the years; and then we need to look at how we may achieve the optimum outcome specifically in Northern Ireland. This is to be done quite aside from the context that, realistically, Northern Ireland’s system has to be very close to Great Britain’s in order for it to be affordable via subsidies from the UK exchequer (an arrangement known as “parity”, which requires welfare and taxes to be similar across the UK).

The welfare system in its modern form dates back to the Beveridge Report, by Liberal economist William Beveridge, in 1943. This identified five “giant evils” in society – squalor, ignorance, want, idleness and disease – and proposed dramatic changes in social policy to tackle them. These included (in practice) the introduction of a National Health Service free at point of access, state-sponsored legal aid to ensure access to justice, and a welfare system to act as a safety net. These were all introduced by the post-War Labour government in Great Britain, and (although not immediately in all cases) subsequently by the Unionist administration in Northern Ireland.

Fundamentally, the purpose of Beveridge’s report was to tackle poverty; and the purpose of his welfare system was to provide a safety net. The question in the 21st century, therefore, is does the welfare system provide a safety net to help tackle poverty? We need to be clear that the answer to this, conclusively, is “no”.

The current UK Work and Pensions Secretary (with responsibility for welfare) is Iain Duncan Smith, whose previous role was as Founder and Chair of the Centre for Social Justice. This think tank, established in 2004, came to not dissimilar conclusions to Beveridge six decades earlier. For Beveridge’s “Great Evils” it identified five key drivers of poverty – family breakdown, worklessness, educational underachievement, indebtedness and addiction. Other issues, such as poor housing or low income, are of course associated with poverty but, the Centre argued, they were symptoms rather than causes – and the aim was to tackle the causes.

My own work with the Centre in Northern Ireland found that there was in fact little difference in Belfast from the rest of the UK, and particularly little difference from post-industrial cities such as Liverpool or Glasgow. Certainly, issues such as social segregation and the nature of devolution mean that the interventions required may need to be differently administered, but the fundamental drivers of poverty were the same. (I personally found little evidence, however, for identifying “family breakdown” as a driver of poverty; it seemed to me there was an inherent bias towards arising from the Christian ethos of the Centre’s founders in that regard.)

Tackling these drivers of poverty is not something a welfare system can do alone, nor is it the sole reason for the system. However, it is fair to ask whether the system is helping as much as it could. Plainly, it is not. Why is this?

By 2010, the system did almost nothing to tackle worklessness, educational underachievement, indebtedness or addiction at all. Both by design and culture it had come to be something which compensated people for being in poverty, rather than providing them with a helping hand out of poverty. There were two particular deficits in the system which stood out for me – in many cases it actually penalised people for going into work, and it was far too complex. It is worth investigating these further.

Work is the fundamental route out of poverty. It is commonly stated that the majority of those in poverty are in work, but there are two flaws with this. Firstly, it suggests “poverty” is the same as “low income”; secondly, it misses the point that the vast majority of those in work do not experience poverty (however defined), whereas the vast majority out of work do. Work is about far more than income – it is about social networks, self-esteem and further opportunities. Work, therefore, is to be encouraged – yet, in a huge range of circumstances, the UK’s welfare system was designed in such a way that so many benefits were lost by those entering the workplace that doing so actually causes an overall loss in income. None other than the Massachusetts-based Institute for Healthcare Improvement condemned the UK welfare system for exacerbating mental health problems precisely because it traps people in a cycle of low self-esteem with no way out through the workplace, because accessing employment actually comes at a cost in many cases. That is a nonsense and it was clear in 2010 that it was long past time for reform.

An overly complex system also causes extreme difficulty and stress to the very people it is supposed to help. The vast array of credits, top-ups and rates developed over the years led to genuine confusion about what people were entitled to. In my own advisory capacity I frequently meet people who come to me about potentially accessing one benefit who are in fact missing out on another benefit or rate to which they are entitled, because they had found the system bewildering. On top of that, many people reliant on benefits are also experiencing low self-esteem which limits their ability of even desire to spend time working out what their entitlements are. Clearly, these different layers of rates and benefits are causing too much confusion and actually cost people support to which they are fully entitled. By 2010 it was clear that this too had to be reformed.

On top of all this theory, we cannot ignore one other obvious point concerning the whole culture of the welfare system – there is a culture not of supporting people, but of trying to catch them out. The assumption is almost that any applicant is a potential fraudster and that, thus, any application for any benefit should be treated with suspicion. The whole thing turns into a paper trail, when the system is supposed in fact to be based on basic humanity and trying to provide a safety net when people need it. This adds, of course, to the complexities and the stress involved. Actual fraud happens of course, but rates are in fact extraordinarily low, and in fact this is even more the case in Northern Ireland than elsewhere in the UK. This culture too, therefore, needs to be reformed.

If the welfare system is designed to provide a safety net to those who need it as part of tackling the key drivers of poverty, it was plainly not working in 2010. The reforms passed in Great Britain in 2012 include new “work assessments” and “tapers” designed to ensure those who can access work can do so without financial loss, while also ensuring those who cannot are properly supported; “Universal Credit” is designed to simplify the system and provide direct support where it is required; “Personal Independence Payments” are similarly designed to provide more support to people in greater need (and, implicitly, less support to those in lesser need). As with any reform, there are of course winners and losers but that is the whole point – the reformed system is more targeted on providing interventions which will have real outcomes, particularly to help people return to work. There is also at least a chance that a system designed to be much more personal and much more specific to each individual’s needs will be one in which the culture is one of trying to support rather than trying to catch out.

Ah, but Northern Ireland will surely lose out? It is hard to see, on the basis of the overall reforms proposed, how that is the case. For example, Northern Ireland has the highest rate of economic inactivity in the UK, and the reformed system would help reduce this gap; Northern Ireland has the highest rates of disability, and the reformed system will provide more targeted assistance for those in severest need; Northern Ireland has the lowest rates of fraud, and there are grounds at least for hope that the reformed system will recognise that and be more helpful in ensuring those entitled to support receive it.

Has it all gone perfectly? Of course not. Part of this is the nature of reform – things will always go wrong, not least when IT systems are involved. Part of this, no doubt, is the nature of the Conservatives – alongside legitimate reforms they are indeed seeking to introduce “cuts”, for example by restricting annual rises in benefits, in a way which in fact goes against the whole basis and spirit of the reform programme. Nevertheless, we need to be very clear to distinguish between the principles of the reforms, the practice of the reforms, and proposals which are not reforms at all but straightforward cuts.

Northern Ireland, therefore, should introduce welfare reform. Its needs are not significantly distinct from elsewhere in the UK, and indeed it stands specifically to gain in some areas. However, in conclusion, there are three areas where Northern Ireland needs to do particular work in order for the reforms to be truly beneficial.

Firstly, the reforms assume a functioning state-sponsored childcare system as exists in Great Britain; this does not exist in Northern Ireland, and it would need to. Secondly, the reforms assume the availability of work; there remains too great a reliance on the public sector and non-export business such as construction (although recent levels of private sector foreign direct investment provide grounds for hope). Thirdly, the reforms as now being carried through include a Spare Room Subsidy (the so-called “Bedroom Tax”), which has nothing to do with the original research and would have a particularly negative impact in Northern Ireland given the reality of social segregation; this means that Northern Ireland needs initially to provide mitigation against this, and that it then needs to move decisively to address that social segregation. However all of this, without exception, can be done by a devolved Assembly with very limited budgetary consequences (certainly far more limited than breaching “parity”).

Fundamentally, the principles of welfare reform are sound. However, we do have a devolved Assembly and we do have the capacity, if we choose to use it, to shape the reforms to suit us even within the confines of “parity”. I fear the fact we have wasted five years not having a proper debate on the topic is our fault, no one else’s – but, perhaps, better late than never!

Solution to Northern Nationalism’s problems? It’s certainly not Fianna Fail

The last two sets of elections have resulted in an entirely unforeseen but nevertheless marked decline in the Nationalist vote (from approaching 42% to around 38% in each case, like-for-like or otherwise).

Resulting commentary has yet again seen that usual scourge – people amending the evidence to suit their case, not amending their case to suit the evidence.

Let us first of all accept, straight off, that the vast bulk of votes for Nationalist parties comes from people of Catholic background. There are then two obvious issues about how people of Catholic background have changed which, I would suggest, are the cause of the decline.

First of all, both main Nationalist parties have essentially adopted a hard-left policy of a mammoth welfare state and almost, in fact, of suggesting that work should be a life choice. For most people of Catholic background (note, most), I would suggest this position is seen as outrageous. They did not come through civil rights, fair employment and a grubby conflict for a life on the dole. They came through it as an aspirational class, who demand that the next generation will be treated better and will do better than the previous one. Neither Nationalist party is remotely in tune with that aspirational class, which is why they increasingly stay at home or switch to Alliance (or another sort of protest).

Secondly, only a very slim majority of people of Catholic background regard themselves as “Irish”. At the 2011 census, fully 45% did not tick “Irish” as their identity, even though multiple ticks were allowed. I would suggest that most people who did tick “Irish” and feel strongly about their Irish (and Nationalist) identity already have a party to vote for – Sinn Fein. This makes it all the more mystifying that almost anything the SDLP seems to do is to mimic Sinn Fein, including to add an “all-island” dimension to almost anything that moves (watch the motions and amendments they put down for evidence). This is also why Fianna Fail is not remotely the solution – it offers an appeal to an Irish, Nationalist and all-island identity which is already taken care of in Northern Ireland.

(It is, by the way, by no means clear that people of Catholic background overwhelmingly favour the socially liberal stances adopted by Sinn Fein. However, again, the SDLP has broadly copied those, and Fianna Fail has adopted them too. This again leaves no meaningful difference.)

Instead I would suggest – and it is only a suggestion – that the aspirational, not-particularly-bothered-about-identity class of people of Catholic background have no objection to parties taking nominal positions in favour of a “United Ireland”; but they absolutely don’t want mass “welfarism”, are uninterested in the phrase “all-island” appearing in every other sentence, and are turned off by grandstanding with no purpose. What they do want are people prepared to govern, prepared to demonstrate basic competence in managing public finances, and prepared to recognise economic reality. It’s hardly revolutionary – but no Nationalist Party is offering it.

Burnham fundamentally mistaken on “Labour for Yes”

Labour Leadership front runner Andy Burnham has vowed “not to repeat the mistakes” of the Scottish campaign and thus run a separate “Labour for Yes” campaign in the event of an EU referendum.

Oh dear.

This rather demonstrates that Mr Burnham has not taken enough time to work out what the mistakes were. It was most certainly not a mistake for “Better Together” to run a joint campaign; if anything, the mistake was that it was too political and not sufficiently civic.

Mr Burnham is making two fundamental mistakes – which is worrying, frankly, for a potential Leader of the Opposition (from Labour’s point of view). Firstly, he is allowing his opponents to frame the debate – the SNP claims that the “Better Together” campaign brought Labour and Tories too close together, so Mr Burnham just believes this rather than challenging it. Secondly, he is treating a referendum like an election – but referendums are nothing like elections, focused as they are on a single issue and very often not particularly on politicians at all.

With regards to Scotland, Labour needs to challenge the SNP, not buy into its narrative. If, for example, Labour candidates are nothing but a bunch of “Red Tories” who make no real difference, why was the SNP so intent on seeing a Labour-led UK Government and not a Conservative one? If the SNP really wanted a Labour-led UK Government, why did it recommend that people in England split the left-leaning vote by voting Green? Oh yes, and by the way, if the SNP is so “anti-austerity”, why did it never use its tax-varying powers (and instead reduce Health spending comparative to England when it could have raised the gap), why has it overseen the lowest household taxes in Great Britain (while cutting hundreds of Further Education places that money could have been used for), and why did it make reducing Corporation Tax a focus of its own referendum case (something it itself has now effectively admitted was an error)? The contradictions are obvious – so Labour should waste no time in pointing them out rather than buying into the SNP’s own narrative.

With regards to referendums, the last thing the “Yes” side needs is a whole raft of different campaigns; actually, the very last thing it needs is a whole raft of a overly political different campaigns. What it really requires is a single civic campaign, albeit as an umbrella covering various different civic and local angles.

Andy Burnham may be most useful staying right out of it.

SDLP the most pro-austerity party of them all

“Anti-austerity” is one of those wonderful catch-all phrases that responsibility-shirking politicians so enjoy. After all, who could possibly be “pro-austerity”?

Of course, it turns out those who shout the loudest are usually the most guilty. “Austerity” has developed a political meaning quite distinct from its dictionary meaning; it is of course usefully vague and seems to mean “an overall policy in support of public spending reductions”.

Who on earth would support that terrible idea? Since when did less spending on stuff get anyone any votes?

Well, last month as it happens; you cannot realistically be “pro-austerity” in this political Newspeak, but you can of course be “pro-low taxes”. This is, of course, the same thing ultimately – and it is quite popular.

And of course there is no Northern Irish party more pro-low taxes (and, therefore, pro-austerity as an inevitable consequence) than the SDLP. After all, the SDLP is so supportive of low taxes, it even believes people living in £1.2 million mansions should pay just a third of their rates bill. (It is very important, naturally, for a “social democratic” party to defend “vulnerable people” who may not otherwise be able to afford the February mid-term ski-trip or the brand new 7-series.)

Apparently it is quite reasonable that some poor bugger living in Cornwall who already pays double the Northern Ireland average in household taxes plus water bills, prescription charges and full-whack tuition fees should contribute to the cost of Northern Ireland’s public services; but a chap in Cultra with a Bentley in the driveway who actually benefits directly from those services should pay just a sixth of those household taxes and none of the rest of it. Quite reasonable, that is, if you have absolutely no concept of fairness at all. Even Sinn Fein gets that the boy in Cultra should contribute more. but this has proven beyond the grasp of the SDLP.

There is, of course, the small matter that the poor bugger in Cornwall elected a Conservative government who also see no reason that he should pay so much for public services when people in Cultra (and Carnalbanagh and Cullaville for that matter) get away with paying so comparatively little and when the representatives they elect waste it on inefficiency and segregation.

So the crux of the matter is this: the SDLP is the most pro-austerity party of them all. By demanding we pay vast sums to support a welfare system which does not work, intervening to support segregation of public services such as teacher training, and refusing point blank to consider raising any further revenue whatsoever – even from people in £1.2 million mansions – it is enforcing austerity on the public in a way which goes well beyond anything the DUP or Conservatives propose.

If the SDLP were serious about being “anti-austerity”, it would support integration of public services (starting with teacher training); and it would support revenue raising from the wealthiest (starting with having everyone pay all their rates), thus enabling vast sums (£2b or 20% of the current resource budget under devolved control) to be re-allocated to “front-line public services” and “protecting the vulnerable”. But the SDLP does not want to re-allocate money to front-line services or to protect the vulnerable; it just wants to play the blame game.

For a once great party, the SDLP’s fundamentalist pro-austerity stance, going well beyond that advocated by anyone else, is a disgrace.

Electoral Reform Society must address own failings

The Electoral Reform Society (ERS), of which I am a member and supporter, published a widely distributed report post-election suggesting that once again the “First Past the Post” (FPTP) system is a “system in crisis”.

The report is well presented, superbly researched and factually sound. It is also absolutely hopeless.

It is in fact a classic example of all that is wrong with progressive political thinking. It takes a set of progressive priorities and justifies them. Of course, if it matters to you that the system is “disproportionate”, delivers “wasted votes” or promotes “tactical voting”, then self-evidently the system is “in crisis”. But what if it doesn’t matter to you?

In other words, the report addressed all of the arguments made by those in favour of electoral reform, but none at all of those by those made against. What if, instead of the above, your main aims in an electoral system are to have a simple system designed to “stop extremism”, to deliver “direct representation”, and to promote “stable government”? If those are your aims, then the system has worked brilliantly – keeping extremists like UKIP out of government while delivering a majority centre-right government on a majority right-leaning vote without the need for weeks of uncertainty and fudged coalition. If that is your aim, there is simply no crisis at all – quite the contrary! Not once is that case – as self-evident to many as the need for proportionality is to ERS members – addressed in the report.

(This is, for reference, only one example. I read one Guardian article which accused the Conservatives of “doing away with human rights” – a self-evident outrage to the left. Yet actually what some of them are trying to do is repatriate responsibility for human rights to British courts – a self-evident priority of the right. So we have another example of the left failing to address even the basic case. By the way, I think Michael Gove is mad and any tampering with the Human Rights Act is misguided, but let us at least understand where the support for this is coming from and seek to address it maturely.)

The ERS may be better to stop writing reports about other things, and address the elephant in its own room. In 2011 there was a referendum on replacing FPTP, and it was lost heavily (32-68). Has the ERS yet put out a report on why this happened? “Electoral Reform – a Cause in Crisis” would have been a perfectly apt title.

This crisis remains. It needs to start with this inconvenient truth: for every one person who thinks the 2015 election was disproportionate and it is outrageous that smaller parties were left with just two seats for 5 million votes, there are two (based on the referendum result) who are thanking it for not giving UKIP 80 seats. (After all, the Conservatives will now move to postpone any attempts to do away with the Human Rights Act; but they would proceeding quickly if they were in coalition with UKIP!)

The ERS does in fact need to start with its own assumptions. Let us take just one: it says “STV” (the Single Transferable Vote system used for Assembly Elections here and for local elections here and in Scotland) works “perfectly well” in Northern Ireland. Does it? Do we not have an extraordinarily localised form of politics where our legislators think only of their own area and even their own tribe and never of Northern Ireland as a whole? Is it not a bit peculiar that no country outside the English-speaking world has adopted the system, if it is so obviously brilliant?

It also needs to be accurate. In 2011, for example, it consistently stated, clearly (and now demonstrably) erroneously, that AV (Alternate Vote, the proposed alternative to FPTP) was “more proportionate”. What it does is maintain all the advantages of FPTP while giving more people a say – but, having dismissed FPTP and all the arguments for it out of hand as not even worthy of consideration, this obvious case was never made.

It then needs to tackle the priorities of its opponents, not its supporters. Germany’s PR system has in fact countered extremism perfectly well; delivers direct representation (albeit through constituencies twice the size); and typically produces more stable governments than Britain’s FPTP (just eight post-War Chancellors versus twelve Prime Ministers; no snap elections versus three snap elections in 1951/1966/1974). That is to leave aside the argument that the potential for extremism drives others towards a stronger centre (this is apparent in Scandinavia), that direct representation is overrated (it can result in crazy localism and MPs elected on their ability to run an advice centre rather than legislate), and “stable government” can also mean “unaccountable government”, by no means necessarily a good thing (after all, Northern Ireland has had a devolved “stable government” since 2007…)

The biggest challenge of all is that the ERS is unlikely to succeed without context or, more fundamentally, allies. I joined not because I was convinced of the case for Electoral Reform specifically, but because I wanted political (institutional) reform more generally. Indeed, with the Union itself in danger, that is an increasingly compelling argument. The idea that STV will save the Union is self-evidently ridiculous; but the idea that a new federal set-up with a House of Lords appointed proportionately and wide-ranging devolution of powers to countries and cities (including tax-raising) may bring democracy closer to the people and thus create greater accountability, stability and purpose for the UK as a whole sounds like good sense (and has at least some support across all the main political parties and ideologies).

I want the ERS to succeed. However, it cannot escape the fact it has not. Perhaps the first reform should be internal.

NI parties have no case to make to Treasury

Full text of letter in NI regional papers:

Sinn Féin and the SDLP led the way in opposing our Welfare Reform Bill, deliberately leaving a £2.8 billion hole in this year’s Assembly Budget.

It appears they hope this will be filled by the generosity of the UK taxpayer, despite the fact Northern Ireland already receives £10 billion more that it raises in taxes. We are to “stand together” to demand still more, they say.

This would seem somewhat fanciful given the state of the UK’s finances and its current government’s likely priorities, but let us pretend for a moment that it is an option. Essentially, we are asking for still more money from the English taxpayer for Northern Ireland’s public services. How does that case look?

Firstly, those English householders already pay prescription charges, water bills, three times the tuition fees and Council Tax which is typically over double the Household Rates paid in Northern Ireland. Introducing all of this for Northern Ireland would raise almost £1 billion – that alone adding almost 10% to the Assembly’s annual current resource spending.

Secondly, we may look at our own wastage on segregated provision. Just this year, the Executive overruled a Minister who wanted to move away from the current system of training too many teachers in small and segregated and subsidised institutions inefficiently at a premium. Over an Assembly term, even starting this process by removing the subsidy would save £10 million – and that is just one example. By most estimates, integrating all such services (as is normal in England) would save over £1 billion per year for reallocation to frontline services – enough for the voluntary exit scheme, welfare mitigation and the reduction in Corporation Tax taken together!

Thirdly, there are other quirks here too. For example, both parties voted for a cap which means someone in a £1.2 million mansion pays just a third of their rates. Some voluntary organisations do not pay rates at all. Our concessionary fares scheme includes more people (at greater cost) than the English equivalent. All of this adds up to further millions lost to our budget.

So, we could in fact add over £2 billion (20% of current resource spending) to our frontline service budget by doing things differently ourselves – applying the same charges as in England, cutting the costs of division, and removing some of the quirks. That our populist politicians choose to ignore that obvious truth is not the fault of the English taxpayer!

The response from the UK Government to our begging bowl will be negative. That is hardly unreasonable, given our refusal even to meet halfway. Do we want lower household taxes, ongoing sectarian division and added giveaways? Then we will have to pay for them ourselves!

That is the choice – and politicians who refuse to make it have no business being in government. Of course, we could always just ‘devolve economic control’…

Reform NI institutions – or wave them goodbye

Last week’s vote for welfare reform in the Assembly had a comfortable majority. It is possible, even likely, that the next vote on same-sex marriage will also have a majority. Yet both are/will be blocked.

The iniquitous “Petition of Concern” is the problem. It appears a technicality, but it is in fact an excuse for abusing equality mechanisms for the sake of petty and vindictive politics on issues which have nothing to do with our traditional community balance or human rights protection.

It is not a victimless tool. We are now threatened with 28% cuts, as well as ongoing bias and even hatred towards a particular group, because of it. Economically and socially, we cannot tolerate this.

Its use for purposes other than protecting human rights and ensuring one traditional community does not batter the other one should be stopped immediately – by Westminster intervention if necessary (see last blog for my other recommended interventions!)

That would be the first stop. The second is the issue of so-called “mandatory coalition”. In fact, we do not have mandatory coalition but rather a non-mandatory opposition combined with a non-collective government. The penalty for this is that the only alternative people see to the devolved Executive is Direct Rule. I suspect that alternative now has majority support in Northern Ireland – despite the fact it is fundamentally undemocratic and not what we voted for in 1998! This is not because people are undemocratic, but because they now want an alternative – Direct Rule should not be the only one available.

It is unclear, in current circumstances, whether Independent Unionist John McCallister’s Bill to create an Opposition (and, more to the point, require a collective government) will ever see the light of day. As it happens, I have seen it and, while I do not agree with every subsection by any means, it is a lot better than what we currently have. The NIO could do worse than invite him to Hillsborough Castle for tea!

The fundamental problem is that we have parties in office in Northern Ireland but not in government. They want all the trappings, but none of the responsibility. The only “collective decision making” consists of the big parties bullying the smaller ones. The Emperor has no clothes. It is time we had the option of an alternative.

What the NIO will do…

I wrote about what the NIO should do the other day.

Sadly, I suspect that is not what it will do, although I continue to recommend it in the light of feedback. Narrowing everything down to one issue creates gridlock in Northern Ireland; broadening the package (and thus enabling everyone to claim victory) is the way to go.

So, what will the NIO do and how will this ‘crisis’ be resolved. Well, nothing is reliably predictable about this – it is, genuinely, uncharted waters. However, there are a few options.

Legislative Consent

The fundamental stumbling block is that both Nationalist parties put their signatures on the Petition of Concern to cause the Welfare legislation to fall. If either one or the other had not done so, it would have passed (even if they had voted against) because the Petition would not have had enough signatures.

That means that it remains the case that either Nationalist party can still do a deal to see the legislation pass, and thus the Budget crisis resolved (insofar as the Stormont House Agreement is a resolution).

Theoretically, welfare reform legislation cannot return to the Assembly within the next six months, under Standing Orders; indeed, it is unconventional for any legislation to return within the same Assembly or Parliamentary term. That Standing Order could, of course, be removed, although even that requires agreement. (It is for this reason, for example, that same-sex marriage motions are brought to the Assembly every six months.)

However, there is also the much discussed option of the UK Government passing the legislation. However, it would be unconventional for it to legislate on a devolved matter without consulting the relevant devolved Assembly. This consultation takes the form of a Legislative Consent Motion, to which the Assembly must agree. These are frequently used to keep pensions arrangements or corporate governance regulations in line across the UK, for example.

Conventions absolutely matter in UK politics. Without a written constitution, conventions, from the requirement for the Prime Minister to sit in the Commons to the understanding that the Lords will not block legislation in the governing party’s manifesto, are essential. Even though they are not written down, they are the building blocks of the constitution – therefore “unconventional” above almost means “unconstitutional”.

Therefore, it is highly risky either to re-introduce Welfare Reform legislation before November (or really at all in this Assembly term), or to seek to impose Welfare legislation over the heads of MLAs. Both are much discussed, but neither is a serious constitutional option.

The likeliest outcome, therefore, is that the UK Parliament will legislate to extend the 2012 Welfare Reform Act to Northern Ireland, but then offer it to the Assembly under a Legislative Consent Motion. This still requires Assembly agreement. By that time, however, a deal could be done with either Nationalist party which would gain their agreement not to sign a Petition of Concern to block it. (Possible deals would include removal from the legislation of the Spare Room Subsidy or “Bedroom Tax” as mentioned by Sinn Fein, or agreement to allow one or more of the SDLP’s amendments to in effect be made in future Regulations – alongside a clearer outline in the meantime from the NI Executive of the proposed mitigation measures.)

Enhanced borrowing

The fundamental problem with not passing Welfare Reform is not just that it means the UK Government will gradually withdraw from paying for Northern Ireland’s welfare system (the total cost of this withdrawal to the NI Executive, erroneously referred to as ‘fines’ or ‘penalties’, is currently £114m/year but continues to rise), but that it collapses the Stormont House Agreement. The UK Government cannot realistically proceed with that Agreement if the NI Assembly has not done its part of the bargain.

However, there are parts of the Agreement which the Conservatives may be keen to allow anyway. It is quite possible that they will allow the transfer of funds from capital to current (in effect) to enable the Voluntary Exit Scheme, as they would in principle support this “rebalancing” anyway. They may, so as simply not to be churlish, allow the current £100m loan to be paid out of capital budgets too. However, other similar transfers may not be so appealing, and there will be no reason whatsoever for them to put investment at risk elsewhere in the UK by reducing Corporation Tax in Northern Ireland.

One thing the NIO could offer, however, would be to double the borrowing power of the Northern Ireland Executive and allow it for any budget stream, thus effectively enabling it to borrow the £600m it needs now (and the potential £2.8b it needs if no budget is moved next month) and pay it back over time with interest. In the long run, this would have no real impact on the UK Treasury’s finances (which are worked in terms of 10-year borrowing terms anyway), and it would in effect buy another year to resolve welfare (conveniently to the far side of the Irish General Election).

It would be catastrophic for future Northern Ireland budgets, but the current political stand-off considers only the present and not the future. Therefore, this is probably the second likeliest option.

Assumption of Welfare Powers

Another option talked about is the potential “taking back” of welfare powers by “Westminster”.

To be clear, this phrasing is inaccurate and misleading. “Westminster” usually means the Parliament but since we are talking about executive policy development we should probably include “Whitehall”; more to the point, the UK Government never legislated for welfare in Northern Ireland except under Direct Rule (and even then it was, nominally at least, done separately).

The temptation, however, is that welfare powers are currently not devolved anywhere else (though some, notably around disability, are in the process of being devolved to Scotland).

There would be a case, as part of this package, to “reserve” (i.e. “un-devolve”) equality law competences as well, as these are not currently devolved anywhere else either and are also currently gridlocked; this would be probably be wise for the sake of emphasising consistency and distinguishing between powers being taken by Westminster and those not being taken, such as Health and Education, which are devolved elsewhere. However, it is unlikely in practice.

Theoretically, the transfer of powers to the UK Parliament requires a Legislative Consent Motion (see the likeliest option above). The precedent here was the accidental devolution of powers over UK Antarctic Territories, which required such a motion to return them to Westminster from Stormont (and also Holyrood) a few years ago. However, such a Motion would have to be avoided in practice.

Leaving aside the fact it is unconventional (itself extremely dangerous, as noted above), in the court of public opinion this is a dangerous move for the future of the institutions. This is particularly so if it continues to be phrased as “taking back powers”. The public will say, after all, if MLAs cannot sort out welfare, why should they be trusted with justice, health or education? Why not just do away with them altogether? That underlying and peculiarly Irish (perhaps now specifically Northern Irish) notion that we would really be better governed by somebody else, part of our culture of underlying insecurity, will come to the fore. So this is a possibility, but a much, much riskier one than its proponents imply.

Institutional Reform

Another option for the NIO is institutional reform, particularly to stop abuse of the Petition of Concern.

The NIO could argue that, under the spirit of the Agreement, such Petitions were clearly only meant to protect one “designation” from being deliberately targeted by the other.

This is complex, however. My own proposal in the past has been that this would require the creation of a Tribunal, similar to the old IMC, which would determine whether or not a Petition was legitimate on community grounds. This would itself have to be established, wasting precious time. Furthermore, Unionists may not be so keen on it either – in the next Assembly, for example, the Petition of Concern is likely to be crucial on votes of interest to them such as same-sex marriage.

However, the implicit threat of changing the rules around Petitions of Concern may in itself be enough to push through a deal. This, therefore, is highly unlikely but is a possible ‘dummy’ option, floated to try to speed things up.

Nothing

Another option, at least for the next two months, is for the NIO to do absolutely nothing.

It could simply wait for the budget cuts to start happening, causing public outrage. It would continue to point out that such cuts would not be necessary if only the Assembly had passed welfare reform and thus adhered to the Stormont House Agreement the parties signed up to working from. It would remain ready to implement the Agreement once the Assembly did its bit.

This does risk serious civil disorder, or at least civil disorder being blamed on the political situation. This would not be good for the devolved institutions. Nevertheless, ‘do nothing’ is a surprisingly tempting option politically – and the local parties would need to be aware of that.

Assembly Election

The NIO now has no power over calling an Assembly Election, but could nevertheless suggest one. (It may be forced to, of course, in the event of a resignation or two from Executive office.)

It is unlikely this will figure in the NIO’s thinking because it is not in its own gift. Nevertheless, it will know that, based on May’s results, an election may not be the greatest idea for either big party, nor for either Nationalist party.

Several of the above

Of course, not all of the above are mutually incompatible. The NIO could opt for ‘do nothing’ to start with, then float ‘institutional reform’, and then throw a ‘Legislative Consent Motion’ to pass the Welfare Reform Bill and even a second to reserve welfare powers to Westminster. It may know that an early Assembly Election would be a consequence of these all not working.

So, it’s anyone’s guess! My own instinct is that these options are all in order of likelihood – but who knows?

What the NIO should do now…

What should the Northern Ireland Office do to resolve the current impasse with the Northern Ireland institutions?

Easy, actually. Implement the Smith Commission proposals. Here! Now!

The link gives the details, but we can run down specifically what that would mean:

– Memorandum of Understanding for managing different tax/welfare structures (this enables differentiation if that is the route Northern Ireland chooses);

– devolution of Income Tax (on earned income), Aggregates Levy alongside Air Passenger Duty (if Northern Ireland doesn’t want “austerity”, it now has all the tools to raise taxes to make up the difference itself, and stand or die by these decisions at Assembly Elections);

– assignment of first ten points of VAT to the Northern Ireland budget (this has the effect of promoting policies favourable to value-added economic activity, as much of this will add to the NI budget);

– non-devolution of Corporation Tax (as Northern Ireland has not fulfilled the obligations of the Stormont House Agreement, some penalty should be paid);

– reservation (i.e. un-devolution) of pensions and benefits to do with parenting or low income alongside tax credits (it makes sense to do these across the UK anyway);

– reservation (i.e. un-devolution) of equality laws (it has taken too long for Northern Ireland to tidy up its equality legislation and so makes sense to share best practice across the UK);

– maintenance of devolution of disability benefits with removal of ‘parity’ requirements (this is Nationalists’ key concern apparently, and they now have the aforementioned tools to raise the money themselves from their own voters to pay for any differentiation, including the administration of a different system, without having to pay for the entire system);

– representation of Northern Ireland interests by Northern Ireland ministers directly to European Union (this is particularly important in Northern Ireland given our land border); and

– replacement of cross-community Assembly votes with two thirds super majorities (also now used in Westminster for certain specific votes under the Fixed Terms Act).

The Barnett formula and ‘consequentials’ would of course be maintained, and logically the baseline for welfare payments would be set within it (this would most sensibly be done at the New Year 2012 level, before the Welfare Reform Act, effectively adding £300 million to the NI Executive’s annual budget – a politically feasible amount for the Treasury). This means that Northern Ireland starts from a baseline position of public spending at around £2,000 more per head than the UK average plus an extra welfare subsidy – but if it chooses to move any of that up or down, that is its choice, and it pays for or gains from that as appropriate. The welfare ‘crisis’ would be resolved – some powers would be withdrawn, but others would be maintained and ‘parity’ in effect ended.

So, problem solved – because as a package, I suspect this would find support among the Northern Ireland parties:

– Nationalists can claim victory by securing abolition of parity (with a £300 million welfare subsidy), ‘devolution of economic control’ and ‘more power in Irish hands’ (they could hardly turn down the chance to deliver on ‘no one loses out’ by maintaining DLA as is, having now been handed the fiscal tools to raise taxes to pay for it…);

– Unionists can claim victory also for the welfare subsidy and for ‘protecting the Union’ by securing directly equivalent devolution models (and the DUP would no doubt relish the opportunity directly to pursue its low tax model, albeit with the obvious consequent reductions in public spending…); and

– Progressives would also welcome the effective removal of ‘designations’ (they may remain but would be irrelevant, with protections now offered by super-majority votes) and may then pursue the logical progression of a government/opposition model using that super-majority protection.

Most importantly than any of that, the public would now see the Assembly as much more transparent. It would have to raise money from the public directly if it wished to raise public spending or welfare protections; but it would also have the opportunity to offer reduced taxes if it wished to encourage public sector efficiency, private consumption and tackling of individual/corporate debt. The public would be better informed, civic society would be challenged, and political debate would become meaningful (Scotland would even act as a direct comparison).

Real politics, I believe it is called… that is why I strongly believe the NIO should do this, and do it now!

Follow the lights to economic success…

Just take a quick glance at the below.

Lights

The big bulks of red are all you need to know.

In Europe, in particular, there is a dense red line from London through the Dutch rand (Rotterdam and Amsterdam), the German Ruhrgebiet (Dortmund, Essen, Gelsenkirchen etc), Cologne, Frankfurt, Munich and over the Alps to Milan.

That is a map of connected devices in the world, but it also shows where economic power is thus concentrated. All Europe’s economic focus is on that corridor – innovation hubs target it, government transport policies prioritise it, people seeking a better life are sucked towards it. These just happens to be the cities and regions where GDP/capita is 50% or more above the EU average. They are the ones to which we need to be connected.

Continue it north west from London and you do indeed get Birmingham, Manchester, and yes the east coast of Ireland. We could join the connection! Arguably, Dublin is already there but Belfast lags.

Yet look at the departures board at either Belfast Airport! You may see Amsterdam but you will see none of the others.

It is time we got to know Frankfurt and Milan as well as we know Fuengirola and Marbella…

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