Dr Varney’s prescription for the north – privatisation and wage cuts

The British Government’s grim vision for workers in the north took on some more detail this week with the publication of the second part of the Varney report. This report, the first part of which had dealt with taxation, was commissioned by the treasury in response to the pleading of local politicians for some type of economic peace dividend. Of course the expected economic package from Brown wasn’t forthcoming. As compensation Brown’s close advisor David Varney was tasked with drawing up proposals to boost the north’s economy.

Local politicians had all hung their hats on the call for a dramatic cut in corporation tax as the magical formula for economic growth. However, this was never likely to be conceded in the context of broader Treasury policy and was rejected by Varney in his first report. The second report, which sets out a broad economic prescription is therefore probably more significant, reflecting as it does British government thinking on how to reform the north’s economy.

For workers in the north Varney’s report makes grim reading. It is a programme for a complete shift towards neoliberalism. While this process has been ongoing for a number of years, under both devolution and direct rule, Varney’s proposals would mark a dramatic acceleration.

The main elements of Varney Two are privatisation and wage cuts. He calls for the Executive to increase the role of the private in the delivery of key public services while transferring other “non-core services” entirely into private ownership. The public assets he recommends selling off completely include Belfast Port, the NI Vehicle Testing Agency, car parks and the public housing stock. This last proposal is particularly harsh given the chronic housing crisis in the north and the growing waiting list for Housing Executive properties.

Alongside this privatisation programme Varney demands the lowering of wages in the north. His claim is that the marginally better pay and conditions in the public sector are hammering private sector growth. To counter this he proposes the introduction of regionalised pay for public servants, breaking the link with the rest of the UK. He also proposes a regionalised minimum wage and changes to the benefit system. The effect of all this would be to lower wages across the board, and to coerce people off benefits and into low paying jobs.

What Varney proposes would be a nightmare for workers. It would transfer massive wealth from labour to capital, and drive down the living standards of workers both in terms of their pay and conditions and the costs and quality of public services they use. Unsurprisingly Varney Two received a welcome from employers and criticism from trade union. However, the silence from local politicians was notable. While none of the parties endorsed Varney they didn’t reject it either. Their true position was probably summed up most accurately by a spokesperson for the Institute of Chartered Accountants in Ireland (ICAI) who when welcoming the proposals noted that “to a very large extent they already reflect the existing aims of the Executive”.