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”.

Households facing higher water charges after “miscalculation”

A supposed “miscalculation” by NI Water could lead to a 15 per cent or £20 million increase in the domestic water bill this year; resulting in an extra £30 being added to the average household bill.

NI Water claimed that it had overestimated the amount of revenue it would raise from commercial customers. It also pointed to a number of high profile industrial closures, such as the Seagate factory in Limavady, as an additional reason for the shortfall. As a result it had carry out an internal ‘re-balancing' exercise that shifted the burden of liability for water and sewage costs onto householders.

The arguments and figures used by NI Water are very dubious. There is no evidence of a decline in commercial customers so great as to produce a £20 million annual deficit. This is just a smokescreen for shifting the costs of water and sewage from business onto householders. It fits in with the general thrust of Government towards provision of public services - of transferring resources from labour to capital, from one class of people to another. Generally, the main mechanism for this has been privatisation and the introduction of user charges. In the specific case of water it has been the creation of NI Water and the introduction of a separate water charge.

All this was contained in the water reform proposals put forward by the British Government and inherited by the Executive. It was never clear what contribution commercial customers were going to make. Now we know it is going to be less than they paid under the Water Service; and that householders are going to have to pick up the bill.

This revelation also blows a hole in the recommendations of the Independent Review Panel, which were based on the old estimates from NI Water. The Executive hoped that adopting its proposals of delaying charges for a year, reducing slightly the amount people would be charged and extending relief would dampen down any opposition and buy them some time on the issue. This is despite the fact that all the Panel’s proposals were based on the unlikely premise that NI Water could make 40 per cent cost savings. The latest revelation from the company makes delivery on even these meagre concessions impossible.

DUP dumps Paisley Jnr – can daddy be far behind?

The first ministerial casualty of the power-sharing executive came this week with the resignation of Ian Paisley Jnr. His departure from the post of junior minister in the Office of the First Minister came on the back of yet more revelations about his financial dealings.

The latest one revolved around the rental of a DUP constituency office in Ballymena. A response to a freedom of information request disclosed that Ian Paisley Jnr and his father are each receiving £28,600 per year for the Church Street office. This combined total of £57,200 for one property is almost three times higher than the next highest MLA claim. It was further revealed that the mortgage for this property had been initially secured by developer and DUP member Seymour Sweeney. For a period he was the sole director of the company (Sacron) that purchased it. That company was subsequently transferred to Ian Paisley’s Jnr’s father-in-law.

Through the rental of this office, the Paisley’s were effectively giving a thousand pounds a week (claimed as expenses) to one of their relatives. Paisley Jnr stated that the money was being used by his father-in-law's company to repay the mortgage. However, given the extremely high rent being charged, it wouldn’t take long to pay off a mortgage. In a relatively short time period his father in law would own the property - any money accrued after that would be pure profit.

Another example of Paisley Jnr’s milking of the public purse came just last week with the revelation that he was receiving a salary as his father’s parliamentary researcher in addition to his MLA and ministerial salaries. He was taking three salaries for what is essentially one job.

However, these were just the latest in a series of controversies that surrounded Paisley Jnr during his tenure as a minister. Others included his St Andrews list that appeared to link the restoration of devolution to progress on a number of pet projects in his north Antrim constituency. There was the lobbying for a privately owned visitors’ centre at the Giants Causeway, and the attempt to influence a government department over the sale of public land. The developer and DUP member Seymour Sweeney was an interested party in both schemes. What is common to all of these is the accruement of benefits for the Paisley’s, their relatives and their supporters, at the expense of the public.

However, Ian Paisley Jnr’s dodgy dealings do not in themselves account for his resignation. He had given every indication that he would brazen it out. It was assumed that being the son the DUP leader and First Minister would protect him. There was no opposition from other parties to his continued presence in Government. This prompted SDLP deputy leader Alasdair McDonnell to ask: "Why was it always left to journalists to dig out the truth under the Freedom of Information Act?" Of course he did not offer an answer. This would have exposed the bankruptcy, not only of his party, but of the whole set up at Stormont.

What really did for Paisley Jnr was the opposition of senior members of his own party. This came to a head over the weekend at a meeting of six of its MPs to discuss the Dromore by-election defeat. They told Paisley to resign or face a party disciplinary hearing. Against this background Paisley’s resignation can be seen as the most immediate ramification of the DUP’s debacle. However, his probity was not the major factor in Dromore by-election. It was opposition to power sharing and the strong showing of Jim Allister’s TUV that damaged the DUP. The dumping of Paisley Jnr therefore has a political significance well beyond the immediate claims of improbity made against him. The whole basis of the St Andrews settlement is now in question.

He was offered up as a sacrifice to assuage that section of the DUP’s supporters who are now in revolt against its participation in the power sharing executive. The problem for the DUP is that opposition from this quarter is unlikely to be diminished by such gestures. Paisley Jnr’s resignation was immediately dismissed by Jim Allister. He said that it would “not be enough to redeem the DUP with the unionist electorate.” For him the “fundamental problem” was the “policy of having IRA/Sinn Fein at the heart of government.” He warned that unless this policy was reversed the DUP’s decline would continue.

The departure of Ian Paisley Jnr is undoubtedly a blow to his father. It diminishes his political authority and increases his vulnerability. All the criticisms attached to his son can be just as easily be attached to him. Paisley and his chuckle brothers’ routine is now the primary the focus of unionist opposition to power sharing.

Ten months ago Ian Paisley was considered to be at the zenith of his political career. He had triumphed over his unionist rivals, forced the disbandment of the IRA, and was sitting at the head of settlement that was very favourable to unionists. He was master of the political landscape. Now he looks to be on the way out – forced from the post of party leader and First Minister by a growing revolt among his own supporters.

This turn of events punctures the assumption which has underpinned the St Andrews (and the Good Friday Agreement before that) – that if a settlement had the endorsement of Paisley (or Trimble in the case of the latter) then unionists would accept it. The reality is that there remains a solid core of unionists who will not accept any form of power sharing no matter how favourable. They will not be appeased by the departures of the Paisleys or new faces at the top of the party.

By-election result sends warning to DUP

The defeat in a council by-election in Dromore has sent a stark warning to the DUP over power-sharing with Sinn Fein. Its first electoral test since the restoration of devolution, in a district considered a good barometer of unionist opinion, proved to be a disaster.

The by-election had been sparked by the resignation of a UUP councillor. In such circumstances an alternative UUP member could have been co-opted to serve the remainder of the term. But the DUP insisted on a by-election. Obviously, the party was confident of pickling up another seat. The contest would also enable the DUP to advance its broader objective of consolidating its leading position within unionism by eating further into the support of the UUP, and smothering the challenge of the Anti-St Andrews Agreement unionists grouped around Jim Allister’s Tradition Unionist Voice (TUV).

On the face of it the DUP was well placed to achieve both these objectives. It already held four out of five seats in that ward and in the last council election in 2005 had won over fifty percent of the vote. A repeat of that performance would have seen it romp home. In the event the DUP came a poor second behind the UUP.

Its support slumped from around 50 per cent of the total poll in 2005 to about 28 per cent. Though the UUP won the seat it did not increase its share of the vote. The decisive factor in this election was the performance of the TUV. It took almost 20 percent of the first preference votes cast over all, and nearly 28 per cent of the total unionist vote. Finishing third, its transfers went to the UUP and ended up eliminating the DUP. The fact that most of its transfers went to the UUP demonstrates the degree to which its supporters wanted to punish the DUP.

The Dromore by- election witnessed the DUP being deserted by a significant chunk of its supporters. Given the TUV’s unambiguous position on the St Andrew’s Agreement, this is clearly a vote against power sharing. It reveals that a solid block within unionism is still opposed to power sharing with under any circumstances, even under a settlement as favourable to unionism as St Andrews.

The DUP had been able to accommodate them through the last Assembly election when it did not firmly commit itself to going into government with Sinn Fein. The poor showing of the anti-St Andrews candidates also strengthened the mainstream belief the rejectionist element had been marginalized, and that most had fallen in behind Paisley. However, this assumption has come under strain recently. The first indication was Paisley being deposed as moderator of the Free Presbyterian Church, and the growing speculation over his role as First Minister and DUP leader. Now with the Dromore by-election result we have firm evidence of a revolt among the party’s supporters. If such a result was repeated elsewhere, and remember Dromore was considered to be a relatively moderate area, the DUP could be in serious trouble. The TUV has the potential to do to the DUP what it did to the Ulster Unionists.

There were two reactions from the DUP to the Dromore result. One was to be dismissive. For example, Ian Paisley described it as a "flash in the pan." The other was one of concern. DUP Executive Minister Edwin Poots conceded that there was “an underlying level of discontent.” The local MP Jeffrey Donaldson said: "there is a protest vote there that we cannot ignore. We have got to recognise that message." They both promised that the DUP would listen to its supporters.

While one bad election result won’t precipitate a crisis within DUP it does create restlessness within the party, and will encourage those who have been biting their tongue over the settlement to speak out. Indeed, Jim Allister in the wake to the Dromre by-election, made an explicit appeal to this layer, asking them to “ponder whether by their presence and acquiescence they are not propping up the very thing which concerns them.”

The DUP leadership for its part will try to assuage its wavering supporters by cutting out the “Chuckle Brothers” routines and toughening its stance towards Sinn Fein. However, it will be difficult for the DUP to pick with a fight party that won’t defend itself and continues to capitulate on every issue (such as the Irish language) that it once claimed to hold dear. It also won’t assuage those unionists who are offended by the very presence of nationalists in Government. The only other option for the DUP is to bring the whole settlement crashing down. Any more electoral shocks, such as a victory for Jim Allister in next year’s European elections, may leave them with little alternative.

The St Andrews settlement is not about to collapse, but after Dromore by-election it is looking unsteadier. Jim Allister could rightly crow that it was “a very unhappy St Valentine's Day for the Chuckle Brothers."

DUP rejects transfer of policing powers

The DUP’s rejection of the transfer of policing and justice powers to the Assembly has exposed yet again the vacuous claims of Sinn Fein for the St Andrews Agreement. We were told that St Andrews laid down a firm timetable for the devolution of these powers by May 2008. However, when Gordon Brown and Bertie Ahern recently made an appeal for movement on this issue, it provoked a fierce rejection from the DUP.

Senior members of the party lined up to denounce the proposal. Peter Robinson insisted the DUP had never signed up to a target for the transfer of policing and justice powers. He said that such a move would only happen when there was “the necessary support within the community”. Nigel Dodds said the issue was "not on the agenda". These views were echoed by DUP leader and First Minister Ian Paisley. He said that he had “absolutely no intention of bringing such a proposal to the Assembly as the necessary conditions do not exist." He didn’t detail the conditions, but mentioned the disbandment of the “IRA/Sinn Fein army council” and also the need for financial support from the British Treasury. However, the fundamental condition he laid down was the need for confidence within the unionist community.

The essential message from the DUP was that if unionists were uneasy at the prospect of nationalists having any role (no matter how minor) in administering the police and judiciary in the north it won’t happen. This is basically a reasserting of the unionist veto, albeit dressed up in the language of consensus. Paisley also denied that his party had agreed this at St Andrews. He said that it was “not our idea and we never agreed to it."

Not that the DUP leader has to worry about pressure from the British or Irish governments. Their appeal on the transfer of powers was extremely week. They merely said they believed “the time is right” for such a move, and that they stood “ready to help the political parties”. No hint of coercion or pressure here. Indeed, after the negative response from the DUP, they drew back from their timid proposal. A spokesman for the Irish Government acknowledged that the deadline was not likely to be met and “would accept that there may be some slippage.”

Sinn Fein were left floundering by all this. Gerry Adams made the astonishing claim, particularly in the light of the statements from their leadership, that the “DUP has agreed with the broad principles of all of these matters”. For him it was “only a matter of timing”, although he wasn’t prepared to set a time frame; presumably this is down the DUP. Sinn Fein’s policing spokesperson Alex Maskey said the party was “working very much with a mind that the transfer of policing and justice will happen by the May time-frame, and that is an agreement.”

The contrast of such statements to reality is stark. It could be described as a state of denial. But Sinn Fein can do little else, as to recognise the reality of the situation would be to admit complete failure. We are witnessing the same process we had with the Belfast Agreement. Sinn Fein in the role of the faithful defenders of a settlement they insist is being implemented, while the unionists, with the endorsement of the British and Irish Governments, pick it apart and bring it down. This is happening even more quickly with the St Andrews Agreement as it was pretty threadbare to begin with. The few gestures towards nationalists, such as the Irish Language Act and the devolution of justice and policing powers, have been junked already.

Executive budget starts to bite

As the practical implications of the Executive’s first budget begin to filter through its neo-liberal and anti-working class character becomes ever clearer. For example, last week the Social Development Minister Margaret Ritchie told her Assembly scrutiny committee the draft budget allocated to her department was completely inadequate and not sufficient to tackle homelessness or the number of people in housing stress. She revealed that the Housing Executive maintenance and upgrade budget could be slashed by fifty per cent.

Another organisation, also within the Department for Social Development, whose budget is facing cuts, is National Energy Action (NEA). It has responsibility for tackling fuel poverty. This is a particularly pressing issue in the north which has the highest level of fuel poverty in the UK. There are 154,000 households classed as fuel-poor, and each year more than 2,000 people die because of the cold. Fuel poverty also has a disproportionate impact on the elderly with over 50 per cent of cold homes occupied by older people. It is a problem which is escalating. The results from the 2006 House Condition Survey, which are out soon, are expected to say that this figure has risen to above 210,000 households. That means that 36 per cent of all households in Northern Ireland are experiencing fuel poverty - a jump of 5 percent from 2001. NEA’s director Pat Austin has described the decision to halve its budget as a "dangerous" and "draconian". The clear implication is that suffering will increase and people more people will die.

Another area to feel the squeeze has been health. Spending on the health service in the north is already the lowest in the UK, and the allocation of funds in the budget means it will fall even further behind. This is despite the fact that the population is in poorer state of health and demands on services are greater. Budget restraints mean that the Department’s new mental health strategy cannot be launched, and that the new women and children's hospital, promised for Belfast since 2000, will be further delayed.

Some of the proposals in the Executive’s budget wouldn’t seem out of place in Swift’s Modest Proposal (maybe the finance minister is hoping that more elderly people dying of cold will ease pressure on health service!). Unfortunately, Peter Robinson is no Jonathon Swift. His proposals aren’t biting satire designed to expose injustice, but his vision of how society in north should develop.

What is at the heart of this vision is inequality. So alongside the parsimonious approach to addressing health and housing needs, we have the business class being encouraged to milk the public purse for all its worth. Recent examples of this include the revelation that the fees paid to by Government departments to consultancy firms have gone up from £13m per year to just over £40m. NI Water alone has spent than £16m on consultancy fees since April.

Often the people awarding these contracts are directly linked to the companies that benefit. In one case, the Strategic Investment Board (SIB), which is overseeing the roll out of PFIs in the north, paid the company of one of its own board members more than £2m in fees for his and a colleague's services. By happy coincidence (for him) James Stewart is the chief executive of Partnerships UK plc (PUK), a company which provides public and private sector commercial expertise for public private partnerships.

These examples of the soaking of the poor and the featherbedding of the wealthy are scandalous. But they are not apparitions or mistakes. Rather, they are a direct and deliberate result of the policy, which all the parties have signed up to, of shifting the north’s economy in a neo-liberal direction. They exemplify what glib phrases such as “rebalancing the economy” or “growing the private sector” (which flow feely from the mouths of minsters) actually mean in practice. And this is just the start!