Northern Ireland: Sammy lets the cat out of the bag - what will the cuts in the North mean for workers?

A recent paper on the public spending of the Stormont Executive confirms that cuts are on the way, which will affect jobs and services. How will this affect the delicate political balance set up by the Good Friday Agreement?

Sammy Wilson, the DUP Finance Minister in the Stormont Assembly has inadvertently let slip the size of the spending cuts that the Executive are likely to call for. In a leaked confidential memo to Executive members he announced that £370 million of cuts are on the cards.

According to a recent BBC report, he admitted that “cuts of £200m were required from current expenditure, as well as £172m from capital spending - such as roads, hospitals and schools.” The paper makes it clear that ministers “cannot go on trying to ease financial pressures by looking for unspent funds throughout the budget across the year” and calls for "early action" and "difficult decisions". “Deferring water charges in 2011 could cost up to £420m,” the minister warned.

Initially the British government had made some concessions in terms of delaying cuts and new taxes. They provided some financial help and also delayed the introduction of the new water tax. These were clearly measures to help the new administration establish itself. None of the parties that make up the Executive were keen on having to go immediately to their own electorate, whether Catholic or Protestant, and present simply a list of cuts.

Now that capitalism has entered a serious crisis, and the government in London has massively increased debt to bail out the banks, the pressure is on to cut public spending, and this includes the spending of the Stormont Executive.

For Northern Ireland, this means substantial cuts over and above the “efficiency savings” already identified by the British Government. Wilson is reported as saying that:

"I told the Executive at the last meeting that I would be bringing to them a paper indicating the consequences of a decision that we made and all signed up to - every party - that we would defer water charges," he said.

"The consequence of that is that if we don't find the money from charges, then we find it from departmental budgets.

"This is giving early warning to ministers that here are the consequences for your budget of a continuation of this policy."

He said, according to the BBC, that there needed to be forward planning to ensure there was a "seamless move into next year's spending" and that it was not "an emergency budget".

The truth is that the effects of the crisis are starting to bite in the north. What is particularly important is that the public sector makes up 63% of the economy in the north. This, combined with largely accidental factors such as a substantial increase in cross border shopping expeditions (due to the advantageous exchange rate), has delayed the onset of the worst effects of the slump.

As 4NI reported recently:

“There has been a prediction that cross-border shopper spending will hit a total of €700m this year. There's no stopping the flow of trade north as - despite the recession - the shopping exodus continues. Experts now also say that it will cost the Irish Republic's Exchequer up to €143m in lost VAT, excise duty and corporation taxes. The Central Statistics Office (CSO) report for the Department of Finance, revealed that shopping across the border will increase by some €150m to €700m in 2009.”

The extent of the planned cuts and the fact that the north will also be affected by any further cuts that are determined in London over the next period – and these are likely to be draconian – means that inevitably the Executive will be forced into conflict with the trade unions. The effects of the cuts will also prove to be dramatic in terms of services on a local basis, affecting, as usual, the poor, the vulnerable and the old.

Construction industry

Meanwhile the effect of the housing crash has had a big effect on the construction industry, a situation which will get far worse if the Executive starts slashing public sector capital funding. According to a report in the Belfast Telegraph:

“The construction industry is expecting the jobs situation to remain tough into the new year, despite signs that the house building industry is improving.

“Construction Employers' Federation (CEF) managing director John Armstrong told the Belfast Telegraph that higher sales from house builders are beginning to be reported, albeit against a very low base following the 35-40% drop in house prices.

“However, he added that the flow of infrastructure projects on roads, schools and hospitals is not sufficient to keep the industry moving in the right direction.

" ‘The workload that was anticipated from the public sector, primarily through the (Executive's) investment strategy has been very very slow to come to the market.

" ‘We estimate that over the last couple of years we've lost 28,000 jobs in the industry, that's a combination of the 14,000 that are claiming benefit and approximately 14,000 who were self employed.

" ‘Our concern is that most of our companies' workloads have decreased significantly beyond the end of the year. Most of them are saying to us that they will be making significant redundancies.

" ‘While general comment in the media is more upbeat, that we seem to be coming out of the recession, I fear with regard to the construction industry in Northern Ireland we may not have seen the end of it at all. Early next year we could see significantly increased unemployment,’ he said

Enormous pressures

The combination of deep cuts and economic crisis in the private sector will have important political repercussions in the north, not least because none of the political organisations represented in the Assembly offer any real alternative to working people, whether catholic or protestant. There is a huge political vacuum in the north. The danger is that without the development of a clear class alternative, the situation could become further polarised along sectarian lines.

The Good Friday Agreement, while solving none of the real underlying social and economic problems, was patched together and kept trundling along thanks fundamentally to the decade of economic boom that followed. This allowed for more jobs to be created. This was at the base of the apparent “solution” to the sectarian strife.

Now that boom is well and truly over and Ireland as a whole is feeling the effects in a big way. Jobs are now being destroyed and spending is being cut. In these conditions the trade unions and political parties will come under enormous pressure. This is particularly the case in respect of Sinn Féin, who are intimately tied up with the Northern Ireland Assembly.

Recent events in Lurgan and other such events over the past period illustrate some of this tension. But for the working class the response of the trade unions is of vital importance. How will the movement react to the cuts? The experience south of the border has been that there is no middle ground, it is ultimately a question of fight back or watch jobs, wages and conditions float away.

For the genuine socialists, Marxists and trade unionists in the north the task is clear: to create within the labour movement a clear political alternative, a party that voices the needs of working people on both sides of the sectarian divide.

In the recent years, within the Republican movement there has been a differentiation between those who have thrown their lot totally into Stormont and attempting to apply and keep to the Good Friday Agreement, and those who have started to draw the lessons of the past and move in the direction of class struggle as opposed to sectarian strife. Years of sectarian conflict have shown that down that road there is no solution to the problems of the north of Ireland.

In opposing the Good Friday Agreement, the task is not to turn back to the failed methods of the past, but to move forward to revolutionary class struggle. In the new conditions that are opening up the demands must be:

• Fight the cuts!
• Defend every job!
• No sectarian divisions!
• For the maximum unity of the working class!