North’s profound, long-term political crisis can be avoided but time is running out
IT IS an increasingly stark reality that – as the scale of the next phase of British Government austerity measures becomes clearer – the North is at a serious political crossroads that could lead towards an economic cliff.
British Tory policy is now creating seemingly insurmountable challenges for the Northern Executive and the overall local economic and political situation.
The growing austerity crisis will inevitably push the political process into a profound and potentially long-term crisis unless urgent solutions are applied very quickly.
The British Government’s policy agenda is being set by Tory ideologues.
The stated intention of Chancellor [Finance Minister] George Osborne (pictured) to proceed with a £25billion reduction in the overall British state’s expenditure plan for the period 2015-2018 – and the recent declaration of £3billion in public expenditure cuts this year – means that an estimated £800million will also be lost to the local economy between now and 2018.
This quantum – combined with the actual net cut of £1.5billion already applied to the Northern Block Grant – translates into an overall loss to the Six Counties economy of approximately £2.3billion, and largely within the 2014 to 2018 period.
Some have wrongly characterised the current deep difficulties as a product of the welfare impasse since last February. The fact is that the welfare impasse represents a by-product of the deeper austerity crisis.
The local private and public sectors are already too weak to withstand such a virtual economic tsunami.
One direct consequence of the ongoing austerity crisis is that, in these circumstances, the regional economy will not be able to afford the introduction of Corporation Tax even if a date and rate were to be agreed. Moreover, the level of cuts on track will also wipe out the financial assumptions upon which the local budget is predicated.
If the proposed British Exchequer plans are implemented, greater systemic and perhaps irreversible damage will be caused to the local economy.
The Good Friday Agreement’s political institutions were established as a framework to embed the Peace Process and to serve as agencies of economic and social regeneration. The prospect described would reduce them to delivery mechanisms for the austerity agenda of a Conservative Government and party with no electoral mandate in the North.
Against this backdrop, the ongoing political instability is bound to intensify and the political institutions will be threatened with the real risk of becoming unsustainable, and absent of credibility or purpose. The question which this presents is whether such an outcome has indeed become a calculation of British Government policy towards the North.
The escalating austerity crisis and Tory Government policy has set the regional economy and the political process on a negative downward trajectory. That can only have extreme and long-term effects, including potentially fatal repercussions for the Good Friday Agreement framework and the North’s relationship with Europe.
The emergent political crisis can be averted but for that to happen a change in British Government approach is now essential.
Specifically, that means the austerity agenda aimed at the North must be stopped. A new workable budget is required. (The £1.5billion cut from the Block Grant should be reinstated – this only represents 0.002% of total British state expenditure.)
Borrowing powers similar to the ‘off book’ arrangements proposed for Scotland should be agreed so as to attract new forms of investment. Incredibly, every council in the North presently has borrowing powers which British Government policy denies the Executive. That is an entirely absurd and contradictory policy position.
Full fiscal powers should be transferred to the local Executive.
The regional economy cannot be restructured without a larger private sector and sustainable public services. But this aim will not be realised without the instruments to attract new investment and design and drive forward a regional economic development plan over the next 5 to 10-year period.
A new strategic and policy direction of travel needs to be set for the North and away from political instability and austerity.
This poses an immediate challenge for all political parties, social partners and stakeholders in civic society to work together to establish common ground and to coalesce around an agreed economic and political agenda.
A new negotiation is required with the British Government on what this must mean to move forward in the North. Support for such an approach should be mobilised within the business sector, trades union movement, the churches, and right across civic society.
The potential exists to harness international goodwill in Scotland, Wales, Europe and the United States. The Irish Government has to bring itself onto the right side of any such coalition.
Going backwards is not an option. That will happen, however, unless the austerity onslaught is stopped and the political institutions and power-sharing are stabilised and energised with a sustainable economic and fiscal framework.
The political parties and social partners have to act and speak with one voice – but time is running out.