Following ten weeks of talks yesterday saw the publication of the Stormont Agreement and Implementation Plan, entitled ‘A Fresh Start’. The 67 page paper is presented by the British and Irish Governments and the First and deputy First Ministers. In addition to dealing with ‘the legacy and impact of paramilitary activity’ the purpose of the talks and Agreement are to urgently address “the implementation of the Stormont House Agreement (SHA) of 23 December 2014.”
Although the focus of this article is elsewhere it would be remiss not to mention the glaring omission in yesterday’s Agreement in relation to SHA implementation. The issue that took up most space in the SHA – dealing with the past – is to be parked, due to the British Governments insistence, entirely outside of the terms of the SHA, that ‘national security’ vetoes be inserted in the legislation. See CAJ’s own statement on this here.
Economic, Social and Cultural Rights and the Agreements
The Equality Coalition recently ran a conference on austerity and inequality. This included an equalities analysis, and the presentation of specific research by Professor Christine Bell and Dr Robbie McVeigh of the measures contained in paragraphs 1-14 of the SHA. These paragraphs, entitled ‘finance and welfare’ essentially set out a Whitehall-driven Structural Adjustment Programme for Northern Ireland.
The current Agreement also deals with paramilitary activity, the implementation of SHA processes in relation to flags and parades, and structural reform of the institutions. The purpose of this post however is to give a quick appraisal from the perspective of ESC rights of the economic provisions in the new Agreement.
NI budget cuts to date and shrinking the public sector
Paragraph 1.1 of Section B of the new Agreement puts an official figure on the cuts that have already taken place in NI since the onset of the banking bail out. £3.7 billion of cuts have already been imposed in the years from 2008-15.
Paragraph 1.2 outlines that 5,210 jobs are being removed from the NI Civil Service from April 2014-March 2016 as a result of the November 2014 recruitment freeze and the SHA Voluntary Exit Scheme (VES). It also puts a figure on job cuts in the wider public sector (i.e. outside of civil servants) of 2,200 in the current financial year. To date there has been no overarching official equalities or broader ESC analysis of the impacts of the £3.7 billion cuts or the 7,410 job losses.
The Agreement does state that ‘additional security funding’ of £160m will be provided to the PSNI, which may alleviate some of the pressure from cuts on policing. £25m may also be provided for an NI Executive Strategy on tackling paramilitary activity, if one can be agreed (see section D, 8.1-8.5). Section E makes reference to Irish government commitments on infrastructure spending.
An end to economic sanctions?
The UK government had imposed economic sanctions on the NI Executive for not implementing the provisions of the Welfare Reform Act 2012. Parliament were told that (WQ 201864 30 June 2014) that what are commonly referred to as ‘fines’ or ‘penalties’ of £13m (2013-14 financial year), £87m (2014-15) and £114m (2015-16) would be imposed.
Paragraph 3.5 of Section D of the Agreement on UK government commitments states that the sanctions will be stopped the moment the Assembly passes the consent motion to be tabled today to allow Westminster to temporarily legislate on social security matters. It also states that a ‘deduction due for the remainder of the year’ will be ‘refunded’, and a similar sum will be made available in the next two financial years that the Executive might consider spending on matters like Desertcreat College. It also states no ‘welfare reform act 2012’ sanctions will be levied in the 2016-17 financial year. Unless the ‘refund’ goes further than what is explicitly stated this would appear however only to restore the NI Executives budget to what it was before sanctions were imposed – essentially the budget they were working from anyway rather than any additional resources.
More cuts v progressive taxation
Whilst also containing some commitments for additional resources and ‘flexibilities’ the Agreement makes clear that Plan A is to use further cuts to balance the books rather than raising revenue. Key recommendations from the aforementioned Equality Coalition conference were for the NI Executive to instead consider increasing Rates on the better off (one of the few areas of taxation the devolved institutions have competence over), as well as rent controls as a method of both making housing more affordable but also reducing the social security bill in relation to payments that go to landlords.
Paragraph 1.12 (Section A) on ‘Cost Reduction Targets’ commits each of the new nine NI Departments to setting ‘challenging’ cost reduction targets for each year of the Spending Review Period . Paragraph 1.14 does go on to reiterate the SHA provision that if cuts cannot be achieved quickly enough or there is a decision to “maintain enhanced public services” (i.e. the services we have at the moment) then Plan B will be to consider (unspecified) revenue raising measures.
Paragraph 4.2 of Section D of the Agreement on the UK government financial support contains a provision for ‘fiscal charter’ type legislation to prevent the NI Assembly from considering ‘spending plans’ over what it is allocated through the Treasury’s block grand and borrowing limits.
Cutting profits tax on corporations
What is laid out more clearly is the plan for a tax cut on business profits, as envisaged by the SHA. The intention is now set out in paragraph 1.19 that Corporation Tax will be cut to a rate of 12.5% by April 2018. This is subject to the UK governments SHA conditions on sustainable ‘balanced budgets’ being agreed.
The Agreement sets out that the Northern Ireland purse will bear the costs of the lost revenue from this cut. There is no definitive estimate however as to what these costs are likely to be in the Agreement. What section D of the Agreement does say is that the UK government will do an ex-post review of the costs in April 2022, four years after the change is introduced. At this stage ‘further adjustments’ will be made to the NI Block Grant on the basis of evidence of the “behavioural costs (but not second round effects)” of the corporation tax cut. One reading of this is that no cuts will be made to the Block Grant until April 2022 albeit the language of ‘further adjustments’ and whether there is any retrospective impact would be worthy of greater clarification. The BBC is reporting that officials have calculated the cost as being £240m a year by 2021 – with lower costs of £80m and then £160m in the first two years of operation, all of which will be knocked off the block grant.
Social Security
Sections C and D of the Agreement sets out that the NI Assembly will approve a Legislative Consent Motion (LCM) for the UK Parliament to legislate, by a (fast track) Order in Council, for the GB Welfare Reform Act 2012 clauses with some previously agreed variations (e.g. on sanctions), AND the welfare clauses of the Welfare Reform and Work Bill currently going through Westminster AND a system of ‘top ups’ the NI Executive will introduce to mitigate against the impacts of both welfare and Tax Credit cuts.
An LCM is a provision allowing Westminster to legislate on a devolved matter on a particular set of provisions in a bill. It is not the same as Social Security powers being removed from Stormont permanently. The Agreement states the provisions which go through Westminster will not be permanent but will include a sunset clause to lapse at the end of 2016, by which time presumably it is planned the Assembly will have legislated for its own system.
The UK government will also provide up to £125m over 5 years to address ‘welfare error and fraud’ and might let NI keep some of any of the monies subsequently saved (paragraph 3.5 Section D).
Section C of the Agreement then sets out the ‘top up’ provisions which will entail £585m of executive funds being spent over the next four years to mitigate against welfare and tax credit cuts. This is namely £60m a year on tax credit cuts, and £90m a year on welfare cuts (save 2016-17 where it is £75m). Save for not-applying the Bedroom Tax, which is singled out as already agreed, the exact nature of what is to be compensated is to be determined by an Executive-established working group.
Housing and a ‘shared future’
The UK government section (D) provides additional ‘flexibilities’ on the borrowing agreed under the SHA. This includes (paragraph 7.2) a change in capital borrowing for shared and integrated education which can now also be used for shared housing, subject to the UK government signing off on individual projects.
Tackling segregation in housing is an important human rights goal. Yet depending on how initiatives are framed they can conflict with equality and non-discrimination duties to provide housing to those in most objective need. This is the case where projects focus on quota based provision of new housing developments in a context where objective housing need is much greater in some communities/ethnic groups than others. In this sense initiatives can be a recipe for a shared yet unequal future as existing patterns of inequality are perpetuated. The alternative approach is to create the conditions whereby groups in housing need are no longer intimidated, evicted and excluded from living in areas where there is already housing capacity. It remains to be seen whether any of the envisaged projects will take such an approach.
On housing per se the Agreement (Section B para 1.11) states that the NI Executive is “still committed to progressing significant structural reform of social housing provision” and that this will be focused on reducing Departmental Expenditure subsidy provisions.
On a ‘shared future’ in general terms the UK government also states (section D paragraph 9.1) that an extra £60m will be released over five years for ‘confidence and relationship building measures’ to create the conditions for the removal of peace lines and the creation of a ‘shared future’.
There is therefore a lot still to be determined in relation to implementation across a number of elements and we need to keep the pressure on to ensure mandatory equality impact assessments are properly conducted on the new or changed policies as well as broader ESCR analysis as to the scope of their impact.