Welfare Reform: for once the DUP and Sinn Féin are both right

With Welfare Reform topping the debate at Stormont, we reprint Steven Agnew’s Debate NI column on the issue.

Welfare reform has divided the Northern Ireland Executive down the middle, with the First Minister suggesting the impasse is threatening the sustainability of our political institutions.

The DUP claims we must implement the UK Government’s welfare cuts because we cannot afford the cost of the status quo. Sinn Fein argues that the poorest in our society can’t afford to heat and eat as it is, never mind after further cuts.

For once, both sides are right.

But there is a third option, albeit one our Executive parties may be too afraid to consider; we could raise more revenue. This could allow us to maintain welfare spending in Northern Ireland whilst reducing the cuts to our block grant, and ultimately to our public services.

Take the long-deferred issue of water charges. The Green Party outlined a solution in its 2011 manifesto: bring in water charges on the lines of a progressive tax. Those on the lowest incomes would be protected, and perhaps £200m in block grant savings could be freed to improve public services.

When water charges were introduced in England, the funding earmarked to run the service in Northern Ireland was taken out of our budget by Westminster. So each year around £200m is reallocated from public services like health and education to pay for our water services. In effect we are already paying a £200m penalty for not introducing water charges. Can we afford that? Clearly not.

Again, there has been absolutely no discussion of the tax break that the Executive introduced in 2009 for the very wealthiest in our society by capping the rates payable on property valued over £400,000. Effectively people in working class estates who own their own homes are subsidising the rates of those in million-pound mansions. Can they afford that? Again, clearly not.

I have submitted a motion to the Assembly on this; we will see if any other party will endorse the idea that those who can afford more should pay more.

If we get the power to vary the rate of corporation tax, will those currently emphasising the costs of refusing to cut welfare also highlight the costs of reducing corporation tax – estimated to be anywhere between £200-700 million per year? Don’t hold your breath.

When it comes to protecting the most vulnerable in society the cost, we’re told, is prohibitive. But tax breaks for big business? Money is no object. One plank of the third option has to be that we offset the costs of maintaining welfare support by rejecting the bill for corporate tax breaks.

Northern Ireland politics can sometimes be like the Dr Seuss story about the ‘North-Going Zax’ and the ‘South-Going Zax’. When the two come face to face they both refuse to move because each has a rule to only go one way. The world moves on and builds a bypass around them.

If we don’t reroute the discussion on welfare reform the world will move on while Northern Ireland remains stuck.

23 September 2014 (First published: Belfast Telegraph, Debate NI, 15 September 2014)

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