Time to act on the Welfare Reform Bill

12 July 2014
This being the Twelfth of July, it is not impossible that a few people awoke with headaches this morning. If so, they may have to share the paracetamol: Stormont ministers have something of a headache of their own. According to Finance Minister Simon Hamilton, the Executive will have lost around £119m from its budget by this time next year. Why? Because we are being fined for failing to implement the welfare reforms being brought in elsewhere in the UK.

What are the reforms? There’s a fairly long list (full details here), including the introduction of Universal Credit, Personal Independence Payments, changes to Housing Benefit (including the introduction of the so-called ‘Bedroom Tax’) and a Benefit Cap. And, of course, new powers to enforce the welfare regime through sanctions. Uniquely, under devolution, Northern Ireland has the power to pass its own welfare legislation independent from Westminster, but because we pay the same taxes, the agreement with the Treasury is that whatever we introduce should be essentially the same, and should certainly cost the same – the so-called ‘parity principle’. The NI Executive has already put a Bill together to implement our own version of welfare reform; but it has been on hold since 2012.

So should we simply push our recalcitrant politicians into implementing their own bill? Yes. And no.

For the Green Party in Northern Ireland, the ‘reforms’ brought in by the Conservative-led coalition in Westminster were the wrong answer to the wrong question. The world-wide crash of 2007-08 came as a result of elaborate speculation by powerful financial investors; it began in the US (and to an extent in the UK) with an unsustainable housing bubble, and ended in near global financial meltdown. Incredibly, the Conservatives – credit where it is due – managed to persuade many that government overspending (specifically, Labour government overspending) was the real problem. So cuts in public expenditure appeared to be the number one priority for ‘responsible government’.

They were, and are, anything but. As the Oxford economist Simon Wren-Lewis argues here, fiscal policy (taxing and spending) played ‘no part’ in causing the recession, and to claim that the recovery, when it came, was due to austerity measures is ‘utter nonsense’. If anything, the cuts delayed the recovery. One problem with cutting government spending as a response to recession is that it takes money out of the economy just when you need money going in. Another, arguably more important from an ethical point of view, is that it disproportionately affects those at the lower end of the income and wealth scale. Both problems would hit Northern Ireland hard, were we to implement the full package of cuts. A study conducted on behalf of NICVA concludes that the reforms since 2010 will ‘take £750m a year’ out of the NI economy; that the financial loss to Northern Ireland would be ‘substantially larger’ than any other part of the UK; and that some benefit-receiving households ‘are hit by several different elements of the reforms’, especially relating to disability. The cuts as proposed, then, will affect the lives of the most vulnerable.

For these reasons, among others, we do not support the implementation of the cuts as proposed. That said, a revised Bill could give us the chance to offer social protection something closer to the priority it deserves. The Executive has a certain leeway to re-design the welfare package – we could lose the bedroom tax clause, for instance, along with some of the proposed punitive benefit sanctions. True, we would have to find the money from elsewhere, but at present we are still paying that headache-inducing fine, and will have to continue to do so until we come up with a solution. In any case, those who oppose public sector spending seem quite happy to spend it on cutting corporation tax. For the Greens, we should not be drawn into a race to the bottom: those were the sort of policies that got us into trouble in the first place. Rather, we should be doing everything we can to boost spending at the base of the economic pyramid. Put money in the pockets of the less well-off and they spend it in the local economy. Moreover, we’ve been waiting thirty years for the wealth to ‘trickle down’; time to start spreading it out.

For the Green Party in Northern Ireland, the time is right to revisit and redesign the Bill. But time is short: delay much longer, and George Osborne’s full package of cuts – not to mention Ian Duncan Smith’s shambolic ‘Universal Credit’ – will be imposed on us willy-nilly. So the Executive should stop dithering, stop trying to balance the books on the backs of the poor, show some leadership and ingenuity, and get together to work for the common good.

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