Northern Ireland: New Labour announces huge onslaught on public sector

Schools, hospitals and jobs will be lost…higher rates and new water tax…

In a speech in Belfast, on 21 September, Peter Hain, Secretary of State for Northern Ireland, announced an all-out neo-liberal attack on the public sector. He proclaimed his intent to privatise further swathes of the public sector, sack public sector workers, close down schools, escalate cuts in health and education, and to increase household rates [taxes] and to introduce water charges.

The speech was, in part, a re-statement of current policy and a bringing together of already announced plans but, in total, it amounts to much more than this. In short, it represents the greatest ever assault on all the post-war gains of the labour movement in Northern Ireland – even more fundamental assault than that of Thatcher in the early 1980s.

Hain followed up his speech with a news conference on 25 October, where he revealed next year’s budget for Northern Ireland. In his usual superior, patronising tone, he stated that people in Northern Ireland "don’t pay their way" and announced a 19% rise in the regional rate from next April. The regional rate has now risen by 85% over the last seven years.

It was no coincidence that the initial speech was delivered to the Institute of Directors. New Labour is very comfortable in such company and dances to the employers’ tune. The Secretary of State’s speech was met with acclaim by the employers and by the local press. The local establishment politicians issued a few muted words of criticism or said nothing at all. All accept Peter Hain’s key arguments or, unable to pose an alternative, keep their heads down. It is absolutely clear the main parties will not mount any opposition to these attacks and will implement the cuts if they ever manage to re-establish the Assembly executive [the ‘power-sharing’ Assembly, set up as a result of the ‘peace process’, is currently suspended].

And Hain’s argument is simple – the North’s economy is over reliant on the public sector and workers in Northern Ireland pay too little in tax, when compared to workers in England, Scotland and Wales. His solution, the promotion of the private sector: "As leaders of business and commerce consistently tell me, the current imbalance in the economy is unsustainable…For Northern Ireland to become a prosperous economy there is a need for an increased focus on the development of the private sector."

Collapse of manufacturing

It is indeed true that the Northern Ireland economy is heavily dependent on the public sector. Manufacturing, the main driving force of a modern economy, employs only 12% of workers, whereas 32% of workers are employed in the public sector. Employment in manufacturing has collapsed by an estimated 43% since the start of the ‘Troubles’, in the early 1970s.

Agriculture and especially the service sector make up the bulk of private sector jobs. While manufacturing employs 86,900, the service sector accounts for 549,180 jobs. The service industry has created mainly low-paid, anti-union, insecure employment. Many private sector jobs are dependent on public-sector contracts, on customers employed in the public sector, or on special tax-breaks. 4,000 small businesses, for example, pay no corporation tax.

Privatising public services and sacking workers, however, will further weaken the economy not strengthen it. And, of course, such an approach will further impoverish working class communities. The overall aim of the unelected Secretary of State is to cut £589 million (or 2.5% of the total) from government expenditure by 2007/2008. This signals a ratcheting up of the already large scale attacks on the rights of working people, public sector jobs and the welfare state in the North.

Pension rights for new entrants into the public sector have been slashed, in particular with the raising of the retirement age from 60 to 65 years. Gordon Brown is demanding 40,000 job cuts across the public sector in Northern Ireland, as part of hundreds of thousands of job cuts he plans across the entire public sector. The Review of Public Administration (RPA) is seeking to cut the number of local councils from 26 to as few as seven, the number of Health Trusts and Boards from more than 20 to fewer than ten, and the number of Education Boards from five to one. It is proposed that this will reduce "unnecessary waste" but the reality is that services will suffer and thousands of staff doing very useful work will lose their jobs.

The education sector has been under relentless attack for months, with job losses and cuts in services. Peter Hain has signalled that this will continue, as the government strives both to save money. "Current provision is simply not sustainable,” he said, “…this will inevitably lead to change – and indeed some schools closing". And to re-gear education in the interests of big business to achieve “an entrepreneurial culture in Northern Ireland we need to ensure that the ethos is instilled in our children." The RPA points in the direction of all non-teaching jobs in education – cleaners, caretakers, caterers and others – being privatised.

Further privatisation of the health service is proposed. Thousands of straightforward operations and other treatments are being contracted out to parasitical private health companies. The new hospital in Enniskillen town, in Country Fermanagh, will be privately built and run. Acute services in Omagh Hospital are to close within months.

Eighty-eight public buildings (calculated to be worth up to £250 million) are to be sold off to the private sector. The people who clean the buildings, and who provide security and catering services, will find themselves privatised too, with lower pay and poorer conditions. The buildings will then be rented back by the government – a ridiculous waste of money!

The keystone of New Labour’s slash and burn policies for the North is the privatisation of the water service. To facilitate this vandalism, water charges are to be introduced in April 2007. A year ago, a leaked document revealed the government’s fears over a mass non-payment campaign, if they pushed ahead with the introduction of water charges. The document suggested a series of sharp rises in the rates in an attempt to take the sting out of the eventual imposition of water charges. The proposed regional rate rise of 19% is clearly part of this strategy.

Privatisation agenda

Already large chunks of the water service are being handed over to private companies. Ex-Tory MP and now New Labour junior minister in the Northern Ireland office, Shaun Woodward, awarded a £110m Private Finance Initiative (PFI) contract for the upgrading of treatment facilities to a consortium of multi-national companies (Dalriada Water). The consortium is made up of three companies. One is Farrans, a construction company owned by Cement Roadstone Holdings which, only a few months ago, was awarded a very similar water service PFI contract worth £270m.

The other companies are Tyco International and the Kelda Group. Tyco is a major multinational company, which is based in the Bahamas to avoid tax. Its former chief executive, Dennis Kozlowski, and finance director, Mark Swartz, were recently jailed for 25 years in New York for corruption. The Kelda Group owns Yorkshire Water, one of the privatised water companies in England. Last year, Kelda’s pre-tax profits rose by 16.8% to £223.7m after the regulator Ofwat announced that Yorkshire Water would be allowed to increase water charges by 18% more than inflation between 2005 and 2010. Executive Chairman of the Kelda Group, John Napier, was one of 58 bosses who signed a letter calling on big business to support New Labour before the last general election.

Peter Hain argues that the average annual household bill for rates and water in Northern Ireland should increase from £500 to £1200 (through a combination of increases in the rates and the introduction of water charges). This, he asserts, is only fair as it would bring household charges up to the average level in England and Wales. This argument is as full as holes as our neglected water infrastructure.

Water charges in England and Wales represent not some notional "fair" rate for the service provided but include a huge profit margin. The introduction of water charges in the North will lead not to "extra" funds for health and education but will swell the coffers of the private water companies even further.

Furthermore, comparing the North to England and Wales is not comparing like with like. Wages are lower in Northern Ireland, more people are on benefits, and prices for many essentials are higher. These are the reasons why government expenditure is necessarily higher. The government already recognises regional differences in living costs and taxation. Public sector workers in London, for example, are paid extra to cope with the cost of living in that city (‘London weighting’). The Scottish parliament has the right to "vary" tax rates, up or down, though it has yet to exercise these powers.

And finally, of course, the assertion that we must pay the same local taxation as households in England and Wales is based on the assumption that the rate is right there, and wrong here. The reality is that the direction of taxation policy for thirty years has been to reduce taxes for the rich (mostly through reducing direct taxes) and to increase taxes for the rest (mostly through local and indirect taxes such as VAT). The massive increases in the rates, and the introduction of water charges, are shifting the tax burden more and more on to workers.

If Hain’s real concern is "fair" taxation he and his cabinet colleagues could increase taxes on the very rich – the layer of society who have benefitted most from the tax cuts of the Tories and of Gordon Brown. He has no right to patronise working people and to lecture them on "paying their way." His junior minister, Shaun Woodward, is a millionaire who lives in an eighteenth-century ten bedroom mansion. He also has property in St Helens (Liverpool), London, France, New York and an estate in the Carribbean. In 1947, Aneuran Bevan, the labour minister who introduced the NHS, described his venomous Tory opponents as "lower than vermin". How would he describe an ex-Tory who pockets generous tax cuts awarded to his class and proves his Blairite credentials by leaving all of County Tyrone, in Northern Ireland, without an acute hospital?

Fight-back needed

This all-out assault must be met by a resolute fight-back. The public sector trade unions must unite and co-ordinate a campaign to defend public services. This is not a fight for workers in the public sector alone, as all working people will suffer if these cuts go through. Ways must be found to include local communities in the campaign from day one. A one-day strike of all public sector workers must be built for now. If the leaderships of the unions do not take a lead, then workers must organise from below and pressurise them to act.

The imposition of water charges must be met by mass non-payment. The ‘We Won’t Pay Campaign’ is already organising in communities across Northern Ireland, to build such a campaign. The lessons of the mass campaigns against the Poll Tax, in Britain, in the early 90s, and, later, the Water Charges in Dublin, are clear. A campaign of mass non-payment is necessary to defeat the water charges in Northern Ireland. Defeat of the government on this issue would be a key turning point in the struggle to defend all that we have won since the Second World War.

From Socialist View, magazine of the Socialist Party, cwi in Ireland

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November 2005