22 April 2010
Ulster Bank’s Richard Ramsey (Irish News Business Section March 30) argues the case for a significant transfer of public money away from the delivery of public services and directed towards providing assistance to the private sector to enable that sector to create the necessary jobs and wealth which will take Northern Ireland off its dependency on public expenditure. The journey towards this neo liberal paradise entails cutting public sector jobs (according to Ramsey up to 6000 in the case of the NI Civil Service alone), depressing the pay of public servants, diminishing their pension entitlements and/or making them pay more via a public service pensions levy. Equally threatening is the suggestion that citizens in Northern Ireland who rely on social security and other related benefits should have these set at levels lower than the rest of the UK i.e. cuts in welfare benefit payments. The current levels of benefits are insufficient to bring benefit recipients above the official Government poverty line and any reductions would result in greater misery for those in receipt of benefits. The article proceeds to make the case for capital expenditure elements of public spending to be protected. In essence protect those elements of spending which directly benefit the private sector at the expense of the spending which delivers day to day services to our community, labour intensive services like education, health and social care, local government services and other services which require the employment of staff.
This “Robin Hood in Reverse” approach complements the proposals by the Economic Reform Group NI which has championed the case for a trade off between the Northern Ireland public spending block grant from Westminster in return for a lower rate of corporation tax. This essentially represents a transfer of resources from the poor to the rich irrespective of how the policy is dressed up in the language of business and economics.
It is ironic that the source of these proposals should be employed by the Ulster Bank, i.e. a subsidiary of the larger RBS bank which has benefitted from the largesse of the government or more accurately £45bn of public money. It is a bit “rich” in every sense to take lectures from such corporate sources - these recipients of “government benefits” - on how we grow our economy and best plan for the future.
The Tax Justice Network in the UK has concluded as part of its research that around £120bn is lost to the UK Exchequer annually due to tax avoidance and tax evasion and the beneficiaries of this activity are the wealthy and the private sector, in particular the large business conglomerates. Yet the UK Government cut back on the very staff in HMRC whose responsibility it is to chase after these monies which could be used to support public services or even provide support to small indigenous companies which are struggling to survive the recession.
Any reduction in corporation tax in order to attract Foreign Direct Investment would be tantamount to subsidising large corporations even further as this type of company is already the beneficiary of the current tax rules which permit legal tax avoidance through the employment of specialist tax advisers, accountants and solicitors something PAYE employees cannot avail of at all.
If the NI Executive wishes to grow the private sector it should not be at the expense of public services. There are already a number of venture capital funds operating in Northern Ireland with the objective of growing indigenous entrepreneurs focused to a large extent on research originating in our local universities. This is where the emphasis of the NI Executives policies for developing the private sector should be focused not on attracting FDI; the NI experience of FDI has not been a particularly happy one with the flight of multi national companies from these shores in difficult times following massive public subsidy being an unfortunate characteristic of this over reliance on trans national companies to solve our economic and employment ills.
After decades of the public subsidising the private sector through direct and indirect grants, beneficial taxation law, Public Private Partnerships it is time that it was recognised that the public sector is central to a fair, competitive and stable state in which public services are at the heart. Colin Talbot Adviser to the Treasury Select Committee reinforced the argument against public sector job losses when he stated
“the savings you make from losing jobs in the public sector are far less than the amount you pay out because that then shows up in rising ill health and extra benefits payments.”
A robust public sector lays the foundations of economic recovery by providing an educated and healthy workforce. The economic orthodoxy that blames our economic and financial ills on the public sector is blind to the fact that the real correlation is between public debt and the trillion £ bail out of many banks and financial institutions including the Ulster Banks parent company RBS, and not with the cost of the public sector.
The financial and private sectors interests have successfully shifted the debate away from the real cause of the current fiscal deficit into an attack on the public sector, the services provided to our communities and the employees who work day and daily on behalf of all the people in Northern Ireland.
The agenda of public spending cutbacks reflects the “Shock Doctrine” approach to opening the economy even more towards the maximisation of profit with calls for deep cuts in public spending, the diverting of even greater public resources to the private sector at a time when, as Richard Ramsey claims, the public sector trade unions are in a weak negotiating position. Whatever the reality in respect of the trade unions strength they will not acquiesce in the face of these attacks on the whole community in Northern Ireland because they understand in whose interests these policies are being promoted. It isn’t in the interests of the ordinary citizen and certainly not for the benefit of the less well off in our society.
The Northern Ireland Executive needs to understand the real agenda at work and they need to resist any attempts to restructure the economy at the expense of the people of Northern Ireland. Public services involve the redistribution of wealth to ensure a fairer society. Public spending cutbacks will ensure that our society is more unequal. Attacks on public services represent an attack on almost everyone in Northern Ireland and the agenda outlined by Richard Ramsey represents a version of the Robin Hood story which involves stealing from the poor to give to the rich.