The politics of welfare in Northern Ireland

Published: 12 June 2015
Northern Ireland's deepest and most recent political crisis focuses around the minutiae of welfare powers but, says Duncan Morrow, there's high politics behind this seemingly prosaic issue. 
Who saw it coming?  The latest, and possibly most serious, crisis in Northern Ireland’s fragile devolution came not from bombs, flags or parades but from a neglected aspect of the first version of home rule established in 1920.   Years before the comprehensive welfare state, Northern Ireland got the power to set its own priorities and fund all transferred services from its own resources.   In practice, parity with the rest of the UK in social security could only be maintained by adopting the standards of the Westminster paymaster.  So, while in theory, the expansion of welfare spending after the War was ‘agreed’ by the Northern Ireland Parliament, deviation only materialised where it was in the interests of London.  Thus, benefits and healthcare were at the same levels as elsewhere in the UK, although realpolitik dictated that variations - like keeping domestic rates throughout the poll tax and council tax eras - were determined by pragmatic considerations.
The 1998 Agreement simply left the powers intact.  The residual power to vary attracted almost no attention during the fraught days of negotiation, institutional crisis and brinkmanship before 2007.   Benefit rates were the same in Liverpool, Glasgow and Belfast.  
The consequences for Northern Ireland of the world financial crisis and of austerity in London and Dublin took time to crystallise.   Like other devolved administrations, the Northern Ireland Executive’s ability to influence universal credit, benefit caps or changes to housing benefit was limited.  Furthermore, the Treasury had little sympathy for special pleading from Belfast.  
In Northern Ireland, however, the impact of the crisis was also influenced by events south of the border.  Following the collapse of the banking system, the Irish government introduced radical measures required by the EU-IMF bailout.  Sinn Fein, seeking power in both north and south, refocussed resources southward and rebranded themselves as the leading opponent of austerity.  The priority of the Republic for Sinn Fein implied that they would lead the charge against austerity in the North.  With a southern election looming, most commentators agree that the accusation of administering Northern austerity would be extremely damaging to Sinn Fein.  Thus, despite the absence of internal resources, and with no capacity to design and administer an alternative autonomous welfare system, Sinn Fein, with support from other nationalists in the SDLP, declared they could not agree to impose British welfare reforms in Northern Ireland.  
The implicit crisis was postponed from year to year by special arrangements allowing Northern Ireland to delay the introduction of the changes.  But by late 2014, patience in London was wearing very thin.  At the last minute before Christmas, and in the face of threats of mounting fines and costs, Northern Ireland’s politicians agreed a package of measures with the British Government in the Stormont House Agreement, where the commitment to introduce the welfare changes was mitigated by a number of special ‘Northern Ireland measures’.
Almost immediately, any consensus broke down.  While Unionist and Alliance Ministers agreed on the broad parameters agreed at Christmas, Nationalists disputed both detail and totals.  When the matter was put to a vote, Northern Ireland’s special arrangements for cross-community consensus kicked in, and the proposals failed to gain sufficient support.  
Without a budget, the potential for Treasury to step in rises daily.  In the absence of agreement over finance, all government in Northern Ireland appears to have ground to a halt.  The estimated costs of administering in-year cuts varies from £600m to £300m. Meanwhile, the reputation of devolved government as a mechanism for policy-making is lower than ever.  
Nobody quite knows what happens next.  Against the wider drift of devolving greater fiscal autonomy to Scotland, Unionists propose that the fiction of welfare autonomy be ended and the power repatriated to Westminster.  Sinn Fein, mindful of the optics of extending British jurisdiction in Ireland has declared such a change unacceptable.  The British Government has no appetite for further NI responsibilities.  At some point, however, the music has to stop.  Crisis?  What crisis?
Dr Duncan Morrow is a lecturer and Director of Community Engagement at the University of Ulster.