There are many dimensions to economic marginalisation and deprivation in Northern Ireland and many of them are common to other parts of these islands. It is particularly evident here in the high rates of youth unemployment and the widespread incidence of low pay, often associated with part-time working and zero-hours contracts. A result is that many young people have become demoralised and detached from both the education system and the workforce. It is vitally necessary that we re-engage them.
As requested, this submission addresses what we see as the root causes of the problem and what a Westminster Labour Government can do, in conjunction with the local Stormont Executive, to alleviate it. Many of the policies announced by the party for the economy as a whole are relevant here.
Labour at Westminster may have limited direct responsibility because of Stormont devolution. But it can set a political example to the Stormont Executive. Moral suasion can be very powerful.
Northern Ireland is one of the most unequal parts of the UK, with average earnings some twenty per cent below the UK average and widespread low pay, unemployment and educational underachievement. Labour’s overarching commitment to equality and social justice must inform their approach.
People here suffer discrimination as a result of the party’s ban on standing Labour Party candidates in Northern Ireland. The suppression of progressive Labour Party politics, by forcing our politics ever more firmly into a sectarian mould, contributes greatly to the ingrained structural inequalities.
The marginalised and deprived, as well as those workers organised in trade unions, have no political voice to focus on their needs. To develop the cross-community anti-sectarian politics necessary to tackle these inequalities, we must have the democratic right to vote for Labour Party candidates in all elections.
A key thrust of policy must be to improve the motivation towards work by improving the ability of the workforce and the quality of jobs available, as part of a move to an overall more productive workforce. A Labour Government can contribute in a number of ways.
Make work pay
First, a priority is to make work pay, so that it is more attractive than a life on benefits and that it takes people out of in-work poverty. The cost of living crisis is felt even more acutely in Northern Ireland because of our relatively low wages and high energy costs. Earnings levels can by increased by raising the National Minimum Wage in real terms so that it is closer to average earnings. Also, strong action needs to be taken to improve its enforcement. This is currently the responsibility of HMRC.
Currently, over one quarter of Northern Ireland workers are paid less than the Living Wage. Young people in the 18-21 age group are most affected. So, encouraging the widespread adoption of the Living Wage must be a priority. Labour at Westminster can set an example by ensuring the Living Wage is the minimum pay throughout the UK-wide public sector and in public contracts awarded by these UK-wide bodies.
An important contributor to making work pay is to ensure parents are supported in the workplace. Labour’s policy of extending free child care for three and four year-olds from 15 to 25 hours per week for working parents is key here. As this is to be funded nationally by an increase in the bank levy, the Stormont Executive should be encouraged to replicate it.
Create decent jobs
A second priority must be to help generate more well paid decent jobs. Given the immediate task of tackling youth unemployment, we welcome Labour’s proposal for a repeat of the bank bonus tax, using the funds raised to provide a Compulsory Jobs Guarantee for young people out of work. Northern Ireland must receive its fair share of this tax.
The Stormont House Agreement envisages the devolution of Corporation Tax to Northern Ireland. The main proponents of this move (eg the First Minister and the DETI Minister) wish to cut the rate of Corporation Tax in Northern Ireland to ten per cent, below that prevailing in the Republic of Ireland. They argue that this might eventually result in the creation of up to 55,000 new jobs over an extended time period, though this is pure speculation. The immediate cost of such a tax cut will be a reduction of the block grant from Westminster of around £400 million per annum, starting from year one.
Given the current and likely future constraints on public expenditure here, we believe this will have an unacceptably detrimental additional impact on the Northern Ireland public sector. It will result in many thousands of additional redundancies (probably compulsory) and in cuts in services such as education and training which are vital if we are to build a skilled workforce.
We believe that given the current internationally competitive UK corporation tax rate, it is preferable to invest that £400 million per year in developing the skills of the workforce so that they are equipped to take on higher paid and more productive employment.
We must aim to make the knowledge-based economy a reality. This means increased investment in further and higher education and in apprenticeship training. Northern Ireland has a shortage of university places so that a large proportion of our high achieving school leavers have to move to Britain to go to university. Many of them never return. We need a big expansion of locally provided university places. There should be an emphasis on STEM and related subjects and also in the creative arts, so that there is a supply of well-trained graduates available for both inward investors and local SMEs. A further expansion of apprenticeship training (and tailored schemes such as that for Harland and Wolff welders rolled out at Belfast Met) is key.
Labour’s proposal not to introduce the Government’s additional corporation tax cut for large businesses in 2015-16, but instead to cut and then freeze business rates for small and medium sized businesses should, if passed on, benefit the Northern Ireland economy with its large community of SMEs.
A Labour Government’s national procurement policies must ensure Northern Ireland firms get fair treatment in the tendering process for public sector contracts. These must be opened up to smaller firms. Substantial public contracts should have social clauses requiring both the payment of the Living Wage and the employment of apprentices.
Labour in power should ensure additional sources of finance for new projects. The structures of Labour’s proposed new British Investment Bank must provide fair access to finance for Northern Ireland firms. Working together with the Green Investment Bank, it can supplement local sources of business finance and provide innovative financial solutions to help generate job creation.
Under a Labour Government, Westminster should also be more pro-active in tapping a range of EU sources of finance (eg the European Investment Bank), especially for infrastructure projects.
Unlocking the Talents
A third and major priority must be to tackle child poverty as part of a drive to reduce educational inequality. Northern Ireland has a particular problem of a very high proportion of young people leaving school without any qualifications.
Achieving this will be helped by success in raising pay and creating jobs, as suggested above. Higher living standards and are directly associated with better educational performance.
The best route out of child poverty is for both parents to be in work. Labour’s manifesto offer of 25 hours free child care, if adopted by the Stormont Executive, should help raise the standard of parenting.
Good parenting is an essential influence on childhood development and should be championed by Government. But to do a good job, in work parents on low incomes and carers will need additional support through the welfare system. It is now established that early years (up to 5) are critical to child development. Children who have fallen behind when they arrive at primary school often fall further behind. Labour should champion the further development of early intervention such as Sure Start centres.
Labour should promote free school breakfasts to reduce hunger in the classroom which inhibits learning.
Labour should also campaign to raise standards in the teaching profession and in the leadership of schools, with the aim of reducing innumeracy and illiteracy among primary school leavers.
To help them cope, our young people need changes in their school curriculum to incorporate: parenting education, financial education, and education on drugs.
Without elected Labour Party representatives on the ground, promoting the Party’s values and policies in Councils and in the Stormont Assembly, Labour’s ability to make a difference will be constrained.
The Labour Party in
19 Church Road
Belfast BT8 7AL
There are many dimensions to economic marginalisation and deprivation in Northern Ireland and many of them are common to other parts of these islands. It is particularly evident here in...