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16 June 2005 Edition

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Facing up to the challenges ahead BY DOMHNALL O COBHTHAIGH

At a recent meeting, someone mentioned the likely problems facing putative Sinn Féin Ministers around the Private Finance Initiative (PFI) and Rates issues. I silently groaned and remembered just how bad it had seemed when we had a functioning Executive.

At that time, the problem was that we didn't have the fiscal or financial freedom to avoid PFI/PPPs (Public-Private Partnerships). We were trapped administering piecemeal privatisation: we wanted to deliver investment but were hamstrung in terms of getting money to pay for it.

All the same, I distinctly remember some pointing to PPPs as a 'good thing': enabling us to build more schools and at low cost. However, that argument was never really accepted across the bulk of republican activists, who could point to high levels of inefficiency, poor standards of service delivery and negative impacts on union conditions as strong arguments to support their inherent (ideological) opposition to the extension of privatisation into Health and Education.

Since the collapse of the Executive, it was all too easy to happily ignore the period as an isolated or enforced mistake. Similarly, everyone could fall in behind the campaign against Water Rates and the proposed doubling of the Regional Rate, safe in the knowledge that we didn't have to deal with the British Treasury; after all, these were measures being forced on Irish people by a British Treasury and their 'Day Release' Ministers. My unspoken sigh of discontent at the comrade who raised this issue was reflective of my own (weak) desire to avoid finding answers to the tough questions.

The truth is, however, that the same problems remain. Indeed, they are now present on a far greater scale than before. It is essential that we be honest with ourselves about the challenges we are likely to face. What is more, we need to concentrate on the detail involved rather than a surface-only analysis, which allows for low levels of strategic thought to escape unmolested. As Lenin said, we must beware of becoming 'revolutionary phrase makers' — voicing slogans which nowhere intercept objective circumstances.

Just before the Six-County Executive collapsed, the British and Irish Governments established a Strategic Investment Board (SIB) which would oversee all public capital investment across the board. Republicans were suspicious, more so when it became clear that PFI/PPPs were to be a core element of that investment strategy.

In our absence from Executive Authority, the SIB has developed a ten-year investment plan, covering every new hospital, school, by-pass, water treatment plant and social housing block in the North.

In principle, this is a good thing: the adoption of a planned approach to investment is essential for good governance and also effective social inclusion policy. The reality is, however, that the current investment strategy is likely to be skewed against nationalists by the inherent discrimination within each of the ten Departments who dictated the investment priorities in the first place, but that's a fight to be continued.

Republicans should take note of the scale of the proposed investment, at £16 billion over ten years — it's the equivalent of £1,000 per person per year. That is a scale of public investment unheard of in terms of the Six Counties previously. There are significant opportunities for tying this to the estimated €36 billion of capital investment in the rest of Ireland, opportunities which have not escaped the attention of the Dublin Government. Of course, the downside is the role PPPs/PFI will play in all this.

Indeed, it can be argued that the bulk of this investment arises as a direct result of continued British Government underinvestment in the past. Take, for example, the £2 billion to be invested in water and wastewater treatment necessary to upgrade Six-County water standards to EU standards. This investment has already occurred in the British regions years ago and was financed by the British Treasury and paid through direct taxation, not regional rating.

The crucial issue is, however, how is this all going to be paid for now? The report itself is rather short on answers but a close reading would indicate that two-thirds of investment costs will be met by the existing Barnett allowance from the British Treasury. The remainder will be raised through PPPs and through borrowing under the Reform and Reinvestment Initiative (RRI).

This latter was an initiative agreed between Mark Durkan and Gordon Brown, allowing the Six-County Executive to borrow up to £200 million a year on the guarantee that increases to the regional rate and the introduction to the water rate would be implemented to pay off the debt.

Effectively, any new Executive would likely be bound to an immense investment strategy which would open up 20% of new capital build to PPPs and pay for another 15% with large increases to the regional rate and the introduction of domestic water rates.

These latter increases are likely to be hugely unpopular — primarily with owners of expensive houses but also with those owning houses but not on benefits — as likely agreed exemptions will target the bulk of the tax payable on these groups.

Having said all that, there are chinks of light. The 'Investment Strategy for Northern Ireland' (ISNI) makes no mention of the Peace Dividend, which we might hope would make some contribution to lessening the burden of debt. Republicans will continue to demand the right of the Six-County Executive to avail of Bond issues or local fiscal flexibility to overcome the ultra-tight budgetary restrictions.

The fight to ensure that a higher proportion of investment goes West of the Bann continues, as does the struggle for proactive social inclusion policies across the Departments. Finally, the ISNI itself talks about achieving equality outcomes arising from the huge scale of procurement proposed. So, overall, there is likely to be significant gain from so much pain.

Perhaps of greatest consequence politically is that the challenge will affect other parties in the Executive to a much greater effect, as they tend to derive support from asset-rich voters and are less able to effectively link water rates and a soaring regional rate to British Treasury policy in Ireland.

All of this places in context the dire situation of the Six County economy and will make a strong (monetary) argument for political unity, reaching into the heart of upper-middle class unionist areas.

An Phoblacht Magazine


  • The first edition of this new magazine will feature a 10 page special on the life and legacy of our leader Martin McGuinness to mark the first anniversary of his untimely passing.
  • It will include a personal reminiscence by Gerry Adams and contributions from the McGuinness family.
  • There will also be an exclusive interview with our new Uachtarán Mary Lou McDonald.

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