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How report adds weight to cause for welfare reform

By John Simpson

Published 15/09/2015

Professor Deirdre Heenan of Ulster University
Professor Deirdre Heenan of Ulster University

The special independent commission set up by the Labour Party to make recommendations on tackling intergenerational poverty and social exclusion in Northern Ireland has published its report. Professor Deirdre Heenan (Pro-vice Chancellor, Ulster University) and Colin Anderson (chairman, ASG Ltd) lead a diverse group drawn from across the community and, after a year in preparation, have finalised a thoughtful, multi-dimensional review.

The authors have been asking for advice on how to correct the disadvantages affecting the local economy. Their report is a stimulating review with pointers to novel policy questions relating to the economy, educational and social issues.

The commission was asked to examine 'the current levels of economic marginalisation and deprivation in Northern Ireland with specific reference to the intergenerational transfer of poverty'. The intention was that this analysis would be useful as advice to a possible incoming Labour Government. The initiative came from Ivan Lewis MP, former Shadow Secretary of State for Northern Ireland.

The authors, understandably, suggest that, although Labour lost the election, the views expressed remain relevant and informative. The commission was most forceful in its description of the continuing scale of the economic and social problems as enhanced by the recent years of deep recession from which there has been only a marginal recovery. Inevitably, the bigger challenge to the commission lay in the identification of possible policy improvements.

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In an essentially qualitative presentation, without extensive statistical evidence, a search for the equivalent to an updated programme for Government, along with supportive action from the UK Government, was a demanding agenda. In anticipation (or retrospect) the commission report can be tested by comparison with the existing policies taken by the devolved Executive.

In this brief comment, three issues stand out. None of these offer easy, uncontroversial answers. First, there are suggestions related to welfare reform. Second, suggestions on how to improve educational standards. Third, the emphasis that might be placed on the implications of the introduction of the National Living Wage.

The references to welfare reform need to be read with care. Early in the report, the commission says that it has not focused on the specific issue of welfare reform but adds that it received evidence that the current welfare system was deeply flawed. "The system that was established to assist those in need … has morphed into a complex system that (has) trapped people into cycles of disadvantage and dependence."

Later, the report comments that the welfare system that 'has evolved over the past six decades is not equipped to tackle intergenerational poverty and in many ways simply reinforces dependency and reinforces barriers to paid employment.' Although the commission does not make the step, this conclusion adds weight to the thinking on welfare reform as developing in GB with its implications for Northern Ireland.

The commission does make useful suggestions to improve the delivery of educational services for the next generation. Poor achievement levels, possible better teaching and changes in the education system have been identified. However, on one critical issue the commission ducks the question: what to do with the education system and academic selection? It says 'these topics are much larger and more complex than can or should be covered by this commission.'

That was an opportunity deliberately avoided.

The arguments made by the commission on the merits of the National Living Wage suggest that the social ambitions of the authors ran ahead of the practicalities of economic performance. They acknowledge the need for local NI modelling of its impact. The ambition for a higher living wage supplemented by special employer tax incentives is endorsed. Controversially, the recommendation seems to go beyond any realistic options.

Finally, a pause for realism: the commission in conclusion quotes that 'NI's greatest asset is its vibrant, talented, well-educated, young population.' Even drawing on their own report the evidence is that claim, oft repeated elsewhere, is over-stated.

Company report: Northstone (NI) Ltd

Northstone (NI), trading as Farrans and headquartered in Dunmurry, is one of Northern Ireland’s largest building and civil engineering businesses. The group is a subsidiary of Cement Roadstone Holdings plc (CRH), registered in Dublin. 

The firm also engages in the production, manufacture and supply of building materials and of access systems to the utility industry, trading as Cubis Industries.

The trading results illustrate the changing impact of the recession in the construction sector. Annual turnover peaked in 2012 after a sharp fall in 2010 followed by a two year recovery. Then there was another fall in 2013 which has just been offset by higher turnover in 2014.

In 2014, turnover recovered to the level of 2012 but, as forecast, this was associated with a reduction in profitability. Better trading margins are expected in 2015.

Operating profit peaked in 2007 at over £15m. It fell to just under £7m in 2012 and in 2014 fell further to under £2m. Pre-tax profit also peaked in 2007 at over £20m. More recently, pre-tax profits have been lower and were just over £4m in 2014.

No dividends have been paid since an allocation of £2.9m in 2009.

When retained profits are added to the balance sheet value of shareholders’ funds, the total value of shareholders’ funds, which fell to £76m in December 2009, recovered to over £91m in December 2013.

However, in 2014, a larger actuarial loss on the assessed liabilities of company pension funds resulted in a negative adjustment to the balance sheet value of shareholders’ funds, falling to £75.5m.

Belfast Telegraph

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