Opinion

Newton Emerson: There's a lot Stormont ministers can do to ease cost of living crisis

Newton Emerson
Newton Emerson Newton Emerson

Stormont ministers were already wrestling with the cost of living crisis when it seemed it might ‘only’ be a post-Covid problem for a year or two.

The invasion of Ukraine means we could have a decade of 1970s-type inflation driven by unprecedented energy bills.

Perhaps surprisingly, there is a lot Stormont can do to help households struggling with their bills. The reasons Stormont might fail are entirely unsurprising: lack of ambition, general dysfunction, ministerial silos, wasteful gimmicks and a horror of doing anything unpopular.

SDLP infrastructure minister Nichola Mallon froze public transport fares this week, rather than pass on projected inflation of 5.5 per cent.

To be fair, this is about all she can do with the executive in limbo. It still looks like a Spend Local voucher on wheels - a substantial cost for a universal giveaway few people need. Most recipients will not even notice: the fare freeze will save a Belfast bus commuter £1.15 a week.

SDLP infrastructure minister Nichola Mallon froze public transport fares this week, rather than pass on projected inflation of 5.5 per cent. Picture: Hugh Russell
SDLP infrastructure minister Nichola Mallon froze public transport fares this week, rather than pass on projected inflation of 5.5 per cent. Picture: Hugh Russell SDLP infrastructure minister Nichola Mallon froze public transport fares this week, rather than pass on projected inflation of 5.5 per cent. Picture: Hugh Russell

What Stormont should do is take the subsidy it gives Translink to cover free travel for the over-60s, means test it to the third of retired people on pension credit, then use that saving to extend free travel to working age people on tax credits or benefits.

However, that would be ‘cross-cutting’ and ‘significant or controversial’, so even if ministers wanted to do it, a full executive would be required.

Identifying who is struggling with their bills suffers from a bizarre omission. Housing, the biggest cost most people face, is difficult to capture in inflation statistics. The same is true for poverty statistics, also used for official purposes. So disposable income is tricky to pin down, or simply disregarded, although it is what determines if someone can cope with the price of heating oil doubling between refills.

Nearly half the households in Northern Ireland, 43 per cent, own their home outright with no mortgage. Many are retired and appear to be on relatively low incomes, yet their disposable income is high.

This makes a strong case for means testing the £100 to £300 winter fuel payment. It is claimed by effectively all retirees, making up almost one third of all households. The £50 million annual cost could be much better targeted.

Sinn Féin communities minister Deirdre Hargey has frozen housing executive rents for a year, which is not as well targeted as it might seem: it helps one in ten households on an average rent of £250 per month. The 14 per cent of households renting privately face market rents three times as high.

Although the assembly approved a bill last week to freeze private rents, this has been paused as potentially unlawful. In any case, it is an iron law of economics that rent controls do not work.

The quarter of households with a mortgage have widely varying repayments and exposure to interest rates, which could be about to jump. Help with mortgage interest for the unemployed is only offered as a loan.

Domestic rates have been frozen for a decade - the ultimate untargeted help, forgoing vast amounts of revenue to disproportionately benefit the better off. Rates really ought to go up for many households to fund support elsewhere.

The executive is about to issue a one-off £200 energy payment to most individuals on benefits, agreed in December. It has a similar, permanent cold weather payment mechanism, triggered when temperatures drop below freezing for a week.

Changing that trigger from low temperatures to high prices should not be beyond the wit of the executive to manage, certainly before next winter.

Stormont can set up any benefit arrangement as long as it meets the extra cost above benefits in Britain. Since the welfare reform crisis from 2012 a view has taken hold that diverging from Britain creates nearly insurmountable IT and administrative problems, as benefits and taxes are tangled up UK-wide.

While Stormont has a dreadful record with IT projects and administrative reorganisation, Covid should have debunked some of this as an excuse. Teething troubles aside, the executive rolled out completely new systems for financial assistance, vaccinations and certificates in a matter of months. Even in Northern Ireland, it can be done.

But only if we have an executive, of course. Just by delaying the budget the DUP has thrown away £300 million - six times the cost of the winter fuel payment.

Beyond policy detail lies the bigger picture of whether global crisis will change the behaviour of our politicians and voters. Precedent is not encouraging.