Northern Ireland: the privatisation of peace

Issue: 114

Goretti Horgan

Across the world, where there is conflict or catastrophe, imperialism brings privatisation to help ‘reconstruct’ the country. Naomi Klein calls it ‘disaster capitalism’. From Aceh to Iraq, Nicaragua to Northern Ireland, the modus operandi is the same—get in quick, while the local population is preoccupied with other things, and sell off everything to the multinationals. Most of what people read about the North of Ireland concentrates on the political arena—for example, whether Ian Paisley’s Democratic Unionist Party (DUP) and Gerry Adams’s Sinn Fein can really share power. This article confines itself to looking at what is happening under the radar of the peace process—at how disaster capitalism has invaded Northern Ireland and what this means for workers in the region.

Class or creed? Northern Ireland’s real divide

There is a growing gap between the rich and the rest in Northern Ireland. Recent UN development reports rank the Republic of Ireland as the world’s second most unequal developed country after the US. Yet the Poverty and Social Exclusion Northern Ireland Survey revealed that inequality in the North is greater.1 Government figures for 2004-5 show more than three quarters of people living below the average income (after housing costs) in Britain. Some 36 percent of Catholic households are in poverty compared with 25 percent of Protestant. However, the gap between Protestants and Catholics is reducing—not because Catholics are becoming better off, but because Protestants are becoming worse off. While the gap between poor Protestants and poor Catholics is narrowing, the gap between the rich and the poor within each community is widening.

The other big divide in Northern Ireland is between those who have been affected by the conflict and those who have not. What we euphemistically call ‘the troubles’, when viewed proportionately to Northern Ireland’s population (1.7 million), could be characterised as a war in scale, intensity and duration. By the end of 2002, 3,352 people had died in the conflict. In addition about 50,000 have been injured—just over 3 percent of the population. Most of the deaths were concentrated in fewer than ten postal code districts. Over a third of those who died lived in five postal districts, all of them in North and West Belfast. These areas were, and remain, the poorest parts of Northern Ireland. Having suffered most from the conflict, they have now benefited least from the peace. A map of the areas where poverty is most concentrated matches very closely the map of areas where the conflict has been most intense.2 In the Poverty and Social Exclusion Northern Ireland survey, half of all household respondents said they knew someone who had been killed in the conflict.3

Never had it so good?

Northern Ireland secretary Peter Hain and the Blairites—who administered through direct rule following the collapse of the Northern Ireland Assembly at Stormont in 2002—want the world to believe that people in Northern Ireland have never had it so good. And true, if you are well off, it is probably one of the best parts of these islands to live. But if you are living on benefits or on low wages, it is one of the worst. Since 1990 Northern Ireland has had the fastest growing regional economy in the UK.4 However, conflict undermines economic growth, and the much heralded rate of growth in the region over the past decade started from a very low base. Consequently, while the official unemployment rate is low, so is the proportion of people of working age who are in employment or seeking work. Further, the adult earnings in Northern Ireland, compared to those in Britain, were worse in 2004 than in 1995.5 This is not surprising, since Northern Ireland is promoted to foreign investors as a low wage economy.

Policies forcing those on welfare back to work are an important part of the neoliberal agenda, and Northern Ireland has been subject to such programmes. But there is growing evidence that the legacy of conflict is making it even harder for those living in the poorest areas to get, or keep, a job.6 Variation in the intensity of violence in different areas of Northern Ireland has been linked to differences in the level of psychological disorder. A report from the 1997 Northern Ireland Health and Social Wellbeing Survey indicates that people in poorer households were more likely to suffer significant health stresses and also more likely to have borne the brunt of ‘the troubles’. Recent research suggests that many people who were resilient during the conflict are now suffering psychological distress.7 This prevents residents of areas such as North and West Belfast from taking up any jobs that might be going.

The fear that remains in areas that have taken the brunt of the conflict also helps explain their high levels of unemployment. A large-scale survey of the impact of fear on North Belfast’s ‘interface’ communities collected data on over 4,500 individuals. It revealed that just one in 12 worked in areas dominated by the ‘other’ religion. Some 48 percent would not travel through an area dominated by the other community during the daytime, due to fear. Between a third and two thirds said their jobseeking activities are limited by fear.8

Disaster capitalism—privatising peace

Following a war there are expectations of a ‘peace dividend’ where money previously spent on security is spent on improving public services. Successive British governments have blamed low levels of investment in public services in Northern Ireland on the cost of security. It was understandable, then, that social attitudes surveys found high hopes that a more ‘normal’ politics would emerge, where issues like the economy, health, education and employment would dominate, rather than the divisive sectarian issues that had overshadowed politics in the region during ‘the troubles’.

Before the 2002 collapse of the Stormont assembly, the administration had been anxious to repair the infrastructural deficit in the region, following 30 years of neglect by British governments. It accepted the Treasury’s edict that not all the capital projects required to do this could be undertaken with public money and that Private Finance Initiatives (PFIs) and Public Private Partnerships (PPPs) would have to be used for some. However, the level of opposition from trade unions and the public generally led to a search for a different model for PFI/PPPs, in particular one that would keep affected workers in the public sector. A report produced by an interdepartmental working group advocated limited use of PFI/PPPs, with a social partnership approach involving trade unions and the voluntary sector in decisions about which projects should involve the private sector.

Direct rule provided an opportunity for Tony Blair and Gordon Brown’s neoliberal dream to be pushed through while no one was looking too closely. This marked the rise of what Naomi Klein referred to in another context as ‘a predatory form of disaster capitalism that uses the desperation and fear created by catastrophe to engage in radical social and economic engineering. And on this front, the reconstruction industry works so quickly and efficiently that the privatisations and land grabs are usually locked in before the local population knows what hit them’.9

While there is a widespread awareness of the corporate takeover of Iraq, what the shock troops of neoliberalism have done in parts of Europe such as Kosovo and Northern Ireland is less well known. One of the few articles on Kosovo, by Neil Clark, appeared in the Guardian in September 2004. Clark argued that the Nato bombing of Kosovo was used to attack public sector enterprises and that the ‘reconstruction’ period has seen the corporate takeover of the country. The Kosovo Trust Agency (KTA), which operates under the jurisdiction of the UN Mission in Kosovo, was set up specifically to privatise industries, mines and services. Its internet homepage starts with this message:

The KTA has been established to preserve or enhance the value, viability, and corporate governance of socially owned and public enterprises in Kosovo. For Socially Owned Enterprises the KTA initiates ‘Spin-offs’ and Liquidation, its preferred procedures for privatisation… The inaugurating Board meeting of the KTA took place on 25 July 2002. Since then, the KTA is operational, continuing the preparation of privatisation of the Socially Owned Enterprises and the administration of Publicly Owned Enterprises.10

The corporate takeover of Northern Ireland

The Strategic Investment Board, established under direct rule in 2003, is Northern Ireland’s expression of disaster capitalism and is modelled on the Kosovo Trust Agency. The Strategic Investment Board has become a vehicle for the active promotion of PFI/PPPs. Up to the end of 2003 the region had 31 PPP projects worth on average £11 million each. Over the next decade the Strategic Investment Board plans at least £3.2 billion in PPP projects. Eight of the latest projects in procurement have an average value of £110 million each.

As in Scotland,11 the education sector is firmly in the private sector’s sights. In 2005 there was a ‘consultation’ on ‘new procurement and delivery arrangements for the schools’ estate’. This proposed a ten‑year programme to rebuild 15 percent of schools through PFI/PPPs. It planned the outsourcing all non‑teaching education workers into the private sector, whether or not their schools were being refurbished by a PFI scheme.

These proposals are based on a 2005 report prepared by Price Waterhouse Coopers for the department of education and the Strategic Investment Board. They describe the proposals as ‘partnering friendly’, which indeed they are. Every effort is made to ensure that private contractors are ‘incentivised’, ie the effort put into making it easy for private contractors is the same as the effort put into making it difficult for workers to keep their jobs and services in the public sector. While Price Waterhouse Coopers provides guidance for potential investors, trade unions are denied basic information about what is going on and barred from the consultation process.12 Meanwhile, having shaped the policy, Price Waterhouse Coopers is also ‘currently seeking to build a number of these partnering consortia to exploit the next wave of projects moving to procurement’.13

New Labour has been described as fixated with partnerships. But its ideological drive to privatise as much of Northern Ireland’s public services as possible before the restoration of devolution meant it ignored the devolved administration’s determination to involve social partners in decisions about PPPs. In preparing its report, Price Waterhouse Coopers was to consult with ‘education partners’. According to the Unison union ‘this was deemed to include private companies who were potential strategic partners’ but not the unions representing education workers. Strategic Investment Board chief executive David Gavaghan spelt out the nature of these strategic partners in the PFI Journal. He told readers that ‘a lot of partners’ were involved in ‘encouraging investment in education’ in the North, and named three from whom there had been ‘a very strong response’—Amey, Bilfinger Berger and Hochtief. Amey, owned by the Spanish construction company Ferrovial, holds contracts for maintaining London Underground and owns a number of airports. Bilfinger Berger is a German-based construction company. Hochtief became a partner in schools development here when it acquired the PFI operations of Jarvis for £1—the price reflecting Jarvis’s fall from grace following its role in the Potters Bar train disaster. While the -involvement of trade unions in social partnership in the Republic of Ireland has been disastrous for workers and did nothing to stop the race to the bottom, New Labour’s unwillingness to even ‘consult’ unions speaks volumes.

So what are the prospects of mounting a serious challenge to the privatisation spree? We have to note, first, that the reason local politicians don’t challenge the Blair/Brown agenda is not only that they are focused almost exclusively on sectarian issues. It is also because they have bought into neoliberalism. They either fully accept it—the position of most of the Democratic Unionist Party (DUP) and Ulster Unionist Party—or believe it is futile to oppose it—the position of Sinn Fein and the SDLP. While they argue at the top of their voices about who should run the North, they give the neoliberals the nod to get on with it. The parties have revealed their true colours where they have already had some power—in relation to the council-owned City of Derry Airport, for example. The DUP, Sinn Fein and the SDLP (the Ulster Unionist Party is effectively defunct in Derry) all gave full backing to Ryanair’s demand for the eviction of families near the airport in order to facilitate expansion required by its new fleet of Boeings.

The parties’ September 2006 submissions to the economic subgroup of the ‘preparation for government committee’ tell us a lot. The DUP said, ‘Northern Ireland needs a serious dose of introspection within its government department’s [sic] vis-a-vis their relationship with the business community and the promotion of a genuine partnership between government and business with government taking on the role of facilitating entrepreneurial opportunity.’ Sinn Fein said, ‘We should say yes to goal driven tax incentives which increase R&D activity, aid new product and process innovation, enhance worker training and development, help our entrepreneurs break into new markets and aid environmental improvements.’ Either statement could fit comfortably into a policy statement from the Confederation of British Industry or an election appeal from the Tories.

Water: a privatisation too far?

One privatisation that is well known and faces almost 100 percent opposition from public and local politicians alike is water privatisation. The publicly owned Water Service is to be scrapped and a government-owned private company—known as a Go-Co—is to be set up. The Go-Co will mean full privatisation. The company will be incorporated the same as any other private company. It will have shares, which will, initially at least, be owned by the government, and it will be subject to the same rules and regulations as other private companies. The private consortium that conducted a review of the water service said that the reason for not moving directly to full‑scale privatisation was that this ‘would not be practicable nor sufficiently acceptable in the short term… The position will, however, be reviewed in 2008.’ In other words, ‘We might not get away with it in one go, so let’s hang on a year.’

The review allocated the Go-Co an opening valuation of ‘not less than £1 billion with zero initial debt’. The proposal is, then, that a billion‑pound‑plus public asset will be handed over to private interests between now and 2008, its debts discharged with public money. Private interests will then be guaranteed a revenue flow sufficient to meet all expenditure and allow for profit by means of water charges levied by law on the public. An estimated 700 local jobs will be destroyed in the process.

In Northern Ireland, as elsewhere, there are many with no strong views on the principle of privatisation or the idea of charges, who nevertheless draw the line at water being handed over to private interests. Water is not a consumer choice but a necessity of life. The idea that access to a water supply should come at a price set by profiteers strikes many non-ideological citizens as plain wrong. Some are inspired by the defeat of water -privatisation plans in places as far apart as Bolivia and the South of Ireland. While slow to move to defend threatened jobs and public services, the trade union movement finally woke up in 2006, with the largest union, the Northern Ireland Public Sector Alliance and the Transport Union voting at their conferences to support the campaign for non-payment of charges. Even the Irish Congress of Trade Unions’ Northern conference voted to ‘adopt and support’ non-payment as the best means of defeating privatisation and charges.

Meanwhile, the four main parties have all insisted on their detestation of the plans for water privatisation. But none advances a strategy to stop the plan. None of them are willing to back a mass campaign of non-payment—partly because this would mean mobilising people on a basis that has nothing to do with the community they come from. There is no way that water privatisation can be defeated on a Unionist or Nationalist basis. So there is no way any party could demonstrate that it was the better representative of its own community vis-a-vis the other side. That is, a campaign on water charges would not fit into the pattern of politics on which the four main parties are founded.

For those who can maintain optimism of the will in the face of the pessimism that Northern Irish politics breeds, mass non-payment of water charges offers the best hope of tilting the political axis away from community and towards class, to the benefit of the entire working class. It opens up the prospect of a future no longer dominated by sectarian hostilities and of a real challenge to disaster capitalism in the North of Ireland.


1: P Hillyard et al, Bare Necessities: Poverty and Social Exclusion in Northern Ireland (Belfast, 2003), found that Northern Ireland has a Gini coefficient of 0.42, compared to 0.36 in the South. The Gini coefficient is a measure of inequality ranging from zero (complete equality) to one (complete inequality).

2: M T Fay, M Morrissey and M Smyth, Mapping Troubles-Related Deaths and Deprivation in Northern Ireland (Belfast, 1998).

3: P Hillyard, W Rolston and M Tomlinson, Poverty and Conflict: the International Evidence, (Dublin, 2005).

4: In the decade to June 2000 gross domestic product per capita rose by 53.5 percent compared with 46.4 percent in the UK generally, the number of employee jobs increased by 16.7 percent and manufacturing output expanded by 26.2 percent compared with only 2.8 percent in the UK generally.

5: In 1995 workers in Northern Ireland earned 89.3 percent of average earnings in Britain. In 2004 the figure was 86.5 percent.

6: E Cairns and R Wilson, ‘Stress, Coping and Political Violence in Northern Ireland’, in J P Wilson and B Raphael (eds), International Handbook of Traumatic Stress Syndromes _(New York, 1993); D O’Reilly and S Browne, _Health and Health Service Use in Northern Ireland: Social Variations (2001).

7: E Cairns, ‘Coping with Political Violence: Lessons from Northern Ireland’,

8: P Shirlow, ‘Ethno-sectarianism and the Reproduction of Fear in Belfast’, in _Capital and Class 80 _(2003).

9: Naomi Klein, 10:

11: Lynne Poole and Gerry Mooney, ‘Privatising Education in Scotland? New Labour, Modernisation and “Public” Services’, in Critical Social Policy 26:3, pp562-586.

12: Unison, ‘Response to DE/SIB Consultation on New Procurement and Delivery Arrangements for the Schools’ Estate in Northern Ireland’.

13: C Tenner, ‘Partnership for Regeneration’, in Public Service Review: the PFI Journal 49 (2005).