Stormont would have an extra £3.3 billion (€3.8 billion) a year at its disposal, equivalent to almost a fifth of its budget, if it ended populist giveaways and overstaffing in the public sector.
That is the finding of a so-called “open book review” by the UK treasury, after combing through the finances of every Stormont department. The review was a condition of an emergency loan in February to cover £400 million of overspending, mainly due to unfunded pay rises in health and education, departments controlled by the UUP and the DUP respectively.
Unionists are a little more conservative than Sinn Féin with public money – the health and education ministers made some cuts to help towards the pay rises. But the difference between them is becoming more like that between Fianna Fáil and Fine Gael than any party would care to admit.
Similar budget reviews have been made in recent years by the Northern Ireland Office and independent fiscal bodies. These have produced figures of about £700 million, so the treasury’s shocking assertion is that matters are five times worse. Most of the giveaways it identifies are wearily familiar. Subsidising university tuition fees, refusing to introduce domestic water charges, charging lower household taxes than the rest of the UK, plus waived fees and discounts on other public services all add up to about £1.3 billion by the treasury’s reckoning.
Public services are collapsing because Stormont wastes money trying to be loved instead of investing in reform
There is no prospect of Stormont scrapping these policies. Discussion of them has being going around in circles for years. Sinn Féin is becoming more entrenched due to its position against water charges and students fees south of the Border. A common criticism of powersharing is that parties act as if they are in government and opposition at the same time. This is literally true for Sinn Féin from its all-Ireland perspective. It takes opposition stances in the Republic that it feels it must adopt in office at Stormont, dragging policy down to a responsibility-free level.
The DUP has always been a populist party. It liked to convey an image of sober economic leadership when it was Stormont’s largest party, but since dropping to second place it sees no advantage in even pretending it might seriously tighten the purse strings. Its ministers are currently boasting of a £100 emergency heating payment for low-income households that will arrive in the middle of July.
The novel aspect of the treasury assessment is that it confronts the hidden giveaway of excess spending on public services. Independent experts have assessed that Northern Ireland needs to spend 24 per cent more per head than England to deliver services to the same standard, due to social and geographic factors.
Stormont receives enough funding from the treasury to do this, yet spends “significantly more” on most services: 52 per cent more on health and 40 per cent more on education, for example.
This is its own form of populism. Failing to take difficult decisions on managing and reforming services means, in practice, employing more people than necessary in more locations than necessary.
The treasury claims getting Northern Ireland’s public-sector pay bill even half way towards UK average levels would save £1.25 billion a year, enough to cover everything the northern executive wants to do on spending and investment. Reducing Stormont’s civil service to a UK average headcount would save £400 million a year – the same as last year’s overspend on health and education.
Emma Little-Pengelly, the DUP Deputy First Minister, dismissed the review as “absolutely preposterous”. “Who is suggesting that we are going to raise over £3 billion in one year from a population of approximately 1.9 million?” she asked.
“The burden of that on hard-pressed families in Northern Ireland would be extraordinary.”
This confused raising revenue with cutting costs. Ending the £1.3 billion of low taxes and fees would involve taking more money from the public. Everything else is money Stormont could put to better use – it could even cut taxes and fees further.
Michelle O’Neill, the Sinn Féin First Minister, said the fundamental problem is that London has not given Stormont enough money for “well over a decade”, while Wales and Scotland are more generously funded in terms of need.
Her first claim is subjective, but considered mistaken by Stormont’s independent financial experts. The second appears objectively mistaken: Northern Ireland is better-funded than Scotland and Wales.
“But it is the starting point which is wrong,” O’Neill concluded on the review.
“It is very hard to go out to the public and talk about raising funds when their services are decimated day by day because of the lack of investment over the years.”
This was back to front. Public services are collapsing because Stormont wastes money trying to be loved instead of investing in reform. Addressing that need not be as unpopular as Sinn Féin and the DUP fear.
