The former Sinn Fein leader, Mr Gerry Adams was recently arguing how Irish unity had become more an issue of “when” rather than “if”.
A critical plank of his argument was that Northern Ireland is not in fact as heavily subsidised by the UK Exchequer as many of us think: he believes the actual level of spending here is lower and as a result the gap or deficit between public monies spent and revenues raised by taxes in Northern Ireland is smaller than we are often told.
Amongst other things, if he is right, Irish unity could become more affordable. Mr Adams’s argument becomes something of a fiscal dance of the seven veils. With each sentence a few more billions come off!
Mr Adams argues as follows. In 2015-16 of the public spending of £24bn which the Treasury attributes to Northern Ireland £3.7bn was actually Northern Ireland’s “share” of UK spending on defence, overseas representation (e.g. embassies) and payments on the national debt. At the same time revenue raised was £16.7bn. So the true deficit is not £24bn minus £16.7bn but £20.3bn minus £16.7bn.
In fact, Mr Adams goes further, he says £1.8bn of spending in Northern Ireland is actually spending by UK (presumably London-based) government Departments and “may not be essential” (it is surprising to see the former leader of Sinn Fein become a proponent of caution regarding public spending, but in any case it is unclear what this £1.8bn is which he is referring to). So, there you seem to have it, the fiscal transfer from the UK Treasury to Northern Ireland has shrunk to “only” a few billions.
Since Mr Adams says HM Treasury produce figures which are “deliberately misleading”, I will use data from the UK’s official and independent statistical authority: the Office for National Statistics (ONS 26 May 2017, “Country and regional public sector finances: Year ending March 2016”).
In 2015-16, total public spending attributed to Northern Ireland was £26bn and total revenues raised £15.9bn implying a fiscal deficit of just over £10bn.
Incidentally, for the estimate of revenue raised Northern Ireland is allocated a share of North Sea oil tax receipts- Mr Adams has not registered any complaint about taking some of Scotland’s money!!
Back to Mr Adams argument, the nub of which is that within the attributed spending was Northern Ireland’s share of the UK’s common services (£0.5bn), international services (£0.3bn), interest on the national debt (£1.0bn) and defence (£1.0bn).
Can we simply write off these sums of money as Mr Adams implies? Membership of the “club” of the UK implies making a contribution to the cost of those common services from which we all benefit.
Perhaps Mr Adams feels that global conditions are now so stable that the UK has no need for defence spending? The Secretary of State for Defence certainly disagrees. Perhaps Mr Adams feels that Northern Ireland has derived no benefit from public spending funded in part from the borrowing that then added to the national debt? Sinn Fein has never been slow to ask for ‘more’ public spending.
A number of other commentators have adopted a rather fast and loose approach to Northern Ireland’s obligations in respect to UK national debt. Irish Senator M. Daly (in this Irish Senate Report, 2017, “Brexit and the future of Ireland and its People and Peace and Prosperity”) rather flippantly claimed much of the UK national debt had been created by wars as though that meant Northern Ireland had no obligation to share in its repayment.
Much is made of the discredited Hübner Report (on the economics and the provenance) on which Senator Daly also relies heavily.
In short, after Mr Adams has finished his fiscal dance, the numbers still do not add up the way he would like. Perhaps points for effort, not content.
Dr Esmond Birnie, economist
Gerry Adams twirling around the Northern Ireland public spending numbers
The former Sinn Fein leader, Mr Gerry Adams was recently arguing how Irish unity had become more an issue of “when” rather than “if”.
A critical plank of his argument was that Northern Ireland is not in fact as heavily subsidised by the UK Exchequer as many of us think: he believes the actual level of spending here is lower and as a result the gap or deficit between public monies spent and revenues raised by taxes in Northern Ireland is smaller than we are often told.
Amongst other things, if he is right, Irish unity could become more affordable. Mr Adams’s argument becomes something of a fiscal dance of the seven veils. With each sentence a few more billions come off!
Mr Adams argues as follows. In 2015-16 of the public spending of £24bn which the Treasury attributes to Northern Ireland £3.7bn was actually Northern Ireland’s “share” of UK spending on defence, overseas representation (e.g. embassies) and payments on the national debt. At the same time revenue raised was £16.7bn. So the true deficit is not £24bn minus £16.7bn but £20.3bn minus £16.7bn.
In fact, Mr Adams goes further, he says £1.8bn of spending in Northern Ireland is actually spending by UK (presumably London-based) government Departments and “may not be essential” (it is surprising to see the former leader of Sinn Fein become a proponent of caution regarding public spending, but in any case it is unclear what this £1.8bn is which he is referring to). So, there you seem to have it, the fiscal transfer from the UK Treasury to Northern Ireland has shrunk to “only” a few billions.
Since Mr Adams says HM Treasury produce figures which are “deliberately misleading”, I will use data from the UK’s official and independent statistical authority: the Office for National Statistics (ONS 26 May 2017, “Country and regional public sector finances: Year ending March 2016”).
In 2015-16, total public spending attributed to Northern Ireland was £26bn and total revenues raised £15.9bn implying a fiscal deficit of just over £10bn.
Incidentally, for the estimate of revenue raised Northern Ireland is allocated a share of North Sea oil tax receipts- Mr Adams has not registered any complaint about taking some of Scotland’s money!!
Back to Mr Adams argument, the nub of which is that within the attributed spending was Northern Ireland’s share of the UK’s common services (£0.5bn), international services (£0.3bn), interest on the national debt (£1.0bn) and defence (£1.0bn).
Can we simply write off these sums of money as Mr Adams implies? Membership of the “club” of the UK implies making a contribution to the cost of those common services from which we all benefit.
Perhaps Mr Adams feels that global conditions are now so stable that the UK has no need for defence spending? The Secretary of State for Defence certainly disagrees. Perhaps Mr Adams feels that Northern Ireland has derived no benefit from public spending funded in part from the borrowing that then added to the national debt? Sinn Fein has never been slow to ask for ‘more’ public spending.
A number of other commentators have adopted a rather fast and loose approach to Northern Ireland’s obligations in respect to UK national debt. Irish Senator M. Daly (in this Irish Senate Report, 2017, “Brexit and the future of Ireland and its People and Peace and Prosperity”) rather flippantly claimed much of the UK national debt had been created by wars as though that meant Northern Ireland had no obligation to share in its repayment.
Much is made of the discredited Hübner Report (on the economics and the provenance) on which Senator Daly also relies heavily.
In short, after Mr Adams has finished his fiscal dance, the numbers still do not add up the way he would like. Perhaps points for effort, not content.
Dr Esmond Birnie, economist