The NDNA did secure a return to devolved government after a gap of 3 years. That achievement is welcome but nevertheless the institutional changes in NDNA were comparatively small. NI continues to face the challenge of operating a very unusual form of government: a five Party coalition some of which is mandatory. To the extent that the breakdown in 2017 was caused by “culture” (i.e. how the Parties, particularly the two largest Parties) operated the institutions as much as by the institutions themselves it remains to be seen how much is different this time round.
As an economist I would wish to comment on the financial aspects of the devolution settlement. Here several points are relevant: (1.) “money” (or the lack of it) played a part in creating instability along with the impact of any institutional weaknesses and lack of a culture of co-operation and common purpose (e.g. the unbalanced Executive Budget in 2014, disagreements over welfare reform during 2015, RHI 2016-17), and (2.) I see only limited evidence that in NDNA Stormont’s financial settlement and its relationship with HM Treasury is any sounder than it was before.
I would repeat my point from Question 1- the changes in the institutions may be of lesser significance than whether there is now a new, more co-operative, collegiate culture or spirit between the Executive Parties and particularly the DUP and SF: true collective responsibility (and responding to the current COVID-19 situation will be a very important test case).
Given that Brexit is an important and cross-cutting issue the establishment of such a sub-committee makes a lot of sense. Here are some observations:
This reform weakens a bit (in the sense that the effect is felt much less quickly) the ability of either of the two largest Parties to collapse the institutions by a walk-out. However, that power is still there. Obviously, one would like to think that NDNA has been accompanied by a sea change in political culture and attitudes so that all of this becomes rather theoretical. Only time will tell.
As an economist I believe that decision makers, in this case politicians, do respond to incentives-carrots and sticks. Unfortunately that would probably imply that the UK government (and perhaps the Dublin government too) needs to think about how it indicates to the Stormont Executive politicians that in the event of any future walkout/collapse the consequences of that would be less favourable for their Party’s position than those of continuing to operate the institutions. Basically the UK Government needs to credibly signal to either the DUP or SF, whichever is threatening to leave the Executive, that any administration of NI beyond devolution whether full Direct Rule or otherwise will not be an attractive outcome for them.
There is certainly a lot in NDNA re. achieving more and better outcomes for NI citizens. There is a bit (see next question) re. how to fund that. However, the two key words in this question are “transforming” and “reforming” and I don’t see much detail in NDNA about how to do public services differently in order to achieve “more for less” or “better for the same”. I don’t think there is much ambition in the text although perhaps there is some below the surface- the NDNA contains many admirable quantitative targets (e.g. “No one waiting more than a year for treatment…etc.”) but there is a lack of detail about how these would be attained. It might be objected that the detail of reform is something for Departments’ operational plans- well, time will tell when we see those plans. Certainly, the recent publication of the recent Report on RHI provides an opportunity to look at and improve the governance of NI’s civil service and public sectors.
Much will depend on the contents of the Executive’s Programme for Government (PfG)- both in Year 1 terms and a longer-term/multi-year document (of note and commendably because this has not happened before the latter will be linked to Budgets). The PfG will be a good indicator of how far things are actually being done differently.
In January 2020 I attempted to add up the various shortfalls in public spending (unfunded spending pressures) identified by senior officials, the NI Audit Office and other public agencies. This is not quite the same as what is been asked for in this question, i.e. a costing of the commitments made in NDNA and the required investment needed to “reform” but nevertheless there is a lot of over-lap. My reckoning was a funding shortfall in January 2020 of at least £4.5bn for capital spending (i.e. once off projects notably in terms of health reform and clearing waiting lists and in terms of investing in the NI water and sewerage system) and at least £0.5bn for recurrent or annual current spending (notably schools and health service pay and running costs): see Belfast Telegraph 14 January 2020
Following the restoration of devolution we have seen a bidding war between the various Stormont Departments as Ministers, Permanent and Under Secretaries have stated their needs. This has implied that almost certainly the figure for total indicated funding “needs” is even higher:
Unfunded Capital spending pressures
Source of estimate/comments
NI Audit Office. For context compare to Chancellor’s Budget 2020 announcement of £2.5bn to “fill” 5m pot holes across England. https://www.belfasttelegraph.co.uk/news/northern-ireland/12bn-hole-in-budget-needs-filled-to-bring-roads-up-to-standard-audit-report-reveals-37949820.html
NI health-clear waiting lists and implement Bengoa reform
Health Permanent Secretary. £50m p.a. for 7 years to clear waiting lists. £150m p.a. for 5 years to do Bengoa.
Water- particularly water treatment and sewerage system
Northern Ireland Water (NIW). Range depends on quality of output desired. Over 6 years 2021-27. https://www.belfasttelegraph.co.uk/news/northern-ireland/ni-water-warns-half-northern-ireland-treatment-plants-will-reach-full-capacity-by-2027-38881726.html
York Street Inter-change
(Major junction redesign in Belfast connecting NI’s two main motorways.) As stated previously in the Confidence and Supply agreement.
Other improved roads, railways
My estimate, perhaps “modest”. Difficult to ascertain because there are several big roads projects in the pipe-line but sometimes behind schedule (money was in earlier capital budgets but remained “under spent”)
Digital- ultra high speed
As in Confidence and Supply
Unfunded Current or recurrent spending pressures
Education- pay, SEN
Social housing in NI (NIHE)- maintenance and new builds
Communities Minister estimate of maintenance and new build requirements- £3bn total over 11 years plus £4.1bn total over 30 years.
Universities and FE Colleges
Previously (2016) the Employment and Learning Minister identified that a combination of lower block grant support and lower tuition fees implied a funding shortfall to NI HE of £50m p.a. I am adding a modest amount for FE estate plus training provision.
Police pay, police numbers, Court Service, Translink operating subsidy
Making up likely reduction in UK government transfer to NI for support payments to farming compared to previous EU
My estimate- comparing £300m now (as per EU Single Farm Payment etc.) to NI’s population share (3%) of UK farming support spending of £3bn (and that latter figure may go down too)
Putting in place infrastructure etc. to achieve carbon zero by 2050
The Infrastructure Department have argued that £0.3bn p.a. is required to shift public transport vehicles to renewables. Also some money for putting in place charging points etc.
Welfare reform mitigation
The previous four year package (ending March 2020) was £125m p.a. (although large under-spends).
The new institutions (Commissions etc.) in NDNA
A number of observations could be made about these figures:
- Ask (negotiate with) HM Treasury for more money. Worth trying but do not expect any easy victories. Remember that the Executive and HM Treasury are in a long term relationship and the past performance of the Executive has probably reduced the credibility of the Executive (perhaps viewed by HM Treasury as irresponsible and suffering from the moral hazard produced by a history of soft budget constraints).
- Seek more generous terms and conditions from HM Treasury, e.g. in terms of the various loans, NIHE debt etc.
- Priority setting. This may need to be ruthless- you can’t have everything and you certainly can’t get it this year or next! What in France are called Grand Projets are off the table.
- Efficiency of spend. The NI Audit Office (December 2019) recently reported on a weak record in terms of major public procurement projects: https://www.niauditoffice.gov.uk/publications/major-capital-projects-0
- Recognise that used imaginatively and in a cost effective manner private capital could play a role, e.g. a change in the status of the NIHE housing stock (85,000 dwellings) could perhaps enable borrowing from private capital markets. A strategic review for the Social Development Department in 2011 recommended that stock move to a social enterprise landlord: http://www.niassembly.gov.uk/globalassets/documents/social-dev/housing/nihe-review/pwc_report.pdf
- (Perhaps the main response but also the hardest one to do) revenue raising- since 2007 the devolved administration’s focus was on keeping regional taxes and charges at a low level which has produced a major gap compared to revenue raising in GB (perhaps £300m-£500m annually): https://www.nicva.org/resource/review-fiscal-powers-northern-ireland-assembly. Whilst the rationale of this policy in terms of protecting household disposable income is understandable it has become a luxury we can no longer afford.
There is some clarity albeit that has been developed over time. Certainty as to total amounts of resources is elusive given that as we have already seen in terms of the 2020 Budget a number of Barnett consequentials will come along over time. The Annex to the NDNA agreement did set out what bits of funding would be provided by the UK government and what bits would relate to Barnett consequentials which were coming in any case. That position was further clarified a few days later in terms of the UK government statement about the “£2bn”.
A number of considerations are relevant:
It should be beneficial but what we see here is a classic policy making trade off. In an ideal world Stormont would not have needed this degree of oversight but RHI and other difficulties in the Executive’s relationship with HM Treasury imply it is necessary. The Board could imply that HM Treasury becomes a bit of a back-seat driver as far as policy making in NI is concerned. This cuts across the spirit of devolution but past experience suggests the Executive needs over-sight and would benefit from an external institution willing and able to exercise a challenge function.
I am not sure what this question means but I will interpret it as follows, “In January 2020 the NI Parties were presented with NDNA as something of a take it or leave it position from the UK and Dublin Government- agree to this and devolution comes back and you get some extra money but if you don’t agree the unsatisfactory status quo continues and there is no extra money”. A number of observations follow:
- The IFC needs to be established.
- From 2021/22 the Executive must establish multi-year Budgets.
- The UK Government considers the implications of the RHI Report.
19 March 2020