Belfast Telegraph

John Simpson: Local spending poorly controlled


Both the PSNI and the education system in Northern Ireland have suffered from budgetary problem in recent years
Both the PSNI and the education system in Northern Ireland have suffered from budgetary problem in recent years
Both the PSNI and the education system in Northern Ireland have suffered from budgetary problem in recent years
John Simpson

By John Simpson

In the overall UK public spending allocations, Northern Ireland is relatively generously treated by the Treasury. Public sector spending here is more than £3.3bn higher than if we had the same per person allocation as for the whole of the UK.

Here, 20% more per head is spent compared to the UK average. Scotland receives 16% above the average, Wales 11% and the English get 3% less than the UK average.

The relatively generous allocation to Northern Ireland, as calculated before any Confidence and Supply arrangement was in place, does not leave local politicians or civil servants feeling content or able to proudly show how this funding makes public services more acceptable: quite the reverse since critical complaints of inadequate funding are frequent.

Since, proportionately, we have a much bigger spending allocation, how come that:

• The Housing Executive cannot adequately maintain its 89,000 houses?

• The Education Authority cannot sustain current school budgets?

• Health service funding allows waiting lists to continue to grow?

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• The PSNI has budgetary problems?

• Public sector capital spending leaves big deficiencies?

The gap between an apparently generous funding allocation, based on the Barnett formula as enhanced by various one-off supplements, and the recurring inadequacies in public services living with constrained spending allocations, merits a careful examination and explanation.

Generous levels of total funding seem to translate into seriously underfunded specific services.

It should come as no surprise that, viewed from Westminster, the anomaly of higher spending alongside inadequate services needs to be explained and investigated.

The explanation must consider whether the NI outcome is similar to that in England or Scotland, or why the NI outcome is worse than elsewhere in the UK. If, as some of the evidence suggests, NI delivers a less satisfactory bundle of public services, where has the available extra money gone?

Of the extra £3.3bn spent in NI, the biggest single explanation lies in the amount spent on social protection (including the social security payments).

This difference alone accounts for £1.8bn or fractionally over half of the total.

This is an inherited difference stemming from higher levels of payments related to personal incapacity, disability, poorer health and (until recently) higher unemployment rates. Spending on social security is 24% higher per person in NI than the UK average. The next highest regional figure is for Wales where it is 17% higher.

Using a simple per person comparator, the published Treasury statistics allow a crude estimate of a range of generic topics where public spending differs from UK averages.

Northern Ireland differences in 2017-18 were as shown in the table (left). Each of the statistical comparators calls for careful explanations but the broad order of magnitude confirms that public services are generally better funded in administration, policing, economic policy, housing, education and health.

Somewhat surprisingly, funding for transport and the environment is below equivalent UK levels.

From either a local perspective for consideration by MLAs and ministers or from a Treasury examination, the comparative figures do call for more than a naive 'we deserve it' response.

There are some demographic factors at work and there is an inheritance of spending commitments built up over many years of special pleading or Troubles related needs. However, even with a sympathetic audience, justification for more than about £2bn of the enhanced NI spending may be difficult to find.

In NI we spend more per head on public services. Whether we do it efficiently merits investigation. Whether we can justify lower domestic rates bills or the absence of domestic water charges will need to be justified.

Taking a longer term approach, Northern Ireland's political players should even now be building an adequate defence against a less accommodating Treasury after the next general election.

N Ireland public sector extra spend compared to UK average (in £m)

Public administration: 168

Public order & safety (inc.police): 370

Transport: -365

Economic affairs (exc.transport): 441

Environmental protection: -66

Housing & community: 311

Health (excl social services): 205

Education: 200

Recreation, culture & religion: 280

Social protection: 1,790

Belfast Telegraph