We may be witnessing the birth of a new Northern Ireland myth, false but as fondly believed as ‘Rathcoole is the largest housing estate in Europe’ or ‘Windsor Park is named after the royal family’.
Over the past week, political representatives and others have claimed that Northern Ireland has been historically underfunded, that this is why our infrastructure is crumbling, and that the government has admitted it.
All these points are mistaken. Northern Ireland has been funded above UK norms since the inception of the post-war welfare state. The subvention escalated dramatically throughout the Troubles – five-fold in real terms, even excluding security costs. It kept growing from the ceasefires until the financial crash, tripling in real terms to £10 billion by 2009. Then it bumped along at this level for a decade, with total public spending in Northern Ireland only just outpacing inflation. However, this was stagnation at a very high level, with spending per head almost 140 per cent the level in England.
There is an argument that infrastructure was neglected during the Troubles, certainly compared to the enthusiasm of the 1960s. There has unquestionably been neglect during modern spells of direct and indirect rule. But all of this was due to lack of political direction, not lack of money. When devolution has been operating, neglect of infrastructure has been an active choice to pursue other priorities. If funding for NI Water had kept pace with inflation, for example, it would be £150 million a year higher and overloaded sewers would not be obstructing housing development. Instead, that sum is spent subsiding university tuition fees.
The Treasury imposes some limits on infrastructure investment within Stormont’s budget, but Stormont has repeatedly failed to reach those limits.
Other forms of neglect by the executive are effectively unrelated to available funds. Health trusts cannot plan investment due to single-year budgets, rather than the size of budgets. Key transport and energy projects cannot be built because of interminable decision-making processes that indulge every objection.
The notion of historical underfunding has emerged from discussion of the ‘fiscal floor’, the proposed new funding arrangement for Stormont that would guarantee minimum public spending per head of 124 per cent the level in England.
Stormont parties say this offer from London is an admission that Northern Ireland has higher financial needs that have not been met.
Yet funding only dropped below the floor this year, to 123 per cent, and only then because the government engineered a fake financial crisis to embarrass the DUP back to work.
Some experts say the needs-based formula used to calculate the floor overlooks tax and security issues, so the figure should be 127 per cent. But Northern Ireland only dropped below that in 2021, during the pandemic, when comparisons with England were meaningless as the whole UK was being fire-hosed with cash.
There are concerns it could take a decade to get the floor back up to 127 per cent, depending on how the new funding arrangement is implemented, but that is not a historical problem. The worst than can presently be said is that we might have had a year or two of marginal underfunding, for artificial reasons, after half a century of cash raining from the sky.
Not always, but too often, Stormont parties have spent their plentiful funds on populist giveaways instead of investing to grow the economy
The myth of historical underfunding has an obvious appeal to nationalism, by portraying Northern Ireland as a basket case and Britain as at fault. The myth also increasingly appeals to unionism, by portraying Northern Ireland as an expense only Britain can easily afford – the DUP did much of the work to make the fiscal floor a political issue.
However, the main appeal to Stormont parties is that it distracts from their poor record in office. Not always, but too often, they have spent their plentiful funds on populist giveaways instead of investing to grow the economy. Just as they can use the myth to excuse their failures in the past, they will inevitably use it to dodge responsibility and difficult decisions in the future. Naturally, many voters would prefer to hear the Treasury must pay more, rather than hear households in Northern Ireland must pay more.
If such a convenient tale takes hold, we may be stuck with it unhappily ever after.