BRENDAN Keenan wonders if devolution actually makes any positive difference to the Northern Ireland economy. Meanwhile, a new report indicates that while southerners are tighening their belts in a ‘Rip-off Ireland’ where both the quality and cost of living are increasing, more northerners living outside Greater Belfast saw an improvement in their lifestyles than those within the city limits.Keenan wrote:
The annual “subvention” of spending over local revenues is around £5bn (€7bn), out of total current spending of £14bn. There may be a perception that Northern Ireland has to go begging to London for this money each year. But it does not work like that.
In practice, Chancellor Gordon Brown decides what he is going to do about UK public spending, and the devolved regions get their share. The amount is calculated under an elaborate formula, which is also applied to Scotland and Wales. This “Barnett formula” may be revised as circumstances change, but it is hard to see how it could ever be abolished.
Recently, it has been delivering lots of extra cash, as Mr Brown throws money at the public services. There is little chance of the public sector’s share of the North’s economy declining, while London is ramping up public spending by 15pc over the next three years. Equally, the expected cutbacks after the May general election will cause a disproportionate cooling on the North’s economy, although the effects will not be felt until 2009.
In this context, what difference can a local administration make? There was quite a fuss a few weeks ago when Bank of Ireland economist Alan Bridle argued in a newspaper article that it would make no difference at all. “Arguably, the economy is doing better in spite of, rather than because of, the politics,” he wrote.