The payout could be higher as a result of studies of the impact of lower corporation tax and scrapping air passenger duty. In its financial analysis the FT points out that
Costs will be higher if the renewed commitment to allow Northern Ireland to set its own lower corporation tax rate and air passenger duty results in lost revenues to the UK exchequer.
The DUP has confirmed to the Guardian that they will seek assurances that the block grant will not be cut as a consequence, thus creating a further instalment of subsidy.
The FT calculates the cost of the deal with Northern Ireland’s Democratic Unionist party at about £15 a person across the UK. If the money were shared equally in Northern Ireland, it would amount to £540 each. If £540 extra per person were spent across the UK, the cost would be £35bn.
The £1bn is also equivalent to 2.9 per cent of the Northern Irish economy in 2015, the most recent year of data. For the UK economy as a whole, extra spending of 2.9 per cent implies a £58bn bill
The annual cost in the first two years is £455m a year, which amounts to an increase in public spending of roughly 1.3 per cent of the Northern Irish economy or £245 a year per person. To pay for this will cost everyone in the UK £7 each a year.
. he equivalent amounts can be estimated either on a per person basis or on the size of the regional economies. For Scotland, that would mean the equivalent of between £1.3bn and £1.7bn a year. For London, which has a higher gross domestic product, it is the equivalent of between £2bn and £5bn a year.
Northern Ireland will receive an additional £1bn in funding for infrastructure, health, education and other services. That injection — equivalent to nearly £540 per resident — is especially contentious after an election where many more than expected across the UK voted for the Labour party and its promises of greater public investment.
“How is it right that austerity has ended for my cousins in Bessbrook but not my constituents in Billinge?” asked Conor McGinn, a Northern Ireland-born Labour MP for the Merseyside seat of St Helens North.
Yet the risk is that the additional funding is not seen as enough. The money will increase the province’s funding by less than 3 per cent, from its current level of £20bn. “It will allow the executive to avoid some hard choices, but is it a game changer for Northern Ireland? No,” said Paul MacFlynn, an economist at the Nevin Economic Research Institute, a trade union-affiliated think-tank
In Commons exchanges Damian Green the First Secretary of State who led the negotiations on the government side, tried to play down the scale of the special treatment for Northern Ireland, insisting that Glasgow and Cardiff were among several GB cities that had benefited from City Deals outside the block grant, worth hundreds of millions of pounds each. A UK Prosperity Fund of £23 billion partly created from savings as a result leaving the EU was already benefiting all UK regions – with lots more to come! Whatever happened to austerity?
Green was repeatedly pressed by half a dozen women Labour MPs to pay for Northern Ireland women to have abortions in England, including the former leadership candidate Yvette Cooper and the campaigner Stella Creasy. They were joined by the former Conservative minister and anti-Brexiteer Anna Soubry who asked the government to think again.
Damian Green’s reply that “this very sensitive matter” was one for Stormont under devolution is not quite correct. The Supreme Court decision of a fortnight ago found by 5 to 3 that the Health Secretary for England was right to deny funding out of respect for the decision of the devolved body to block abortion. It did not rule that the English minister’s hands were tied and so presumably, his discretion remains.
What a gesture it would have been if the Conservatives had balanced credit to the DUP with a concession to the social liberals in the Assembly. In the real world however this was hardly likely to happen on the day the DUP “ saved “ the Tory government. Nevertheless perhaps an opening is being created that could yet be exploited …
Former BBC journalist and manager in Belfast, Manchester and London, Editor Spolight; Political Editor BBC NI; Current Affairs Commissioning editor BBC Radio 4; Editor Political and Parliamentary Programmes, BBC Westminster; former London Editor Belfast Telegraph. Hon Senior Research Fellow, The Constitution Unit, Univ Coll. London