Phew! A rescue package for Northern Ireland may be on the way after all – but with conditions

The Secretary of State’s grim budget statement may not be the last word after all.  From a Dublin dateline, the Poltico website casts a more favourable light on it, predicting another £1 billion “bung” – but with conditions

A half-dozen senior insiders in the British government and Northern Ireland civil service have told POLITICO that Westminster is mulling a £1 billion offer to boost the region’s public services if its main political parties restore a power-sharing government before the end of the year.

The deal would mark the third time in seven years Westminster has ponied up £1 billion to get the fractious Northern Irish parties back on side — but is still seen as a price worth paying to break the yearlong political deadlock.

“When you look at previous points in our history where there have been crises, there has always been money to sweeten the deal,” said David Sterling, the former head of the Northern Ireland Civil Service, who retired in 2020.

Officials in Heaton-Harris’ Northern Ireland Office and the senior civil servants tasked with actually delivering the cuts bitterly disagree on the tactics being deployed — but privately foresee the same end game: a new political accord that coaxes the Democratic Unionist Party back into government with their Irish republican opponents, Sinn Féin.

“The secretary of state sees value in inflicting pain in the short term to achieve the necessary gain in the medium term,” said one of Northern Ireland’s 10 permanent secretaries — the departmental heads tasked with reluctantly wielding the budgetary axe in lieu of an elected assembly.

“We don’t accept being ordered to take decisions that, frankly, he needs to take himself.”

Heaton-Harris argues that the only way for British unionist and Irish nationalist leaders to manage the coming financial pain themselves will be to grab back the reins of power and revive their cross-community executive, the central goal of the American-mediated Good Friday Agreement of 1998.

And he did not quash behind-the-scenes chatter that any such breakthrough will be accompanied by a special financial sweetener — a well-established pattern dating back to the earliest days of power-sharing a quarter-century ago.

“The purpose was not to punish anybody with this budget. The purpose is to make sure public services can continue in the absence of an executive,” Heaton-Harris told reporters after meeting the leaders of the DUP, Sinn Féin and three other parties at Hillsborough Castle outside Belfast.

This time an additional financial package would be offered with far tighter conditions than the pious hopes of New Decade New Agreement even though the package offered in 2019 to restore the Assembly then was less generous than appeared at first.

The economist Richard Ramsey has identified what he calls  NI’s “super-parity” measures – the additional benefits that NI citizens receive over & above their GB counterparts. A couple of years ago the NI Fiscal Commission identified these as up to £700m per annum. So if NI is to receive  more real money  a restored Executive will be obliged at last  to consider amending concessions like free prescription charges for all, free transport for the elderly, lower tuition fees rises, a pegged regional rate and levying water charges.

Ramsey describes CHH’s tactics as “a pincer movement” between raising more revenue and spending more effectively and efficiently. How politically realistic is it to pressurise the local parties  to  reduce some  of these concessions and impose higher charges  as the price of  restoring   Assembly powers?

By itself CHH’s present offer may not be enough to entice the DUP. They are holding out for more “clarifications” over the operation of the Windsor Framework. On offer now are assurances that it will work smoothly in operation plus a promise to review particular problems.

Bluffs need to be called, Sinn Fein’s  as much as the DUP’s. Blaming CHH is  water off a duck’s back as he is not locally accountable. The main pressure on him is from the NI Civil Service who are virtually in revolt but would probably  truckle down  in the end.  The Assembly parties  have to face up and take responsibility.  As an election cycle has begun the timing for gripping the issues is terrible but then it usually is.

On the merits of the case all parties argue powerfully that such concessions are essential because of the scale of NI poverty. How great are its needs anyway and can they also be addressed by better, more efficient spending?   More light will be shed on this when the watchdog   the Fiscal Council issues its latest report on Northern Ireland’s needs next week. This is expected to defend higher spending on the poor and disadvantaged in exchange for raising more revenue locally in the form of the realistic three year budget plan the Executive parties have been avoiding for  years.