The UK should unilaterally devolve tax varying powers to NI

It looks like we are a couple of weeks out from a new Prime Minister in the UK. There’s been plenty of commentary about Andy Burnham and what he may bring to the table when, as seems inevitable, he takes over in mid-July. But what about Northern Ireland ?

Burnham is making a major set-piece speech tomorrow about his economic plans, and we know that devolving more power to regions across the UK is something he has strong views on. I also expect he will, after he takes over, announce a soft reset of economic policy with some kind of fiscal announcement in the first few weeks – perhaps an emergency budget.

Back home, local politicians have two Finance-related complaints. They don’t get enough money; and (sotto voce) they don’t have powers to raise more. On the first of these, they’re currently waiting to see if the Burnham government will raise the block grant. On the second, they are rather quieter.

Politically, NI’s attitude to finance is embarrassing. It amounts to demanding that the central government fund our policy of subsidising the middle class. We refuse to introduce the kind of public service revenue collection that exists elsewhere in the UK, such as water charges or raised regional rates. We provide free prescriptions and free healthcare to those who are well able to pay for it. For motorists, there’s cheap car parking in Belfast city centre, toll free major roads, subsidised MOT testing and cut-price fines for minor motoring offences – all from a government that says it wants to encourage public transport. For anyone into shooting, the farmers recently bullied the Justice department into continuing to subsidize the gun licensing system. There are many more examples of these kinds of subsidized user fees and low taxation across the public sector.

I think it’s time the UK government threw down the gauntlet. It should simply delegate corporate and income tax varying powers, at minimum similar to those in Scotland, to Northern Ireland without waiting for permission. Their use would remain within the prerogative of the Executive but it would at least take the issue of fundraising powers off the table.

Another major change should be to put in place a mechanism to provide match funding over and above Barnett for major capital investment. This makes sound financial sense, as investment which translates into either economic growth or cost savings feeds into the spending and revenue picture for the UK as a whole.

Nobody should expect major capital infusions from the UK any time soon, at least as long as Northern Ireland politicians refuse to lift their end of the log. But am I hopeful, if not necessarily optimistic, that tomorrow’s announcement will see some serious policy reform around how the UK allocates its taxation and spending.

Brendan Heading

centre-leftish waffler working in IT and living in Belfast

Writing in a strictly personal capacity – all opinions are exclusively those of the author