“They could never afford us!” and related economic myths

When talk of Irish reunification comes in the door, hard on its heels inevitably comes “Sure the South  couldn’t afford us.” That’s because, it’s explained, the British government every year pass something like £10 billion our way. Seriously big bucks, which a relatively puny Dublin wouldn’t be willing to shoulder and couldn’t even if it were willing.

There’s an implicit assumption there that reunification will be the South taking over the North, which is a seriously misguided notion.  But let’s leave that for another day and focus on the figures.

£10 billion is the sum in question, and the impression is given that London writes a cheque or sends a container stuffed with notes each year.

But let’s examine that £10 billion and see if we’re really getting it all.

Take 2017-2018.  That year, the British Office of National Statistics published a document showing the finances of the North.  That year, almost £26.5 billion was spent on the north, and nearly £17.5 was raised in taxes.  Which leaves you with a figure of some £9 billion for the North  – a billion less than the touted £10 billion, but let that go.  Instead, let’s take a closer look at that £26.5 billion.

It comes in categories: ;Total Identifiable Expenditure, ‘Total Non-identifiabale Expenditure’ and ‘Total Outside the UK expenditure.’

Take the first – Total Identifiable Expenditure. That’s money that is spent by the Assembly and local councils, providing public services and benefits.  In 2017-2018 it came to almost £20 billion.

Of this £20 billion,  £3.4 billion was paid out in pensions.  You get a pension in recognition of the years you’ve spent working, and even if you were to emigrate to Spain or the US or Australia, you’d still be entitled to your pension. Likewise if you lived in a reunited Ireland. So that’s £3.4 billion that wouldn’t make demands on the south.

Total Non-identifiable Expenditure’  – that’s money the British government spends on things it thinks important, and every part of the UK contributes to this particular pot.  What does the British government think important? Well, funding its army. We pay £1.1 billion of that and yes, Virginia, very ironic, ironic on stilts. Then there’s helping pay off Britain’s national debt, to which we contribute £1.3 billion every year. Those two areas – the British army and Britain’s national debt – account for 85% of Non-identifiable Spending. The rest goes on funding such worthy causes as the British royal family, palaces and museums. Add up all the Total Non-identifiable Expenditure and you get over £2 billion.

Now let’s look at that ‘Total Outside the UK’ spending.  This is money the Westminster government spends – the North has no say in it, and it comes to £679 million. Plus there is the sum of £500 million, raised in corporate tax here but which isn’t factored into the North’s finances. 

So let’s stand back. That initial £9 billion  – a lot of it would vanish in a reunited Ireland. For example, the £1.1 billion the north has to fork out as its share of keeping the British military well-fed and well-armed is considerably larger than all the military spending of the Irish government. Big saving there.

As for projected figures in a reunited Ireland, Prof  Kurt Hubner from the University of British Columbia believe that Irish unity would give a boost to finances North and South. Reunification, he figures, would benefit the North By €18 billion and the South by  somewhere between €5  and €6 billion.

But count up the way things are right now, and you’ll see that fabled £10 billion is what we economists refer to as a bloody  but convenient lie. It’s actually a lot less than that, and support from the EU and the US, not to mention improved trading conditions as identified by Hubner, would make Irish unity financially beneficial, not the £10 billion ball and chain political unionism likes to talk about .

Comments are closed.