Stormont has more power than you think
The NI Fiscal Council released its first reports last week, one of which is a primer on local public finances. It’s useful simply as a guide to how Northern Ireland works. And, if you look closely, you see how important Stormont is.
One of the most common jibes about Northern Ireland’s government is that it is just a glorified local council.
This joke has been commonplace since the modern Executive was established. It has many layers or interpretations. Take your pick:
If the Executive collapses, it doesn’t matter because Westminster can step in anyway; Stormont doesn’t really raise much cash on its own, its spending power comes from London – and comes with a huge extra stipend to compensate Northern Ireland for being Northern Ireland; it doesn’t have any monetary powers and, as such, isn’t much of a government by any definition.
In fact, in some ways, the Executive (along with the Assembly) comprises something even less than a council. Its ability to borrow money is tightly constricted. Local government bodies have far more leeway.
However, Stormont is incredibly important. The UK has three devolved parliaments. Broadly speaking, the House on the Hill has more power in NI than Holyrood does in Scotland or the Senedd does in Wales. In some senses, it even has more power here than Westminster does in England.
The Northern Ireland Fiscal Council was established this year to bring “greater transparency and scrutiny to NI’s public finances”.
Establishment of the council was a commitment in New Decade, New Approach (NDNA) and its role includes moving forward other NDNA commitments, such as assessing the Executive's revenue streams, spending proposals and budget balancing, and oversight of the sustainability of public finances, including the implications of spending policy and the effectiveness of long-term efficiency measures.
The council’s first two papers were published last week. One was an assessment of how the UK’s Spending Review will affect NI. The other is a reference guide to public finances in NI - The public finances in Northern Ireland: a comprehensive guide.
How NI works
Public spending in NI is delivered through three different layers of government: Westminster, Stormont, and the 11 local councils.
Scotland and Wales have similar three-layer systems, while England has a two-layer model.
Despite this, Stormont is responsible for a higher percentage of spending in Northern Ireland than Holyrood is in Scotland, the Senedd is in Wales, and (perhaps surprisingly) Westminster is in England.
Almost £9 in every £10 of public spending here in NI flows through Stormont (89% of total spending, to be more precise, while London is responsible for 7% and local councils the remaining 4%).
Per the Fiscal Council’s reference guide: “The Executive has responsibilities in NI that in the other regions fall either to the UK Government (e.g. pensions and social security benefits) or to local government (e.g. education, social care and roads).
“Like the other devolved administrations, the Executive finances its spending from various sources, but it raises less in tax and relies more on grants from the UK Government than the Scottish and Welsh Governments – devolution of tax-raising powers having been much more limited than in those two regions. The Executive raises less than £1 in every £20 of NI tax revenue, almost all from Regional Rates.”
So Stormont might not be raising a high percentage of NI public money, but it sure is spending it – and often deciding where it is spent (bear in mind an areas like pensions, which represents a huge amount of what is technically Stormont spending, but where NI keeps in step with Westminster as a matter of course).
The Fiscal Council’s report explains some of the different approaches to both revenue raising and spending in NI, compared with other parts of the UK.
“When the Executive sets spending or charging policies that are more generous than those in England or the rest of the UK, this is referred to as ‘super-parity’. Examples include domestic water charges, welfare reform mitigations, university tuition fees, concessionary transport fares and charges for domiciliary care.
“It is often argued that bringing these more into line with UK policy would free resources to spend elsewhere (which it would), but it is for the Executive and Assembly to judge if they are worth the cost – they are policy choices like any other. ‘Sub-parity’ policies are rarer but include less generous childcare support in NI than elsewhere.”
These are indeed policy choices. The above areas of “super-parity” are almost a bingo card of areas where Northern Ireland had options to raise more money for itself and chose not to (throw in prescription charges and that’s house).
This also provides some illustration just how much leverage our ministers and MLAs have. Not only do they currently direct 89% of public spending in NI, they could control more if they so chose.
To look at some examples:
- Water charges are perhaps unpopular in principle, but NI Water is a desperately under-resourced agency and infrastructure everywhere is being held back by a lack of capacity in the sewage system.
- Prescription charges are also unpopular in principle, and any payment system that made things harder for struggling people to access healthcare would be bad – but a system of caveat charges could raise money for cash-strapped Health and Social Care (caveats could mean, for instance, that charges only apply to working-age adults, only apply to one-off or first-time prescriptions so people with long-term needs are not milked over time, and could also have an exemption for people on benefits). Suggestions about creating some prescription charges, even with a progressive model, tend to be met with fierce resistance in the Assembly.
- Welfare Reform mitigations have political support that is fairly broad. Progress on implementation has been slow, but a package of extensions was recently agreed and an independent review is being established to advise on this matter in future.
At the other end of the spectrum we have sub-parity, where childcare stands out as an area that has lagged behind other parts of the UK despite its apparent popularity with both the public and elected representatives. However, change is now in motion, at least in theory.
The bottom line is that Stormont has power. It has agency. It has the ability to make decisions that lead to sweeping changes in the lives of local people.
Sometimes it does not do those things, but that is rarely down to a lack of options. For all the jokes and jibes – many of them completely understandable – the Executive and Assembly hold considerable sway over our social and economic future.
Stormont is important. It needs to work. Let’s hope the next few months, and the inevitable electoral posturing, leads to stability rather than collapse.
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