Cost of a United Ireland and the GFA

Sam Russell

Today (16-12-2022) John Fitzgerald has an article on the cost of Unification of Ireland.

https://www.irishtimes.com/business/economy/2022/12/16/john-fitzgerald-a-united-ireland-would-come-at-a-heavy-financial-cost/

[Might be paywalled]

He makes the point that the cost to the Irish State might be significantly higher than many would suggest, and that NI would carry a proportion of the UK borrowings.

He particularly says the Social Welfare State pensions would fall to the Irish State to pay. He instances the Scottish proposal in their 2014 referendum.

Now this I disagree with because the UK state took all the contributions for the state pensions from the workers who would now be entitled to that pension after 40 years of contributions. Furthermore, those contributions could have been paid into the fund from any part of the UK as it is not a separate NI fund. It is a UK wide fund, and contributions are not identified as to where the employment occurred.

Now it has been argued that the pensions are paid from current taxes, but that is like saying my mortgage is paid from my income, but my mortgage is still due if my current income is zero. I bought my house when I signed the contract, and money was passed over - not by paying the vendor over thirty years.

There is another difference. Scotland was leaving the UK to form a new state, and the basis for Scotland departure failed to win the referendum, so that proposal is now reduced to nought.

It is not the same for NI. NI is moving from one state to another, which has its own financial structure. I would think the UK state pensions will continue to be paid as they are to those in Ireland that are entitled to them, having worked in the UK and paid contributions, and have an entitlement to them. So a worker in Lisburn works forty years and gets a UK State pension, and another works in Leeds for forty years. NI votes for unity, and the Leeds worker continues to get a UK pension but the Lisburn worker gets an Irish pension. Say they both move to Cork on retirement, and do not even vote in the referendum, why should they be treated differently? It can be even more tricky, if they both move to Newry on retirement, or part of their working life was in GB and part in NI. It is too simple to say the liability passes to the Irish State.

Another point regards the GFA.

What terms are built into the GFA for NI to transfer from being governed from Westminster to being governed by Dublin? I never saw any condition beyond a simple majority voting for it - North and South. I never voted to take on the NI share of the UK national debt, and certainly not the current UK debt.

So, say a whopping majority, N&S, vote for unity - will the UK Gov say 'Wait a minute - there is a big bill to pay!'

Would they go against the majority and demand unreasonable terms? What would reasonable terms be? Would NI be saddled with all the chumocracy bills that the UK has had to swallow for dodgy PPE or failed track and trace, or even Johnson's parties in No. 10? Or the cost of two Royal Navy aircraft carriers ploughing the South China Sea with its complement of American Marines? Or the cost of nuclear subs? Or with its share of the HS2 railway infrastructure serving the SE UK, or the new Elizabeth Line underground railway for London. These are all very significant costs that have no bearing on NI.

I think the whole basis should be with zero baggage. The UK would save a huge annual subsidy to NI every year, and should continue the subsidy for perhaps a decade. They should agree a deal and have the same joy as a successful seller of a clapped out motor has when the cheque clears.

Fr Tod Umptious

https://www.boards.ie/discussion/2058276065/cost-of-a-united-ireland-and-the-gfa

So, say a whopping majority, N&S, vote for unity - will the UK Gov say 'Wait a minute - there is a big bill to pay!'

Would they go against the majority and demand unreasonable terms?

No

Before any referendum on unification was put to the people the terms and conditions of what would happen if it was passed would have to be clear.

The cost of unification should not matter to people, if they really want unification they will vote for it, irregardless of the economic impact that it will bring.

blanch152

https://www.boards.ie/discussion/2058276065/cost-of-a-united-ireland-and-the-gfa

Unfortunately it is paywalled and I can't read it.

However, I would tend to agree with him and we will be on the hook for those pensions. The British taxpayer will not want a continuing liability.

Chris_5339762

https://www.boards.ie/discussion/comment/120013095#Comment_120013095

It wasn't with Brexit. Lies and bluster filled the air, and the true cost was not published - nor did anyone really know what it was.

Big things like this are never typically thought through. It would be done under ideological terms only, not with rationality and careful economic thinking happening. Only AFTER the vote was done would the realities hit.

Sam Russell

The cost of unification comes down to a few major items.

Defence is obviously not transferring as we are a neutral country and are not joining NATO nor are we paying for the British military.

National debt - well, there are two issues here. 1. Are NI responsible for big ticket items like the Elizabeth line, Heathrow expansion, or the HS rail links that do not serve north of Birmingham - so do not benefit NI in any way. 2. Much of the level of the national debt has been increased by mismanagement by the GB Gov, and a tiny bit by NI Assembly mismanagement. So how are those corrupt spendings to be divvied out.

No proper or reliable financial/economic figures are published that isolate the trading figures for NI. Many figures are amalgamated into total UK figures.

Pensions entitlement is collected UK wide by contributions to National Insurance. This is the same for a worker in Leeds as in Lisburn, or Newry or Norwich. So how is it to be accounted for, and who gets to be set in one system or the other. Currently, there are UK pensioners in Ireland collecting their UK pensions every week. Some are entitled to full Irish pensions and Full UK pensions. What happens to them?

Now a canard is dragged out that posits that as current /NI contributions are used to pay pensions but that bears no relevance.

Motor tax is supposedly to pay for roads, but it does not, it goes to the LA, who do maintain roads, the cost of which is not related to motor tax.

When I bought my house, the Vendor got 100% of the purchase price and I became the owner. Now I had to borrow from the bank for it, and repay them over the years. The fact that I pay monthly for my mortgage out of my income is detached from ownership of my home. If I pay NI contributions then that entitles me to a pension at retirement age - the terms are set for my contributions and change from time to time, but if I qualify for certain benefits, they continue till retirement. Where the Gov gets the funding to pay me is irrelevant to me.

Which bit of the deficit the UK gov is running is to pay the pensions and which bit is to pay for the HS2? Money is money - and in your head you can assign one income stream to one expense, but that is notional - not reality. When the Gov cuts back, it is political choices that determine which parts of the economy gets to suffer most, and which parts are immune because of the tendency to vote to support the Gov.

The Irish Gov has set up a 'rainy day fund' to allow the Gov to have a fund for emergencies (like Covid) but it is not assigned to anything in particular. Would that be used to pay for unification? I don't think so.

jh79

https://www.boards.ie/discussion/comment/120013591#Comment_120013591

With regards pensions, the British are under no legal obligation to continue paying them. If they decide not to then we would have no choice but to pay it instead.

A lot if what you've mentioned is related to the subvention and it's true amount. The major costs come from increases in PS pay and welfare to Irish levels.

Then you have adjustments needed to keep the markets happy. Our per capita metrics are going to significantly drop due to the huge increase in population with little in the way of a revenue increase. So even if we find the cash to pay these extras we still have to reduce spending to get the per capita stuff back in line.

Our GDP is 350bn for 6m people, after unity it would be 385bn for 8m. Fitzgerald has already given research saying just the subvention at 10bn alone would require similar adjustments to the last recession.

maccored

how is it possible to even conceive a cost if the idea itself hasn't actually been discussed properly nationwide?

blanch152

https://www.boards.ie/discussion/comment/120013591#Comment_120013591

This is a very simplistic analysis and does not take account of a number of issues.

Regarding pensions, you could make the same claim in respect of unemployment benefit or other social insurance payments as they are based on credits already acquired. The rUK taxpayer is going to pay for the rUK pensioners and unemployed. You see, what your analysis misses is that NI taxpayers are moving over, and UI tax income increases as a result. NI pensioners move over as well, and are paid out of UI taxation. There is absolutely no reason why the rUK taxpayer should pay for NI pensions out of their reduced tax income.

The cost of unification doesn't come down to a few major items, and even pensions are only a small part of the overall huge cost.

Take social welfare for example. At the moment, social welfare rates in NI (under a SF/DUP government) are far lower than in Ireland and are paid out of NI taxes plus rUK subsidy. What will happen with unification? If they are levelled upwards, they will cost more than NI taxation plus rUK subsidy. Those wishing away the rUK subsidy or pretending that the EU and the US will pick up the tab are deluding themselves. There is no doubt that, unless you want to cut social welfare rates in the South, that the cost of a united Ireland will be significantly higher than the current UK subsidy.

Sam Russell

@jh79 Our population is 5m not 6 m. So 350bn/6m = 50k. I assume these are €.

There are no separate GDP figures for NI given by the UK Gov. You give a figure for NI of 35bn - where did that come from?

If I qualified for a UK pension after 40 years, I would expect them to pay that pension wherever I lived in the UK while I contributed, and wherever I live in retirement. Are you prepared to forgo such a pension?

The real issue is those yet to retire but living in NI at the time they retire.

Sleepy

There's a huge issue with regards to the NI public sector as well. It's incredibly bloated at 27% of the total employee jobs in NI. This would be unsustainable in a United Ireland and would necessitate a huge number of redundancies.

This is also likely to exacerbate the inevitable unionist violence as there'll be grievances from some who lose their livelihood through the necessary streamlining as public services are amalgamated. While it's probably easy enough to calculate the additional spend that would be needed for whatever the unified Gardai / PSNI would be called, the repair bills for the impact of any bombing campaigns on public infrastructure (and the health spending for the victims of same) are understandably far more difficult to quantify.

No doubt there'll be a shinner bot along soon to link to their "Modelling Irish Unification” research paper authored by "world leading experts" which has claims of unification leading to a huge boost for the GDP of the island as a whole and which certainly reads well if you're economically illiterate or have no understanding of data modelling but which uses a lot of guesstimates as inputs to a model designed for analysing the impact of lifting trade barriers along the US / Canadian border i.e. it's garbage data fed into a data model that's a poor fit for the scenario being modelled.

I'm sure we'll see a referendum on unification in the next 20 or 30 years but I'd have no faith that it will be presented alongside any detailed plan on how the social institutions of both countries are to be merged, the costs of same and how the whole exercise is to be paid for. It's worrying tbh as I can see the Irish electorate voting for unification from a position of almost total ignorance of the economic hardships it'll bring and the lives it will destroy on both sides of the border.

Sam Russell

https://www.boards.ie/discussion/comment/120013897#Comment_120013897

Pensions are not the same as unemployment benefit or other social welfare payments. Contributory State Pensions are not social welfare - non-contributory pensions are. We are talking about UK State pensions based on National Insurance contributions made over forty years. They keep records, all of them, and are very careful to make sure those that those who are entitled to a pension get their due entitlement. And that entitlement applies world wide. So someone who worked for 20 years in the UK and paid NI stamps but emigrates to, say, Australia, will get their pension exactly as if they were in the UK with the same contributions.

You get EB if you are unemployed now - that is Social Welfare. The entitlement is fairly easy to acquire and bears on your current need. Pensions, the ones we are talking about, on the other hand are earned through contributions made over 40 years of employment in the UK - wherever that employment occurred in the UK - a totally different metric.

If the state pension was run like a private pension scheme there would be no question that the pension would continue to be paid out of the pot built up by those contributions. So what is different - just because the UK Gov does not keep a pension pot for all those past contributions, but spends it instead on current expenses?

Podge_irl

I suspect the UK's opening position will be "it is entirely your problem now" with regards to pensions etc. Of course that is offset against what to do with the national debt seeing as it is not calculated by region. It will be an exceedingly complicated negotiation process I suspect. I have seen the suggestion that it would inevitably entail two rounds of referenda (one on unification conceptually, one with the actual designed plan in place) which I think is a reasonable expectation. There is very little chance that the momentous effort required to negotiate and plan for the specifics will be done on a "just in case" basis.

I do not consider it all that likely that there will be an attempt to distinguish what parts of the national debt paid for what project and exclude those that did not benefit NI, as it really doesn't make much sense.

Sam Russell

I agree that apportionment of the national debt could not be apportioned by region because it is accumulated by spending way beyond their means over decades throughout the economy, often with the bias towards the governing parties areas of interest. NI was never within that metric.

However, it could be apportioned according to the average income earned in each region, with certain obvious major items removed.

jh79

https://www.boards.ie/discussion/comment/120013900#Comment_120013900

Sorry,thought it was 6. The 35bn is the GDP increase after 8 years if unity was done as outlined in the SF approved Hubner Report. The GDP of NI is 54bn according to Google.

So, 350/5 becomes 404 /7 overnight and if we are lucky 439 bn after 8 years. That 70k per person before unity becomes 58k per person overnight and possibly 62k per person after 8 years if we are lucky and NI accepts the conditions set out in the Hubner report. The markets will expect adjustments to counter the dilution of the economy and that needs to be factored into the cost too.

With regards pensions, the law is it comes from current spending. If the British decide we should pay it instead of them there is nothing we can do about it. We accept it or reject unity.

jh79

https://www.boards.ie/discussion/comment/120013870#Comment_120013870

Didn't stop SF from commissioning the Hubner report on the benefits. Outside of the subvention all other data is available. There is no magic right answer just different estimates.

blanch152

https://www.boards.ie/discussion/comment/120013971#Comment_120013971

https://www.gov.uk/national-insurance/what-national-insurance-is-for

Let's start with some basics. Pensions in the UK are paid out of the Social Insurance Fund. So is Jobseekers, Maternity Benefit and some other (but not all) social welfare allowances.

How do you therefore claim that pensions are different to unemployment benefit?

https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1124729/Northern_Ireland_National_Insurance_Fund_Account_-_2021_to_2022.pdf

Now look at this link. You will see three things:

(1) There is already a separate NI Insurance Fund

(2) "The National Insurance scheme is financed on a pay as you go basis with contribution rates set at a level broadly necessary to meet the expected benefits expenditure in that year, after taking into account any other payments and receipts, and to maintain a working balance."

(3) There is a subsidy from rUK taxpayers of €500m to the NI Insurance Fund.

So, unless someone can point to some unbelievable generosity on the part of the British, it is plainly obvious that the Fund will be handed over (and it amounts to 16.7% of one years benefit) and our taxpayers will then pick up the tab.

Now it gets even better when you consider that the social insurance rate in Ireland is generally 4%, while in the UK, it is generally 12%. So that means that if we switch to UI rates, then the fund will require a subsidy of more than €500m. So even if you wish away the €500m subsidy, you need to explain how we could make up the difference of up to half the missing contributions, around €1.3bn. Alternatively, you could suggest increasing SI rates for those of us living in the South.

Sleepy

https://www.boards.ie/discussion/comment/120014716#Comment_120014716

Like clockwork...

The Hubner Report is a work of fantasy (made up figures fed into inappropriate data models). Sinn Fein approve it because it was paid for by their US base to give the answer they wanted i.e. that unification would increase GDP of the island as a whole.

Sam Russell

The method used to fund pensions is a political matter, and designed for administration ease. The State pensions are based on contributions and are not the same as other benefits paid for under the NI scheme.

Pensions are not social welfare. If they were, the UK Gov would not pay pensions to people living abroad. They do not pay any social welfare to people living abroad, but they do pay pensions to anyone living abroad, wherever they live. I know someone who gets a UK pension even though they have never worked in the UK in their lives and never paid a single NI contribution - it is granted based on the spouses contributions but in the name of that person, so they retain it for the rest of their lives.

It might be a starting negotiating position for the UK Gov to pass over the cost (along with as many others that they can think of), but it should be rebuffed. If they had a separate fund for the pension contributions then the issue would not arise.

I was not aware there was a separate fund for NI, but it does not change the argument. How do they handle 'migrants' who return to NI after working in GB? Do they get a split pension from NI and GB, or just one pension - just the same as if they stayed in GB? Are the NI pensions administered from GB or NI?

[Edit: Having read through the link above, the cost of the State Pension in NI is about GB£2.5 billion pa - not an insignificant sum and well worth arguing about. The notion that payments are related to receipts is just an administrative equivalence - since unemployment is included in the equivalence but is totally separate and of no bearing. The fact that NI has a separate fund is a nicety because the whole scheme is administered by HMRC, as in GB.]

facehugger99

Thankfully the GFA, in removing the constitutional claim on NI, provides Republic of Ireland voters with a veto on any unification proposals.

The eye-watering costs associated with unification will have to be laid before the people before any referendum. The first mention of 'unification tax' will scupper the proposals before they even get off the launch pad.

Irish unification is about 20 years away

and always will be.

Sam Russell

https://www.boards.ie/discussion/comment/120015018#Comment_120015018

You could turn that around, and the British Gov might look at the current subvention to NI a Unionist Tax, and decide to get rid of it as too expensive for no benefit only misery.

facehugger99

https://www.boards.ie/discussion/comment/120015063#Comment_120015063

I'd imagine they'd love to.

blanch152

https://www.boards.ie/discussion/comment/120014986#Comment_120014986

I have explained it as clearly as possible to you now with extensive links.

There is a separate fund for Northern Ireland, it includes more than pensions, it is funded on a pay-as-you-go basis, requiring an annual subsidy of £500m from rUK, and the reduced PRSI rates in the South will create an additional hole of £1.45 bn (I actually underestimated 50% of the cost in my previous post).

The absolute best that you could get from the UK if your pipedream came true would be a continuation of the £500m (or more particularly, around £400m which would be the subsidy of the pensions element). It still leaves you with a gap of £1.5bn or more, before we even look at the other areas of social welfare where the Irish taxpayer would have to pick up the tab.

jh79

https://www.boards.ie/discussion/comment/120014972#Comment_120014972

To be fair it wasn't the answer they were hoping for and they tend not to mention it much anymore.

The Hubner report shows that even with an optimistic approach to a UI, the benefits would be quite small.

The reason I brought it up is that whenever there is a discussion on the costs of unity , pro unity posters tend to say you can't make estimates until there is a plan but forget their own side had no issue with estimates for the benefits.

blanch152

https://www.boards.ie/discussion/comment/120015232#Comment_120015232

It is even worse than that.

The pro-unity claims all sorts of optimistic nonsense for economic growth with no real solutions for the core problems in Northern Ireland (third-level education, public service too big, political division), yet when you present hard facts around costs like detailed data on social welfare rates or pension funds, they dismiss the costs either as requiring a plan or that the EU/UK/US (delete as appropriate) will be delighted to pay for it all.

maccored

https://www.boards.ie/discussion/comment/120014716#Comment_120014716

so you answer my question with whataboutery? Nothing new there then

The point remains - the concept itself needs to be discussed before you can start with makeyuppy scenarios of cost.

breezy1985

https://www.boards.ie/discussion/comment/120013434#Comment_120013434

Brexit gave absolute no idea of what the future would hold. No agreements or framework.Brexit voters voted for unicorns and castles in the sky.

I would vote for a UI despite being fully aware it will cause economic problems but I think long run it will work out.

I would certainly vote against reunification if it was one of those wishy washy UK referenda and not more like here where you know what you are voting for.

Sleepy

The best approach for the Republic would be to refuse unification, best for NI to have a couple of decades of independence to sort themselves out and then unification can be discussed as a merger of two functioning states rather than a takeover of an economic basket case at huge costs (economic, social and - let's face it - likely in terms of lives).

kazamo

https://www.boards.ie/discussion/comment/120020904#Comment_120020904

Irish Referendums have been largely about social matters and other than divorce, money wasn’t a material consideration.

I am expecting a wishy washy referendum, whenever it happens, but this referendum has a lot more potential impact than any other we have held.

breezy1985

https://www.boards.ie/discussion/comment/120020986#Comment_120020986

Not more than the wishy washy ones I had to live through in the UK.

Absolutely pointless having a vote for a magic fairyland future.

blanch152

https://www.boards.ie/discussion/comment/120020863#Comment_120020863

So you think the SF-sponsored studies are makeyuppy? Glad we agree on something.

breezy1985

https://www.boards.ie/discussion/comment/120021064#Comment_120021064

Practically all studies on the cost of a UI are makeyuppy because no one knows what shape a UI will take.

Sam Russell

There is an article from 2018 on Slugger O'Toole that gives figures on this. I have failed to find other sources for these numbers because a lot of them are hidden by the integrated nature into the UK economy of these numbers.

https://sluggerotoole.com/2018/07/22/would-a-united-ireland-be-affordable/

There are two interesting issues to pick out and look at - State pensions @ £3.5 billion, and 'allocated expenses' of £5 billion. Allocated expenses is a makey-up number that is plucked from the ether by Westminster mandarins to keep the Barnet Formula in check.

The shortfall of taxes vs expenditure (2016) is given as £10 billion. Now those figures will have changed somewhat but not hugely, and can be taken as indicative. So using those numbers, with the UK accepting the State pensions and 'allocated expenses' as to the UK account, then the deficit to be taken by Ireland would be about £1.5 billion or less than €2 billion. That I would think could be managed, and certain economies be found without due burden, like moving some State administration to the NI public service, and fostering inward foreign investment into NI.

Now, obviously, if a UI was in prospect due to an desire for it by an obvious majority, negotiations on the financial settlement would take place prior to a border poll, and both sides would look for the best deal. The UK would be losing a hole in their finances of £10 billion so a lot of room for accommodation, and Ireland would say such a burden would not be accepted by the Irish electorate, so there would have to be a compromise, or the whole issue is intractable with growing political unrest a likely result.

Now there are gains to be made on the tax receipts (VAT and excise duty are both higher in Ireland) and losses due to higher social welfare, so the difference might be small. Health cost is lower per head in NI, so probably not an issue - we just keep it as it is, and try to copy their systems to give economies within the HSE.

Now the two issues mentioned above would be obvious targets. To sugar the pill for NI, the Irish side could offer to supplement the UK paid for State pensions of NI recipients to Irish levels - that is the UK pays, say £178 pw, and Ireland brings it up to €255 pw - or whatever the then rates are.

The claimed 'precedent' of the Scottish referendum is irrelevant because the referendum failed to be implemented and was simply a negotiated position. Besides which, the Scottish case was of a territory becoming independent, while NI will be moving from one jurisdiction to another which is a totally different situation. The Irish electorate has to accept it, and the terms have to be favourable - all things considered. Of course the terms have to be acceptable for the NI electorate as well.

It is not easy to find a solution, but there is certainly room to find one.

Furze99

The only certainty in relation to this matter is that costs associated with a UI will have to be 100% crystal clear to any electorate on both sides of the border. No room for fudging or grey areas in which to deceive the citizens.

Sam Russell

https://www.boards.ie/discussion/comment/120021297#Comment_120021297

That perhaps is the virtue of the simplicity of two separate headings - State pensions @ £3.5 billion, and 'allocated expenses' of £5 billion - being simple to agree and easy to understand by all voters - north and south. Easy to justify, and the right order to be acceptable to all sides.

breezy1985

https://www.boards.ie/discussion/comment/120021297#Comment_120021297

Not just the costs. I wouldn't vote for something that could be hijacked by the likes of Bruton and his Redmondites.

We should have the entire framework nailed down first. New voting constituencies in the Dail, the role of devolved power if applicable, flag, anthem, county council boundaries etc.

Sam Russell

https://www.boards.ie/discussion/comment/120021324#Comment_120021324

Yes, but this topic is about the costs involved in a UI.

The other items you mentioned are significant but not related to cost.

Furze99

https://www.boards.ie/discussion/comment/120021324#Comment_120021324

Absolutely, there's a whole raft of other structures and emblems that should be debated and changed/ adapted as agreed in advance of any votes. Who wants to buy a pig in a poke? But this thread seems to be about costs of same.

Sleepy

https://www.boards.ie/discussion/comment/120021335#Comment_120021335

All of the details will affect the costs though. If the NI public sector is to be kept as is, that's an extra €1bn a year the exchequer has to find, if (as would realistically be necessary) it's to be cut in half to avoid duplication of service provision and waste, there'll be an expensive redundancy package to be funded and a large increase in our social welfare bill. If the 6 counties are to keep NHS like services as part of some new "HSE-NI" political sop, there'll be costs involved with that. Even changing the flag, passports, anthem etc could cost hundreds of millions.

TBH, Northern Ireland has a lot of work to do before it can come to the negotiating table with anything other than a begging bowl and a list of crazy unionist demands.

Sam Russell

https://www.boards.ie/discussion/comment/120021495#Comment_120021495

Taking your points:

The NHS costs less per head than the HSE so no extra cost if it stays the same.

The public service is at a higher level than the Irish equivalent, but many Irish functions could be moved to NI and the costs mitigated. You can solve duplication be reducing the work load of the civil service in Ireland. I see no need for redundancies.

The passports are already in place for the majority in NI.

The flag and anthem are unlikely to change, but if they do, then so be it - hardly much of a cost.

SW could be an increase, but that depends on the balance of taxation and employment. Economic growth at Irish levels for a few years could well cover that.

As for crazy unionist demands, well we will cross that bridge when we come to it. A few of May's billions might be enough to buy them off. Unfortunately, once bought, the unionists do not stay bought.

blanch152

https://www.boards.ie/discussion/comment/120021232#Comment_120021232

There are so many fallacies in this post that I don't know where to start.

Firstly, did you read the article you posted? You claim that the deficit to be attributed to Ireland "would be about £1.5 billion or less than €2 billion", yet nowhere in the article is that assertion made. A number of estimates included in the article range from €5.7bn to €11.3 bn, and for the lower figure, some extremely optimistic assumptions are made. For example, it assumes that a unified Irish state would be a net beneficiary rather than net contributor to the EU, but given economic trends since 2018, this would not be the case. How you get from an out-of-date extremely optimistic scenario of €5.7 bn to €2 bn just by waving something away is completely unexplained in your post and removes all credibility from your calculations.

Secondly, you make further wild assumptions that have no foundation in reality. You say savings could be made by "moving some State administration to the NI public service". Say what? Have you never heard of the failure of decentralisation? I would really love to read your thoughts on what that would actually mean in practice as it sounds like complete fantasy. Furthermore, you talk about "fostering inward foreign investment in NI". How would you do that? FDI wants to go where there are qualified graduates. Because of the mess that is the NI education system (brilliantly overseen by SF among others), there isn't a hope that they will want to go there.

Thirdly, you then offer "sugaring the pill" through increasing social welfare. There are about 400,000 pensioners. Increasing the pension by €50 per week as you propose costs around €1 bn. Who is going to pay for that?

Fourthly, you make up some of the gap by increasing VAT and excise duties in Northern Ireland post-unity. Are you seriously suggesting that a referendum on a knife-edge in Northern Ireland will be swung towards a positive outcome for a united Ireland by promising the people of Northern Ireland that taxes will increase in a united Ireland?

Finally, you call "allocated expenses" a makey-uppy number and assume it just goes away. It requires you to assume that not only will the UK continue to pay for every pension but also that they will hand over NI without any debt.

Those are only examples of the numerous flaws in your analysis that wouldn't last five minutes in any coherent debate on the costs of a united Ireland.

kazamo

https://www.boards.ie/discussion/comment/120021232#Comment_120021232

In your post you state that “the Uk would be losing a hole in their finances of £10 billion” but “the deficit to be taken by Ireland would be about £1.5 billion or less than £2 billion”

Which is it ?

From the last thread I saw on this topic, there seems to be an expectation that current NI health and educational outcomes are a lot lower than ours, so the likelihood is that the deficit we finally get visibility on, will increase in the short term as we address these deficits.

Sam Russell

Well, the subvention to NI includes 'allocated expenses' that include such things as the cost of historic national debt, defence, fixed asset depreciation, and other charges that do not relate to NI. These are just notional allocations made by the HMG to balance the books. They are not real but amount to £5 billion - quite a large portion of the subvention. How much of this relates to NI I have no clue, but neither do they. A number is plucked out of the ether. We will not pay for UK defence, and most historic debt has nothing to do with NI.

The next ticket item is the state pension that amounts to £3.5 billion. Now I would argue that this is paid out of historic contributions paid in by workers over their working life. Now the fact that HMG, through the HMRC, who keep the records on every contribution, pay out current pensions from current contributions is really irrelevant. If it was a private pension, then the regulator would have a thing to say about it, but HMRC is a law unto itself. Now it is obviously expedient to collect pension contributions along with contributions for unemployment and other social welfare payments. However, the state contributory pension is not social welfare - as is any private pension plan not social welfare.

I do not understand why anyone cannot see that pensions are not social welfare. The UK Gov pays state pensions all over the world to qualified recipients but no SW payments outside the UK - for just this reason.

Now £10 billion less £5 billion and less £3.5 billion is £1.5 billion, which equates to less than €2 billion. We could cope with that.

Ian OB

ti7f

blanch152

https://www.boards.ie/discussion/comment/120022441#Comment_120022441

To be honest, your post amounts to nothing more than wishful thinking. There is no substance, there is no logic, there is nothing backing it up. Even the article from 2018 (pre-Covid which changed an awful lot about public finances) which you quoted gave a minimum figure for what we would require to cough up of three times your figure. And all of that is before your tax increases in the North and your sugaring the pill with €1 billion of pension increases. Like did it ever occur to you that if the rUK sees an Irish government willing to pay out €1bn in pension increases that it would take a tougher negotiating position?

Sam Russell

Well, whatever negotiations take place, both sides need to end with agreement, and both sides need to get the voters to agree - assuming the intention is to get agreement that a UI is carried. Of course, that may not be the intention of HMG.

I am only considering the costs - not the emblems and other contentious issues. They may scupper any agreement.

Sleepy

It's a massive assumption that the intention is to get an agreement that a United Ireland is carried. Quite frankly, there's a hell of a lot of us in the Republic who don't want it, and there are even more who don't want to spend the rest of their lives paying for it.

Your point about the NHS costing less per head is another fallacy. The NHS benefits from economies of scale in a way that even a United Ireland couldn't match. Ever wonder how Tesco are able to sell OTC medication so much cheaper in the North than in the Republic (e.g. their 15p packets of paracetamol)? It's because licensing those drugs for sale in the Republic isn't worth it: the market is simply too small to justify the pharmaceutical company's time and costs to do so. Now multiply that effect throughout the entire supply chain for the NHS, from drugs to equipment to software. The cost of Healthcare provision will increase dramatically in the six counties post any unification and that's before we even get to the subject of unifying service levels (free GPs/Dental etc.).

No matter how well the negotiations go, make no mistake that there'll be a need for a unification tax of some form, we'll almost certainly have to endure decades of unionist paramilitary violence, any increase in FDI in NI will take decades to get off the ground (arguably an entire generation since it'll be a *minimum* of a full education cycle - infants to graduate - before the NI education system could be in a position to produce an equivalently educated population).

"The Passports are already in place" - really? There's no such thing as a passport for a United Ireland and you can be sure the Unionist Community will object strongly to a United Ireland still being called the Republic of Ireland so, yes, passports, driving licenses, virtually every piece of the state will need to be renamed, rebranded and re-printed. If you recall that it cost Aer Lingus over €8m just to tilt their shamrock logo in a rebrand in the mid 90's, it's safe to say we'll be talking billions to do any such rebrand (never mind the entire cost of the necessary restructures). Unionists are not going to buy into a United Ireland that simply sees them being subsumed into the existing Republic of Ireland with the same flag, anthem and name. A unified Ireland would have to be a new nation.

On the public sector - Northern Ireland's PS is vastly bloated. In part this is down to some of their functions operating for the entire UK. These positions will be obviously redundant. And many more redundancies would have to follow unless the public are prepared to accept an even more inefficient public sector than we already have. A United Ireland wouldn't need two Departments for the Economy, two Departments of Agriculture, Environment and Rural Affairs, two Departments of Education etc. etc. etc. and in any merger of such departments there simply won't be any need for the entire staff of both departments to remain - yes, the front-line staff would likely be safe but the entire administrative and management functions would need to be restructured and streamlined.

And finally, on your last point (which I tend to agree with), historically Unionist politicians have never stayed bought for long. They make Danny Healy Rae look positively statesmanlike and many of their Republican counterparts aren't much better. Their inclusion in Dáil Eireann (or whatever the new Parliament for a United Ireland is to be re-named as), is not a bridge to be crossed when we come to it. It's something that will require extremely careful consideration and planning far in advance of any proposed unification if we want to avoid a scenario where the entire island ends up running without a government for years on end.

Sam Russell

@Sleepy You must have a different passport to me. Mine says 'IRELAND' on the front, not Republic of Ireland. I cannot see the name of the country changing in any way. The rugby team is 'Ireland' as are most all Ireland sporting bodies. The only sporting body that trades under the name 'Republic of Ireland' is the soccer team.

A high proportion of the NI population have Irish passports, including quite a few unionists and even Orange Order folk. It is a very powerful document for travel around the world.

As for your point, there will be increased costs for the Irish Gov post unification - yes, but that depends on the negotiations. Many assumptions made by commentators are not valid, and anyway, are subject to negotiations and could go either way. But I take your point - it will cost us. The GFA has no mention of any financial settlement following unification.

FDI will probably be from companies already invested in Ireland, and being prepared to move north. They could recruit from the whole island and would not have a problem with that. Their success would get more to follow.

As for loyalist paramilitary violence - I doubt it since there is no point to it. There main activity is criminal activity - mainly drugs. They are well known to the PNSI, and will still be well known to the PNSI.

I do not know anything about the relative strengths of the two health services so cannot comment.

StupidLikeAFox

https://www.boards.ie/discussion/comment/120025259#Comment_120025259

For the bail outs and never ending costs of the NCH, cost was just something we had to take on.

Yes- and even by conservative estimates a united ireland would be equivalent to funding a NCH every year, possibly two. That will be funded by tax increases or spending cuts most likely. The difference is we get to have a say in this.

It would be an easier sell if it was some once off cost or a time limited cost but there doesn't seem to be any economic benefits for the island as a whole

Capt'n Midnight

The UK continued to pay the civil service pensions last time there was a split.

UK spends 2% of GDP defence which is 1.5% more than we do so there another saving.

Many of the civil service are long timers, not replacing everyone who leaves would reduce the wages bill over time

EU would help with some costs. Foreign investment and new 3rd level places would boost the economy over time.

NI is a poor area in the UK heavily dependent on subsidies. The Tories haven't had payback yet for the DUP undermining May. The UK economy is down 5.5% since Brexit compared to where it should. UK GDP growth (excluding recent inflation) is lower than the population growth. Even if you do GNI Ireland still has a GDP per capita 50% higher than the UK.

The devil is in the detail. So a lot of horse-trading

getoutadodge

https://www.boards.ie/discussion/comment/120023043#Comment_120023043

If bean counters like you held sway we'd still be a pathetic rump province of little England.

Sam Russell

If a UI is proposed through the intention of the SoS for NI to call a border poll, then a series of negotiations will have to take place between the Irish and HMG before such a poll.

There must also be a series of canvasses of the voters as to their wishes. These will probably take the form of citizen's assemblies - likely to be arranged from the various communities in NI, and one from Ireland. The various assemblies would, I expect, be combined and whittled down to a single CA that can come up with a series of recommendations that the two governments can assimilate into a proposed settlement in the event of a positive vote for unification. The citizen's assembly has proved to be invaluable to solving the major issues that faced Irish politics that were beyond solution - like the abortion problem.

Now, if the UK Gov is an honest, bone fide, party that is favourably in support of the result - whichever way it goes, then there is hope that the result of the proposed unification will not be a huge burden on the UI formed, because otherwise it will fail to be ratified by the Irish electorate.

Now one of the precepts of the GFA was that nothing was agreed until everything was agreed. I assume that will be the case for the proposed settlement after the border poll if it is carried.

Any talk about one side not agreeing to this or that is obviously futile. The CA could come up with surprising results that would be acceptable to all sides.