Cost of a United Ireland and the GFA

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.

Charles Babbage

This type of thread always runs into the ground because of the range of issues involved and it is easy for people to latch on to one relatively unimportant element.

These can be grouped into the political and the economic. The citizens assembly can deliberate on the former, other bodies are needed to look at the latter.

Public employment in NI is not growing, and there won't be large scale public funding in the net few years. The large number of public servants can be reduced by early retirement and move to Britain provisions. Generally everyone in education and health will be needed whatever system is in place.

Pensions come in the form of the civil service pensions, for both devolved and central services, other public service, contributory pensions and welfare pensions paid to people without enough income. All of these could be treated differently, which is where the complexity arises.

It is quite wrong to say that there are no economic benefits for the island as a whole, once you go north of the line from Dublin to Galway there are diseconomies of various sorts that will be improved. In an overheating economy the northern part of the country can still develop further, there are huge diseconomies in the north-west, there is no reason that Derry should be less successful than Limerick or Galway, it hugely unachieves at present.

There is a cost but it is a complex calculation and sound bites do not capture the issue. There is need for serious thinking on the subject from economists, tax experts and the like.

As for the Unionist Community strongly objecting to a United Ireland still being called the Republic of Ireland, they should not have much of a problem as the term "Republic of Ireland" is not much used even when it should be.

Sam Russell

If anyone were to compare 1980's Ireland to today's Ireland they would think a revolution had happened between then and now.

Indeed it did.

Instead of queues of people emigrating to Britain and the USA, and other places like Australia - those are now returning - well some are. Plus, many Europeans and other nationals are arriving in our country finding work, starting businesses, and settling here 'for ever'. The economy has grown beyond belief, as has the population, from 3 million to over 5 million today, with approximately 15% of those born outside of Ireland.

We are far more confident that the 1980's Ireland, or at any time since the founding of the state. We have made a huge success of being in the EU moving from being a supplicant for hand-outs to being a net contributor. We have also succeeded in the UN.

We have still room for more improvement both socially and economically, and a UI might be the spur for that.

There is no doubt in my mind that an all island Ireland would prosper greatly given the success we have seen in the last 40 years. The benefit to not just NI but to those border counties south of the border would justify it. But the economies of scale that a united public service, health service, and education service - plus an integrated police service - would result in greater prosperity for all.

asdfg22

I expect a UI can happen in about 10 years after a lead-in period and after a time there be a committment like the GFA and if all the boxes are ticked it will happen. The timing of a referendum more complicated as it will take alot of money.

There likely be a fund created USA/EU/GB to make it happen, i expect we will be able to draw from the fund as going forward we will be one country. It likely be big thing if it happens. New set up for all of us.

blanch152

https://www.boards.ie/discussion/comment/120038832#Comment_120038832

On what basis do you think a fund created by USA/EU/GB will be created to make it happen?

They like us? We are in NATO? We are a buffer against Russia? This sort of 1980s dreamy nonsense has no part in any planning for a united Ireland.

blanch152

https://www.boards.ie/discussion/comment/120038764#Comment_120038764

That is a huge compliment to the FG and FF governments that have been in power during that period.

However, extrapolating that scenario forward is difficult. I don't see the parties that have created the success you speak of advocating for the type of united Ireland that you put forward.

blanch152

https://www.boards.ie/discussion/comment/120038054#Comment_120038054

What do you mean by "move to Britain" provisions?

Are these similar to the move to Croatia provisions, or move to Serbia provisions, that we saw in Europe over the last few decades?

Sam Russell

https://www.boards.ie/discussion/comment/120039452#Comment_120039452

A lot of Unionists who found themselves in the Free State following 1922 did move to NI or Britain.

Some remained and adopted to the new situation and others just kept their head down. I would think that a similar reaction would follow a united Ireland by Unionists in NI. Arlene Foster has already said she would leave, though when push comes to shove she might reconsider.

https://www.boards.ie/discussion/comment/120039442#Comment_120039442

Well, whoever was responsible for it, it certainly happened. Whether the political parties led or followed is up for debate.

I would think that they followed public sentiment as there was a lot of activism on certain issues like divorce that led to political change..

asdfg22

https://www.boards.ie/discussion/comment/120039437#Comment_120039437

Why is a Kennedy appointed as NI envoy?

Why is Biden coming to NI for 25th of GFA?

Why are the EU heads coming to NI to discuss the protocol?

What do you think is going on since you think i am talking nonsense. I do have an opinion. Whats yours?

Capt'n Midnight

https://www.boards.ie/discussion/comment/120038054#Comment_120038054

As for the Unionist Community strongly objecting to a United Ireland still being called the Republic of Ireland

Article 4 The name of the state is Éire, or, in the English language, Ireland.

Charles Babbage

https://www.boards.ie/discussion/comment/120039452#Comment_120039452

For people working in the UK civil service they have a right to transfer within that service and some will elect to do so for reasons of career advancement or loyalty to the colonial power. This was the case in 1922, as you very well know, your discussion of Serbia is merely trying to derail the discussion.