Defending The £1 Billion DUP Deal

There are many criticisms that can be levelled at the confidence and supply deal struck between the Conservatives and the DUP. For one thing, it compromises the British Government’s position as an independent mediator in negotiations between Northern Ireland parties. For another, the social policies of the DUP are outdated and even inhumane. But there has also been criticism from Labour, the SNP and sections of the media about the £1 billion extra funding that was part of the deal, with cries of favouritism and unfairness. This critique fails to acknowledge the historical context and deprivation that makes Northern Ireland unique and this fiscal transfer long overdue. It is money to deal with the problems of the past and present but the real price of the deal between the Conservative Party and the DUP may end up being the economic future of Northern Ireland.

Legacy lingers

Almost 20 years on from the Good Friday Agreement (left) which brought the Troubles to an end, Northern Ireland still suffers from the conflict. One relic is the stubborn sectarian divisions, which are expensive as well as socially corrosive. Researchers at Ulster University have estimated that the extra costs imposed in the form of segregated education systems, policing and housing reach between £404 million and £833 million a year. The cost of that division is unique to NI and the £1 billion over two years is hardly extravagant when those costs are factored into the equation. It is these special circumstances, which for years have been overlooked, that justify this spending.

Regional woes

Northern Ireland has some of the worst economic results in the UK. The European think tank Bruegel assesses the NI economy as fragile, highlighting the fact that  “22% of the population was in relative income poverty in 2014, contrasting with 16.8% at UK-level.” The province has low productivity, wages and growth, and high unemployment. It also suffers from a severe infrastructure deficit, with the NI Assembly admitting last year that a number of strategic road projects had not been completed, partly because of a shortage of funds. The grim economic statistics mean that the financial assistance Theresa May has paid to win support for her minority government from the DUP’s 10 MPs is long overdue for areas such as Belfast West and Foyle, which are routinely in the top 10 constituencies in the UK for unemployment. This money, regardless of intent or motive, provides a chance to bring the standard of living in NI closer to the UK standard.

Brexit bombshell

This fiscal boost will simply act as a buffer rather than insulating NI from the economic lunacy that is months away. When Brexit occurs, Northern Ireland will be on the frontline. Unless there is a softening of Theresa May’s rhetoric a hard border seems to be inevitable. This will be devastating for the Northern Irish economy, since most of its trade is dependent on the EU, in particular the Republic of Ireland. A hard border would make business difficult for companies that rely on cross-border trade. One example is Diageo (left), the firm that owns Guinness, which expects extra costs of an estimated €1.3m a year. The burden of Brexit could make the billion-pound bonus a drop in the Irish Sea due to the costs of Brexit.

The Conservative Party-DUP deal gives Northern Ireland the potential to increase living standards, which is warranted given the systematic economic neglect that has occurred over the past decades. However, this financial breathing space will be short-lived as Brexit draws nearer and nearer. The true cost of this deal may be that Northern Ireland will end up as collateral damage if the DUP supports a Tory Brexit.

 

by Thomas Chambers

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