The study published last week by Adele Bergin and Seamus McGuinness of the ESRI comparing Northern Ireland and the Republic showed a major gap in living standards between the two jurisdictions. Whether measured in terms of disposable income, health or education outcomes, the Republic now performs much better.
The ESRI study shows that there is gap of over 50 per cent between output per person North and South. However, the gap in personal income per head is much lower, at just under 20 per cent. Transfers from the Westminster government account for much of the difference between what Northern Ireland produces and what those living in the North have to spend. These transfers amount to more than a quarter of Northern Ireland output, up from just a fifth in the 2010s.
The Westminster subsidy not only protects personal incomes in the North, it also plays an essential role in maintaining northern public services close to the standard elsewhere in the UK. But similarly funded health and education services have not been sufficient to deliver as good health and education outcomes as are achieved in Britain or in the Republic.
While many in the South have long envied the UK’s National Health Service, the reality today is that waiting times in the North for healthcare are higher than in the Republic, and much higher than in England and Wales. Life expectancy and infant mortality are both now worse north of the Border. The well-established link between these outcomes and social class is likely to be a bigger factor in this underperformance than the differences in health services across the island.
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The ESRI report also highlighted differences in educational attainment, and drew the link between early streaming into separate secondary and grammar school tracks in the North, and higher levels of early school-leaving there. The problem is also that many northern students pursue their third-level studies in Britain, and few of these return to the North after graduation. There is extensive research which shows that the poorer educational outcomes in Northern Ireland are echoed in worse economic performance.
It’s not about funding. The persistence of early segregation into different education tracks at age 11, long after it had been abandoned elsewhere in the UK, is a Northern Ireland policy choice. So too is maintaining parallel Protestant and Catholic schools, neither as effective as a unified local system could be.
A Department of Social Protection study last month compared the two welfare systems on the island, with some striking conclusions. In Northern Ireland, a quarter of the adult population is in receipt of a disability-related payment, while in the South, and in Britain, the ratio is half of that. As a result, the proportion of Northern Ireland’s adult population that doesn’t participate in the labour market is exceptionally high compared to the South or the rest of the UK.
[ How UK social welfare reforms hit Northern IrelandOpens in new window ]
The gap in living standards may make unification with the more prosperous South look attractive to many northern eyes. Conversely, the cost of unification would be very high for residents of the Republic.
A study I did with DCU’s Edgar Morgenroth, using 2019 data, estimated that the cost of unification would be around 5 per cent of the Republic’s national income, if Dublin had to shoulder the shortfall between revenue raised in Northern Ireland and the cost of northern public services. Those estimates assume Northern welfare and public service pay rates would remain lower.
Updating that study using 2022 data found the cost has now risen to 6 per cent of national income. However, if pay and welfare parity were to be delivered, Dublin would have to pay more than 10 per cent of national income as the cost of unification. That would deliver a much bigger hit to southern living standards than the results of the 2008 crash.
It’s unlikely that the UK would continue to subsidise a Northern Ireland that had become part of a united Ireland, particularly as our island’s economy, after absorbing the North, would still remain more prosperous than Britain. For example, even if the UK did not require Northern Ireland to take its share of the UK debt with it on exit, as happened on Irish independence, this would only make a marginal difference to the cost of unification.
It’s easy to see why many in Northern Ireland aspire to join the successful southern economy. But is harder to see why those south of the Border would be as happy for them to do so, given the likely hit to their living standards from paying the cost of unification.
