Is public spending in Northern Ireland 45% higher than in Ireland?

UPDATE: This article has been amended to take into account updated figures from the Office for National Statistics, which suggest that public expenditure per person in Northern Ireland was near par with Ireland in 2019–20.

CLAIM: Public spending in Northern Ireland is 45% higher than it is in Ireland.

CONCLUSION: INACCURATE WITH CONSIDERATION. Using public expenditure as a measure of public spending, total public expenditure per person in Northern Ireland in 2015–16 was 10% higher than in Ireland. More recently, it was near par with Ireland. As a part of national output (GDP), government consumption contributed an estimated 45% more, per person, in Northern Ireland than it did in Ireland. But government consumption excludes aspects of spending, like investment in roads and social welfare.

The Institute of Irish Studies at the University of Liverpool has produced two videos as part of its Civic Space initiative, one which presents pro-Union arguments and another which presents pro-unity arguments. This fact check investigates a claim in the original version of the pro-Union video, which stated, “public spending in Northern Ireland is 45% higher than in Ireland”.

FactCheckNI contacted Liverpool University, which clarified that the statement is meant to be “45% higher per person”.

The source of information in the original 45% claim is an academic paper published in March 2020 by the Statistical and Social Inquiry Society of Ireland: “The Northern Ireland Economy: Problems and Prospects”, written by Professors John FitzGerald and Edgar Morgenroth. In a section comparing the standard of living in Northern Ireland with that of the UK as a whole and Ireland, it states, “Funded by the transfer from central government, public [government] consumption per head in Northern Ireland was 45% higher than in Ireland.”

What is “government consumption”?

Consumption data — what individuals, businesses, and government spend — is used to calculate a Gross Domestic Product (GDP) or other measures of total economic output of an area. Government consumption includes government spending on employing people to provide services (for example, the work of civil servants, police officers, healthcare workers), but it excludes the transfer of money to people (such as welfare or pension payments) as well as government investment in capital projects (like roads and buildings).

We spoke with Professor FitzGerald, who confirmed that in their paper they were arguing that the percentage of government consumption that makes up Northern Ireland’s GDP is 45% greater, per person, than government consumption in Ireland that makes up Ireland’s GDP.

Total public expenditure, on the other hand, is the amount of money spent on the delivery of all public services, including the transfers of money (subsidies) and capital expenditure. Public expenditure is a clearer and more comprehensive measure to explore this claim regarding public spending, rather than government consumption, for example.

What are public expenditure figures for Northern Ireland and Ireland?

To compare public expenditure between states, we need to look at the data that governments submit to Eurostat, the statistical office of the European Union. Because each state may calculate its national figures slightly differently, Eurostat audits the figures to a common standard (European System of Accounts). This makes the states’ figures more reliably comparable.

Some UK public expenditure benefits people in Northern Ireland generally and not specifically as a region — for example, spending for defence and diplomatic services. Because of this, for this article we used figures for “total managed expenditure” (TME), which is greater than “total identifiable expenditure”.

For the UK, the annual figures published by HM Treasury are close to the figures published by Eurostat. This suggests that the figures published by the Office for National Statistics for public expenditure (TME) in Northern Ireland are sufficiently accurate, which we can then compare with the standardised Eurostat figures for Ireland.

Using population estimates (Ireland, UK, Northern Ireland (Table 17)) and implied exchange rates (from the Eurostat figures), our analysis is that public expenditure per person in Northern Ireland in 2016–17 (for comparison with the academic paper) was £14,495; in Ireland, it was an estimated £13,264. Per person, total public expenditure in Northern Ireland was about 10% higher than in Ireland, in 2016–17.

Label 2016-17 2017-18 2018-19 2019-20
COFOG Total General Government Expenditure
Ireland (Eurostat) 76,500,500,000€ 78,929,300,000€ 83,786,600,000€ 87,285,000,000€
UK (Eurostat) 1,010,949,600,000€ 973,616,100,000€ 993,978,800,000€ 1,036,139,300,000€
UK (Eurostat) £828,453,000,000 £853,540,000,000 £879,383,000,000 £909,492,800,000
Northern Ireland (ONS) £27,513,000,000 £28,065,000,000 £28,868,000,000 £30,118,000,000
Exchange Rate (€/£) 1.22 1.14 1.13 1.14
Population
Ireland (Eurostat) 4,726,286 4,784,383 4,830,392 4,904,240
UK (Eurostat) 65,379,044 65,844,142 66,273,576 66,647,112
Northern Ireland (ONS) 1,862,137 1,870,834 1,881,641 1,893,667
Expenditure Per Head (£)
Ireland £13,264 £14,463 £15,346 £15,622
UK £12,672 £12,963 £13,269 £13,646
Northern Ireland £14,775 £15,001 £15,342 £15,905
NI/IRL ratio 111.39% 103.72% 99.97% 101.81%

For 2019–20, the most recent data available for Northern Ireland, our analysis is that public expenditure per person in Northern Ireland was £15,905; in Ireland, it was an estimated £15,346. Per person, total public expenditure in Northern Ireland was 2% higher than in Ireland in 2019–20.

These figures do not take into account the purchasing power of the amount of expenditure, as different places will have higher or lower costs of living.

Since FactCheckNI started investigating this claim, the video (at 2:04) has been updated to state that “public spending in Northern Ireland is 15% higher than in Ireland”. The new source for this revised claim could be an earlier working paper by Professors John FitzGerald and Edgar Morgenroth, which states “… the transfer to Northern Ireland has been fairly constant at around 20% of GDP since the Belfast Agreement, having averaged under 15% of GDP between 1980 and 1999.”

This revised claim is still at odds with the public expenditure figures.

Article orignially published on 16 April 2021.


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