Warning from the archives: NI breaks welfare parity at its peril

PRONI Public Records Office Northern Ireland files secret files.

PRONI Public Records Office Northern Ireland files secret files.

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In a warning from the Government archives which is unusually prescient given the current debate about Northern Ireland breaking welfare parity with the rest of the UK, Stormont was told in 1984 that such a move would carry grave risks.

A 1984 memorandum provided to the then Assembly’s Health Committee warned about the danger of Northern Ireland abandoning the ‘parity principle’ and attempting to set up a more generous benefits system than that in the rest of the UK.

Her Majesty's Treasury

Her Majesty's Treasury

Although such a move at that point was deemed virtually unthinkable, Sinn Fein is now refusing to implement Westminster’s welfare reforms, which means that Northern Ireland is retaining — and paying for — a more generous welfare system.

A second paper in the file stated that there had been an assumption at the creation of Northern Ireland in 1921 that the Province would not suffer from having its own Parliament and that the very limited system of social security which then existed would continue in the Province as elsewhere in the UK. However, it later became necessary for Stormont to defend what would become known as the parity principle.

The paper given to the Health Committee, which is contained in a file released at the Public Records Office in Belfast, explained: “Northern Ireland’s long-standing parity arrangements with Great Britain in social security matters rest on two main principles, reflecting its constitutional position as an integral part of the United Kingdom:

“i) equality of taxation and national insurance contributions throughout the United Kingdom;

“ii) equality in social security benefits for all United Kingdom citizens.”

The paper set out the constitutional basis for the principle, with the philosophy of “common citizenship of the United Kingdom with consequent common rights and obligations. The principle of parity in taxation and in national insurance contributions brings in its wake parity in benefits.”

It also highlighted the “substantial administrative convenience both for Government and for employers, especially those with employees in both Northern Ireland and Great Britain”.

And, crucially, the paper drew attention to the vast financial benefit brought to the Province because of the parity principle.

“The parity arrangements between the two National Insurance Funds have provided substantial financial transfer to Northern Ireland.”

It went on: “To the extent that benefit rates have tended to bear a relationship to earnings, the figures used for movements in earnings have been those for Great Britain, which are relatively greater than the corresponding Northern Ireland figures.

“Social security beneficiaries in the Province have therefore gained from the link with Great Britain in that local rates of benefit established using local data for earnings would be likely to worsen rather than improve their situation.”

It highlighted that parity was recognised in statute “by the express provisions in the principal acts of both Great Britain and Northern Ireland which enable arrangements to be made for co-ordinating the operations of both acts ‘with a view to securing that, to the extent allowed for in the arrangements, those acts provide a single system of social security for the United Kingdom’”.

It said that the system then operating meant that when new social security legislation was introduced at Westminster it was automatically introduced in Northern Ireland as well unless Parliament specifically voted to annul the legislation.

“This is the most practicable way to legislate on social security for Northern Ireland as it best secures parity in timing as well as in substance and allows any implications for Northern Ireland to be legitimately debated and considered during the passage of the bill through both houses of Parliament.”

The paper was sent with a cover note from the then permanent secretary of the health and social services department, Dr Maurice Hayes, although it is not clear whether he was the author.

The paper set out the history of the principle: “Parity with Great Britain in the cash social services of Northern Ireland is of long standing.

“From the time of the establishment of the Government of Northern Ireland, unemployment ran at a level much higher than in Great Britain, and the cost of benefits led in 1926 to the negotiation of the first of a series of re-insurance agreements assimilating the burden with the Treasury.

“That carried into taxation and national insurance levels, which as matters reserved by Westminster have always remained the same in Northern Ireland as elsewhere in the UK. For non-contributory benefits, such as child benefit, the Social Services Agreement of 1949 committed the then Government of Northern Ireland to maintain rates of benefit ‘in general parity with the rates of benefit obtaining in Great Britain’.”

Those arrangements, it noted, meant that fluctuations in the demand for benefits did not then impact on other Government departments or services throughout the year.

The paper went on to examine the consequences for public expenditure if there was a move away from parity.

“Viewed in purely financial terms, any increase above parity in the rates of contributory benefits would require to be financed out of the National Insurance Fund by an increase in the local rates of contributions, and might also put at risk the existing annual ‘parity’ transfer from the Great Britain fund.

“An increase in respect of non-contributory benefits would in turn have to be met without any automatic addition to the total resources available to Northern Ireland and would thus be at the expense of other Northern Ireland expenditure programmes.

“Such departures would have not only direct financial effects but also wider fiscal and policy implications which would be very closely considered at national level.”

Union backed the status quo

The file on welfare policy contains a letter from the Northern Ireland Committee of the Irish Congress of Trade Unions which expressed its strong support for Northern Ireland maintaining parity with the GB welfare system.

It stated that “to attempt to make any changes in the basic rates of the main benefits in Northern Ireland alone would have very grave implications for the principle of parity, and the NIC would not support unilateral changes in any of the main basic rates”.