Declassified files: officials questioned if NI's high public spending was justified

A confidential blunt assessment of government spending found that in several areas of expenditure Northern Ireland was receiving “between three and four times” more public spending than in the UK as a whole.

The only area which officials could identify in which Northern Ireland received less money than elsewhere in the UK was roads and transport.

To this day Northern Ireland remains enormously dependent on the rest of the UK in financial terms, receiving about £10 billion more per year from the Treasury than is raised locally in taxation.

The 1992 civil service analysis of public spending is striking because it does not major on the Troubles as the reason for increased public spending in Northern Ireland, an argument still used by many local politicians almost 20 years after the Troubles ended.

However, significant portions of the government spending within Northern Ireland at the time were unquestionably as a result of terrorism – from the obvious security costs for police overtime and compensation for bomb damage to less apparent additional expenditure such as the increased effort required to attract foreign investment to an area prone to terrorist attacks.

The 1992 paper from Stormont’s Department of Finance and Personnel to the Policy Co-ordinating Committee of senior civil servants candidly questioned the basis for the level of public expenditure.

It also probed the strength of Stormont’s position in arguing with the Treasury that the Province either deserved the money which it received or ought to be receiving even more.

The lengthy memorandum – which has been released at the Public Record Office in Belfast – said: “It is a statistical fact that for many years per capita levels of public expenditure in Northern Ireland have been about 50% higher than the UK average.”

The memo said that while this differential had not been the subject of “direct controversy”, it was the case that there was “a common perception in Whitehall that NI is very generously funded, if not actually over-funded”.

It went on: “The former Prime Minister [Mrs Thatcher] is reported to have mentioned the public expenditure differential on more than one occasion, expressing the view that standards of provision in public services here were higher than in her own constituency.”

The memo added that “more recently and more directly” Treasury officials had made clear that the chief secretary to the Treasury would be briefed on “the already high levels of public expenditure in the Province: They claimed to have figures showing that on a relative needs basis, NI is £300m over-funded.

“We, of course, would argue in turn that the levels of expenditure are fully justified on the basis of need.”

The officials set out what they said “at least at a superficial level” explained Northern Ireland’s increased dependence on the taxpayer – proportionately higher social security spending because of higher unemployment and lower incomes, higher agriculture expenditure because of a larger agricultural sector, higher health spending “because of higher levels of morbidity”, higher education spending because of a relatively young population, “and so on”.

But the officials said there was a dichotomy between the “apparent wealth” of the public sector in Northern Ireland and the difficulty which they found each year in funding public services.

One question which they said that raised was: “Is there inefficiency in the management or delivery of the major services which is negating the benefits which the higher levels of public spending ought to confer?”

They also queried whether the way in which central and local government in Northern Ireland were organised mean that the Province was “in certain respects ‘over administered’”.

And they questioned whether people in Northern Ireland are “accustomed to generally higher standards in public services”, meaning that “expectations are therefore higher than would be the norm in GB”.

Civil servants also pondered whether there were inevitable diseconomies of scale which meant that a small region such as Northern Ireland needed to replicate GB institutions, meaning that less funding got to the front line.