12 December 2023

Will £2.5bn persuade the DUP to return to power sharing?


For almost two years, the DUP has refused to participate in power-sharing at Stormont because of the Northern Ireland Protocol. Will it be money from the Treasury, though, rather than a solution to the Irish Sea border, that finally persuades the party back to work?

At a ‘roundtable’ meeting yesterday at his official residence at Hillsborough Castle, the secretary of state for Northern Ireland, Chris Heaton-Harris, offered the province’s political parties a financial inducement to restore the devolved executive.

The government claimed that its mooted package would be worth £2.5bn, but the DUP and Sinn Fein, who both wield a veto over devolution, quickly expressed their dissatisfaction with that sum. Discussions on the ‘technical’ details of the proposals will continue today.

The government’s plan involves reforming the way that public services are financed in Northern Ireland, by introducing a ‘fiscal floor’, so that funds from the Treasury are based on need. That would be similar to the system in Wales, where the Barnett formula was tweaked in 2015 so that at least £115 is spent in the region for every £100 in England.

In addition, if Stormont is restored, Westminster offered to provide a lump sum to settle pay disputes with public sector unions in Northern Ireland. Their members, many of whose salaries have been frozen for two years, protested noisily outside the talks venue yesterday.

Ahead of the meeting, Sinn Fein created headlines by claiming that the government’s negotiations with unionists about the protocol were already over. The implication of that statement was that funding was the only part of a potential deal yet to be settled.

The Northern Ireland Office quickly described this assertion as ‘totally incorrect’. The talks with the DUP over the sea border, it said, would continue. Meanwhile, in an email to members over the weekend, the unionist party’s leader, Sir Jeffrey Donaldson, wrote that, ‘Monday’s roundtable is distinct from our discussions with the government regarding the NI Protocol / Windsor Framework.’

This seemed to clear up any confusion, but Mr Heaton Harris has claimed for weeks that the government’s negotiations with the DUP were in their ‘final stages’ and even their ‘final, final stages’. Sir Jeffrey has also expressed optimism, but emphasised that there was ‘work to do’ to satisfy his party that Northern Ireland’s place in the UK’s internal market would be fully restored.

Back in 2021, the DUP set out ‘seven tests’ that it regarded as critical to solving the Irish Sea border issues. They included avoiding diversion of trade, removing checks on goods moving between GB and NI and restoring Article 6 of the Act of Union, which guaranteed that Northern Ireland would be on ‘the same footing’ as the rest of the UK as regards commerce.

These criteria are still formally in place and, while Donaldson refers to them less frequently, they remain the yardstick by which he says any agreement on the framework will be judged by the DUP. At the same time, funding for Northern Ireland has become an ever more prominent theme for the party. And the reforms it has been demanding were strikingly similar to the government’s proposals yesterday.

The province already has significantly higher public spending per head than England, Scotland or Wales, funded by a subsidy from the Treasury of £10bn more than NI’s tax take and rising. Nonetheless, the DUP claims that Westminster’s contribution does not meet Northern Ireland’s requirements and services are unavoidably more expensive in UIster due an absence of ‘economies of scale’ compared to Great Britain. After the Royal Hillsborough meeting yesterday, Sir Jeffrey said that the government’s offer, ‘falls short of what is required to enable our public services to be placed on a sustainable basis’.

After a number of chaotic years, the DUP mounted a recovery under Donaldson based on its tough stance on the protocol and its boycott of Stormont. Many unionists accepted the idea that the Irish Sea border was an existential threat to their place in the UK and believed that power-sharing was worth sacrificing in an attempt to get it removed.

The fact that Sir Jeffrey now appears to be bargaining for more funding in a second track of negotiations will make them uneasy.

The Stormont executive has a record of spending taxpayers’ money badly and the DUP is yet to shed its reputation for venality. In 2017, the party annoyed many Tories by boasting that it had secured £1 billion for Northern Ireland in return for supporting Theresa May’s government in a ‘confidence and supply’ arrangement.

It was already doubtful, given Rishi Sunak’s leadership difficulties, that the government could agree and deliver an effective solution to the Irish Sea border before the general election. The DUP’s voters will judge any deal by its likely impact on the Northern Ireland Protocol, not on any extra cash that Westminster throws down the black hole that is Stormont’s finances.

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Owen Polley is a writer, commentator, consultant, and the co-author 'An Agenda for Northern Ireland After Brexit'.

Columns are the author's own opinion and do not necessarily reflect the views of CapX.