United Ireland: money should not be the deciding factor but nor should it be ignored

In dealing with the stubbornness of Northern Ireland prime minister James Craig in November 1921, UK prime minister David Lloyd George sought to appeal to unionists’ pockets. He wrote a letter to Craig decrying the idea of a partitioned Ireland that would involve “cutting the normal circuits of commercial activity ... When such frontiers are established they harden into permanence”. Failing to convince Craig to sign up to an All-Ireland arrangement, Lloyd George and his colleagues opted instead for the idea of a boundary commission that would, as part of an Anglo-Irish settlement, review the Border. As recorded by Lloyd-George’s secretary, Thomas Jones, the impression given to Sinn Féin negotiators about such a commission, just before they signed the Anglo-Irish Treaty, was that it would involve “so cutting down Ulster that she would be forced in from economic necessity”.

Such hopes were of course dashed. The Border did indeed solidify and the British treasury contributed handsomely to the Northern Irish economy. It was hardly something British chancellors of the exchequer enjoyed doing. In late 1923 Neville Chamberlain, as the occupant of that position, was irritated about the mounting bills, hoping “very much” in correspondence with Craig, that “you will not have to ask a harassed chancellor for any further aid not hitherto contemplated”. Politics, however, would continue to trump economics. Richard Hopkins, British treasury controller in 1939, memorably described financing Northern Ireland as involving “fudges, dodges and wangles” to provide the interventions needed to preserve parity with the rest of the UK.

Pondering the cost of a united Ireland in 1954, GC Duggan, the former comptroller and auditor general for Northern Ireland, noted both the North’s “Imperial Contribution” to the British exchequer and the various, secretive and sometimes “devious ways” in which the UK government provided subvention in social services and agriculture. It was money that “in a united Ireland would not be available from outside sources”.

[ United Ireland could cost €20bn a year for 20 years, says new study ]

In the late 1960s, TK Whitaker, secretary of the Department of Finance, advised the then taoiseach, Jack Lynch, on his policy towards Northern Ireland and was also a member of the constitutional review group established in 1967 that examined constitutional barriers to greater North-south co-operation. Whitaker reminded Lynch in 1968 that Westminster was paying an annual subsidy for the upkeep of Northern Ireland of more than £90 million. Reunification, he suggested, without “a good marriage settlement” would involve “imposing on ourselves a formidable burden which many of our own citizens, however strong their desire for Irish unity, may find intolerable”. After the Troubles intensified, some ministers, including Charles Haughey, spoke of the “fast-tracking” of unity, but Whitaker, in September 1969, was sober in his assessment, as noted by his biographer Anne Chambers: “one of the crucial elements in any possible solution is how to keep the British £100 million a year for the North and to work this requirement into a constitutional arrangement”. As he saw it, most in the North, Catholics and |Protestants, would not contemplate a unity “entailing a loss of material advantages” and citizens of the Republic “do not desire unity strongly enough to undertake the subsidisation of Northern standards now financed by Britain”.

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Whitaker’s observations remain pertinent. For over 50 years, opinion polls in the Republic have suggested roughly two thirds of respondents desire to see a united Ireland, but that wish can be heavily qualified when supplementary questions of financing and taxation are asked. New Taoiseach Simon Harris has said he “instinctively” wants to see a united Ireland and that cost should not be the “overbearing factor”. He was reacting to the findings of a new study from the Institute of International and European Affairs (IIEA) that suggests unification could cost €20 billion a year for 20 years, with a 25 per cent increase in taxation potentially needed. But Harris maintains now is not the time to consider this.

Since Brexit, a raft of studies have homed in on the practical considerations of unity. In 2017 Edgar Morgenroth, one of the authors of the recent IIEA report, looked to the example of German reunification (“the gap between east German per capita GDP and that of the reunified Germany was similar to that which would apply to a united Ireland”) as well as the cost of public sector pension liabilities. A substantial majority in Germany considered unity a success, despite its costs.

An Analysing and Researching Northern Ireland (ARINS) paper from 2021 suggested, taking into account differences in prices in both areas, household disposable income in the Republic was about 12 per cent higher than in NI and identified other gaps, generally favouring the Republic, in relation to poverty risk and advancement through education.

Harris is correct that questions of unity should not be primarily dictated by finance, but the questions raised by the recent research, though much of it is accompanied by significant caveats, should be welcomed in order to avoid updated “fudges, dodges and wangles”.