This article highlights some of the main issues that will arise – will a Labour government (later if not sooner) set public spending significantly above the Conservatives’ plans; what difference, for example, will the fiscal floor (the greatest innovation in our financial position for many decades) make? Will Labour enforce the tougher aspects of the financial deal that coincided with the restoration of devolution, or treat them as past rhetoric? And what can the Executive do realistically when the electoral dust settles? In particular, what might it mean for the budget for health and social care, when we already have extremely long waiting times for treatment and which on present plans risks catastrophic cuts and a serious political fracture. 

Barnett, need and the Fiscal Floor 

The Barnett Formula gives Northern Ireland a population-based share of the increases (or decreases) in the public expenditure allocations that are determined for comparable services in England – the relevant amounts are called “Barnett Consequentials”. The galling thing about this approach, and the amendments that were agreed for Wales a decade ago and for Northern Ireland more recently, is summed up in the word “Consequentials”. The grown-ups (Ministers in the UK Cabinet responsible for public services in England), take the important decisions – negotiating on the amounts to be provided for their Departments and programmes. Like dependent children, Scotland, Wales and Northern Ireland have no agency whatsoever in those decisions, but their spending allocations are determined by that process -we get “Barnett Consequentials”. The “fiscal floor” – that is, the principle that Wales and now Northern Ireland should get no less than an allocation determined by their needs relative to England, maintains that England-centred decision making process. The calculation that the Treasury has adopted accepts that Northern Ireland needs 24% more public expenditure per capita to provide for a standard of service similar to that of England. It is relative method of determining need, not an absolute one, when in fact most people would understand ‘need’ to be measured in an absolute sense. Including a need-based calculation is a very positive step, but by no means a solution to all the issues facing the Executive. 

As Mr Micawber might put it – 124% per capita of a generous settlement, result happiness; 124% of an austere settlement, result misery. And it’s all decided by the UK (English?) government. 

As Joel Barnett would have been the first to acknowledge, all this is driven not by principle but by the need to keep decision making simple, because giving devolved administrations greater agency is complex – and a simple system (deliberately) leaves less room for negotiation. Many different distributive models of public finance exist across the world – in Spain, different provinces have different degrees of control, with the Basque Country having full autonomy over taxes raised there; Australia has the Commonwealth Grants Commission, which advises the government on how federal funding should be distributed to the states and territories to ensure equitable access to services. Within any country, equitable distribution means some transfer of money from areas which are more prosperous to those that are poorer. That is quite normal – Northern Ireland’s subvention attracted disproportionate attention because, as well as being conspicuously large in the recent past, it was easier to identify than, for example, the subsidy paid from London to Cornwall within England. 

The devolved administrations have very limited fiscal autonomy, though some tax raising powers have been devolved. That insulates them from the sheer power of the market in judging the viability of their fiscal plans, as was demonstrated in the response to the Truss/Kwarteng mini-budget. Misery, for Mr Micawber, was imprisonment for debt (unlike him, the Truss government was not sufficiently afraid of excessive debt). But the Northern Ireland Executive is not subject to that constraint – the only discipline it faces is Treasury oversight – and since 1998, that has been undermined frequently, with the effect that control has become ineffective, and irresponsibility rewarded. 

So how will the election make a difference? 

Because it will mean a change of political priorities. Just now, Labour is carrying the Ming vase of its electoral hopes across the slippery floor of the campaign, and it would appear that the fiscal position might not be so different with a change of government. The SNP, the Green Party and Reform all claim that Labour and the Conservatives are indistinguishable. But that understates the impact of different political philosophies and priorities. It is abundantly clear that the Conservative priority is to reduce taxes. That is not the sole or even the main reason for the very challenging position on, for example, NHS funding in England. But even allowing for all the recent factors affecting fiscal policy, it is clear that the Labour approach is much more likely, over time, to see some material improvements. So, it would be astonishing if, in time, 124% of Labour’s view of the appropriate level of public expenditure in England will not be materially higher than 124% of the Conservatives’ view. 

The position will be affected by how Labour might take forward the financial deal that coincided with the return of the Executive: the deal is conditional on the Executive raising additional revenue (which all parties are loath do to) and actually living within budget (which is threatened by the UUP stance on the health budget). Repaying the overspends from previous years (£559 million) would be crippling. More subtly, it will be interesting to see if the Conservatives’ approach of direct spending by UK departments in devolved areas continues or if Labour is more faithful to the principle of devolution. 

Health and Social Care needs transformation as well as money 

The budget for health and social care dominates the local landscape, and is worth some considered analysis. In my nine years in that Department, I was faced many times with the arguments that the system is monolithic, inefficient, bureaucratic and like a black hole into which money vanishes without trace. 

Health and Social Care (NI) has many features in common with other state controlled monopolies. It does not face competition, so the drive for high standards comes internally from the professionalism of the workforce and from top-down leadership and externally from regulatory bodies (notably RQIA as well as the professional regulators such as the GMC). It depends almost wholly on public expenditure as the source of its resources. It runs at or very close to capacity – and hence there is no market-type mechanism to reward the best and challenge poor performance. There is a near complete absence of demand management (because when price is zero, demand is infinite). 

Drilling further into these fundamental principles, the state has a near monopoly on healthcare provision. It seems to me that that fact disempowers most citizens (as private medicine is unaffordable for most). That creates a dependency that risks leading us as individuals to a state of “learned helplessness”. But the state’s monopoly in turn implies an obligation on the state to meet need, and meet it well. The “NHS principle” that services are free at the point of use of need is wonderful – if the necessary services are actually

available. And the UK wide NHS principle of “no defined benefit” is very significant too – it means that, unlike the small print exclusions of any commercial health insurance policy, the HSC in Northern Ireland promises to provide whatever is needed, whatever the cost – subject only to the guidance from the National Institute for Health and Care Excellence (NICE) on the cost-effectiveness of drugs and other technologies. 

The catch, of course, is that the promise does not commit to timely treatment. Time is the only parameter available to shoehorn near infinite demand into the very tangible limits of the service’s capacity – whether by waiting lists for elective treatment, or even the need to wait on the phone for first place in the queue to make an appointment with a GP. Waiting times here – for both scheduled and unscheduled (or emergency) care – are now such that it is hard to recognise the system as fulfilling its fundamental principles. Compromises have compounded on compromises. Aspects of elderly care have long been classified as social care (hence allowing means-testing and co-payment) rather than as health conditions that are covered by the state. Of necessity, some interventions that used to be routine now have waiting lists that mean that in effect, they are being treated as of very low priority. But we are well past the stage where such relatively benign practices are enough. We have near-interminable waiting times for serious and painful conditions, which should be intolerable – but the fact is that the electorate tolerates them. There is more concerted opposition to the smallest idea of increased revenue raising by the Executive than to the appalling state of our most essential public service (possible except for water supply). “People can’t afford to pay more” – yes, I understand that, but are you saying people can and have to put up with a broken health system?The NHS model is inherently very expensive. Its principles were settled in a different world, where hospitals were for treatment of acute temporary conditions, where the scope and value of what medicine could do was far less wonderful than it is today, most people lived only a handful of years after retiring from work, and where relatively few people had to endure many years of old age with multiple chronic illnesses. There is a clear body of evidence that Northern Ireland needs more health spending per capita than England (because social deprivation increases need for services) and also that our resources are used inefficiently (primarily because we have too many small units, where larger centres of excellence are a better model). 

Even the best and fastest possible implementation of the transformation programme recommended by Rafael Bengoa would not resolve the funding problem we face. Indeed, for some of the changes needed, a period of double cost would arise, as it is impossible to stand down an obsolete form of service provision before its shiny new replacement is operational. 

So, it is very hard to overstate the urgency and importance of addressing the issues. It seems clear that the citizens of Northern Ireland want the continuation of a state owned and provided health and social care service, including, for example, access to very expensive, but effective, cancer drugs, to new and evolving technologies, and to access at local level. But wanting the NHS model doesn’t make it possible or affordable. 

Here are four ways in which healthcare and how people think of it need to change, and urgently, if our health and social care system is to survive.’: 

• Individuals: A major shift in behaviour, with as many people as possible taking real personal responsibility for their own health – the best way to value the health service is to treat it as a precious resource, not an entitlement we can take for granted. This would depend on education and publicity, as changing cultural attitudes is an enormous challenge;
• Society: Partnership between the state, the voluntary and private sectors, and individuals to help those who need support, addressing the many links between physical health, mental health issues and social inclusion; 
• Transformation: Sustained and urgent progress on the transformation of health and social care based on the Bengoa Report, which addressed the issue of the need for evidence-based rationalisation of hospital services, the benefits of integration of hospital, community and social care and urged a focus on innovation; 
• Social care: A radical reform of social care, including an approach to the risk of high lifetime costs that “feels fair” (such as that recommended by Dilnot in 2011, which would have capped the costs that individuals might face) and a sustainable workforce strategy. 

These ideas all require political leadership, not fear of losing votes – it is deeply ironic that the one jurisdiction in the UK where the loss of power is least likely is characterised by the absence of hard decisions.

Raising additional revenue 

The revenue issue in Northern Ireland is receiving next to no attention, and yet it will matter immensely in the next parliament – unless, as has happened all too often in the past, the UK government acquiesces with the Northern Ireland parties and throws away the latent power it has following the financial package earlier this year. It affects the full range of public services, not only health service funding. 

Devolution of powers in relation to income tax would be a radical step. Hence the main possible sources of additional revenue remain the Domestic Regional Rate, charging for household water and sewerage services, and student tuition fees. The evidence is unequivocal that Northern Ireland households and individuals contribute much less proportionately through those three routes to public services than the UK average – and less than many household in Great Britain which have greater challenges in the cost of living than many here. Some of the main objections do not stand up to any scrutiny: 

“We already pay for water” – this misses the fundamental differential in household contributions on a comparison of the sum of Council Tax and water charges in Great Britain with the Domestic Regional Rate in Northern Ireland. 

“We can’t ask people to pay more for substandard services” – so it’s okay to allow the services to get worse, because we can’t find the resources necessary to stop the decay? 

“Nobody can afford to pay more” – of course, there are many who cannot afford to pay more, but there are more than a few who can: data from the NI Consumer Council shows that NI’s highest earning households (Quartile 4) have over 18 times more discretionary income left to spend every week compared to the lowest earning households (Quartile 1) (£667.78 compared to £36.65). 

“It wouldn’t raise enough money to address the scale of the funding shortfall” – true, but it would make some difference and it would also remove one of the UK government’s primary objections to the Executive’s requests for assistance. 

Concluding thoughts 

The financial package is a clear demonstration of a point that always, and always will, apply – the resources available for public services here is vitally affected by what is decided at UK level. The conditions attached to the package, if they are sustained, mean specific obligations on the Executive – to balance the budget and to agree a sustainable plan including reform and revenue raising. 

Hence the role and influence of MPs elected on 4 July will be very important, as will the attitude and approach of the new Secretary of State and Ministers in the Treasury. The Executive Ministers will have some very big decisions to take, and the air of unreality that is still around is deeply concerning. Influencing the new government on the relative priority of decent public services and the tension between that and low taxation should be a clear responsibility of everyone elected on 4 July.