Cost of Division

“Separate but equal is not an option. Parallel living and the provision of parallel services are unsustainable both morally and economically … the costs of a divided society — whilst recognising the very real fears of people around safety and security considerations — are abundantly clear: segregated housing and education, security costs, less than efficient public service provision … Policy that simply adapts to, but does not alter these challenges, results in inefficient resource allocations. These are not sustainable in the medium to long-term.” (Section 1.4, Fundamental Principles, Shared Future).

Introduction

Division in Northern Ireland is a historical development that is multifaceted and difficult to unpack. A lauded attempt to do so is by historian, Jonathan Bardon, with his work, A History of Ulster. It can be said that there has been centuries of distinct cultural development, accompanied by inequalities, and the resulting societal divisions and periodic bouts of violence continue to be salient in Northern Ireland today.

The last bout of violence that began in the 1960s greatly accelerated the pre-existing trend of greater spatial separation, as the outbreak of violence led to the brutal displacement of 45,000-60,000 people in Northern Ireland, “the largest movement of civilians in Europe since World War II”. Although there was a history of single community townlands across the province, by the end of the conflict, huge swaths of Northern Ireland were more heavily divided along sectarian lines. A majority of the population, concentrated in 17 out of 39 towns, was living in “highly segregated” neighbourhoods. The most divided areas were mainly working class neighbourhoods in places like Belfast, Londonderry, and Craigavon, incidentally the areas most affected by the conflict.

Northern Ireland remains highly segregated, possessing more peace walls than during the conflict, opinion polls indicating that there is little appetite for reversing this trend. Interdisciplinary research suggests that the psychological consequences of the divide are pervasive and trans-generational, signalling that the divide may very well be a defining feature of Northern Ireland for many years to come.

Whereas a substantial body of work exists on the human cost of continued segregation, less attention has been given to the financial cost. As Northern Ireland continues to head towards greater “normalisation”, the extra weight of the cost on division on government spending will become an issue of greater prominence.

As it stands today, the financial cost of delivering public services in Northern Ireland is higher than the overall UK average. However, the percentage of these extra costs that can be attributed to division is hard to quantify, as it is difficult to parse out division from other possible factors, such as a “higher level of need, policy decisions, historical lack of decision-making, and inefficient delivery”. Nonetheless, a 2016 report, “Cost of Division: A Benchmark of Performance and Expenditure”, by Ulster University’s Economic Policy Centre attributed an annual cost of between £403.6m and £833.9m to division and other possibly interrelated factors. A report conducted by Deloitte in 2007, “Research into the Financial Cost of the Divide”, produced a much higher figure, attributing £1.5b in additional annual expenditure to the cost of division.

Using these two major reports along with a range of supporting sources, this research will examine the direct, indirect and missed opportunity economic costs of division. It will examine the societal sectors producing the most additional costs attributable to the division, for example: policing, education, health, community relations, housing, and transportation, as well as the impact of division on economic growth.

Policing and justice

The Police Service of Northern Ireland (PSNI) spends significantly more money per capita than any other police force in the UK, and a substantial amount of additional expenditure can be attributed to continued division. Figures from 2013/14 indicate that the PSNI spends around £600 per capita annually whereas the second highest UK police force spends a little more than half that, at £331 per capita. Although such high costs can be attributed to other factors, such as the “current level of threat from terrorism and legacy issues”, as well as the fact that Northern Ireland is the only region in the UK with a land border, there is evidence to suggest that such high expenditure can also be attributed to the division.

Direct cost of policing divisions

Civil unrest along the peace walls and at interfaces drives elevated police expenditure. The interfaces continue to be sites of rioting, especially around culturally important or political contentious events, requiring police interference. In 2014, the PSNI reported 600 incidents of sectarian violence in Belfast alone.

In 2014, HM Inspectorate of Constabulary estimated that approximately £374m, or 34% of their budget, was spent on “dealing with the security situation”. An example of the significant costs incurred by sectarian rioting is the disputed Whiterock parade that resulted in riots in 2005, producing an estimated “£2.2m overtime, £0.9m in damage to police vehicles and £0.2m spent on protective equipment required for officers”.

The PSNI itself reported that overtime demand is due to “operational pressures associated with the divide (e.g. policing disputed marches, interfaces, the loyalist feud, and the threat from dissident republicans) coupled with reduced numbers of police and a high level of long-term sickness”. The cost of a heightened security situation has been compacted by a consistent shortage of PSNI personnel over the years. In 2018, it was reported that struggles to “plug gaps in the workforce” has resulted in the PSNI spending an average of £125k a day on overtime.

It’s also important to note that although the security situation has greatly improved over the years, the UK is preparing for this trend to reverse, with a risk of a hard Brexit threatening the stability of Northern Ireland. Upon request from the PSNI chief, the UK has begun training 1,000 police officers in England and Scotland for deployment to Northern Ireland in the case of disorder as a result of a “no-deal Brexit”.

Prisons

Northern Ireland spends about £60k per prisoner, twice as much as England and Wales on per capita spending. This is due to the financial cost of an inefficient prison infrastructure, paired with the special needs of housing paramilitary members.

Northern Ireland’s prison infrastructure was built for the realities of the conflict and therefore contains features that are costly and unnecessary for a post-conflict context. It also has features that are costly but necessary for housing paramilitary prisoners. The costs of these inefficiencies and special circumstances are difficult to quantify.

What can be quantified, however, is the amount of money that would be saved if Northern Ireland prisons housed no paramilitary prisoners. In 2015, the cost of housing 70 paramilitary prisoners was £4.1m.

Cost of the legacy of division

The legacy of division has produced a number of unique bodies designed to address the past and keep the peace in the present. These bodies (and annual costs) include:

• Independent Commission for the Location of Victim’s Remains: £133k annually
• Sentence Review Commissioners, which “oversees and regulates the early release of certain prisoners convicted” during the conflict:” £131k
• Home Protection Scheme, which provides “physical security measures to individuals who fall within certain occupations In public life and who are under a high level of threat:” £7m
• Independent Assessor for Military Complaints Procedures, which provides oversight of military complaints: £52k
• Total: £7.3m

Other costs that can be linked to the legacy of the past is the maintenance costs of interface barriers and structures (“peace walls”), at an average annual cost of £65k. There are also compensatory payments under the Terrorism Act (£130,749 three-year average), the administrative cost of the Parade’s Commission (£1m annually), and the Legacy Investigation Branch (£3m).

Education

In 2011, the Department of Education reported a high level of segregation in schools, particularly at the primary level. A little more than 5% of Catholics attended controlled (primarily Protestant-enrolled pupils) schools and only 1% of Protestants attended maintained (primarily Catholic-enrolled pupils) schools. Only 5.5% of primary school children attended integrated schools.

Although little research exists to support the idea that segregated schooling perpetuates division, there is a body of work that indicates that integrated or mixed education can deliver more positive social attitudes through increased inter-group interaction. Where there has been an examination of past pupil attitudes amongst students of integrated schools, studies have found that 93% felt integrated education had a positive impact on their lives on their lives, by making them more tolerant and less prejudiced.

Alongside the moral argument for integrated education, there is good reason to believe that servicing a segregated education system is inefficient and produces a range of extra costs.

Surplus capacity

The current level of surplus capacity at schools as reported by NIAO and DENI is 19%. This figure is not significantly out of the norm when compared with other UK regions like Scotland and Wales, but is considerably higher than England and is above the 10% that was suggested as an acceptable surplus by the Bain review. Furthermore, the number of surplus in schools in Northern Ireland has risen from 53,000 (15%) in 2007 to 71,540 (19%) in 2014.

Although the UU report (2016) cited other possible factors for the higher level of surplus and stated that it could not definitively attribute the surplus to societal division, the Independent Strategic Review of Education (Bain Review) was able to draw a causal link between Northern Ireland’s surplus and the multi-sector schools system, asserting that “there has been a lack of any integrated or consistent planning of pupil places across the various school sectors,” which contributed to the surplus and was as a direct consequence of the division between state and Catholic schools. The cost of the surplus is estimated to be between £14.3m to £92.8m.

In terms of unit costs, the Department of Education’s Effectiveness Evaluation found that when compared to other UK regions, the schools in Northern Ireland were more expensive. Drawing from this, the Independent Strategic Review concluded that Northern Ireland had too many schools, especially in the primary sector. Although the money that could be saved with the implementation of reform is hard to quantify, it’s reasonable to suggest that there is a significant amount to be saved in terms of administrative costs.

In 2017, the Education Authority came out with a report that laid out a plan for consolidating the amount of schools operating and making the education structure more sustainable. Belfast Telegraph noted that the report found that more than 220 schools were running on budget deficits and that 36% of primary schools in Northern Ireland have less than 106 students. To try to reduce the excessive number of schools, the report identified up to 40 schools which could close or merge.

Community relations programs

It’s also important to note that as a consequence of segregated schooling, additional funds are allocated for improving community relations amongst youth, an endeavor that could be achieved much more directly through integrated schooling. In 2014/15, the Department of Education spent an estimated £1.4m on “community relations, equality and diversity” and “planned youth service intervention”.

Teacher training

Lastly, researchers at UU identified duplication costs at the level of training teachers. The International Review Panel Report (2014) stated that Northern Ireland has “five relatively small teacher education providers, three of them in close geographical proximity … failing to minimise the significant duplication of activity that occurs”. Out of the five, two schools — St. Mary’s University College and Stransmillis University College — receive a total of £2.2m annually for their businesses, a cost that could be reduced if the schools were consolidated.

Health

Northern Ireland’s high average health need per person and its upper range of per capita health expenditure cannot be confidently be attributed to legacy issues. However, some aspects of health sector spending can be so.

Mental health expenditure

Mental health spending related to the trauma inflicted by exposure to violence can be considered a direct cost of the legacy of the conflict and as a cost of ongoing division. Ulster University’s cost of division report estimated that based on the amount of people suffering from conflict-related PTSD, £10.3m of public expenditure a year can be counted as a cost of division. Research has also suggested that “for a smaller number, the mental health impact is more significant and a greater level of treatment is required,” than in other parts of the UK. Compared to England, the additional cost of treatment can be estimated at £25.2m per year.

Location of facilities

Continued segregation has also affected the planning of the delivery of public services. For example, in planning the spatial distribution of health and well-being centres in Belfast, research indicated that the most important factor for people in north and west Belfast in terms of service usage was “the perception of religious or territorial ‘ownership’ of the facility location”. Therefore, in deciding where to place facilities, planners had to balance the specific needs of a segregated society with other general needs related to “population, deprivation and other patterns of service”. Although researchers were unable to measure the extent to which this produced costly inefficiencies, it is reasonable to suggest that duplication costs may exist in the distribution of health resources as a consequence of division.

Community relations

In response to the division, a wide range of community relations programs continue to operate in Northern Ireland aimed at “bringing both communities together and enhancing mutual understanding and respect”.

Direct cost of community relations

Recent attempts to quantify the cost of community relations programs by UU (2016) put the cost anywhere between £24.3m to £35m annually. In 2014/15, the two Executive departments through which community relations spending is run, The Executive Office and the DENI, reported spending a combined total of £24.3m on Northern Ireland.

On the upper end, a 2013/14 government report found that Northern Ireland spends an average of £22 per person on “Religious and Other Community Services”, a number that is more than seven times greater than the second highest, Scotland, at £3 per person. Based on population size, Northern Ireland would save £35m per year if it spent as much as Scotland.

Voluntary and community sector

In 2007, an estimated 30,000 people and 5,000 organisations made up the voluntary and community sector (VCS) in Northern Ireland. Excluding housing associations (which focus more on capital expenditure than community programmes), the VCS in Northern Ireland received £49.76m in public funding in 2001/02, the highest amount in the UK. By using Scotland as the nearest comparator (with an amount of £34.17m), it can be argued that in Northern Ireland the divide increases expenditure in VCS activities by approximately £15 per person.

Some researchers have suggested that some of the extra cost is derived from the duplication of services as a consequence of division. Although there are other reasons for this duplication, including the “overlap of aims by funders” and “organic growth within the sector” the sectarian divide is also cited as a factor.

Other researchers have suggested that the voluntary and community sector is “embedded to a significant extent in each of the two communities”. In 2006, a report funded by the Community Relations Council and OFMdFM found that “almost three-quarters of organisations had management committees that were either wholly or mainly from one community. Seventy percent had not changed in this respect since their inception.”

Housing

In response to rising civil unrest as a result of religious discrimination in housing, the Northern Ireland Housing Executive was created in 1971. Since then, the NIHE has largely held onto its reputation as a neutral body, managing to avoid political interference and to develop consistent delivery mechanisms based on housing need. Unfortunately, this has not been enough to counteract the trends of division that were accelerated by conflict and persist today.

Because of Northern Ireland’s particular situation, a regional comparison of public housing expenditure is not useful. Instead, the cost of division in housing is best quantified by looking at a number of unique government programs that exist as a direct result of the division.

Cost of forced displacements

During the conflict, thousands of families were “burnt out” of their homes for being perceived to be part of the “other community”. The material consequence of this is that large swaths of Northern Ireland remain heavily segregated, with 90% of public housing almost wholly consisting of one community or the other. The psychological consequence is that communities with high levels of homogeneity continue to regard contact with the other community as dangerous or undesirable, a perception that is only compounded by the practice of forced displacement that continues to exist in certain parts of Northern Ireland.

The financial cost of continued forced displacement can be traced to two sources of public expenditure: homeless Base 2 funding and the SPED Programme. In 2014/15, homeless Base 2 funding, a funding stream aimed at providing “support and mediation services to individuals/families at risk of violence or exclusion from their communities” spent £101k.

The Special Purchase of Evacuated Dwellings (SPED) Program also exists to assist those forced out of their homes in Northern Ireland. The program allows the government to purchase properties from those found by the PSNI to be in “acute physical danger”, allowing those under threat to relocate to a safer place. Although the programme aims to be self-financing, a cost is incurred when “capital value” falls. Between 2012/15, the average amount spent on this program was £79k, a significant reduction from the 2004/05 high of £43.7m.

Cost of civil unrest at interfaces

High levels of segregation have also led to the creation of interfaces, places where highly homogenous populations meet. Interfaces have produced a number of costs that can be attributed to the divide, especially as persistent civil unrest makes the areas undesirable in the housing market.

This undesirability is best reflected in the number of “void” properties that are potentially vacant due to the impact of division. In 2015, 1,094 properties were deemed void. Of those, 204 were designated because they were “difficult to let” and 29 because of “exceptional circumstances (habitable)”. It’s reasonable to suggest that the impact of division on the housing market contributed to the decommissioning of these 233 properties. Therefore, the loss associated with these properties of an estimated £1.5m can be counted as a cost of division.

Furthermore, habitable but undesirable properties face the prospect of being demolished, the NIHE faces significant waiting lists for housing in other areas, with an average wait time of 38 months. In 2017, while 1,000 properties owned by the NIHE lay vacant, the Housing Executive had 37,611 households on its waiting list, with 23,694 deemed to be in “housing stress of priority need”.

Lastly, in 2014/15, the NIHE spent £102k on “normalising” interface areas in an effort to make them more desirable.

Transportation and infrastructure

The following costs related to transportation can be attributed to the civil unrest sustained by division: additional security on buses, bus substitution services provided during security alerts on the railway network, buses destroyed during civil disturbances, damage to road infrastructure as a result of bonfires, and the cost of delays due to security alerts on the railway network.

The total cost of additional security on buses, bus substitution services, and buses destroyed is estimated to be about £53k annually. Damage to road infrastructure as a result of bonfires costs approximately £4k a year, a figure that is substantially lower than the £218k that was spent in 2005/06, and the cost of delays is about £5k. This comes to a total of £61k annually of extra transportation costs that can be attributed to continued division.

Lost opportunity cost

Decades of conflict, followed by instability associated with post-conflict transition, created an environment of industrial development in Northern Ireland that cannot be considered “normal”. In terms of foreign direct investment, investors had to accept “normal commercial risks associated with a business investment” as well as the “additional unquantifiable risks in Northern Ireland”. This produced a slower development of the private sector and a relatively larger public sector.

To compensate for this, Northern Ireland has enjoyed “more generous investment incentives” compared to other regions of the UK, in order to encourage private sector growth. But despite modest growth since 1998, the public sector continues to be outsized and the private sector small. This can be considered to be part of the cost of division, and attempts to quantify the lost opportunity cost are outlined below.

Lost opportunity cost of division

When compared to other regions in the UK, Northern Ireland shows a relatively poor economic performance. Northern Ireland lags behind in employment rates, productivity levels, and the number of jobs available for lower skilled laborers. However, when compared to similar post-industrialised regions, such as Wales and the northeast of England, economic performance is broadly similar and Northern Ireland performs better in jobs for people with higher-level qualifications and in foreign direct investment and R&D expenditure. The table below demonstrates the areas how Northern Ireland lags behind compared to other regions, potentially as a consequence of division:

It’s important to note other factors in Northern Ireland, including the challenges of transitioning to a post-industrial economy and the presence of a large rural/agricultural economy. Some aspects of the current economic position, however, can more strongly be associated with the cost of division.

Lost tourism opportunity

Recent data indicates that Northern Ireland does not attract the same level of tourism that other similar regions attract. The extent to which a “negative external image” continues to exist and contributes to this, however, is difficult to identify.

In terms of tourist development that was lost during the years of conflict, there is data to suggest that the loss was significant. In the late 1960s, “the volume of tourist visits to Northern Ireland exceeded one million per annum”. In 1972, tourism fell by 60 percent and would not reach the levels reached in the 1960s until the 1990s. Furthermore, it is useful to compare levels of tourism in Northern Ireland with Ireland, seeing as they share a great deal of “actual and potential similarities” that bear an impact on tourism. As seen in the graph below, whereas revenues derived from tourism markedly increased after 1985 in Ireland, tourism revenues in Northern Ireland remained stubbornly low, even going into the mid 2000s.

The 2007 Deloitte report quantified the revenue lost, assuming that the Northern Ireland tourist economy would have grown similar to the way the Ireland economy grew in the absence of violence. Between 1976 and 2005, the Northern Ireland tourist economy grew at 3.66% compared to the average growth in Ireland at 4.76%.

Costs summary

The following table summarises identified and quantified costs of division, as calculated by Deloitte (2007) and Ulster University (2016). For both sources, the upper bounds are used. Costs for “sports and leisure” and governance of Northern Ireland are excluded.

Conclusion

Although Northern Ireland has made some strides in reducing the cost of division over the last number of years, the recent report conducted by Ulster University indicates that there is still a way to go. Policing in Northern Ireland continues to outspend the rest of the UK by a large margin, and division in education produces inefficiencies that are arguably avoidable. Despite compelling evidence that the cost of division produces additional costs, there is little agreement on what can or should be done about it. Researchers caution against viewing these costs as potential savings, arguing that in many instances, “costs are unavoidable or would require significant investment to ameliorate”.

Research by Allison LIRA.

Image source: “Police Cordon” used by licence CC BY-NC Allan LEONARD @MrUlster

Last updated: 7 May 2019