Raw ‘cash for everyone’ schemes are another symbol of Stormont’s dysfunction – The Irish Times
Stormont’s Covid vouchers were a ridiculous waste of money, according to an assessment just produced by the Department of the Economy. However, they were a fascinating and timely demonstration of how not to hand out funds in an emergency.
The scheme, which ran from October to December last year, offered £100 to every adult in Northern Ireland to spend on retail or hospitality. Inquiries were received from 1.4million people – almost the entire adult population – resulting in a bill of £145million, or 1.2% of Stormont’s normal budget.
The aim was to boost department store spending in the wake of the pandemic. People were encouraged to use vouchers at local businesses and there is strong evidence that they tried to do so, but the ineffectiveness of the program was still horrendous. Almost half of the money was spent on UK chains and other businesses that had not closed during the lockdown, mainly supermarkets which had thrived during the pandemic. Only 30% of people said they had used the vouchers for something they wouldn’t have bought otherwise. Everyone else spent them on regular purchases and spent the difference on savings or bills.
The program was of great interest to economists as a rare example of “helicopter money” – money raining down on everyone from above.
The universal £400 payment can only happen if ministers sit down together and work out a plan. It became an unsubtle pressure point to get the DUP back to work.
A report published in May by the British Observatory of Economics, based on initial statistics from Stormont, found that the program would have been better focused on pensioners and people on benefits, even for the sole purpose of making enter money in shops. Low-income households are very effective distributors of extra cash, usually spending it quickly, locally, and on many small items. The fact that they do it because they need the money was not taken into account in the voucher system, when it should have been.
However, household needs are believed to be the only consideration in the much larger sums Stormont has to dish out this winter.
The British government has set up two types of programs in Britain to help with the cost of living. People on benefits will get £650 in two instalments, with additional payments for pensioners and people with disabilities; and each household will receive an additional £400 in the form of six monthly electricity bill rebates.
Stormont receives an equivalent sum to run the same programs in Northern Ireland, or to set up its own versions, or to spend as it sees fit – that’s the point of devolution.
Benefit-based payments happen automatically unless northern ministers step in, which they are unable to do in their current limbo and are unlikely to do anyway.
The reverse applies to the universal £400 payment: it can only go forward if ministers sit down together and tailor a program for power companies and the Northern regulator.
It became an unsubtle pressure point to get the DUP back to work.
Ministers and the regulator believe they have concocted a plan within the confines of the interim arrangement, but the Treasury remains mysteriously skeptical.
This argument has diverted attention from the debate that should be taking place on distributing more money for helicopters.
The cynical explanation for universal Covid vouchers was that politicians could not cope with the complaints of all those missing out
Not everyone needs the £400 payment. In a poll for the Belfast Telegraph this week, 10% of respondents said the cost of living crisis had no effect on their household budget. Another 50% said it only affected them ‘mildly’.
If Stormont was operating normally, he would have had time to design a fairer system or a cheaper system that would free up money for other uses. There should still be time to test basic resources: Northern Ireland’s electricity industry operates a unique ‘zero disconnect’ policy, which gives companies good insight into those who are already struggling to pay their bills.
The cynical explanation for universal Covid vouchers was that politicians could not cope with the complaints of all those who were missing out. This nagging grudge undoubtedly exists in our culture. Decentralized accounting was another factor: additional funding was made available by London, which Stormont tends to see as ‘free money’ to be disbursed as soon as possible. When Stormont spends his own money, he is more cautious. In March, he granted a £200 energy payment to all households on benefits, at a cost of £55million.
Sinn Féin say £400million is now tied up in the budget as there is no DUP premier. While other parties dispute that figure, there should be enough to provide meaningful help to those in need.
Developing a braver policy than alms-for-all is not just a matter of getting through this winter, or restoring decentralization.
“The next five to ten winters will be difficult… all over Europe,” Belgian Prime Minister Alexander De Croo warned on Monday. Cost-of-living payments are here to stay.