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Jon Tonge: Voucher scheme is a boost to retail, but can NI ever truly pay its own way?

Spent your £100 voucher yet? I hesitate to spoil the fun, as the high street really needs a break, but the last time I got a three-figure sum for nothing was for passing Go on the Monopoly board. Stormont’s £166m giveaway is set against a long-standing…

Spent your GBP100 voucher yet? I hesitate to spoil the fun, as the high street really needs a break, but the last time I got a three-figure sum for nothing was for passing Go on the Monopoly board. Stormont's GBP166m giveaway is set against a long-standing, unresolved question: can Northern Ireland ever pay its way? t has been the most heavily subsidised part of the UK since the 1960s.

Geography and conflict provide two core explanations. But only one has been a constant. Amid relative peace, why does the region, in the words of its Secretary of State, "punch well below its weight economically?"

The UK Government spends 21% more on each Northern Ireland citizen than on those in south-east England. It's not that I'm against subsidies. I inhabit the region with the second-highest level of subsidy in England.

But the deficit per head here -- that is the amount spent per citizen minus the amount contributed -- is a mere GBP3,000 for every individual. The figure for Northern Ireland is not far shy of GBP5,500. Stormont controls 90% of what is spent locally.

But the overwhelming bulk of Executive finance comes from the UK Treasury. A big chunk of Executive spending is devoured by inescapable items, such as social security payments, with levels determined elsewhere. Options for Executive action are limited.

Unlike in Scotland and Wales, powers over income tax are not devolved. Even if eventually transferred, they would be no panacea. Income levels are only three-quarters of the level found elsewhere in the UK.

Taxes paid by Northern Ireland's citizens are, on average, nearly 20% lower than those contributed by those elsewhere in the UK, at GBP10,500 per year compared to GBP12,500. The only area where taxpaying in Northern Ireland per head reaches levels comparable to elsewhere is on "sin" items: alcohol and tobacco duties. There lies the dilemma.

The unhealthier your average local citizen's habits, the healthier the revenues. The Executive parties may sometimes be daft, but they are not stupid. It would be political suicide for any to advocate tax-raising powers for Stormont, which could hit the lowest earners in the UK.

Related to Northern Ireland's dismal financial position are its other big problems: low productivity, 10% below the UK median, and an overreliance upon public sector jobs, at 28% some 10% above the UK-wide figure. When the Troubles raged, the dearth of private sector jobs was understandable. Possible kidnapping -- or even execution -- did not make the greatest inward investment prospectus for would-be investors.

But those days have long passed and irritation at Westminster has mounted over perennial subsidies. Remember David Cameron -- who subsequently proved an expert on raising personal finance at least -- and his comment prior to the 2010 General Election that Northern Ireland was "ripe for public expenditure cuts?" The poor old UUP had formed an alliance with the Tories and was left high-and-dry by such fiscal rectitude.

Gleefully, the DUP warned against supporting Tory austerity, using language of which Sinn Fein would have been proud. If one thing unites Northern Ireland's parties it is that the region has "special circumstances", which mean, bluntly, that the place cannot possibly pay its way. We have moved seamlessly from massive Troubles subventions to non-local taxpayers underwriting the eternal cost of peace.

Is there any scope to raise local finance? Water charges, anyone? More chance of pushing water uphill, given the strength of the campaign against the idea a decade-and-a-half ago.

We pay an average of GBP400 per year in England by the way. Just saying. Prescription charges?

No chance, even though expenditure on drugs in Northern Ireland is way more per head than in England or Scotland. Free prescriptions cost more than GBP1m per day. I think of you all every time I hand over GBP9.35 for pills to keep my heart stable at the high rates of tax I pay.

What about raising rates bills? The obvious difficulty is the relatively low property prices in Northern Ireland. The average house price is GBP150,000, compared to GBP268,000 in England.

Given the amount spent on hotels over the years, the biggest career mistake I ever made was not buying a property in Northern Ireland. But the immense value available for house-purchasers makes Northern Ireland a great place for everyone to live -- except for its Finance Minister. That minister sees average rating revenue on a property in Northern Ireland raise only 55% of the amount yielded by a house in England.

And the comparative dearth of commercial properties compared to residential ones (nine out of 10 buildings are in the latter category) exacerbates the financial shortfall. How about raising university tuition fees, so that Executive subsidies could be cut? This is a probable "file with water charges".

Students from Northern Ireland (and the south) embarking on their courses at Queen's or Ulster University this autumn will be paying a mere GBP4,350 per annum. UK students enrolling at the University of Liverpool will be coughing up GBP9,250 for the privilege of hearing my gripping exposition of Northern Ireland's fiscal problems. Now, with all due respect to my own distinguished institution, I am not quite sure it is worth paying an extra GBP5,000 per year to attend than one of Northern Ireland's own reputable seats of learning.

But can Executive subsidies continue? So, you see the financial dilemmas for Northern Ireland. As someone once didn't quite say, it isn't going to pay its way you know.

I'll vouch(er) for that.

Jon Tonge is Professor of Politics at the University of Liverpool