Newton Emerson: Crude ‘cash for everyone’ schemes are another symbol of Stormont dysfunction

Stormont’s Covid shopping vouchers were a ludicrous waste of money, according to an assessment just produced by the Department for the Economy. However, they were a fascinating and timely demonstration of how not to dish 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. Applications were received from 1.4 million people — almost the entire adult population — incurring a bill of £145 million, or 1.2 per cent of Stormont’s normal budget.

The aim was to stimulate high-street spending in the wake of the pandemic. People were encouraged to use the vouchers in locally owned businesses and there is strong evidence they tried to do so, but the inefficiency of the scheme was still horrendous. Almost half the money was spent in UK chains and other businesses that had not shut during lockdown, mainly supermarkets that had prospered through the pandemic. Only 30 per cent of people said they used the vouchers on something they would not otherwise have bought. Everyone else spent them on their usual shopping and put the difference towards savings or bills.

The scheme was of great interest to economists as a rare instance of “helicopter money” — showering cash on everyone from above.

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The £400 universal payment cannot go ahead unless ministers sit down together and tailor a scheme. This has become an unsubtle pressure point to get the DUP back to work.

A report in May by the UK Economics Observatory, based on initial Stormont statistics, found the scheme would have been better focused on pensioners and people on benefits, even with the sole aim of getting money into shops. Low-income households are highly efficient distributors of additional cash, generally spending all of it quickly, locally and on lots of small items. They fact they do so because they need the money was not a consideration in the voucher scheme, although it should have been.

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However, household need is meant to be the only consideration in the much larger sums Stormont has to hand out this winter.

The UK government has set up two types of scheme in Britain to help with the cost of living. People on benefits will get £650 in two instalments, with further payments for pensioners and the disabled; and every household will get another £400 as six monthly discounts off electricity bills.

Stormont receives an equivalent sum to run the same schemes in Northern Ireland, or to set up versions of its own, or to spend as it sees fit — that is the point of devolution.

Pressure point

The benefits-based payments happen automatically unless Northern ministers intervene, which they are unable to do in their present “caretaker” limbo and would be unlikely to do regardless.

The opposite applies to the £400 universal payment: it cannot go ahead unless ministers sit down together and tailor a scheme for the North’s electricity firms and regulator.

This has become an unsubtle pressure point to get the DUP back to work.

Ministers and the regulator believe they have cobbled together a scheme within the confines of the caretaker arrangement but the treasury remains mysteriously unconvinced.

This argument has distracted from the debate that should be taking place on handing out more helicopter money.

The cynical explanation for universal Covid vouchers was that politicians could not face the complaints of everyone who missed out

Not everyone needs the £400 payment. In a poll for the Belfast Telegraph this week, 10 per cent of respondents said the cost-of-living crisis was having no effect on their household budgeting. Another 50 per cent said it was affecting them only “slightly”.

If Stormont was functioning normally it would have had time to design a more equitable scheme, or a cheaper scheme that freed up money for other uses. There should still be time for some basic means testing: Northern Ireland’s electricity industry operates a unique “zero disconnection” policy, which gives firms good information on who is already struggling to pay their bills.

The cynical explanation for universal Covid vouchers was that politicians could not face the complaints of everyone who missed out. That tight-fisted begrudgery undoubtedly exists in our culture. Devolutionary accounting was another factor: extra funding was made available from London, which Stormont tends to see as “free money” to be shovelled out as quickly as possible. When Stormont is spending its own money it is more careful. In March, it gave a £200 energy payment to all households on benefits, at a cost of £55 million.

Sinn Féin says £400 million is now stuck in the budget because there is no DUP first minister. While other parties dispute this figure, there should be enough to give meaningful help to those who need it.

Developing a braver policy than handouts for all is not just a question of getting through this winter, or of restoring devolution.

“The next five to 10 winters will be difficult ... throughout Europe,” Belgium’s prime minister, Alexander De Croo, warned on Monday. Cost-of-living payments are here to stay.