What price DUP support?
Some initial thoughts on what the DUP might want (in financial terms) to support a Conservative government
“There are going to be some shiny new motorways, schools and hospitals in Northern Ireland.”
That was the verdict of George Osborne’s former advisor, Rupert Harrison, as it became clear that the Conservatives are likely to need DUP support to form a government.
But what price could the DUP extract?
One demand could be that EU funds which will be lost as a result of Brexit are replaced in full.
Northern Ireland agriculture benefits from around £350m a year in EU agricultural subsidies.
There are additional payments under the Peace and Interreg programmes which are aimed at community development and cross border projects.
These programmes are due to spend about £400m in the period between 2016 and 2020.
In August last year Northern Ireland’s then First and Deputy First Ministers wrote to Theresa May warning that “the absence of EU programmes in the future is of real concern to a range of sectors.”
The DUP may also want money for the Northern Ireland Investment Fund.
It is essentially a public/ private infrastructure fund which was first proposed by the then DUP Finance Minister Simon Hamilton in 2014.
It was hoped that the European Investment Bank (EIB) would help seed the fund, but after Brexit the EIB stepped back.
There is also the issue of corporation tax devolution.
The main parties in Northern Ireland want to devolve the tax and then cut the rate to 12.5% (compared to the current UK rate of 19%.)
That cut in the rate will mean less revenue is collected for the Treasury.
EU rules mean the NI Executive would have to make up the shortfall through a cut in the block grant it receives from Westminster.
The Treasury wants to continue that principle even after the UK has left the EU, which is likely to mean a cost to Stormont of at least £100m a year.
The DUP could use its leverage to get the Treasury to significantly reduce that cost.