Matthew O'Toole quizzes Dr. Esmond Birnie on £850m Protocol cost figure

Economist Dr. Esmond Birnie has been questioned by SDLP MLA Matthew O'Toole on the scale of the 'opportunity-cost' of the Protocol.
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Dr. Birnie in an article published in the Belfast Newsletter last August suggested there was an estimated annual cost of about £850m as a result of the Protocol across the public and private sectors.

At a briefing of the Finance Committee Mr. O'Toole quizzed Dr. Birnie on the figure.

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"Your initial analysis in the 'News Letter' last August mentioned UK public expenditure of £560 million and added that figure to the £850 million that has been quoted regularly.

Debate on cost of Protocol.Debate on cost of Protocol.
Debate on cost of Protocol.

"The figure has been used by the Member of Parliament for Lagan Valley [Jeffrey Donaldson] and that is a testament to your impact. According to that analysis, the £560 million is a cost to the Northern Ireland economy.

"Have you brought that analysis to the Fiscal Council and suggested that it be factored into, for example, 'The public finances in Northern Ireland: a comprehensive guide'? Is it something that you are willing for the Fiscal Council to look at?" asked the South Belfast MLA.

Dr. Birnie replied: "It is not directly relevant to the question of the balance of the Executive's Budget. There is a dedicated amount of money passing from the UK Government to the Northern Ireland Executive to handle Brexit plus the protocol arrangements.

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"It is a ballpark figure of £30 million per annum. That is largely the cost of the vet checks and so on. What you are referring to, Mr O'Toole, is over two years. You therefore divide the figure by two, and it is approximately £250 million, which is UK Government spending.

"As an economist, I would say, 'Look, there is an opportunity-cost problem here. This is funding that cannot be spent in other ways'. Whether the funding would have been spent in Northern Ireland or Great Britain, I do not know. At a certain level, it does not matter: there is an opportunity cost."

Mr. O'Toole asked Dr. Birnie if it would be 'true to say that, in order to arrive at an analytical position about either the cost of the protocol or the overall cost of Brexit, you would also have to factor in, for example, lost EU funding and, indeed, reduced EU trade'.

Dr. Birnie responded: "If you were doing an overall analysis of Brexit, yes, of course. We have dealt with this offline, Mr O'Toole. I strongly recommend that you look at the Fraser of Allander Institute (FAI) has done a general equilibrium mathematical forecasting model. As always, it has made assumptions and produced results."

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Mr. O'Toole said: "I do not think that anyone would seriously say that there are no costs associated with moving goods now from Great Britain to Northern Ireland, along with a huge range of other additional costs, including lack of EU labour etc. The only point that I will make, and I am sure that you will agree, is that, in comparing the costs of the protocol, it is difficult to compare it with a no-Brexit situation, which is what a lot of the analysis does."