The Dirty Road To Dublin

September 3, 2014 — Leave a comment

Unionists used to talk about the “dirty road to Dublin”. It was both political metaphor and motoring fact. The actual road between the two cities was a complete stinker, particularly on the southern side.

For those of us who grew up with lengthy and frustrating battles through every fume-filled bottleneck from Newry to Balbriggan, the easy sweep from the Lagan to the Liffey these days remains a pleasant surprise no matter how frequent the trip.

During the Troubles, the roads in Northern Ireland were one of the few things we northerners could boast about. When they weren’t blocked by bomb attacks or security checks our roads were remarkably good compared to the south.

I remember writing a piece for the Irish News in the 1990s which highlighted the investment the Dublin government was planning to put into roads in the Republic. The story included a quote from a leading business organisation warning that before long roads in the south would be better than those in the north.

The very suggestion provoked outrage and was a lively topic of discussion on the airwaves that day. Never, never, never…surely not?

This week the Wall Street Journal published a chart listing the “cheapest countries to fly 100 kilometres on average”. India was the cheapest. But Ireland made it into the top 20 – just below Germany but considerably cheaper than the UK.

The added cost in the UK is probably a result of air passenger tax which no longer exists in the Republic but adds £13 per economy passenger on short-haul routes from the UK and up to £97 on long-haul.

The Irish boss of British Airways, Willie Walsh, warned recently that the tax was damaging the Northern Ireland economy. He’s right. Why pay tax in Belfast when a short drive to Dublin can offer a cheaper alternative?

The damage to the Northern Ireland economy was recognised whenever Westminster rushed through legislation that devolved power over the tax to Stormont. It allowed the Executive to cut the long-haul rate in return for repaying the lost tax to the Treasury out of Stormont’s own budget.

That effectively allowed Stormont to subsidise Northern Ireland’s only long-haul route – a daily connection by United to Newark – at an annual cost of up to £5 million. But so far the extra incentive hasn’t been enough to persuade any new operators to set up, nor has it been enough to prevent United dropping its service during the quiet months.

Stormont doesn’t want to spend the extra to reduce the tax to zero, nor can it afford to apply similar concessions to short-haul flights. So Dublin will continue to win business at Belfast’s expense.

To quote Willie Walsh: “I speak to airline chief executives around the world and when I ask them about starting new routes to Northern Ireland, they are not interested because of the tax issue.”

Fewer direct air links means fewer tourists arriving and less business travel and trade. The only way the north can grow its tourist economy is by persuading those that land in Dublin to turn left rather than right when they reach the airport exit. But that’s not happening.

The south is enjoying a tourism boom while the north continues to lag behind. Selling Ireland abroad is the responsibility of Tourism Ireland for both north and south. The all-island arrangement predates the Good Friday Agreement. It makes sense, but it has never been an easy relationship.

The departing boss of the Northern Ireland Tourist Board believes he’s being short-changed. Alan Clarke told the Irish Times that the north funds around one third of the all-island budget but only gets around one tenth of the tourists. He has always argued for a more distinctive message for the British audience.

But perhaps his analysis misses some more fundamental problems that may explain the problem.
It may simply be the case that it costs a lot more to persuade a tourist to Northern Ireland than to the Republic: Titanic Belfast and the Giants Causeway are great draws, but street riots and sectarian strife are not.

The lack of direct connections into Belfast is a major problem because having arrived in the Republic, it’s simply easier to stay there. Changing currencies is a minor hassle nowadays, but it’s also a psychological barrier.

That lack of direct connection is not Tourism Ireland’s fault, but the Westminster government’s. Stormont can’t afford to offset the entire cost of air passenger duty, but in order to compete and grow the economy it should be scrapped. It’s not just a tax on tourism and trade, but on economic activity within the UK.

Effectively, Northern Ireland’s citizens are being punished for being separated from the rest of the UK by the Irish Sea. As Labour MP Kate Hoey suggested, the Treasury ministers and officials should try taking the ferry to Larne next time they’re travelling to see what its like if you can’t afford the tax.

Meanwhile, the Republic has taken other strategic measures to boost tourism – notably a healthy reduction in the VAT rate to 9%. Many in the industry credit that as the key factor in driving numbers up. As someone who has holidayed recently in the West and dined out in Dublin, I can happily vouch for the fact that competitiveness has returned. Northern Ireland is too expensive, because here the industry must compete with a 20% rate of VAT.

When you analyse the economic story, and tourism is representative of the wider tale, you see the Republic making strategic investments and tailoring its taxes to suit its medium and long-term economic objectives while Northern Ireland is unable to tackle fundamental problems because of a lack of power and an unwillingness to make some tough choices.

This week, Nancy Soderberg, a key player in President Clinton’s administration and former US ambassador to the UN, slammed the “abysmal lack of leadership” from the north’s politicians in recent years – obsessed with culture and the past, neglecting the economy and the future.
The “dirty road to Dublin” remains a potent political metaphor, but it’s a old myth and a dangerous one which leaves Northern Ireland in the slow lane.

Article first appeared in The Sunday Business Post on Sunday 31st August 2014

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