Belfast Telegraph

Wednesday 20 August 2014

DebateNI home of Northern Ireland politics

Stormont Executive's welfare crisis is very real

Simon Hamilton MLA is Minister of Finance
Simon Hamilton MLA is Minister of Finance

It was with some astonishment that I read the article entitled 'Welfare row cash crisis fears eased by Treasury' (July 15).

Your readers will be well-aware of the difficult financial position the Executive finds itself in as a consequence of Sinn Fein's inability to display leadership on the issue of welfare reform.

However, they deserve to be presented with accurate, timely information. The headline misleadingly created some hope that HM Government may be intervening to allow the Executive to circumvent its responsibilities on welfare reform.

The article implies that the Budget Exchange Scheme (BES) that applies to the UK devolved administrations is new and that it allows the Executive to carry forward funds from the 2013-14 financial year to address the welfare reform penalty in this financial year of £87m (not the £80m quoted).

BES, which has been in existence for two years, allows routine carry-forward of current and capital underspend up to certain limits if it accrues in the previous financial year.

Unfortunately, the tightening public expenditure position last year means the Northern Ireland Budget will not have anything like the sums permitted for carry-forward available in this 2014-15 financial year.

The creation of BES is in no way linked to our ongoing problem with the increasingly punitive welfare reform penalties being levied by HM Government.

The article also alludes to a £114m penalty, but does not make clear that this relates to the following 2015-16 financial year. The article does not make any reference to the fact that the quantum of penalties will increase over time, as will other costs such as having to create bespoke Northern Ireland welfare IT systems.

The Executive faces significant challenges to public expenditure levels now and in the months ahead.

Presenting stark headlines will not assist your readers in gaining an accurate understanding of the dilemma confronting Executive ministers.

Simon Hamilton MLA is Minister of Finance

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