Belfast Telegraph

Friday 21 November 2014

Finance Minister Simon Hamilton warns of massive cuts if Northern Ireland does not agree to welfare reform ... but Sinn Fein urges him to defy Westminster

At loggerheads: Finance Minister Simon Hamilton and Sinn Fein's Alex Maskey

The Finance Minister Simon Hamilton has warned the Assembly of devastating cuts to health and education budgets if Stormont does not agree to extend welfare reform.

The Belfast Telegraph has seen a letter sent by Mr Hamilton to other ministers just over two weeks ago in which he gives the likely cost to various government departments and public bodies.

Westminster passed the controversial welfare reforms in February 2013. The Northern Ireland Executive has negotiated some amendments, but has still not passed the bill.

The cuts range from a relatively modest £100,000 cut to the Audit Office to a £68.2 million reduction in health spending.

The figures are arrived at by top slicing all budgets by 1.5%.

Health suffers most because it has the largest budget of £4.54 billion, making up just under half (47%) of our £10 billion a year block grant from Westminster.

"Whatever way you dice up £68 million of a reduction in the health budget it is vulnerable people at the end of the day who will suffer whether they are elderly people, whether they are people who are waiting for hip replacements or knee replacements, whether it is people who are getting domiciliary care.

"Whatever the service, the impact of not progressing welfare reform is that, if we get those penalties, we have to make those adjustments to the health budget and the impact will be devastating," Mr Hamilton said.

Mr Hamilton revealed the figures yesterday after receiving a letter from Danny Alexander, the Chief Secretary to the Treasury, telling him that the block grant was going to be reduced with immediate effect if we did not move to the new benefits system in line with Britain.

This means that benefit claimants would be paid as before but London will claw back any additional cost from payments they make to us.

"The letter makes it absolutely clear that the Treasury is beginning the process of restructuring the block grant now," a source close to Mr Hamilton said.

If payments from London are reduced, the Executive can decide how it meets the shortfall.

If health was ringfenced and protected against overall spending cuts, as it has been up to now, then other departments would suffer nearly twice the burden. Education is the next biggest spender and it would be expected to lose £29.2, or £58.4 million if health is protected.

Justice, which covers policing, would be another heavy loser, suffering a £16.3 million or £32.6 million cut if health were protected.

In the financial year that started on April 1 the Treasury will deduct £105 million plus £45 million for other areas where we spend proportionately more than Britain, for instance on local government reform and student loans.

If the reforms aren't introduced, Mr Hamilton argues, the cost will go up each year.

After about five years our system will become so different from the new British system that they will ask us to develop our own IT system to run it.

So far Sinn Fein has blocked the benefit changes. The DUP accuses republicans of reneging on a compromise deal agreed last summer.

It would have blunted the impact of some of the changes at reduced cost to public spending.

Yesterday Alex Maskey of Sinn Fein rejected Mr Hamilton's claims and called on him to stand up to the British government.

"This is a time when all parties should stand together and tell the British government that we will not accept taking money from those least able to afford it and driving even more people into poverty," Mr Maskey said.

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