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Budget bid clears crucial hurdle

Published 15/06/2015

Arlene Foster is determined to drive through the Budget
Arlene Foster is determined to drive through the Budget

A budget plan that commits the Stormont Executive to a £600 million overspend has cleared a crucial Assembly hurdle.

Finance Minister Arlene Foster secured backing to draw down Treasury funds for a spending plan some have dubbed a "fantasy" budget.

The backing of Sinn Fein was crucial to passing the unusual legislative move.

The Executive struck a budget in January but the Assembly must vote twice a year to secure the legal authority to spend the money.

The first vote, in January, released 45% of the budget and Mrs Foster is currently seeking Assembly backing for the remaining 55%.

But since the start of the year the Executive's financial health has deteriorated markedly, leaving its resources sitting around £600 million short of what was anticipated at this point in the year.

The black hole is in large part due to the failure to implement the landmark Stormont House Agreement and the financial commitments made within it.

Mrs Foster today secured a "supply resolution" to enable money to continue to be drawn down from the Northern Ireland Consolidated Fund, which is essentially the Executive's Treasury-funded bank account.

Tomorrow she will table a "budget Bill" in a bid to secure approval for spending that money by Executive departments. There will not be a substantive debate on that bill until next week.

If the Assembly does not back the budget then a senior civil servant would be forced to take over financial control of spending at the end of next month - an extraordinary move that could well a strike a fatal blow to the stumbling power-sharing Executive.

The majority of the shortfall - £350 million - is due to the failure by local politicians to implement December's Stormont House Agreement - a stalemate caused by Sinn Fein's refusal to introduce the UK government's welfare reforms in Northern Ireland.

The remaining £250 million relates to other departmental budgetary pressures that have emerged since the budget was first struck in January.

Mrs Foster is seeking approval for a budget spend that does not factor in these funding black holes in the hope that a resolution to the welfare deadlock can be found later in the financial year, and that in-year budget management can absorb the impact of the remaining £250 million.

During a lengthy Assembly debate, the minister stressed the importance of finding a way through the welfare wrangle. The DUP wants the Government to step in and implement welfare reforms over the head of the Assembly if Sinn Fein does not change its tune. The Government has insisted such a step, which runs the risk of Sinn Fein walking away and collapsing the Executive, remains very much a "last resort".

"This Budget Bill is predicated on the Executive's already agreed 2015-16 Budget which requires all parties to honour commitments made in the Stormont House Agreement," Mrs Foster told the Assembly.

"Progressing this Bill ensures that our public services continue to be funded through this financial year."

She added: "Failure to agree these spending plans would put the delivery of our public services at significant risk."

The 2015/16 budget was shaped at the start of the year when the Stormont House deal between the British and Irish governments and the five Executive parties was still on track.

Since then the welfare element of the accord has been stymied by a Sinn Fein/SDLP veto - a logjam that has put the rest of the measures contained in the deal on hold.

If the budget spend is approved but there is no resolution to the Stormont House Agreement impasse, the Executive's coffers will effectively run dry well before the end of the financial year next March.

While backing today's supply resolution, Sinn Fein did not indicate it was about to change stance on the welfare issue.

In their contributions to the debate, Sinn Fein speakers repeatedly pointed the finger of blame for the Executive's current financial situation squarely at the Conservative government in London.

Sinn Fein's Daithi McKay said: "As MLAs, we have to ask ourselves whether we are here to stand up for people, local communities and local businesses, or to act as puppets for a Tory administration who cut budgets so deep that the Executive cannot effectively function."

An amendment from Jim Allister, leader of non-Executive party Traditional Unionist Voice, calling for the budget to reflect the £600 million shortfall was defeated.

"The purpose of this amendment is to show what a balanced budget would look like in the context of the folly of negating welfare reform," he told MLAs.

"The House should be facing up to that folly, rather than pandering to, and practising, the economics of fantasy."

The Alliance Party's Stephen Farry said the issue of welfare reform might be "thorny and difficult" but it was "inescapable".

He said backing Mrs Foster's plan was the "least irresponsible" option in the current crisis.

"Obviously we wouldn't wish to start from this particular place," he said.

"But I suppose the least irresponsible thing to do is to proceed on and ensure we have some sort of legal framework in place around money.

"We have a duty to ensure the money doesn't run out."

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