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Budget proposal is 'real' - Foster

Published 09/06/2015

Finance Minister Arlene Foster's proposal has been dubbed both a
Finance Minister Arlene Foster's proposal has been dubbed both a "fantasy" and "phantom" budget

Stormont's Finance minister has rejected the characterisation of her proposals for a partially unfunded budget as a "fantasy" spending plan.

Arlene Foster insisted her budget was "real", as it was based on money that will be available if the troubled Stormont House Agreement political deal is implemented.

Mrs Foster's proposal has been dubbed both a "fantasy" and "phantom" budget because it factors in around £600 million the Executive currently does not have.

That sum would only materialise if a crisis over welfare reform is resolved to enable December's Stormont House deal to be rolled out.

Sinn Fein and the SDLP backed the Stormont House Agreement but subsequently vetoed the element of the deal that committed the Executive to implement the UK Government's welfare reforms.

During Assembly question time, Mrs Foster today referred to the critical labels some had attached to her budget plan.

But she added: "As regards the budget I believe it is a real budget and I say that because the budget was agreed on figures that were agreed back on December 23 under the Stormont House Agreement. That's the process under which I am bringing this budget forward on."

The Stormont crisis has pushed the five-party mandatory coalition Executive toward the edge of a financial cliff.

If the budget does not complete its legislative passage by the end of July, a senior civil servant will take over control of Stormont's purse strings - a move that could well trigger the collapse of the power-sharing administration.

By itself, the DUP's unfunded budget would not bring a resolution to the deadlock any closer, but it would start the required budget legislative process and thus push a potential tipping point a few more weeks down the line.

Stability could only be achieved with the implementation of the Stormont House Agreement and that will only happen if the welfare row is resolved.

Mrs Foster said if the Sinn Fein and the SDLP do not change their position then the Government has to intervene to push through the welfare reforms above the head of the Assembly.

"The budget I am bringing forward is a budget that is based on the full implementation of the Stormont House Agreement," she said.

"Therefore those people who are not standing by the Stormont House Agreement have to look at themselves and ask themselves why they are not standing by the commitments in the Stormont House Agreements because to do otherwise will cause grave difficulties to public services in Northern Ireland.

"There are two choices if the budget goes ahead - either the Government will have to implement welfare reform or those who have turned their face against welfare reform will have to deal with it - those are the choices ahead of us."

Sinn Fein has not ruled out the DUP's budget plan, but has made clear that Government intervention on welfare would be "unacceptable".

Mrs Foster said the Executive finances had been further squeezed by Chancellor George Osborne announcement last week of a further £3 billion of in-year cuts in the UK. She said Northern Ireland would lose £38 million as a consequence of that move.

The defeat of the Welfare Reform Bill in the Assembly last month, due to the Sinn Fein/SDLP veto, has endangered other political and economic developments that hinge on the implementation of the agreement, such as the devolution of corporation tax powers, access to £2 billion of increased borrowing powers from the Treasury, a major civil service redundancy scheme and new structures to address the legacy of the Troubles.

Today Mrs Foster said around 1,200 civil servants who have received a conditional offer to exit through the redundancy scheme in September will not know their fate until the budget impasse is resolved.

The future of power-sharing essentially hangs on the fate of the Stormont House Agreement, with the failure to implement it having left the Executive facing a funding gap of hundreds of millions of pounds this financial year.

It is estimated the Executive will lose out on £604 million this year if the agreement is not introduced.

The sum accounts for direct contributions from the Government; more ability to access Treasury borrowing; and enhanced budgetary flexibility to pay off both £114 million in penalties for non-implementation of welfare and a £100 million emergency loan secured from the Treasury last year.

Much of the £604 million does not directly have an impact on current spending on front line services - as it is money only available to roll out specific elements of the Stormont House deal, such as the legacy initiatives and the civil service exit scheme.

However, a significant proportion will put pressure on the Executive's core budget.

If a senior finance department civil servant is forced to step in at the end of July, that individual will be subject to tighter spending restraints than Executive ministers, which will mean even more funding will be cut from public services. The DUP estimate a total of £2.8 billion will be slashed if that scenario plays out, though Sinn Fein claim the amount is much smaller.

Mrs Foster has circulated her spending plan to colleagues in the Executive and will table it before the Assembly on Tuesday.

Next week she will also ask her Stormont scrutiny committee to grant her Bill "accelerated passage" through the Assembly.

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