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Phantom budget only option to save Stormont, insists DUP's Arlene Foster

By Noel McAdam

Published 08/06/2015

Finance Minister Arlene Foster will present her budget on Thursday
Finance Minister Arlene Foster will present her budget on Thursday

A 'phantom budget' being put to the Executive this week appears to be the "only option" to keep Stormont on track, Finance Minister Arlene Foster has warned.

An ongoing impasse over introducing welfare reforms has pushed the five-party coalition Executive toward the edge of a financial precipice.

The DUP minister said none of the other four Executive parties has produced any viable alternatives - and time is running out.

Agreement would get ministers over the legislative hurdle of passing a budget, buying time for departments that would otherwise face further stringent cuts.

The future of power-sharing essentially hangs on the fate of the agreement - with the failure to implement it having left the Executive facing a reputed £604m funding gap for this financial year.

The 'phantom' budget is, however, based on the assumption that the Executive has reached a deal on welfare reform and therefore will not factor in the massive shortfall.

But in fact the long-running impasse still remains - with few signs that it will be resolved in the near future.

The Executive meeting on Thursday should, however, point the way to more intensive negotiations on the benefits changes or allow Stormont to limp on as at present, with deadlines for the budget and a June redistribution of unspent cash looming.

There are also growing indications that the London and Dublin governments may become more formally involved again, as they did in the run-up to the Stormont House Agreement (SHA) in December.

Taoiseach Enda Kenny has said he will bring up the welfare crisis when he meets with David Cameron the week after next.

Mrs Foster, however, said: "It has been left to us (the DUP) to come up with a solution. No one else has come up with a solution and we have to move ahead.

"But all of it is predicated on welfare reform being dealt with. It has to be dealt with at some point and Sinn Fein and the SDLP know that."

She said the main advantage of the 'phantom' budget was that it would help the Executive get back to the point where the SHA was being implemented.

The DUP hopes the initiative will either push Sinn Fein and the SDLP to think again on welfare, or prompt the UK Government to intervene directly, potentially to implement welfare over the heads of the Assembly.

Secretary of State Theresa Villiers has given broad support to the DUP's plan, devised by First Minister Peter Robinson, although she has also said that London would oppose taking back responsibility for welfare.

The DUP leader, himself a former Finance Minister, had urged the other parties to come up with their own proposals.

Mrs Foster said: "We asked the other parties. Nothing happened. This is really the only option available to us."

There was no immediate response, however, to Ulster Unionist leader Mike Nesbitt's demand for papers on what appeared to be a potential deal over welfare at the end of March to be released.

Treasury penalties for non-implementation of welfare reforms, currently running at just under £10m per month, and inability to access the funds to pay for the already established redundancy scheme in part explain the black hole in the budget.

If Executive ministers fail to set an agreed budget to implement the multi-million pound cuts in the second half of the financial year then a senior civil servant will be forced to take over departmental purse strings at the end of July.

But 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 estimates a total of £2.8bn will be cut if that scenario plays out, though Sinn Fein claims the amount is much smaller.

Meanwhile, Deputy First Minister Martin McGuinness said both Sinn Fein and the DUP agreed a deal with former Prime Minister Tony Blair that there would be a "peace dividend" up until 2018.

"As far as I'm concerned the cuts foisted on our Executive now are a rescindment of that commitment by this British Government," he said at the North South Ministerial Council last Friday.

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