Belfast Telegraph

Robinson warns on welfare reform

Northern Ireland's first minister has warned that a political dispute which could lead to £1 billion being cut off the public spending budget is capable of bringing the devolved administration down.

Peter Robinson said it was imperative a solution was found to the welfare reform disagreement between his Democratic Unionists and Sinn Fein before fines imposed by the Treasury take effect.

The Chancellor's department pays about £10 billion a year to prop up public services in Northern Ireland.

Stormont's five-party coalition has been beset by division over dealing with controversial parades, flags and the legacy of the conflict. But Mr Robinson said republicans' refusal to introduce Tory-led welfare cuts and the potential for fines was the most pressing concern.

He said: "It is absolutely imperative that we deal with the matters that are capable of bringing this assembly and (ministerial) executive down.

"We simply cannot tolerate a set of circumstances where £1 billion is to be taken off our budget."

Sinn Fein Deputy First Minister Martin McGuinness has said he expected wide-ranging negotiations involving the British and Irish governments would take place soon. He supported a reduction in the size of the assembly to show politicians are prepared to accept part of the pain caused by budget cuts.

Mr Robinson has said the mandatory coalition led by the Democratic Unionists and Sinn Fein was no longer fit for purpose.

In a dramatic intervention, the DUP leader called for a second take on the 2006 St Andrews Agreement that paved the way for the return of devolution in May 2007, when Ian Paisley and Mr McGuinness became first and deputy first ministers.

Mr Robinson said the St Andrews Agreement - which included an elaborate system of checks, allowed one party to block changes and provided no significant opposition - was only a short-term solution and called for renewed negotiations involving the British Government as well as smaller parties not currently on the five-party Executive.

He said issues like flags, parades and the past were not as capable of endangering the institutions but a reduction of over £1 billion a year over welfare reform out of a total of £10 billion could not be done.

"If people want to bury their heads in the sand, if they want to be in denial about these matters, if they want to fool themselves that somehow things could be different if there was another government at Westminster, or indeed that somehow they can put pressure on the present coalition to change course, they are heading for a set of circumstances which will ensure that the most vulnerable people in our society are going to be worst hit because the very health service, education system, the justice system, all of the other elements of government that they need most will not be available to them without very considerable reductions to the service."

Northern Ireland Secretary Theresa Villiers has been engaged in political meetings on the back of Mr Robinson's suggestions, discussing the potential for new party talks. She is also keen on a resumption of negotiations on dealing with peace process issues which broke down at the end of last year.

Northern Ireland is pressing for devolution of power to vary the levy imposed on businesses known as the corporation tax.

On prospects for wider devolution of tax-raising powers, Mr Robinson envisaged some being more difficult to operate than others.

He said stamp duty on house sales could be devolved with little difficulty and was doable but would not transform the economy in Northern Ireland while a small cost could be attached to it by Treasury.

The First Minister added: "If VAT was to be considered, there would be some very major EU difficulties in Northern Ireland being given those powers but even if it was being devolved around the UK, there would be very considerable costs.

"Although on the one side it would allow you to work with hotels, restaurants and other tourist-led functions and reduce VAT so that you could increase that element of your economy, levers you could use if you had VAT control, I don't think we would get it because of Europe and I think there would be a cost in us exercising it."

One of Northern Ireland's main competitors for tourists is the Irish Republic. In 2011 the Irish Government announced a 4.5% cut in VAT on tourism-related goods and services to 9% to promote employment.

The Northern Ireland Hotel Federation claims the Treasury would be £4 billion better off by 2020 if tourism VAT was cut to 5%. The current rate is 20%.

Mr Robinson said devolving power to set the level of income tax or national insurance contributions would also cause considerable difficulty and significant cost .

"This is no panacea, there are problems that need to be thoroughly investigated and I am glad that the Department for Finance and Personnel is already preparing papers on each of those elements."

The Ulster Unionist Party brought forward a Stormont motion calling for replacement of the budget.

Leader Mike Nesbitt said: "This budget has so many holes it is fatally flawed... the budget does not add up."

Sinn Fein MLA Daithi McKay said the Ulster Unionist proposal did not make any sense and called on the parties to unite the way the Scottish administration did.

Justice minister David Ford said there would be particular challenges for the police service, which receives the largest share of his budget.

"I will work with the chief constable to minimise the impact of the cuts and will also continue to argue for due recognition of the importance of appropriate funding for policing.

"Without urgent additional funding, these in-year cuts will need to be made immediately, and further cuts will obviously increase the risk to public safety, a situation that cannot be supported."

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