Corporation tax in jeopardy as Sinn Fein issues a shopping list, including Irish Language Act
Sinn Fein has set out a list of demands - ranging from millions of pounds in Stormont funding to an Irish Language Act - it wants to see movement on before signing off on any deal on welfare reform and the budget.
Progress on the two disputed financial issues - which have seen the DUP and Sinn Fein at loggerheads - is the key to unlocking the powers for Stormont to set corporation tax, the Chancellor said on Wednesday.
But with an effective negotiation deadline of Christmas looming, Sinn Fein has indicated that it is not willing to move without major concessions over the block grant - the money allocated to Northern Ireland by the Treasury.
A party source said: "We are looking for an end to the assault on the block grant and we are looking for a financial package.
"The whole lack of finance is at the heart of the difficulties we are facing now. In our view you can't keep taking money out of the block grant, capping it and then saying: 'By the way, we also want you to grind the poor into the ground'."
Conor Murphy, a leading Sinn Fein negotiator, said London had "stripped more than £1bn from the Executive's block grant with year-on-year reductions over the past four years".
"This attack on public services and the Executive's finances is at the heart of the difficulties and challenges currently facing the Executive. This has been compounded by its demand for the imposition of welfare cuts on the most vulnerable people in our society," he said.
The Newry and Armagh MP also listed a series of issues he said the Government must address.
"It has failed to implement commitments such as Acht na Gaeilge (an Irish Language Act), the Civic Forum, an all-island Consultative Forum, North South implementation bodies and a Bill of Rights," he said. "The British Government has also refused to address its role and responsibilities in dealing with the legacy of the past."
Gregory Campbell of the DUP recently dismissed the demands as a "wish-list" and said his party would treat it as "toilet paper".
Talks will continue next week and if there is a chance of a breakthrough, Prime Minister David Cameron, Taoiseach Enda Kenny and new US envoy Gary Hart could be back before Christmas.
Secretary of State Theresa Villiers said "between now and the end of the year is the crunch time in these discussions. Beyond that it is very hard to be confident that we will get the Bill on devolving welfare through before the general election on May 7".
The £1bn figure quoted by Mr Murphy is agreed by the DUP, which is also pressurising the Government for more money.
Under EU rules, a devolved region must pay for any reductions it makes to national taxation. It cannot be subsidised by central government. That means if the Executive were to lower corporation tax from 21% to match the 12.5% charged by the Republic, it would lose £300m a year from the Treasury's block grant. The hope is that lowering the tax will encourage investment worth more than is lost. Sinn Fein believes it is possible to get allowances and other payments increased.