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Stormont crisis: Senior civil servant to take hold of Northern Ireland's purse strings for first time

Control of devolved spending at Stormont will be handed to senior civil servant David Sterling for the first time on Wednesday.

The unprecedented move has been forced by the lack of powersharing executive or agreed budget at the turn of the new financial year.

Mr Sterling, the permanent secretary of the Department of Finance, will take hold of the purse strings until such time as an executive is formed or the UK government intervenes.

While there is a limit on how much he can spend - 75% of last year's budget total for the first four months and 95% thereafter - significant cuts to public services would only be required if the political crisis stretches beyond Christmas.

It is highly unlikely things will ever get to that point, as the UK government has indicated it will step in, at least to legislate for a budget, even if local politicians fail to establish a new administration.

The setting of a budget means 100% of Northern Ireland's annual funding allocation can be spent by departments.

Mr Sterling said: "The powers available are simply an interim measure designed to ensure that services are maintained until such times as a budget is agreed and a Budget Act passed.

"At which point departments will have access to the full level of funding available."

Addressing the Commons on Tuesday, Northern Ireland Secretary James Brokenshire said if there was no agreement by Easter he would move to "provide further assurance" around the region's budget.

Mr Brokenshire's officials at the Northern Ireland Office are in daily contact with their Stormont counterparts to assess the financial picture.

Legislating for a budget at Westminster would not require the full introduction of direct rule, but it would certainly be another step in that direction.

In the meantime, Stormont officials have a scenario planned for the next four months. The Finance Department will issue letters to other departments on Wednesday advising them of spending control targets.

Mr Sterling said the arrangements were "not a substitute for a budget agreed by an executive".

"Indeed we are very clear that the prioritisation and allocation of financial resources is a matter for ministers," he added.

Departments will not be able to undertake any new initiatives in the weeks ahead, rather maintain services at current levels.

All, with the exception of health, will be urged to be prudent in this interim period when Mr Sterling is at the helm.

Health will be given more latitude to spend as officials envisage a budget, when it is finally struck, would incorporate an uplift for that department.

Departments will write to all government-funded groups in the community and voluntary sector by the end of this week advising them that money will continue to flow during the period without a budget.

Farmers will also receive their Common Agricultural Payments (CAP) as usual.

Annual rates bills to pay for services provided by local councils will be delayed.

But as Mr Brokenshire has made an explicit commitment to legislate for rates if no local administration is in place by Easter the only real impact will be a month delay on the 800,000 bills.

Spending on already commenced capital projects will continue as planned, as will work on the last executive's previously agreed flagship infrastructure builds.

If the interim financial arrangements only last for a month or two, officials do not anticipate any major issues - effectively the only difference will be how departmental money is drawn down.

But the longer departments run without ministers to make policy-based spending decisions the more problematic it will become, underscoring the need for a budget sooner rather than later.

Mr Brokenshire's stance indicates it will be sooner. The coming weeks will determine whether it will be him or local politicians that pass it.

Q & A

Q. Are public services in Northern Ireland going to run out of money?

A. Ministers have not met as an Executive since mid-winter and major decisions about funding projects like compensation for child victims of institutional abuse have been left in abeyance.

No budget or Programme for Government has been set to govern public spending during the financial year, which begins next month.

The PSNI is anticipating a near £20m cut in the force's budget because of the political crisis.

The senior civil servant in Northern Ireland's Finance Department will take over responsibility for allocating money on Wednesday as part of a fail-safe mechanism.

David Sterling will have responsibility for a sum equivalent to 75% of this year's budget until July.

If the political impasse goes on and ministers are not appointed before the end of July, he will have access to a total equivalent to 95% of this year's spending packet.

Stormont's main annual budget for day-to-day spending in 2016-17 was worth just under £10bn.

Most of that comes in the form of a block grant from Westminster, linked to the amount available for spending in the whole of the UK.

The money which Mr Sterling allocates will be intended to provide a degree of certainty to departments about their spending plans.

It will be concentrated on existing services and no major new initiative is expected.

Q. Who is the man who will have his hands on the purse-strings?

A. Mr Sterling is a hugely experienced civil servant with a background in finance stretching back to the turn of the century.

The married father-of-two (59) has been responsible for co-ordinating public expenditure planning across the Northern Ireland departments.

He has had oversight of a range of prestige projects including the development of the Titanic Belfast visitor centre, the hosting of the 2012 Irish Open Golf Championship and the 2014 Grande Partenza of the Giro d'Italia cycling race.

In 2013 he chaired the ministerial Executive's G8 summit steering group for hosting the world's most powerful leaders.

Q. So, he will ensure everything will just go on as normal?

A. Groups delivering services on the ground remain deeply uncertain.

Remember, inflation is eating away at the value of this year's budget settlement and the total needed to increase just to stand still in real terms. The population is ageing and the health service coming under increasing pressure.

A recent survey of voluntary groups which receive funding from Stormont suggested nine out of 10 had received, or believed they were at risk of, cuts.

In the health sector, many GPs have signed undated resignation letters from the NHS over what they believe are funding shortfalls and are considering charging patients for care.

A British Medical Association (BMA) doctor has said she cannot recruit sufficient staff to help alleviate a relentless increase in workload.

In education, teachers have taken strike action over pay, job security and workload.

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