UK bid to reach Ulster deal fails
The future of Northern Ireland's stumbling power-sharing Executive has been left mired in uncertainty after a failed bid by UK leader David Cameron to resolve a series of major disputes.
The British Prime Minister left Belfast without reaching the agreement he had hoped for when he arrived to join cross-party talks on Thursday.
During a long night of negotiations at Stormont House, Mr Cameron and Taoiseach Enda Kenny tabled a range of proposed solutions on vexed wrangles on flags; parades; the legacy of the past; reform of the Assembly; and the Executive's serious budget crisis.
The Prime Minister offered Northern Ireland what he described as £1 billion (1.2 billion euro) of increased spending power over six years, conditional on an agreement being struck on the swathe of logjams destabilising the administration.
But the region's politicians failed to sign up to the document and rejected the financial offer as not credible, raising the looming spectre of a possible collapse of the institutions and a return to direct rule.
While many of the issues on the agenda of the talks are peace process logjams that have rumbled on for years, the budgetary problems, in particular the impasse over the non-implementation of the UK Government's welfare reforms due to Sinn Fein opposition, pose an immediate threat to the institutions.
Ministers in Belfast have already had to ask for an emergency £100 million (126 million euro) loan from the UK Treasury to balance their books this financial year, and if a deal on welfare reform is not agreed they will face about £200 million (252 million euro) of Government penalties for non-implementation
As it is unlikely the five-party administration would be able to absorb such a financial burden, the future of the Executive effectively depends on a resolution to the welfare reform issue.
Many of the politicians have conceded that Christmas is an effective deadline for resolution, as positions will undoubtedly harden as the UK general election looms in the new year.
Mr Cameron insisted the financial package on offer would give new "financial firepower" to the Executive.
But he warned: "If there isn't an agreement, then that financial firepower isn't there."
The UK Prime Minister said "intensive work" needed to be done to ensure the Executive's budget was sustainable.
"I think a deal is possible. It's possible because I think the parties have done a lot of good work on the issues that need to be settled - the issue of how to manage parades, how to handle the past, the issues of flying flags.
"The real work that still needs to be done is to make sure that the budget of the Northern Ireland Executive is sustainable and works, so intensive work needs to be done between the parties on that issue."
Regarding his offer of £1 billion of spending power, Mr Cameron said a "comprehensive agreement" was needed to release it, rather than "simply some words about these issues".
Stormont's First Minister Peter Robinson and Deputy First Minister Martin McGuinness both questioned the credibility of Mr Cameron's offer, insisting hardly any new money was on the table.
It is understood the majority of the Government's proposed financial package relates to extending greater flexibility to the Executive to draw down and borrow funds.
Democratic Unionist leader Mr Robinson said the offer had to be improved.
"In terms of the package from the Prime Minister I don't think it was adequate," he said. "I think if he wants to bribe us, to bribe us with our own money comes a bit short of what's required."
Sinn Fein veteran Mr McGuinness said: "Whatever you have been told by the British Prime Minister David Cameron, there was no credible financial package offered to the Executive ministers to allow us to combat the austerity agenda that this British government has been inflicting on us over the course of the last four and half years."
Mr McGuinness said he did not want to see the institutions collapse.
"We don't want Stormont to crash, we want these institutions to continue," he said.
While critical of Mr Cameron's offer, Mr Robinson also claimed the Executive had been unable to test the Prime Minister's bottom line as Sinn Fein's stance on welfare reform had undermined their negotiating position.
"I don't believe we sufficiently challenged the Prime Minister on what his bottom line was on financial issues and we did not do that because we had not ourselves been able to complete agreement on other aspects of the financial issues, namely the matter of welfare reform and I think the Prime Minister would have had more give in him if he had seen that was going to be resolved," he said.
Mr Robinson acknowledged there would be less inclination to compromise after Christmas.
But he stressed: "I don't like putting up timetables, we have a very long standing habit in Northern Ireland of flying through deadlines.
"The reality is we need to just roll up our sleeves and get down to the work and see where it takes us."
Negotiations involving the five parties continued at Stormont House after Mr Cameron and Mr Kenny departed. They are set to resume in the middle of next week.
The stakes in the talks were raised even higher earlier this month when British Chancellor George Osborne said he was willing to accede to a long-standing Stormont demand to devolve corporation tax powers - but only if progress was made in the political negotiations, particularly on the budgetary matters.
Mr Kenny said he genuinely felt agreement could still be reached.
"I have to say the document that was tabled last evening is comprehensive and does address all of the issues that have been involved here for the last period," he said.
"Politically there is not agreement on the issues that were tabled last evening, that doesn't mean politicians who are elected and have responsibility devolved to them cannot conclude on a number of these matters."
The Taoiseach added: "From the Government's point of view in Dublin, we will continue to be available, along with the British Government, to assist, to encourage, to co-operate and help in any way possible here."
It is understood Mr Cameron's financial offer is primarily based on allowing the Executive greater flexibility on how it spends money it can borrow on long terms under a process called the Reinvestment and Reform Initiative (RRI).
At present ministers can draw down money using the RRI to spend on infrastructure projects in Northern Ireland. It is understood the terms of the Government's offer would enable ministers to use RRI money to address other budgetary pressures.
The UK Government proposed deal does apparently include so-called "new" money to the tune of £10 million (12.6 million euro) a year to fund potential new mechanisms to take on investigations into historic Troubles crimes.