Belfast Telegraph

Northern Ireland talks: A wasted trip for the deal that never was

Two leaders come and go, the parties are as far apart as ever... so where do we go from here?

By Liam Clarke

David Cameron came here on Thursday warning that "the credibility and effectiveness" of the devolved institution was at stake and flew out on Friday morning saying there had been no agreement. His ears were still ringing from the insults being hurled at him by John O'Dowd of Sinn Fein.

Mr O'Dowd called Mr Cameron a "penny-pinching accountant", and that probably cut short the PM's visit.

Just hours earlier, at 1.50am, Mr Cameron's team were telling journalists that "the Prime Minister and the Taoiseach presented an amended heads of agreement document to parties taking part in the talks at Stormont House; additionally the Prime Minister tabled a potential financial package to the parties for them to consider overnight."

The statement added: "The PM informed the parties he would be returning for further talks on Friday morning before departing Northern Ireland at 10am."

Call it coincidence, but once Mr O'Dowd had spoken Mr Cameron took off like a scalded cat, followed by Enda Kenny, the Taoiseach.

At 8.51am the Press were again contacted to be told that Mr Cameron and Mr Kenny would shortly be making a statement. Mr Cameron was gone shortly after nine.

Talks will continue for now, and there is a possibility of the two Prime Ministers returning next Wednesday before a European summit if a deal looks likely. Gary Hart, the US special envoy, is also willing to return before Christmas if a deal seems close.

But the mood music at Stormont is pretty poor, and if these talks fail it will mainly be the fault of the local parties.

Among them, the DUP and Sinn Fein must bear the brunt of the criticism. They are by far the biggest parties and have between them guided this process into its current mess.

Mr Cameron knows he is going into an election which may produce a hung parliament, perhaps one where three or more parties are needed to form a Government. The DUP, with eight seats at Westminster, could be very useful, so he will want to keep on the right side of it.

Mr Cameron also doesn't want to be the British Prime Minister on whose watch Stormont collapsed. He doesn't want to see us landed back onto London while a new Assembly election is conducted, probably on the same day as the general election, and then more talks. A previous suspension lasted five years.

There is still a chance for the talks to work, but we are drinking in the last chance saloon and it is easy to see what went wrong. Mr Cameron came here saying he was prepared to help but insisted the Executive must show the Government it can balance its budget.

The situation is that the Executive had built up hundreds of millions in debt. It had waived tax-raising powers to please voters. We are the only part of the UK without water charges (£270m a year) and we also have the lowest household taxes. On top of that we have failed to implement welfare reform and, from London's point of view, are overspending as a result. It is claiming back the money from our block grant, £114m so far, and now our books won't balance without a major cash injection.

Finally, we want corporation tax powers developed so that we can reduce the levy on business profits to the 12.5% charged in the Republic or lower. That will cost around £300m a year, or £40m for each percentage point needed under EU rules to cover the loss of revenue to London.

Without a plan to handle these inevitable stresses, Mr Cameron argued, it was pointless adding cash to the equation. It would quickly be spent and we would be in debt again. It is like lending money to an addict or an alcoholic; it can make matters worse unless they change their lifestyle first.

The British Government had given a few broad hints where the savings might be made. Mike Nesbitt, the Ulster Unionist leader, gave one example: "If you announced that corporation tax was being reduced to 15% starting 2017, you could put Belfast Harbour on a long lease or sell it, which could generate £400m or £500m, and that could cover any potential hiatus is terms of a dip in actual corporation tax take until 2018 or 2019."

A Civil Service redundancy scheme is also suggested and the money to pay for it can be borrowed from the Reform and Reinvestment Initiative, a Government fund for Northern Ireland generally intended for strategic capital projects like roads. About £700m of the £1bn in extra spending promised by Mr Cameron came from this source.

Sinn Fein wants more and it wants Mr Cameron to give it to us without it committing to any cuts. It resists welfare reform and a £70m provision, of our own money, has been made to ease the worst effects if it is introduced.

It needs to say how much it wants to set aside and where it plans to find it. That would be a more effective negotiating tactic than insulting the PM at Press conferences.

It could put the necessary pressure on David Cameron to write off the fines. Mr Nesbitt and other leaders like Peter Robinson and David Ford think that is likely. Mr Nesbitt said: "David Cameron was up for those conversations. I got that impression at our bilateral with him and also at the round table. He went beyond hinting he would look imaginatively and generously at helping us."

There is still more to play for here, but the parties must get a move on. The whole thing is fast drifting into the general election, and after that, who knows what will happen?

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