Belfast Telegraph

If we can't agree on cuts, a civil servant will take over

Finance Minister's warning over welfare reforms impasse

By Liam Clarke

A civil servant will be forced to take over control of Stormont's budgets if parties cannot agree cuts to pay for not implementing welfare reforms, it can be revealed.

That is the grim scenario painted by Simon Hamilton, the DUP Finance Minister, in an interview with the Belfast Telegraph.

He warned that the non-elected official would have the ability to implement cuts of up to 5% in every department.

That would mean up to £227m taken off the health budget, the highest spending department.

Westminster passed the controversial welfare reforms in February 2013.

The Northern Ireland Executive has negotiated some amendments but has still not passed the bill, and £5m a month penalty charges came into effect in January. Mr Hamilton has recently taken legal advice on the issue.

He said that it could also lead to departments not being able to spend money they raised from the sale of assets or fees like MOT charges. "If this slips past July we are into uncharted territory and to get a budget through in July, even on accelerated package, we would need to make a start on agreeing it at the first Executive meeting after the elections. That is May 29," Mr Hamilton said.

"I would hate to think that anybody would contemplate not taking the decisions that were required to get a budget through, and what would happen under the Northern Ireland Act 1998 is that civil servants would make the decision," he added.

Stephen Peover, the Permanent Secretary of the DFP, is charged by Section 59 of the Act to give 95% of the previous year's budget to the departments if there is no agreement by the end of July. This would mean a year on year cut in our total budget of £514.5m, equivalent to nearly the whole budget of the Department for Social Development.

Mr Hamilton is hoping that the nightmare scenario of handing over control from our Executive to an unelected civil servant with only limited choices available to them will focus minds.

There is a narrow window of opportunity after the election to reach agreement before the summer recess.

Mr Hamilton argued that under our budgetary system, carried over from direct rule, budget adjustments must be agreed twice a year, once in February and again in June.

If we do not agree the next round by the end of June, and that will require legislation to be passed, then the departments will run out of spending money in August unless Mr Peover steps in to make allocations.

All the options now are fairly tough as he sees it. If we don't implement welfare reform there will have to be a 1.5% cut, or £154.3m, because our block grant will be reduced, according to a letter which Mr Hamilton sent to ministers in March.

This will rise each year.

If we do implement the reforms, a package which has been offered would blunt the impact of some of them, but even that would cost us more than £40m a year.

Ivan Lewis, the shadow Secretary of State, has said that even if his party forms a Government next year, it will still proceed with most of the reforms.

John O'Dowd, the Education Minister, said: "The discussion we should be having as an Executive is how we present a united front to the British Government. How we stand up to the British Government over these cuts.

"It is regrettable that the DUP have decided, for whatever reason, to form a relationship with the Tory party".

STORY SO FAR

British welfare reforms aim to ensure that working always pays better than benefits. As a result welfare spending will rise more slowly. If Stormont introduces the reforms here we will be the hardest hit region, but if it doesn't London will still give us the reduced package under the new system, leaving us to make up the shortfall from cuts in other departments. There is a standoff between the DUP and Sinn Fein, with Sinn Fein resisting both changes and cuts.

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