| 8.4°C Belfast

Last-minute deal on budget saves Northern Ireland Executive, but fears remain over £250m debt

Close

Finance Minister Simon Hamilton

Finance Minister Simon Hamilton

Finance Minister Simon Hamilton

Stormont sources have warned of a £250m 'black hole' at the centre of a budget agreed at the last minute to save the Executive from collapse.

The deal, which will see hundreds of millions of pounds being removed from certain governmental departments, was struck during a crunch meeting at Stormont Castle in Belfast yesterday.

The Belfast Telegraph can also reveal that Gerry Adams, the Sinn Fein president, was at Stormont on Wednesday to sign off on the main points of the budget on behalf of Sinn Fein's ruling Ard Chomhairle.

Mr Adams is now a TD for Louth and his involvement in Northern Ireland budgetary decision has irked some unionists.

However, one admitted privately that "decision-making goes a lot quicker when he is here. Otherwise they are running to Dublin to consult him after meetings".

If the power-sharing executive had failed to agree the budget before the end of this week, the UK Government had warned ministers they would have forfeited a £100m emergency loan from the Treasury.

If the loan had not been secured, the administration would have bust its annual spending limit - a move that would have seen civil servants taking control of financial decisions next year.

The £250m 'black hole' revolves around the cost of failing to agree on welfare reform.

This puts huge pressure on the parties to agree a deal on this divisive issue in the coming weeks.

The shortfall is partly made up of the £100m the Treasury will loan to the Executive later this month to tide us over until the end of the financial year in April.

This bailout is largely intended to help us pay off £87m in fines from the Treasury for overspending on welfare in the past year.

But how the loan is to be paid back is not mentioned in the document presented to ministers yesterday.

In addition, the £114m in fines we are due to pay next year if we still haven't implemented welfare reform is not in the document.

Nor is £40m we will have to pay in computer costs if we have not made the change for there is still no agreement.

Last night First Minister Peter Robinson said he hoped to repay the £100m bailout from the sale of government assets.

This might include land, like old Army bases, and surplus buildings.

However this move will require special permission from the Treasury.

Next year's welfare fines would not be charged if we brought our welfare system into line with the UK. Finance Minister Simon Hamilton previously said that he hoped the Treasury would let us off next year's fines if we made agreement in the next few months.

If we don't, the costs will be hard to bear and it will precipitate a new financial crisis.

There was little change in the budget document since the first draft was produced on Tuesday. The most significant gain, £15m, was made by the Department for Education and Learning (DEL) which controls further and higher education. Its budget now goes up from £659.4m to £675m.

It is planned to claw this £15m out of a contingency fund for the pensions of Executive staff. It had been anticipated that pension payments might be increase in the next couple of years and part of this safety net has now been removed.

The whole budget will be laid out in the Assembly on Monday by Mr Hamilton. After that it will go out for public consultation for eight weeks and it is hoped that a final version can be agreed and published by early January.

Peter Robinson last night conceded that the draft budget did not include provision for financial penalties from Westminster because Stormont has not yet introduced welfare reforms.

"No it doesn't, nor does it include any money towards the costs that there would be if we were to continue with our own separate system of welfare payments in Northern Ireland," he said.

"That is a matter for the talks, it is a matter for Her Majesty's government. They have three options.

"We have left within the draft budget an amount of about £70m which would enhance any GB system of welfare reform for the people of Northern Ireland.

"It would mean we could wipe out the bedroom tax which would be imposed in the rest of the UK. It means we can have a fund that allows those who are most severely disabled to ensure that they have no downward pressure on the payments available to them.

"There are things that we have done separately and there are funds available for that, but if there is no deal done on that, then there are only two available options - that the UK Government pays for a separate welfare system for Northern Ireland or else they legislate for it."

UUP minister Danny Kennedy, who leads the Department of Regional Development, said he had "major concern" over the draft budget.

Belfast Telegraph