Belfast Telegraph

Resolution sought on welfare reform

A resolution to the welfare reform impasse in Northern Ireland will be the key to unlocking corporation tax powers to the region.

The Chancellor's clear pre-condition that the responsibility will only be transferred to Belfast if the Executive demonstrates an ability to "handle the financial implications" left parties under no illusions as to where George Osborne wants to see swift progress.

While the current Stormont talks process has an agenda packed full of thorny issues - the majority long standing political disputes outstanding from the peace process - the one that most threatens the financial viability of the powersharing Executive is welfare.

As a consequence of not implementing the UK Government's controversial changes to the benefits system, the Executive is facing a huge bill from the Treasury.

Penalties for failing to roll out welfare reform will be £87 million this year and in excess of £100 million next year. This is the sum the Government claims would have been saved in public expenditure if the policies were operating in Northern Ireland.

It is highly unlikely the Executive, which only weeks ago staved off a funding crisis with an emergency budget, could survive if had to absorb the welfare penalties as well.

Sinn Fein has set its face against implementation, insisting the policies will hit the most vulnerable hardest. The structures of the mandatory coalition mean the republican party has an effective veto on the issue.

Sinn Fein's partners in government, the Democratic Unionists, have also raised serious concerns about the reforms but insist they have negotiated key flexibilities from the London government.

Unionists have claimed Sinn Fein's stance is politically driven and influenced by the need to maintain consistency with the party's line in the Republic of Ireland, where it has seen its popularity grow by adopting a vociferous anti-austerity stance as an opposition party in the Dublin parliament.

In October, Stormont ministers struck a budget hours before a Treasury-imposed deadline.

If the Executive had failed to agree a provisional 2015/16 budget, the Government had warned ministers they would have forfeited a £100 million 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.

But the budget did not factor in the cost of paying the welfare penalties.

Instead that issue was farmed off for further negotiation during the wider all-party talks process convened by the Northern Ireland Secretary Theresa Villiers.

Two months into that initiative, the stakes on settling the welfare wrangle have just been raised by Mr Osborne's autumn statement.

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