Belfast Telegraph

Welfare crisis is a bump, but it's not end of the road for Stormont or the agreement, insists Villiers

By Liam Clarke

The Secretary of State has pledged that she will not pull the plug on Stormont over the welfare reform debacle - but she warned that unless the crisis is sorted out it will destroy devolution.

Theresa Villiers was speaking after Deputy First Minister Martin McGuinness unexpectedly announced on Monday that Sinn Fein would no longer support the legislation to reform Northern Ireland's welfare and benefits system.

The move means the Stormont House Agreement that brought stability to the institutions at Christmas is now in danger of unravelling.

"I don't think we are anywhere near that sort of crisis yet and I do not intend suspending the Assembly," Ms Villiers said.

"This is a serious setback, it is a real bump in the road, but it is by no means the end of the road for the Stormont House Agreement."

On Monday, Mr McGuinness accused the DUP of bad faith on welfare reform just hours before a key Assembly debate on the matter.

He claimed that First Minister Peter Robinson's party had reneged on promises to protect everyone in Northern Ireland from any reduction in welfare payments.

The plan for Mr McGuinness' surprise move was made at a meeting of Sinn Fein's ruling Ard Comhairle on Sunday afternoon. It followed a week of discussions between Sinn Fein and the DUP.

Final figures on the cost of protecting all claimants were provided by civil servants on Friday - it was about £400m more than had been set aside.

Yesterday morning Mr McGuinness produced another figure, telling RTE that another £200m was needed to resolve the welfare issue. But Ms Villiers ruled that out, saying a more expensive system in Northern Ireland would be unfair to the rest of the UK.

"If Northern Ireland wants a more expensive welfare system it needs to pay through the resources it is given in the block grant. "That position hasn't changed. If welfare reform is implemented the welfare shortfall payments stop but there would be no refund of what has already been spent," she said.

With welfare reform the key to unlocking Treasury loans that will pay for thousands of civil service redundancies and preventing hundreds of millions of pounds in fines by Westminster, there has been speculation over an early Assembly election.

Under the Northern Ireland Act 1998, the Secretary of State may call an Assembly election at her discretion. Otherwise the election will be held in May next year. The Westminster general election is on May 7 this year.

An Assembly election could also be triggered if the First or Deputy First Minister resigned. Senior sources in both the DUP and Sinn Fein say that neither man wants to bring down the administration but don't see an easy way out in the long term. If the welfare issue cannot be resolved next week it will probably lead to a crisis after the election, a period that coincides with the start of the marching system.

Just before that, April, marks the start of a new financial year. If books cannot be balanced by that time, Stormont will start running out of money and civil servants will step in to stop ministers overspending. Such an administration would, one DUP source said, "die of shame" if it wasn't brought to an end. Ms Villiers met the UUP, Alliance, SDLP and Mervyn Storey of the DUP yesterday. She has been in telephone contact with Mr McGuinness and Mr Robinson and plans to meet them tomorrow.

What next?

Because the Executive has not implemented welfare reforms, it is set to be hit with a £114m bill from the Treasury this coming financial year, having already shouldered around £100m in penalties for the last two years.

The lack of legislation also risks access to £400m in loans offered by the Treasury to finance 20,000 public sector redundancies. It also jeopardises the devolution of corporation tax powers. There also the possibility of a snap Assembly election after London warned the Assembly cannot now deliver on its Budget.

Further Reading

Electorate deserves better from Sinn Fein

There were other agendas at work, claims minister behind Bill 

DUP welfare reform plans handed over to Sinn Fein by mistake, claims Gerry Adams

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