A £600m-plus black hole in the finances of Northern Ireland’s power-sharing government is threatening to bring down the devolution settlement as parties prepare for a budget debate to thrash out a deal.
Ahead of the Stormont debate on Tuesday afternoon, Labour’s Northern Ireland spokesman, Ivan Lewis, warned the parties that there is no extra money from Westminster.
The Treasury has offered the Northern Ireland executive a loan to plug the finance gap in return for cuts to welfare and jobs in the region’s public sector.
Sinn Féin has been leading the fight against cuts and there are fears the party may vote for Martin McGuinness, its deputy first minister, to resign rather than implement the measures demanded by the Treasury.
Under the rules of power sharing in the province, his resignation would trigger the collapse of the devolved government in Belfast.
Unionists as well as the centrist Alliance party have accused Sinn Féin and rival nationalist party the SDLP of reneging on the Stormont House agreement back in December when all five parties in the power-sharing coalition appeared to accept the Treasury’s offer.
If Sinn Féin continues to oppose cuts, Westminster could retake the powers over welfare in Northern Ireland and implement the austerity measures from London over the heads of the assembly. If this happened, Sinn Féin has hinted that it would quit the executive.
The Sinn Féin South Belfast assembly member, Máirtin Ó Muilleoir, told the assembly that his party would not act as “water carriers” for the Tories or implement austerity cuts.
But Lewis warned: “Parties need to understand that there will be no extra money coming from Westminster for welfare.
“Therefore, if they are going to have a viable budget they are either going to have to make further savage cuts [to the executive budget] or they are going to have to reach an accommodation on welfare. I think it is time that they reached an accommodation on welfare.”
One of the major reasons for the current crisis lies south of the border and the Irish general election, which is expected next year.
Sinn Féin is rising in the opinion polls over its opposition to almost five years of austerity cuts in the Republic. Its opponents both on the centre right and the far left have accused the party of operating double standards north and south of the border. Leftwing parties in the Dáil have pointed to Sinn Féin’s initial support for the Stormont House agreement cuts programme agreed in December as evidence of this.
Arlene Foster, the Democratic Unionist finance minister, will formally propose a budget on Tuesday which is around £604m short. The DUP is hoping that a deal can be agreed before the executive literally runs out of money, which could happen in some departments as early as December.
