Northern Ireland

Arlene Foster warns welfare reform impasse will cost £500m

Arlene Foster Image copyright PAcemaker
Image caption Arlene Foster said there was a short window of opportunity to deal with welfare reform

The new finance minister Arlene Foster has warned a £500m hole will open in the executive's budget if the Stormont House Agreement is not implemented.

The agreement involves a series of interlocking commitments on welfare reform, a balanced budget and public sector redundancies .

However, the welfare element of the agreement has stalled.

Sinn Féin has said the plans for implementing the deal did not provide enough protection for claimants.

Mrs Foster told the assembly that the budget is predicated on welfare reform being implemented half way through this year.

She said if that did not happen, the Treasury would reduce Stormont's departmental budgets by £114m.

She added that other factors mean that "at the moment because the Stormont House Agreement has not been implemented... there's a £500m hole in the budget".

Mrs Foster said there were "around two weeks to deal with this matter" which is a "very short window of opportunity".

The minister said that after that there would have to be "contingency planning" which could involve the top civil servant in the Department of Finance taking over the budget.

Mrs Foster said that scenario would be "pretty nuclear."

"The financial package secured as part of the Stormont House Agreement paved the way for executive agreement on the 2015/16 budget," she said.

"However, in the absence of progress on welfare reform, we simply do not have a workable budget.

"Delays in implementation will undoubtedly have a significant impact on departmental budgets and would necessitate further cuts to public services."

'Greater challenge'

Sinn Féin assembly member Daithí McKay said his party was committed to the full implementation of the Stormont House Agreement.

"Sinn Féin is committed to achieving the full implementation of all the outstanding issues of the Stormont House Agreement, including welfare, to ensure the agreed protections are in place for children with disabilities, adults with severe disabilities, the long-term sick and large families," he said.

"Work is continuing on all of these issues.

"A much greater challenge to the executive comes from the £25bn in further cuts promised by the Tories which would result in a huge hole in the budget."

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