“Stormont House” deal – financial/political implications

As in Scotland, five parties have been locked in negotiations for weeks in Northern Ireland and have now reached a deal which impacts on finances and the political institutions. This is a brief, immediate, overview of what has been agreed.

Welfare Reform

The Welfare Reform Bill will pass the Northern Ireland Assembly by the end of February 2015, to be implemented by the end of March 2016.

The faster implementation proceeds, the lower the “deduction” from Northern Ireland’s devolved budget will be – if it takes the whole of the 2015/16 financial year, it will be £114 million.

The NI Executive agrees to pay the administration and costs for anything it does differently – it has already been agreed this would cost around £17 million to avoid the so-called “Bedroom Tax”.

Finance

The Financial Deal effectively means that money may be relatively freely passed between Capital and Resource (current) budgets.

The £650 million of “new and additional funding” in fact covers only those things which are partly the responsibility of the UK Government (e.g. Commissions on the Past, Identity, Historical Inquiries and Implementation) or which have to be agreed with the UK Government (essentially for Shared Education campuses).

The £350 million of increased borrowing for Capital projects is over four years, and is effectively to cover for the re-allocation of other money from Capital budgets.

The £900 million of resource re-allocation over four years essentially allows money from Capital budgets to be used for:

  • paying for a “Voluntary Exit scheme” to reduce the size of the Civil Service and public sector at large (£700m);
  • payment of this year’s UK Treasury loan (£100m); and
  • payment of any deductions for breaching parity on welfare (up to £114m).

Additional Tax Powers

The deal allows for the devolution of landfill taxes, aggregate levy, stamp duty and most notably Corporation Tax (specifically on trading profit) by mid-2017. The last of these is additional to those powers proposed for Scotland; on the other hand, income tax powers are not proposed for Northern Ireland.

Institutional Reform

The most surprisingly advanced section of the deal is perhaps that on institutions, which essentially allows for the creation of an Official Opposition from the next Assembly Election (2016).

The proposal is that instead of forming the Executive automatically “by d’Hondt” (the mathematical formula which determines the number of Ministers for each party and order of choice of Ministry), parties which would be entitled to a place in the Executive would meet to agree a Programme for Government and any party not in agreement would be entitled to opt to go into Opposition instead, with appropriate allocations of speaking rights and research funding.

The Deal also agrees:

  • reduction in the number of Executive Departments from 10 to 7 (plus OFMDFM and Justice) from 2016;
  • reduction in the number of MLAs from 108 to (likely) 90 from 2021;
  • some changes to the operation of Executive meetings;
  • changes to protocols around the use of the “Petition of Concern” (although these are not expanded upon); and
  • re-establishment (in effect) of the Civic Forum.

The Departments are not expanded upon, but it is likely that in effect Culture, Regional Development and Employment/Learning will be merged into others (most obviously Education, Environment and Enterprise respectively).

New Public Bodies

There will be new Commissions and various other bodies on Identity, Oral Archives, Historical Investigations, Information Retrieval and Reconciliation.

It is proposed that Parades be devolved, effectively to OFMDFM.

Conclusion

Much of what was supposed to be agreed during last year’s “Haass Talks” remains unresolved, mainly handed over to new bodies.

There is clear agreement to proceed with Welfare Reform and institutional reform (to allow formation of an Opposition).

There is some flexibility over finance, but really very little clearly new. Most notably, current budgetary pressures are not significantly helped.

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One thought on ““Stormont House” deal – financial/political implications

  1. […] are trying to make it – from its point of view, Sinn Fein negotiated very badly ahead of the Stormont House Agreement. In return for Welfare Reform (which it had presented as “Tory cuts”), there would be […]

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