Welfare Reform: what next for Northern Ireland?

Today sees the debate on the final stage of the Welfare Reform Bill in the Northern Ireland Assembly. Given the Petition of Concern brought forward by both Nationalist parties (and the Greens), it is bound to fall.

What next?

Firstly, the Northern Ireland Assembly becomes bound to pay for Northern Ireland’s welfare system in its entirety. This will cost £300 million per year extra, plus whatever the set-up costs are for the separate systems (notably IT and general administration) which could run past £1 billion.

Secondly, December’s Stormont House Agreement falls. The UK Government’s enabling of transfers between current and capital spending (including for the voluntary exit scheme for public servants), its allocation of funding for Shared Edcuation and Dealing with the Past, and the passage of the Corporation Tax Bill are all predicated on Welfare Reform proceeding. This also means that agreement with the UK Government on extension of loans and loan repayments will no longer apply.

Thirdly, it becomes impossible to fund Northern Ireland public services based on a Budget predicated on the arrangements of the Stormont House Agreement and the UK Government paying for welfare. The Civil Service would have to take over and could spend only baseline amounts (effectively 90% of last year’s base budgets without any extra resource allocations) – effectively a 28% reduction in current resource spending overall (with welfare costs included).

Clearly, the latter situation is unthinkable.

Other options remain:
– the return of a Welfare Reform Bill to the Assembly under accelerated passage and with priority (it is unconventional for a fallen Bill to return in the same legislative term, but much about Northern Ireland government is unconventional!)
– an amendment to the Welfare Reform Act 2012 in the UK Parliament to extend it to Northern Ireland (again, this would be unconventional without Legislative Consent, but is theoretically possible);
– an amendment to the Northern Ireland Act 1998 in the UK Parliament to add “welfare” to the list of reserved matters (also unconventional, but now surely the most likely course of action). Any of these itself would come with a significant risk. The first could again see the Bill fall; the second would cause (at least feigned) outrage at the UK Government overruling the local representatives without a local mandate; the third would lead to public questioning about whether other things should also be “un-devolved”.

In theory, there is no threat to the Executive and Assembly themselves. Any of these things could happen and it would continue to operate as normal. However, they would lead to further public disenchantment with the Assembly’s ability to make decisions in the real world – given serious concerns about Health reforms, debates over progressive social policy, and gridlock in the school transfer system. It is inevitable that these will at least lead to a reform of the Assembly’s operations (perhaps most obviously the Petition of Concern); it could also lead to a resignation of First or deputy First Minister forcing an election, but it is hard to see how that solves very much. Any “return to Direct Rule” is a remote prospect, literally – it is only feasible after an Assembly Election which fails, for any variety of reasons, to form an Executive.

As we know from the past month, nothing is predictable!

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