Category Archives: Analysis

Assembly Election fundamentally alters NI

The comparative gains for non-Unionists in last week’s Northern Ireland Assembly Elections have changed the political landscape here forever.

The election, under a preferential system called ‘STV’, saw a reduced number of legislators (‘MLAs’) elected, with the 18 constituencies choosing five rather than six members.

Of the 18 seats thus lost, Unionists lost 16, emerging with just 40 out of 90, only one ahead of Nationalists and an overall minority for the first time in the history of Northern Ireland.

The DUP lost just over one percentage point in its vote share, although this was shielded by a marked reduction in the number of candidates from smaller Unionist parties. The result, however, was a loss of ten seats – including incumbents Nelson McCausland (Belfast North), Emma Little Pengelly (Belfast South), Maurice Morrow (Fermanagh/South Tyrone), Brenda Hale (Lagan Valley), Adrian McQuillan (East Londonderry), Philip Logan (North Antrim) and Trevor Clarke (South Antrim) as well as non-incumbents in Belfast East and East Antrim and an undefended seat in North Down. The outcome was 28 seats on 28.1% of the vote.

Sinn Fein gained nearly four points in vote share, to its best share ever in an Assembly Election. This enabled it to maintain all but two of its seats (losing incumbent Oliver McMullan in East Antrim and a seat in Upper Bann) and in fact gain one (Jenna Dolan in Fermanagh/South Tyrone). The party also produced new MLAs replacing retirees at the top of the poll in Foyle and South Down, Elisha McCallion and Sinead Ennis. the outcome was 27 seats on 27.9% of the vote.

The SDLP moved up to third place despite a narrow decline to its worst vote share ever. As expected it lost seats in Fermanagh/South Tyrone (Richie McPhillips) and Belfast West (Alex Attwood), yet it also secured its seat in East Londonderry despite a candidate replacement (through John Dallat) and made last-gasp gains in Upper Bann (Dolores Kelly) and Lagan Valley (Pat Catney). This it returned with as many seats as in the last Assembly, 12 on 11.9% of the vote.

The Ulster Unionists had a disaster. Their vote share was up, though mainly because there were generally fewer Unionists standing overall, and particularly in Greater Belfast where a gain in East Antrim (John Stewart) was off-set by losses in Strangford (Philip Smith) and Lagan Valley (Jenny Palmer). However, away from Greater Belfast the party’s vote fell as between Lough Neagh and the border fully five further seats were lost – incumbents Jo-Anne Dobson (Upper Bann), Danny Kennedy (Newry/Armagh), Sandra Overend (Mid Ulster) and Harold McKee (South Down) fell alongside another loss of a non-incumbent in West Tyrone. Thus the Ulster Unionists return with just 10 seats on 12.9% of the vote.

The Alliance Party picked up its best share in any election since 1987 and retained all its seats, narrowly failing to pick up any further gains. Thus eight members were returned on 9.1% of the vote.

Elsewhere the Green Party saw a small decline in vote share but retained its two seats; People Before Profit lost a seat in Foyle (Eamon McCann) to be reduced to one; and TUV suffered a decline in vote share despite retaining its one seat. Independent Unionist and outgoing Justice Minister Claire Sugden was returned in East Londonderry.

The outcome, therefore, is a much more even Assembly than the one before – and thus one which is more anti-Brexit, more social-liberal, and broadly younger.

The question now is if it will ever sit and, if so, on which terms. The four overall options here are:

  • a deal between the parties enabling the establishment of an Executive before the first meeting on 27 March;
  • an extension in the time allowed for a deal, with civil servants carrying out the administration of services and handed some budgetary powers;
  • no deal and no extension and thus, under the current law, a further election on 4 May;
  • no deal and no extension and a law passed to enable the effective restoration of “Direct Rule” by Ministers appointed by the Conservative Government in London.

These are probably in rough order of likelihood. Absolutely no one serious wants the latter, so it is unlikely; the possibility of a further election has already been noted in the House of Commons by the Secretary of State; the possibility of extension has been put forward publicly by his predecessor; and the potential for a deal exists, even on a temporary basis, since neither main party would really wish to risk a further election.

We shall see!

Event – Parkinson’s UK

Ultonia Communications is sponsoring What Matters Most.

This is your chance to have a real influence at a fun, innovative event aimed at establishing what matters most to people with Parkinson’s and working together to improve those matters.

The event will take the form of four interactive workshops designed to answer four questions, emphasising on how people can work together to do so.

Those at the event will include Parkinson’s UK members, health professionals, businesspeople, community representatives and prominent politicians.

  • Venue: Girdwood Community Hub, Belfast
  • Time/Date: 12.30pm to 3pm, Wednesday 9 November 2016

A light lunch will be served; and tea/coffee will be available throughout.

Please join us!

Attendance is by invitation only but you can secure an invite simply by leaving a comment below, emailing info@ultonia.com or leaving a voicemail on 07956045764.

Central Political/Economic Forecast

This is our Central Forecast currently for Northern Ireland (and the UK/EU generally) after last week’s referendum. Clearly, there are hugely varying scenarios possible, including political and economic conditions spiralling out of control.

The UK will exit the EU (under Prime Minister Theresa May) in Spring 2019, agreeing an EEA deal minus Financial Services access in return for some additional controls of movement of labour (somewhere between “Norway Model” and “Swiss Model”). Significant variations of this scenario are possible, ranging from remaining within the EU with some additional border controls to a completely disorderly exit with no deal.

The UK (and Northern Ireland) will enter recession in Spring 2017 and the economy will contract during 2017, with recovery not beginning properly until 2019. It is possible the UK (but not Northern Ireland) will avoid technical recession; conversely a disorderly exit could cause an economic shock beyond that of the 2008 “Credit Crunch”.

The UK debt burden will hit 100% of GDP in 2017 and the deficit will remain almost as high in 2020 as it was in 2015. Although we do not expect the debt in itself to be more expensive to service (contrary to some forecasts), a combination of inflation plus the fact the deficit was due to have been closed by the end of the decade means there will be a marked reduction in funds available for public services and welfare provision (we estimate this reduction will be around 3% versus previous, pre-referendum forecasts). There is little variation of this forecast as it is determined by uncertainty around the UK’s future status, rather than the status itself.

UK public spending and welfare provision will be reduced by 8% versus previous pre-referendum forecasts which, combined with higher unemployment (thus welfare bills) will see spending on public services reduced by 14% versus pre-referendum expectations. This will lead to significant strain on Health and Care services in particular. As with the above, there is little variation on this forecast.

UK consumption will reduce 3% in 2017 and will not stabilised until late 2019. This will particularly hit the retail and hospitality sectors, and there will be disinvestment in city centres. The property sector will also be hit, with a knock-on effect on local government services. Again, there is little variation in this forecast.

EU funding will cease to be available for most cases, particularly Rural Development, from 2020. UK will retain access to EU funds for business R&D (except in financial services and agri-food) and for infrastructure. CAP and CFP will be withdrawn from 2019/20 and, outside England, will need to be replaced by devolved Executives.

There will be neither an immediate General Election or a second Scottish independence referendum, but this is an uncertain forecast. There remains the possibility of an early UK General Election to approve a negotiating strategy or exit deal; a Scottish referendum is highly unlikely this decade although we do expect polls consistently to indicate in-principle support for Scottish independence.

UK party political turmoil will continue through the next election, with potential for radical change up to a potential change in electoral system and the Barnett Formula. UKIP is currently likely to form the Opposition after the next General Election. Political debate will shift from internal social issues to immigration and economic development. Despite reductions in public spending, there will be downward pressure on taxation with Corporation Tax potentially being abolished altogether. It is this political uncertainty which feeds into instability in the real economy.

Northern Ireland will attain “Special Access” to the EU, including potentially a Shared Customs arrangement, as its citizens generally qualify for EU citizenship and it shares a land border with the EU. This will mean more EU support is available than elsewhere in the UK, but CAP and CFP will cease as elsewhere in the UK. There will be a surprising degree of political stability but significant strain on public services due to reductions in funding provision versus previous assumptions (these will be marginally less marked than elsewhere in the UK, but still significant). The voluntary/community sector will be particularly hit in Northern Ireland, as many EU or EU-related funding streams simply come to an end without prospect of replacement. There will be the need for significant reform and collaboration.

The UK’s long-term economic outlook is marginally poorer than it was pre-referendum, but with the potential advantage of regional re-balancing due to less dependence on the finance sector and the City of London. The most significant risk to the UK is its loss of reputation for political stability, and loss of faith in its institutions. The longer-term viability of the Union itself, however, remains in question, which could bring further economic shocks. This forecast cannot now be made with any precision, as there are too many variables.

The Eurozone will generally avoid recession but will be subject to a marked slowdown in the short term. There are also significant political risks, with notable elections in 2017 in the Netherlands, France and Germany and the increased focus on issues forced by populists across the continent. Recession, and the election into government of populists opposed to EU membership, remains a risk in almost every EU country currentlyalthough there is no prospect of any committing to an in/out referendum.

Sterling will stabilise at just under $1.30 and €1.20, but will be subject to occasional significant volatility. It remains possible that Sterling will stabilise significantly lower than that, particularly against the US dollar.

Stormont Opposition

A full official opposition, under the terms of the Assembly and Executive Reform Act 2016, will now be formed in the Northern Ireland Assembly for the current five-year term.

It will be the first official cross-community opposition to a cross-community government in the history of Northern Ireland.

Executive

The seven Executive Departments except Justice will be allocated four to the DUP and three to Sinn Féin. There is already a DUP First Minister and Sinn Féin deputy First Minister in the renamed Executive Office. The Justice Ministry will be filled by cross-community vote, but terms have not been met for the Alliance Party to continue to fill it (the likeliest outcome is a DUP Minister, in return for some deal on policy or ministry with Sinn Féin).

Opposition

The Ulster Unionists will nominate the Chair of the Public Accounts Committee, have first question at Executive Office question time, and their leader will be referred to in common parlance (though not in fact officially) as “Leader of the Opposition”.

The SDLP will nominate Deputy Chair of the Public Accounts Committee, have second question at Executive Office question time, and its leader will no doubt be seen as “deputy Leader of the Opposition”.

Research funds will be made available, but largely at the bequest of the Executive, so these may not be significant.

Non-qualifying parties

The Alliance Party fell one seat short of qualifying for the official opposition but would have been deprived of most of its benefits anyway, given that two larger parties are already in it. It will have no official status beyond that of an Assembly group.

The Greens and People before Profit have limited rights as groups also (their speaking rights are in that order, in line with overall first preference vote).

Practice

The practical outcome of this is still to be determined.

The Ulster Unionists’ early response to the SDLP’s opting out of the Executive was to welcome it warmly, implicitly offering cooperation. The SDLP seems somewhat cooler about such a prospect, suggesting each party will operate wholly independently.

It is noteworthy that every constituency in Northern Ireland is represented by either an Ulster Unionist or SDLP MLA (and some have both, of course). However their combined strength, no matter how calculated, is still only equal to Sinn Féin alone and considerably less than the DUP alone.

Add in the Alliance Party and the “opposition coalition” would become bigger than Sinn Féin, and also than DUP on first preference vote share (though not on seats). However, a formal arrangement of this kind is surely unlikely.

Majority

For all this, the DUP and Sinn Féin still have 53% of the first preference vote and 61% of the seats between them. Throw in that the DUP can raise a Petition of Concern on their own and Sinn Féin only need the Greens or People before Profit for one, and they can in effect put through anything acting jointly or block anything acting (almost) alone. This was the case during the last Assembly term, so the main change of having an opposition is that this majority (and gridlock mechanism) will become more visible to the public.

The political challenge is for the Executive parties not to come to look too cosy but to prove they can deliver in cooperation with each other. The challenge for the opposition will be to demonstrate they are a serious alternative. Both of those are significant challenges.

Obstacles

The first obstacle, which will become notably obvious towards the end of this calendar year, will be what is commonly termed “austerity”, i.e. the real-terms reduction in public spending available for day-to-day services while delivering “mitigation” from welfare reform from devolved funds.

A second obvious obstacle will be corporation tax reduction. It seems almost impossible that Sinn Féin will be able to stand over this politically. Watch for it to be played off against welfare mitigation politically, but this is not going to work financially.

There is also the potential for a new relationship with the European Union.

Further difficulties over the next three election-less years will include Health Reform, reductions in basic funding for street maintenance and similar services, and public sector redundancy and pensions. There is scant evidence the new Executive is prepared for any of these.

This is all before the unforeseeable events that can always shake a system which is still somewhat flimsy. Interesting, but also challenging, times ahead.

Why has “Remain” taken referendum lead?

The odds, which are often more accurate than the polls because they show the “wisdom of the crowds”, had been shifting slowly but clearly towards the “Remain” side in the UK’s forthcoming referendum on EU membership even before three polls yesterday showed a marked shift in that same direction.

Why would this be?

In fact, our suggestion would be that the shift has happened almost entirely in England, and it has happened in such a way that in fact the referendum result in each of the four countries of the UK could end up much more similar across all four than many had assumed. (The commonly stated assumption has been that Scotland, Northern Ireland and Wales would vote heavily “Remain” while England may vote marginally “Leave” – though in fact all the evidence has been that Wales will vote much more in line with England than with Scotland.)

Very little attention has been paid to the reason for the shift, but our suggestion is that it has happened mainly among Conservative voters and has to do with their increasingly being persuaded of the case that the UK will have more global influence of it remains part of the EU (this view was already widely accepted among the population according to previous surveys and polls, but it had not previously had much effect on voting intention).

There is another possible reason. A peculiarity of referendums in the UK, perhaps a result of its electoral system and naturally quite personality-focused political coverage, is that politicians rather than ideas remain central to each case. It is quite possible that some prominent “Leave” campaigners are actually making the campaign toxic. Our analysis does not particularly show this, but reliable commentators are beginning to suggest it.

Yesterday was probably the most interesting day of the campaign, resulting even in a marked rise in Sterling in the currency markets. But it is not over yet – there will be other interesting days to come!

What does “Opposition” mean at Stormont?

The Ulster Unionists have announced they will not take their seats in the Executive Committee of the fifth Northern Ireland Assembly (effectively Northern Ireland’s devolved Cabinet), and will thus “lead the opposition”.

Northern Ireland’s peculiar institutional arrangements, however, lead to some confusion over this. What does it mean?

Overview

The Assembly and Executive Reform Act 2016 (often referred to as the “Opposition Act”) allows for the official creation of what is termed an “opposition” at Stormont.

Such an opposition is “official”, but may only be formed from parties which would have qualified for the power-sharing Executive but have opted not to take their seats in it.

It entitles the leading party in it to certain research funding, speaking rights (such as first question at First Minister’s Questions) and positions (such as appointing the Chair of the Public Accounts Committee). Any second party entering “opposition” on the same basis gets similar, deputised arrangements.

Fifth Assembly

In the fifth Northern Ireland Assembly, the parties qualifying for the newly reduced seven-member Executive are the DUP, Sinn Fein, Ulster Unionists and SDLP.

In practice, having accepted their nominations for First Minister and deputy First Minister, the DUP and Sinn Fein are committed to the Executive. This gives the Ulster Unionists and SDLP the choice.

The Ulster Unionists have announced that they will not take their Executive seat, and thus will be entitled to the role formally described as “leading qualifying non-Executive party”, but which will informally no doubt come to be known as “largest opposition party”. The SDLP has not yet announced if it will take the same step, thus taking the deputy roles available to it.

The Alliance Party does not qualify to be a formal opposition party because it does not qualify for a seat in the Executive as of right. (There is a separate issue of the Justice Ministry, which is not directly part of Executive formation but, rather, is elected by cross-community vote of the Assembly; but this has nothing formally to do with “opposition”).

Outcome

The Ulster Unionists are likely to be followed out of the Executive by the SDLP, forming an “opposition” of sorts which will be able to scrutinise the work of the Executive. This will provide for an Executive-versus-Opposition debate in the Assembly and in the media which will be more typical of other jurisdictions.

This is still not an “opposition” in the sense understood elsewhere, however, in that it is not an alternative government in waiting. Even if the “opposition” parties were narrowly to win more seats than their rivals in each designation at the next Assembly Election, their opposition would not be compelled to go into “opposition”.

It is, therefore, a work in progress!

UK Elections 2016

The UK goes to the polls on 5 May for a set of elections which are closest to ‘mid-term elections’ in scale, even though (with the exception of London) they now always fall just one year after the General Election.

London

London elects its Mayor, via a top-two instant run-off system, and its 25-member Assembly by Mixed Member Proportional Representation (14 from single-member constituencies and 11 via “top-up” to make the outcome roughly proportional by party) for a four-year term.

In scale, these are the most significant elections taking place on the day – London’s population alone now exceeds Scotland’s and Wales’ combined.

However, it will have little influence on various Leaders’ political future because London is now so politically exceptional – it was the only part of the UK to show a clear swing to Labour last year and is of course home to its new Leader, Jeremy Corbyn.

Sadiq Khan is expected to regain the Mayorality for Labour, by 10-20 points. Labour already began to make gains in the Assembly last time out, and may expect to add one or two more.

Scotland

Scotland elects its 129-member Parliament by Mixed Member Proportional Representation (73 by single-member constituency and 56 by regional top-up in line with regional party strength) for a five-year term. The Parliament elects a First Minister, who appoints a Cabinet.

Scotland is politically exceptional, having come within half a million votes of outright independence in 2014. Nevertheless, it was Labour’s losses in Scotland which delivered such a crushing overall defeat in last year’s UK General Election, so it would hope to gain some ground to show at least a hint of revival.

The Scottish National Party (SNP) enjoyed a stunning victory in 2011, securing an almost incredible absolute majority of nine. It is expected to retain this, and perhaps even increase it slightly.

Labour will likely be disappointed. There is even the potential, with the rise of the Greens on the regional party vote and a Conservative recovery, for Labour to end up third behind the Conservatives.

Wales

Wales elects its 60-member Assembly by Mixed Member Proportional Representation (40 by single-member constituency and 20 by regional top-up in line with regional party strength) for a five-year term. The Assembly elects a First Minister, who appoints a Cabinet.

It also elects its Police Commissioners.

Wales is a significant test for Labour, who declined here at the last UK General Election last year.

UKIP is the big imponderable, having outpolled Plaid in Wales in the UK General Election last year despite winning no seats. It, Plaid and the Conservatives are all polling roughly evenly, with Plaid probably just favourites to emerge second.

Labour, meanwhile, is struggling to maintain the 30 seats which enable it to form a single-party government. It is likely that it will have to form a coalition with Plaid, regardless of who finishes second, to stay in office.

Northern Ireland

Northern Ireland elects its 108-member Assembly by Single Transferable Vote (from 18 six-member constituencies). The largest party appoints the First Minister and the largest party in the largest other designation (pro-British “Unionist”, pro-Irish “Nationalist” or “Other”) appoints the deputy First Minister, who is equal in stature. Parties are then offered seats in its Executive (Cabinet) in line with party strengths in the Assembly, but are no longer effectively obliged to accept them.

Although four parties form the current Executive, in effect the largest party in each main designation is dominant – meaning the DUP and Sinn Féin.

The complex electoral system means it is impossible to predict the outcome for sure. However, the Ulster Unionists and Alliance seem set to pick up some seats on the margins at the expense of the DUP and SDLP.

UK-wide, this will make little difference.

England

English voters will elect their Police Commissioners and many will also elect their local Councils.

This is a significant test for Labour after its surprise UK General Election defeat. Further losses seem possible, which would render any sort of comeback before the next UK General Election very difficult.

It is possible these will be the last elections David Cameron faces as Conservative Leader. Some gains, from what was already a strong position for an incumbent government, would ease the pressure a little.

Where now for Welfare Reform mitigation?

The “Fresh Start” Agreement put in place funding for “mitigation of welfare reform”, to be allocated on the basis of a report by Dr Eileen Evason, Emeritus Professor in Social Administration.

The objective of the report is to:

  • allay anxiety over reform, partly by providing supplementary payments for up to four years to carers and those with ill-health/disabilities;
  • supporting and protecting claimants with independent advice, particularly with regard to sanctions; and
  • follow the strategy adopted in Scotland to alleviate hardship for those losing out under Universal Credit.

The report specifies a (reasonable) assumption that the “Bedroom Tax” will be fully mitigated against.

Carers will retain a supplementary payment of one year from cessation of Carer’s Allowance, in the event that the person they are caring for currently qualifies for Disability Living Allowance but, under the new system, qualifies for neither Disability Living Allowance nor the Personal Independence Payment. In the event of a successful appeal and subsequent award of Personal Independence Payment, any supplementary payment will cease and the carer will be advised that they may once again claim Carer’s Allowance.

Employment and Support Allowance (ESA) will only be withdrawn with three months’ warning, after an automatic check has established an entitlement to income-related ESA does not exist, and after one year during which a supplementary payment equivalent to the ESA previously claimed will be paid. This in effect means that ESA entitlement is no longer retrospective in Northern Ireland.

Those who are currently on Disability Living Allowance (DLA) but are unsuccessful in their application for Personal Independence Payment (PIP) will retain their DLA for the duration of any appeal. Those whose application for PIP is successful but who lose more than £10 per week as a result of the change will receive a supplementary payment of 75% of the loss for one year, with an extra points allocation to increase the number who will receive this entitlement. As in Great Britain, there will also be transition support for those using the Motability Scheme.

In addition, those receiving the Enhanced Disability Premium of DLA will receive a supplementary payment for one year if they lose out during the transition to PIP. Similar arrangements will exist for those losing the Severe Disability Premium or even the Standard Disability Premium.

The Discretionary Support Scheme is extended to emergency provision in cases of difficulty relating to the introduction of Universal Credit, specifically with regard to those on low wages and most particularly for lone parents. No detail has yet been worked out, but this would be expected to be similar to the Winter Fuel Payment.

There is also a provision in theory for supplementary payments to those losing out as a result of the “Benefits Cap” for up to four years, but it is not envisaged that there will be any in practice.

It is noted that there are two key differences in the Northern Ireland legislation:

  • the maximum sanction that can be imposed in Northern Ireland is lower than in Great Britain, at 18 months; and
  • Universal Credit may be paid fortnightly in Northern Ireland (noting also that payments for rent will be payable directly to the landlord).

In addition to supplementary payments, specific funds set aside for mitigation are:

  • £105m (£35m for three years from 2017/18) for those on low wages receiving Universal Credit (with specifics noted above);
  • £2m per year from emergency payments arising from confusion over transition to Universal Payment;
  • £2.7m as a one-off to assist the voluntary sector tackle food poverty, provide support and advice, and assist credit unions.

Note that the Welfare Reform Act for Northern Ireland will not receive Royal Assent and become law until 1 May 2016.

Ulster Unionist withdrawal from Executive – whither now?

The Ulster Unionists today announced their decision to withdraw from the Northern Ireland Executive some time next week, before the Assembly returns on 7 September.

What does this mean?

In practical terms, it is best to start with the simple stuff: this means the Ulster Unionists will withdraw their Minister from the Executive. They are not withdrawing from the Assembly, nor have they stated any intention to bring it down.

The Minister concerned in Danny Kennedy of the Department of Regional Development, which deals predominantly with infrastructure and general transport. Under the system used to appoint the Executive proportionately, the outstanding Ministry now goes to the DUP, giving it a fifth Minister out of the ten proportionately appointed. The likelihood is they will simply appoint a new Minister, although a case could be made for re-appointing all the Ministries in order from the start.

The Ulster Unionists say they will go “into opposition”, but formally there is no such thing. They do not receive any extra speaking rights, any priority for Committee Chairs, or any particular role in assessing public accounts or such like.

What will happen now?

What happens now depends to a large extent on what other parties do.

Arguably, the DUP is caught in an awkward position, in that staying in the Executive makes it look weak on “Republicans”, but leaving makes it look like it is following the Ulster Unionists’ lead. It is likely to choose the former, and has already attacked the Ulster Unionists for promoting instability and being unwilling to govern.

Sinn Féin has no interest in risking a complete breakdown of the institutions, but is currently safe in the knowledge that, among its own supporters and would-be supporters, it is devoid of blame for the current “crisis”. It is unlikely to change stance.

The party with the most immediate problem is perhaps the SDLP. Of all the Executive parties, it has been ceding votes the fastest in recent elections; and it holds the Environment Ministry, which has been stripped of almost all its powers (and much of its funding) since Local Government Reform. Some voices within the party had already been pushing to “go into opposition”, and these will no doubt get louder.

The Alliance Party is in the curious position that, although it holds fewer seats than either the Ulster Unionists or the SDLP, it gets the same number of Ministers in the proportional allocation plus the Justice Minister. Withdrawing from the Justice Ministry, uniquely appointed by cross-community vote, would almost certainly lead to the Executive falling (most likely resulting in an early election and then uncertainty), and the party has been unwilling to risk taking the blame for this. However, the Ulster Unionists’ move changes the variables a bit and, although the party was scathing about today’s announcement, it now has a freer hand to decide its own next move.

In other words, we have no idea what will happen next!

Is Direct Rule imminent?

No.

All that has happened is that one party has resigned its Ministry. This in itself makes almost no difference.

The crux issue remains welfare reform and the consequences for the overall devolved budget – a debate which was always fundamentally between the DUP and Sinn Féin, as they hold the power of Petition of Concern (albeit indirectly, in the latter case) and therefore to block any change in legislation or major policy they do not like.

There is also no way of simply “suspending” the Assembly. In practice, there would need to be an election followed by a failure to form an Executive before any form of “Direct Rule” could be brought in, and even then determined efforts would be made to make it as short-term as possible.

We do live in uncertain times so nothing can be said for sure, but the odds are that “collapse” is not as immediate as is popularly believed.

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!