Delays to welfare reform in Northern Ireland could cost the Stormont Executive £200 million a year in penalties by 2017, it was revealed.
Tens of millions of pounds may need to be found from elsewhere in the budget if the block grant from London which runs public services is cut to compensate for a failure to deliver benefits savings, the Department of Work and Pensions (DWP) has warned.
Westminster reforms include a new universal credit payment to replace child tax credit and housing benefit. But the legislation is still going through the assembly at Stormont amid concerns that low-paid and unemployed people could lose out.
Stormont Finance Minister Simon Hamilton said: “The penalties applied to the Northern Ireland Executive are reflective of the additional costs being incurred by the UK Government as a consequence of welfare policy in Northern Ireland not aligning to that in the rest of the United Kingdom.
“Whilst the penalty currently stands at £5 million a month, it is expected that this will increase significantly as welfare reforms are rolled out in Great Britain and will reach an estimated £200 million per annum by 2017-18.”
Chancellor George Osborne recently indicated that it would be necessary to make further savings in welfare costs after the General Election.
Mr Hamilton told his fellow DUP MLA Gregory Campbell: “This has the potential to further increase the disparity between welfare systems in Great Britain and Northern Ireland should we not implement similar reforms. As a consequence, the penalties applied to the Northern Ireland Executive would increase.
“In addition to the penalties applied by the UK Government, the Northern Ireland Executive will incur significant IT and administrative costs if our welfare system is not aligned to the rest of the United Kingdom.”
The financial impact of the welfare cuts is greater in Northern Ireland than other parts of the UK because of the large number of people who claim Incapacity Benefit and Disability Living Allowance, opponents have claimed.
Planned changes include sanctions for those turning down jobs and a cap on benefits paid to a single family.
Sinn Fein MLA Alex Maskey has said reduced housing benefit could mean some people being forced to leave houses they had spent most of their lives in amid a shortage of smaller properties.
The coalition government at Westminster has argued that the changes will “make work pay” and insisted the reforms will ensure those in work are better off than the unemployed.