Talks told: Welfare veto will cost £1.9bn over four years

Theresa Villiers said little on Tuesday the parties had made little progress on welfare
Theresa Villiers said little on Tuesday the parties had made little progress on welfare

Nationalist politicians vetoing welfare reform have been formally warned that Stormont faces unaffordable bills if they do not relent.

A paper tabled at the Stormont talks and seen by the News Letter shows that civil servants’ best estimate is that blocking welfare reform for another four years will cost £1.9 billion.

Stormont's welfare impasse has seen tough penalties levied against Northern Ireland by Westminster

Stormont's welfare impasse has seen tough penalties levied against Northern Ireland by Westminster

That figure is made up of an ever-increasing gap between benefit payments in Belfast and London and the money needed to gradually bring in more and more computer systems to handle the different benefits regime in the Province.

The starkest portion of the briefing paper — which was prepared by officials at the Social Security Agency — relates to immediate spending decisions to fund a Northern Ireland IT system to be operational within months.

Although welfare reform can continue to be blocked, the paper makes clear that to do so will require decisions now to invest in IT equipment that ultimately will cost around £411m over the next four years.

The development comes as various DUP sources yesterday indicated that the party is likely to return to the Executive table next week after the report on paramilitary activity, if, as expected, it largely absolves Sinn Fein of blame for the IRA.

That move is likely to see increased focus on the talks, rather than the questions about the DUP’s in-out ministers which have dogged the party over the last fortnight.

The News Letter has been told that the SDLP and Sinn Fein have been challenged at the talks to bring forward proposals — which can be achieved within the Stormont budget — to maintain the current welfare system, but that neither party has brought forward concrete ideas as to how that could be achieved.

The paper presented to the talks on welfare warns that “current private sector providers will no longer provide different elements of the

IT systems as the [Westminster] DWP and HMRC stop paying for that functionality”.

It states that the Government have “indicated that the Executive will have to decide how it intends to provide the IT systems necessary to pay social security benefits and tax credits from mid-2016” and that “Social Security systems between Great Britain and Northern Ireland are increasingly diverging, leading to increased costs and financial risk for the Executive”.

The document contains a table which indicates the potential costs from penalties and the estimated costs of retaining the existing IT systems in future years.

It shows that if Stormont continues to block both the Coalition Government’s welfare reforms and the current Conservative Government’s welfare reforms, the cost in penalties and IT systems will be £244 million.

However, by 2019-2020 that will have mushroomed to £650 million a year.

The paper warns: “A position of no agreement will require decisions on how to procure and fund IT systems to process and pay legacy benefit and tax credits claims”.

On Tuesday, the NIO released an unusually blunt assessment of the talks on welfare.

Secretary of State Theresa Villiers said: “We didn’t make any real progress on the welfare issues we discussed this morning.”

The Government has made clear that if Stormont fails to resolve the issue, it will step in to legislate for welfare reform.

Some commentators have speculated that such a move would allow Sinn Fein to blame the Tories and claim that it had refused to play any part in implementing Tory cuts.

However, it would also represent a major blow to the party’s core strategy over the last two decades — transferring as much power as possible to the island of Ireland.

And it would also undermine Stormont’s position as a devolved legislature, by showing that Parliament is sovereign and if — on any issue — the Government decides to intervene, there is nothing that Stormont can do.