Westminster bill will ban Stormont overspending

The Palace of Westminster
The Palace of Westminster

Stormont will never again be able to pass an unfunded ‘phantom budget’ under legislative proposals to be debated at Westminster on Monday which would give the Government more control of spending in Northern Ireland.

Under the proposals, the Stormont finance minister would face a series of additional requirements before Stormont could legally pass a budget.

In most years, the extra obligations would have little practical impact. But the changes would stop a minister ever again doing what happened last year when the then Finance Minister Arlene Foster brought forward an unfunded budget based on the hope – which subsequently proved correct – that a deal on welfare reform could be agreed before Stormont’s money ran out.

The Northern Ireland (Stormont Agreement and Implementation Plan) Bill will be debated for the first time in the Commons on Monday.

One aspect of the bill which has received limited scrutiny until now is the proposal to amend the Northern Ireland Act 1998 to require that at least 14 days before the Stormont finance minister brings a draft budget to the Assembly they would have to lay before the Assembly “a statement specifying the amount of UK funding for that year notified to minister by the Secretary of State”.

Then, at the same time as they lay before MLAs a draft budget, the finance minister would have to “lay before the Assembly a statement showing that the amount of UK funding required by the draft budget does not exceed the amount specified [by the Secretary of State] for that year”.

Even after that was done and the draft budget has been laid before MLAs, the Treasury would still have the power to cut Stormont’s budget.

In circumstances where London decided to cut the block grant after the budget had been laid before MLAs, the finance minister would have four months in which to bring fresh proposals to the Assembly setting out how cuts would be made to the budget in order that Stormont would live within its means.

The legislation explicitly bars any ‘phantom budget’ where Stormont knows that the spending it is approving exceeds the amount which it would be given by London.

The unfunded budget passed last year was ultimately resolved when Sinn Fein backed down over welfare reform.

But if that had not happened Stormont would have become effectively insolvent.

The bill states: “The amount of UK funding required by the expenditure proposals (taking account of the revisions under subsection (1D)) [where the budget is cut in-year by the Treasury] must not exceed the amount specified in the notification [from the Secretary of State].”

The bill is likely to comfortably pass its first test in the House of Commons.

A DUP spokesman said: “This provision was agreed as part of the Fresh Start agreement and has been approved by the Executive.

“The provisions will help clarify the funding which comes from Treasury and will regulate the budget process.

“It will not negatively impact on the Executive’s freedom to set a budget.”