Welfare reform testing NI's 'parity principle'

Iain Duncan Smith supports changes to welfare

Thursday sees the first meeting of the joint group on corporation tax which brings Stormont and Westminster politicians together.

Although the outcome of last week's Euro summit may have put a question mark over the future rate of Irish corporation tax, the executive remains agreed in principle that it wants the tax devolved.

However, as Sammy Wilson made clear to the Politics Show at the weekend, the politicians are still haggling over the price tag for Stormont's block grant.

With estimates ranging between £200m and £400m, the sums involved are mind-numbing. But another interface between London and Stormont involves even bigger figures, and will undoubtedly have an impact on the welfare of Northern Ireland's poorest families.

This is the Welfare Reform Bill which was being discussed in the House of Lords on Monday night.

Before addressing parliament, the minister responsible, Lord Freud, met the four church leaders who are concerned that the proposed move to a single "universal credit" will have a disproportionate impact on people in Northern Ireland due to high levels of child poverty and dependency on disability benefits. One estimate is that the local welfare bill, which was running at more than £4bn in the year 2009-10, could be cut by more than £600m.

The church leaders have made their opposition clear before. They described their latest trip as aimed at "raising awareness" of Northern Ireland's particular difficulties.

Afterwards, they said Lord Freud had agreed to monitor the impact on Northern Ireland claimants - the clergymen have scheduled another meeting with the Stormont Social Development Minister Nelson McCausland for the end of this week.

Of course not everyone agrees that the changes are retrograde. Welfare Secretary Iain Duncan Smith is passionate in his belief that they have the potential to break a cycle of dependency and get people back to work.

Secretary of State Owen Paterson is quoted in Tuesday's Irish Times as urging the assembly and executive to implement the changes as a matter of urgency.

He told the newspaper that the fact that a legislative consent motion hasn't been put to the Stormont assembly means Northern Ireland "will miss out on all the benefits of the changes and get all the downsides". Mr Paterson continues by arguing that "to characterise this legislation as being about savings and cuts is absolutely childish. There are huge gains. This is a whole new way of looking at work".

Different welfare systems

The chair of the Stormont Social Development Committee, Sinn Fein's Alex Maskey, told me he expects to see draft legislation as soon as next month.

However, he pointed out that Stormont cannot act until the Welfare Reform Bill has completed its passage through Westminster. Mr Maskey said he's deeply concerned about the proposed changes but acknowledges that Stormont has limited room for manoeuvre because of the so called "parity principle" by which local welfare benefits have always mirrored those paid across the water.

If Stormont breaks from that principle by paying more generous benefits, it could invite Westminster to impose a corresponding cut to the block grant (in the same way that lower corporation tax won't be a something-for-nothing initiative). Additionally departing from the English model could cause huge practical problems given the common computer programmes used to make payments.

Despite these difficulties, Mr Maskey thinks there may be scope for changes. He has asked Nelson McCausland's department to give him precise costings so his committee can assess whether variations are either desirable or affordable.

One aspect discussed by the Lords on Monday night was the government's proposal to pay the new universal credit monthly. Lord Freud argued that paying the credit in this way would prepare people for the reality of work, where the majority are now paid monthly.

His critics expressed concern that some families used to budgeting on a weekly or fortnightly basis would run out of money if the payments were made more infrequent. After the minister promised to show flexibility in exceptional circumstances, a Labour amendment was defeated. So when the new credit is introduced in 2013 it will, as a rule, be paid monthly.

This is the kind of area in which Alex Maskey thinks devolution might make a difference.

He argues that local claimants should be paid on a more regular basis. Mr Maskey is also concerned about the plan to channel all a family's payments through the head of the household. What happens, he asks, in homes where the head of the household spends others' cash or refuses to share out the money?

There have been suggestions that because of the delay in Stormont dealing with the matter, there could be a gap during which Northern Ireland and England effectively have two different welfare systems.

So far, neither the Department for Social Development nor the Stormont committee shadowing it seem too concerned about this.

Certainly, though, the process of transferring the welfare changes from England to Northern Ireland promises to be complex, and could test the so called "parity principle" to destruction.