A hole in Stormont's welfare reform safety net?

Arlene Foster's leaked finance paper warns of a possible £2.8bn cut to the Stormont budget

Arlene Foster's latest finance paper increases the pressure on Stormont politicians as they continue to lock horns over welfare reform.

Until now the parties had been under the impression they had the benefit of a safety net that would allow Permanent Secretary of the Finance Department, David Sterling to pass an emergency 95% budget if an act has not passed through the assembly by the end of July.

A 5% cut to departmental coffers sounds unpleasant and potentially damaging to the provision of public services, but not a doomsday scenario.

However, the Arlene Foster paper introduces the added complication that Mr Sterling won't be able to authorise the Stormont departments to use other amounts, such as EU farm payments, fees from planning applications and money from pension funds.

This cash is known in accountant's jargon as 'accruing resources'.

The best piece of legislation I can find dealing with these resources appears to be the government Resources and Accounts Act (Northern Ireland) 2001.

Section seven of the explanatory notes makes the point that the 95% safety net option "applies only to the release of cash from the consolidated fund and cannot therefore cover the use of resources".

Pressure is increasing on Stormont politicians over welfare reforms

Adding these 'accruing resources' to the potential 5% cut means that, according to the Foster paper, David Sterling would have no option other than to impose a £2.8bn cut, which would puncture a very large hole through the middle of his safety net.

Expect the parties to wrangle over the figures. The welfare reform critics won't accept the Foster paper at face value.

Indeed, the Sinn Féin controlled agriculture department believes farm payments may still be authorised under European rules. However, the DUP will no doubt insist that the crisis can only be resolved if the Stormont House Agreement is implemented.

As things stand, Sinn Fein still appears intent on putting a "petition of concern" down against the Welfare Reform Bill if and when it comes to the assembly on Tuesday.

The SDLP, if they stick by their previous policy, might be expected to sign such a petition. However, there are indications that the Arlene Foster paper may have given the party serious pause for thought.

If the measure is vetoed, what's been dubbed a "zombie" executive may stagger on a bit longer, with London reluctant to take direct control of welfare and the DUP and Sinn Féin at logger heads over the way forward.

Then we might find out just how many pounds sterling we have in the David Sterling safety net.