What the NIO will do…

I wrote about what the NIO should do the other day.

Sadly, I suspect that is not what it will do, although I continue to recommend it in the light of feedback. Narrowing everything down to one issue creates gridlock in Northern Ireland; broadening the package (and thus enabling everyone to claim victory) is the way to go.

So, what will the NIO do and how will this ‘crisis’ be resolved. Well, nothing is reliably predictable about this – it is, genuinely, uncharted waters. However, there are a few options.

Legislative Consent

The fundamental stumbling block is that both Nationalist parties put their signatures on the Petition of Concern to cause the Welfare legislation to fall. If either one or the other had not done so, it would have passed (even if they had voted against) because the Petition would not have had enough signatures.

That means that it remains the case that either Nationalist party can still do a deal to see the legislation pass, and thus the Budget crisis resolved (insofar as the Stormont House Agreement is a resolution).

Theoretically, welfare reform legislation cannot return to the Assembly within the next six months, under Standing Orders; indeed, it is unconventional for any legislation to return within the same Assembly or Parliamentary term. That Standing Order could, of course, be removed, although even that requires agreement. (It is for this reason, for example, that same-sex marriage motions are brought to the Assembly every six months.)

However, there is also the much discussed option of the UK Government passing the legislation. However, it would be unconventional for it to legislate on a devolved matter without consulting the relevant devolved Assembly. This consultation takes the form of a Legislative Consent Motion, to which the Assembly must agree. These are frequently used to keep pensions arrangements or corporate governance regulations in line across the UK, for example.

Conventions absolutely matter in UK politics. Without a written constitution, conventions, from the requirement for the Prime Minister to sit in the Commons to the understanding that the Lords will not block legislation in the governing party’s manifesto, are essential. Even though they are not written down, they are the building blocks of the constitution – therefore “unconventional” above almost means “unconstitutional”.

Therefore, it is highly risky either to re-introduce Welfare Reform legislation before November (or really at all in this Assembly term), or to seek to impose Welfare legislation over the heads of MLAs. Both are much discussed, but neither is a serious constitutional option.

The likeliest outcome, therefore, is that the UK Parliament will legislate to extend the 2012 Welfare Reform Act to Northern Ireland, but then offer it to the Assembly under a Legislative Consent Motion. This still requires Assembly agreement. By that time, however, a deal could be done with either Nationalist party which would gain their agreement not to sign a Petition of Concern to block it. (Possible deals would include removal from the legislation of the Spare Room Subsidy or “Bedroom Tax” as mentioned by Sinn Fein, or agreement to allow one or more of the SDLP’s amendments to in effect be made in future Regulations – alongside a clearer outline in the meantime from the NI Executive of the proposed mitigation measures.)

Enhanced borrowing

The fundamental problem with not passing Welfare Reform is not just that it means the UK Government will gradually withdraw from paying for Northern Ireland’s welfare system (the total cost of this withdrawal to the NI Executive, erroneously referred to as ‘fines’ or ‘penalties’, is currently £114m/year but continues to rise), but that it collapses the Stormont House Agreement. The UK Government cannot realistically proceed with that Agreement if the NI Assembly has not done its part of the bargain.

However, there are parts of the Agreement which the Conservatives may be keen to allow anyway. It is quite possible that they will allow the transfer of funds from capital to current (in effect) to enable the Voluntary Exit Scheme, as they would in principle support this “rebalancing” anyway. They may, so as simply not to be churlish, allow the current £100m loan to be paid out of capital budgets too. However, other similar transfers may not be so appealing, and there will be no reason whatsoever for them to put investment at risk elsewhere in the UK by reducing Corporation Tax in Northern Ireland.

One thing the NIO could offer, however, would be to double the borrowing power of the Northern Ireland Executive and allow it for any budget stream, thus effectively enabling it to borrow the £600m it needs now (and the potential £2.8b it needs if no budget is moved next month) and pay it back over time with interest. In the long run, this would have no real impact on the UK Treasury’s finances (which are worked in terms of 10-year borrowing terms anyway), and it would in effect buy another year to resolve welfare (conveniently to the far side of the Irish General Election).

It would be catastrophic for future Northern Ireland budgets, but the current political stand-off considers only the present and not the future. Therefore, this is probably the second likeliest option.

Assumption of Welfare Powers

Another option talked about is the potential “taking back” of welfare powers by “Westminster”.

To be clear, this phrasing is inaccurate and misleading. “Westminster” usually means the Parliament but since we are talking about executive policy development we should probably include “Whitehall”; more to the point, the UK Government never legislated for welfare in Northern Ireland except under Direct Rule (and even then it was, nominally at least, done separately).

The temptation, however, is that welfare powers are currently not devolved anywhere else (though some, notably around disability, are in the process of being devolved to Scotland).

There would be a case, as part of this package, to “reserve” (i.e. “un-devolve”) equality law competences as well, as these are not currently devolved anywhere else either and are also currently gridlocked; this would be probably be wise for the sake of emphasising consistency and distinguishing between powers being taken by Westminster and those not being taken, such as Health and Education, which are devolved elsewhere. However, it is unlikely in practice.

Theoretically, the transfer of powers to the UK Parliament requires a Legislative Consent Motion (see the likeliest option above). The precedent here was the accidental devolution of powers over UK Antarctic Territories, which required such a motion to return them to Westminster from Stormont (and also Holyrood) a few years ago. However, such a Motion would have to be avoided in practice.

Leaving aside the fact it is unconventional (itself extremely dangerous, as noted above), in the court of public opinion this is a dangerous move for the future of the institutions. This is particularly so if it continues to be phrased as “taking back powers”. The public will say, after all, if MLAs cannot sort out welfare, why should they be trusted with justice, health or education? Why not just do away with them altogether? That underlying and peculiarly Irish (perhaps now specifically Northern Irish) notion that we would really be better governed by somebody else, part of our culture of underlying insecurity, will come to the fore. So this is a possibility, but a much, much riskier one than its proponents imply.

Institutional Reform

Another option for the NIO is institutional reform, particularly to stop abuse of the Petition of Concern.

The NIO could argue that, under the spirit of the Agreement, such Petitions were clearly only meant to protect one “designation” from being deliberately targeted by the other.

This is complex, however. My own proposal in the past has been that this would require the creation of a Tribunal, similar to the old IMC, which would determine whether or not a Petition was legitimate on community grounds. This would itself have to be established, wasting precious time. Furthermore, Unionists may not be so keen on it either – in the next Assembly, for example, the Petition of Concern is likely to be crucial on votes of interest to them such as same-sex marriage.

However, the implicit threat of changing the rules around Petitions of Concern may in itself be enough to push through a deal. This, therefore, is highly unlikely but is a possible ‘dummy’ option, floated to try to speed things up.

Nothing

Another option, at least for the next two months, is for the NIO to do absolutely nothing.

It could simply wait for the budget cuts to start happening, causing public outrage. It would continue to point out that such cuts would not be necessary if only the Assembly had passed welfare reform and thus adhered to the Stormont House Agreement the parties signed up to working from. It would remain ready to implement the Agreement once the Assembly did its bit.

This does risk serious civil disorder, or at least civil disorder being blamed on the political situation. This would not be good for the devolved institutions. Nevertheless, ‘do nothing’ is a surprisingly tempting option politically – and the local parties would need to be aware of that.

Assembly Election

The NIO now has no power over calling an Assembly Election, but could nevertheless suggest one. (It may be forced to, of course, in the event of a resignation or two from Executive office.)

It is unlikely this will figure in the NIO’s thinking because it is not in its own gift. Nevertheless, it will know that, based on May’s results, an election may not be the greatest idea for either big party, nor for either Nationalist party.

Several of the above

Of course, not all of the above are mutually incompatible. The NIO could opt for ‘do nothing’ to start with, then float ‘institutional reform’, and then throw a ‘Legislative Consent Motion’ to pass the Welfare Reform Bill and even a second to reserve welfare powers to Westminster. It may know that an early Assembly Election would be a consequence of these all not working.

So, it’s anyone’s guess! My own instinct is that these options are all in order of likelihood – but who knows?

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