With a snap election looming after the Northern Ireland executive was brought down by a scandal over renewable heat incentives, Alan Bermingham explores the governance and public finance implications of the Stormont crisis.
The Fresh Start Agreement, signed in late 2015 and setting the scene for a new administration in Northern Ireland the following May, is all but a distant memory just 14 months later. The new executive of the Democratic Unionist Party (DUP) and Sinn Fein has been bogged down by repeated controversies surrounding good governance issues. These include ministerial influence in outsourced housing maintenance contracts; alleged corruption in property deals; public resources going to fund community groups linked with paramilitaries; and the controversial decision to cut funding for Irish language projects. Then there was the debacle of the Renewable Heating Incentive Scheme (RHI) or ‘cash for ash’ as it is known. That scheme is likely to cost the Northern Ireland tax payer close to £500m over the life of the scheme due to generous scheme tariffs agreed to by the minister in charge at the time – DUP MLA Arlene Foster, who is now the first minister.
This debacle was the final straw for Sinn Fein: on Monday 10 January, the Deputy First Minister, Martin McGuiness (Sinn Fein), effectively ended the chances of the assembly continuing with his resignation from the post. His resignation resulted from Foster’s refusal to step aside during the period of an independent enquiry into the RHI scheme, one which she has accepted needs to take place. At an Assembly plenary session on Monday 16 January, the two main parties in the executive had the opportunity to re-nominate members for the positions of first and deputy first ministers. As was expected, the DUP nominated Arlene Foster to continue in the post of first minister and Sinn Fein did not make a nomination. Without that nomination the shared executive collapsed and the secretary of state James Brokenshire swiftly announced the date of 2 March for fresh elections to the assembly. The Assembly will be effectively dissolved from the 26 January.
So what happens next? My personal view is that without a massive shift in voting intentions, we will have the same two parties in a position to form an executive following the result of any new elections. This is likely to lead to a new round of negotiations about the conditions under which a power sharing executive will come about, an even fresher fresh start agreement, so to speak. But, in the meantime, there are a number of not insignificant financial management and business issues to be considered.
First there is the issue of setting a budget for 2017/18. The Government Resources and Accounts Act (Northern Ireland) 2001, requires that if no budget is set prior to the end of the financial year for the following year, then the authorised officer of the Department for Finance would be able to use resources in the new financial year equating to 75% of the previous years authorised budget. If no budget act is passed before the end of July in the financial year, this limit is increased up to 95%.
In practical terms this is likely to result in existing projects, polices and services obtaining continued funding, it’s unlikely any new initiatives will be pursued without clear political direction. Departments’ available resources are also likely to come under pressure because the legislation is unclear on the issue of retaining income generated during the year – or, in technical terms, accruing resources. It’s not clear whether the authorised officer would have the legal ability to enable departments to retain their planned income levels. Therefore a department working to a net spending position could be under budgetary pressure fairly quickly into the financial year if it has a significant income level that it cannot use to offset its expenditure levels.
The prolonged uncertainty of an election followed by a potential for negotiations over the formation of an executive will also lead to concerns from groups and organisations funded by the executive over certainty of that funding. The umbrella group for the community and voluntary sector in Northern Ireland, NICVA, is already concerned about the need for organisations affected to consider putting staff on protected notice due to this uncertainty.
There is also the wider national issue of planning for Brexit: it is unclear what the impact of an election in Northern Ireland might have on the UK’s timetable to leave. The UK Supreme Court is due to rule on whether the devolved nations of the UK are required to give legislative consent to the UK’s exit from the EU and, given Northern Ireland’s unique position as the only land border with the EU it seems like possibly the worst timing ever to be in a position of holding an election when Article 50 is about to be triggered by the UK Government.
Lastly, there is the issue of resolving and recovering as much as possible from the RHI scandal once the executive is formed. This will also likely involve some form of independent enquiry to address the concerns over the circumstances under which this was allowed to happen. How did the situation arise in which the policy allowed £1.60 to be paid out for every £1 spent – a feature that fundamentally undermined the core principles of the scheme?
While these are all issues that need to be addressed, there is also a more fundamental issue to consider: the need for good governance within the executive. Without good governance there will be no way to clear the smell in the long term. Acting in the public interest at all times must be seen as the focus of the shared executive in order to restore confidence, and progress much needed public service improvements.
About the author
Alan Bermingham is a policy expert on devolved nations at CIPFA.
For the latest updates in CIPFA Northern Ireland regional branch visit www.cipfa.org/northern-ireland