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BRIEFING PAPER

Number 7389 , 20 November 2015

A Fresh Start: the Stormont Agreement and Implementation Plan and the Northern Ireland (Welfare Reform) Bill 2015-16 [Bill 99]

By Paul Bowers, Steven Kennedy, Lizzie Parkin, Hazel Armstrong, Wendy Wilson

Inside: 1. Introduction 2. Welfare 3. The Fresh Start Agreement:

non-welfare

Number 7389, 20 November 2015 2

Contents Summary 3

1. Introduction 5 1.1 Fresh Start agreement 5

Process 5 Content 6 Political intent 6

1.2 Stormont House Agreement 7 2014 negotiations 7 Finance and welfare 8 Other elements 9 Implementation: January-August 2015 10

1.3 Political events summer 2015 11 1.4 Reaction to the Fresh Start agreement 12

2. Welfare 15 2.1 Introduction 15 2.2 UK Governments’ welfare reforms 15 2.3 Welfare reform in Northern Ireland 17

The parity principle 17 Welfare Reform Bill timeline 17 Agreed “flexibilities” and mitigation measures 19

2.4 Welfare announcements in the Fresh Start Agreement 23 Implementing welfare reform and associated “top-up” arrangements 23 Legislative Consent Motion 26

2.5 The Bill 26 Fast-track procedure 27

3. The Fresh Start Agreement: non-welfare 29 3.1 Ending paramilitarism and tackling organised crime 29 3.2 Northern Ireland Executive Financial Reforms and Context 31 3.3 UK Government financial support 32

Balanced budget 32 Funding for action against paramilitary activity 33

3.4 Irish Government financial support 33 3.5 Other parts of the Stormont House Agreement 34

Flags, identity, culture and tradition 34 Parades 34 The Past 34 Institutional reform 35

Contributing Authors: Steven Kennedy and Lizzie Parkin, Social Policy Section, Welfare Paul Bowers and Hazel Armstrong, Parliament and Constitution Centre, Non-welfare

Cover page image copyright: : Volunteer's Reception, Assembly Buildings, Stormont, Belfast by Joel Riley. Licensed under CC BY 2.0 / image cropped.

3 A Fresh Start: the Stormont Agreement and Implementation Plan and the Northern Ireland (Welfare Reform) 2015-16 [Bill 99]

Summary The Northern Ireland (Welfare Reform) Bill is part of a wider process to stabilise functioning of the political institutions in Northern Ireland. The focus of the Bill is on welfare, but it represents part of the implementation of a package agreed between the UK and Irish Governments and the largest Northern Ireland parties: the Fresh Start agreement.

The agreement includes set of linked measures on welfare:

• A Legislative Consent Motion to allow the UK Government to legislate for welfare reform in Northern Ireland (this was passed on 18 November 2015)

• A Bill at Westminster (the present Bill), under a fast-track procedure, to enable Orders in Council to give effect in Northern Ireland to existing and prospective welfare changes in Great Britain

• £585 million to be allocated from Executive funds to “top-up” UK welfare arrangements over a four-year period, including topping-up tax credits and ensuring tenants in Northern Ireland are not affected by the social sector size criteria1

• Establishment of a working group to make proposals on use of the additional funding

The Bill does not itself contain welfare provisions but is instead an enabling measure providing a power by Order in Council to:

• Legislate for welfare reform in Northern Ireland; and • Confer powers on the Secretary of State or the Department for Social Development

in Northern Ireland to make further provision by regulations and order

According to the Explanatory Notes, the Bill will be followed by an Order in Council (a draft has been published) based on the Northern Ireland Assembly Welfare Reform Bill. It will contain regulation making powers and measures to implement welfare reform in Northern Ireland.

The political situation in Northern Ireland deteriorated during 2015: the Fresh Start agreement as a whole is an effort to overcome these difficulties. They initially manifested in delays over implementation of the Stormont House Agreement of December 2014. This had been intended to achieve progress on contentious issues such as parades, flags and dealing with the past, and to enable UK-wide welfare reforms to take place in Northern Ireland while offsetting their impact and yet still achieving a balanced budget. Implementation of this slowed when the Northern Ireland legislation on welfare reform was blocked in the Assembly. Several deadlines for progress on the Stormont House Agreement were missed.

In August 2015 the Police Service of Northern Ireland stated that IRA members may have been involved in the murder of a former IRA member, Kevin McGuigan Snr, who was himself a suspect in the murder of another former IRA member, Gerard Davison. This implied official recognition that the IRA still existed.

The Ulster Unionist Party left the Executive and Democratic Unionist Party Ministers adopted a strategy of rolling resignations.

The UK Government commissioned an independent assessment of paramilitary organisations in September 2015, which reported in October 2015. It concluded that all the main paramilitary groups operating during the Troubles still existed, and that members

1 Also referred to as the “bedroom tax” and the “Removal of the Spare Room Subsidy.”

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still engaged in violence, but that their leaderships were committed to political objectives achieved through peaceful means.

The DUP returned to its normal role in the Executive after this report.

Talks were also set up between the parties to the Stormont House process, the two Governments and the five largest parties in the Assembly, which are those entitled to positions in the Executive.

After ten weeks an agreement was reached, A Fresh Start: the Stormont Agreement and Implementation Plan, published on 17 November 2015.

This includes measures on welfare and paramilitarism, the core of the impasse, and a commitment to a start date and rate for the devolution of corporation tax (April 2018 at 12.5%). It also includes material on other aspects of the Stormont House Agreement, including a draft Northern Ireland Assembly bill to reduce the number of Members for each constituency from six to five.

Some other aspects of the Fresh Start agreement will require UK legislation, such as a change in the Pledge of Office, a restriction on spending plans that exceed the block grant or borrowing limits, and an extension of the period between the Assembly meeting and the Executive being formed, to allow agreement on a Programme for Government.

5 A Fresh Start: the Stormont Agreement and Implementation Plan and the Northern Ireland (Welfare Reform) Bill 2015-16 [Bill 99]

1. Introduction

Summary

The political situation in Northern Ireland deteriorated during 2015, leading to delays in implementation of the Stormont House Agreement of December 2014, a breakdown in relations within the Executive, and warnings that direct rule might have to be imposed.

Welfare reform legislation stalled in the Assembly, and the Police Service of Northern Ireland confirmed the continued existence of the IRA.

The Ulster Unionist Party left the Executive and the Democratic Unionist Party resigned ministerial positions on a rolling basis.

Talks went on between the five parties entitled to positions in the Executive, the UK Government and the Irish Government.

After ten weeks an agreement was reached, A Fresh Start: the Stormont Agreement and Implementation Plan, published on 17 November 2015.

This includes measures on welfare and paramilitarism, the core of the impasse, and a commitment to a start date and rate for the devolution of corporation tax. It also includes some material on other aspects of the Stormont House Agreement, many of which had missed original deadlines. These include a draft Northern Ireland Assembly bill to reduce the number of Members for each constituency from six to five.

The welfare aspects of the Fresh Start agreement require legislation in the UK Parliament. The Northern Ireland (Welfare Reform) Bill 2015-16 had its first reading on 19 November 2015.

1.1 Fresh Start agreement Process On 17 November 2015 an agreement on Northern Ireland was announced. The text of this was published as A fresh start: the Stormont Agreement and implementation plan. This was the outcome of ten weeks of talks in Northern Ireland, aimed at resolving a political crisis that had developed over the summer. The talks involved the UK Government, the Government of the Republic of Ireland and the five political parties entitled to positions in the Northern Ireland Executive.2

These talks were a way of resolving issues which had arisen in implementation of the Stormont House Agreement during 2015. In particular, difficulties over welfare reform and the budget had stymied wider implementation and brought about a political stalemate. According to the Secretary of State, Theresa Villiers, there was “a real risk that collapse of devolution and a return to direct rule might follow.”3

Difficulties had also arisen in August-September 2015 over the Police Service of Northern Ireland statement that the Provisional IRA may have been involved in the murder of a former IRA member. In response the

2 DUP, Sinn Fein, Alliance Party, UUP and SDLP. 3 A Fresh Start: The Stormont Agreement and Implementation Plan, 17 November 2015,

p7

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UUP withdrew from the Northern Ireland Executive, while DUP Ministers resigned all but one post on a rolling basis.

Content The Fresh Start agreement contains a range of commitments by the Executive and the two Governments: those concerning welfare give rise to the Northern Ireland (Welfare Reform) Bill 2015-16, discussed in detail in Section 2 below.

The agreement also includes measures to end paramilitarism and tackle organised crime, including a new Joint Agency Task Force between the police and customs bodies in the UK and Ireland.

Between them, the measures on welfare and paramilitarism represent the pulse of the agreement: an effort to resolve the political crisis and to return the institutions to normal function. As a result, implementation of the Stormont House Agreement comes back into view. The Fresh Start agreement includes some concrete progress on that, but it does not resolve all outstanding aspects of the Stormont House Agreement. In particular, work on the past is cast at the level of the two Governments reflecting on options for a process to enable resolution.

The agreement covers financial reforms, including civil service reform, designed to reduce the burden on the Assembly budget. It also includes a commitment to activate the devolution of corporation tax, provided for in UK legislation following the Stormont House Agreement, in April 2018 at a rate of 12.5%. There are sections on financial support from the two Governments, and also on implementing the other aspects of the Stormont House Agreement. These include steps to reduce the number of MLAs from six to five per constituency, to create a recognised official opposition, to restrict the use of the Petition of Concern mechanism, and to reduce the number of departments from twelve to nine, with implications for cost reduction.

However, while the agreement noted progress on elements of the legacy of the past, no agreement was reached to take forward the core of the Stormont House Agreement provisions on this, including an Oral History Archive, a new Historical Investigations Unit to take over the investigative work of the defunct Historical Enquiries Team on Troubles-related deaths, and an Independent Commission on Information Retrieval to help victims and survivors obtain information about the Troubles-related deaths of next of kin.

Political intent The Fresh Start agreement opens with a statement from the First Minister and deputy First Minister, which starts:

The Commons Library has published other briefing papers relevant to the Agreement and the Bill: Debate Pack: Northern Ireland update, 8 October 2015 Northern Ireland: Stormont House Agreement update, 18 August 2015 Welfare Reform and Work Bill [Bill 51 of 2015-16], 16 July 2015 Devolution of corporation tax to Northern Ireland, 12 February 2015 Northern Ireland (Miscellaneous Provisions) Bill: amendments, 11 March 2014 Northern Ireland (Miscellaneous Provisions) Bill, 15 November 2013 Northern Ireland (Miscellaneous Provisions) Bill, 17 June 2013

7 A Fresh Start: the Stormont Agreement and Implementation Plan and the Northern Ireland (Welfare Reform) Bill 2015-16 [Bill 99]

We are pleased to present in this document a set of inter-related proposals which seek to provide a far-reaching and comprehensive framework for addressing some of the most challenging and intractable issues that have impacted on our community. It is our belief and conviction that this framework, when implemented with goodwill and shared purpose, has the potential to nudge history forward by transforming how we support each other in overcoming our deepest divisions.4

They go on to talk of a “common commitment to a better way of doing business together” and of a leadership challenge “to build hope and confidence throughout our community so that we can all rise above narrow sectional interests to play a bigger part in creating a truly reconciled and regenerated community.” They refer explicitly to “unresolved difficulties” and to “many areas of disagreement and mistrust that have bedevilled progress in embedding peace and reconciliation.”5

The First Minister and deputy First Minister end with a pledge:

Our pledge is that together we will use the Office of the First Minister and deputy First Minister to lead by example, and through co-operation and common purpose, to ensure that the spirit, vision and promise of the document is fulfilled.

Peter Robinson announced on 19 November 2015 that he would retire as First Minister and Leader of the DUP within a few weeks. He had reportedly remained in post, after telling colleagues of his decision in May 2015, in order to restore stability to the institutions, and felt that the Fresh Start agreement secured this.6

Theresa Villliers characterised the agreement thus:

On behalf of the UK Government I believe that this document, and the commitments it contains, represents the opportunity for a fresh start for the Executive and for devolution. It takes us closer to our goal of a Northern Ireland where politics works, the economy grows and society is stronger. It will be a further stage in delivering one of the Government’s key manifesto commitments for Northern Ireland, the full implementation of the Stormont House Agreement. And it is another step forward towards a brighter, more secure future for everyone in Northern Ireland.7

1.2 Stormont House Agreement 2014 negotiations Negotiations involving the five Northern Ireland Parties represented in the Executive began in October 2014. These were structured into a three strand process which included the Northern Ireland parties, the UK Government and the Irish Government. The US Special Envoy for Northern Ireland, Senator Gary Hart, also provided support and close

4 A Fresh Start: The Stormont Agreement and Implementation Plan, 17 November 2015,

p5 5 A Fresh Start: The Stormont Agreement and Implementation Plan, 17 November 2015,

p6 6 “Peter Robinson: Northern Ireland First Minister says the time is right to quit,” BBC

News, 19 November 2015 7 A Fresh Start: The Stormont Agreement and Implementation Plan, 17 November 2015,

pp8-9

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engagement. In addition to the topics of flags, parading and the past, the 2014 talks covered welfare reform, the NI Executive budget and reform of political institutions.

Sinn Fein’s concern over welfare reforms required by the UK (Coalition) Government was one of the causes of the inclusion of this topic in the 2014 negotiations. The party wanted extra money to create offsetting arrangements to reduce the impact of welfare reforms, coming into effect across the UK, on Northern Ireland. This had prevented the adoption of a balanced budget in 2014.

A broad agreement was reached in the talks on 23 December 2014, and known as the Stormont House Agreement.8 This was immediately welcomed by the DUP, UUP and Sinn Fein, but the SDLP and the Alliance had remaining concerns. The Agreement was not a detailed resolution of all issues: it represented an aversion of immediate crisis and a set of processes to take things forward.

Finance and welfare The first paragraph of the Stormont House Agreement stated that “early measures are needed to address the longer term structural financial difficulties in the Northern Ireland budget.” The UK Government provided a financial support package of almost £2 billion, details of which were set out in an Annex to the Agreement.9

The parties agreed to adopt a final balanced budget for 2015-16 in January 2015, and that the Executive would adopt a comprehensive programme of Public Sector Reform and Restructuring in the same month. This would include a reduction in the size of the public sector, including the civil service, reduction of the pay-bill and extension of shared services.

Also in January 2015, it was agreed that legislation would be brought before the Assembly “to give effect to welfare changes alongside further work to develop and implement flexibilities and top-ups from the block grant as part of a package of measures to address local need.”10

Corporation tax was to be devolved with a target date of April 2017.

Other medium to long term moves would be to include executive departments reporting, by March 2015, on plans for further reform measures, and also looking at how best to realise the value of capital assets, raising income, especially for enhanced public services, or making long term savings.

An undertaking was included that there would be an independent audit of spending to identify “how divisions in society impact on the delivery of goods, facilities and services, and to then consider how best to

8 Northern Ireland Office, Stormont House Agreement, Policy paper, 23 December

2014. 9 Northern Ireland Office, Stormont House Agreement Annexe, Policy paper, 23

December 2014. 10 Stormont House Agreement, para 6

9 A Fresh Start: the Stormont Agreement and Implementation Plan and the Northern Ireland (Welfare Reform) Bill 2015-16 [Bill 99]

reconfigure service delivery in a manner consistent with a shared future.”11

The UK Government would consider additional fiscal devolution, in line with work by the Executive to identify whether this would bring economic or social benefit for Northern Ireland. This would include consideration of devolving the aggregates levy, stamp duty and landfill tax.

In announcing the Agreement to the House of Commons on 7 January 2015, the Secretary of State, Theresa Villiers, stated that the package of financial support would amount to about £2 billion of additional spending power. This would be made up of new funding and flexibilities in existing resources.12

Other elements Flags, identity, culture and tradition

A Commission on Flags, Identity, Culture and Tradition would be created, which would report within 18 months.13 It would have 15 members, seven of them nominated by the leaders of the parties in the Executive, two from each of the two largest parties, and one from each of the next three parties by number of seats in the Assembly.

Parades

The power to take responsibility for parades and any protests relating to them would be devolved to the Northern Ireland Assembly. This would take the place of the Parades Commission, which is unpopular with Unionists. Legislation on this would focus on the rights and responsibilities of those involved in, or affected by, parades and related protests, with proper regard for fundamental rights protected by the European Convention on Human Rights.14

The past

The participants agreed that an approach for dealing with the past should respect principles which included promoting reconciliation, upholding the rule of law and acknowledging and addressing the suffering of victims and survivors.

To this end, they agreed various detailed measures including to establish some new bodies:

Oral History Archive to provide a central place for people of all backgrounds to share experiences related to the Troubles.

Historical Investigations Unit (HIU) to take forward investigations into outstanding Troubles-related deaths.

Independent Commission on Information Retrieval (ICIR), created by the UK and Irish Governments, to enable victims and survivors to obtain privately information about Troubles-related deaths of next of kin.

11 Stormont House Agreement, para 12 12 HC Deb 7 January 2015, c296. 13 Stormont House Agreement, para 15 14 Stormont House Agreement, para 19

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Implementation and Reconciliation Group (IRG) to oversee themes, archives and information recovery.

Institutional reform

The number of Assembly members would be reduced to five per constituency (there are currently six), under Assembly legislation. The capacity to legislate for size of the Assembly was created by the Northern Ireland (Miscellaneous Provisions) Act 2014.

A number of other detailed changes were to be made to the way the Assembly operated, including the option of creating an official Opposition.

The number of departments in the Northern Ireland Executive would be reduced from twelve to nine, in time for the 2016 election.15

Implementation: January-August 2015 The Agreement included a commitment that provisions must be actively reviewed and monitored. An Implementation Group was set up, with representatives of the NI Executive parties, as well as the UK and Irish Governments. A six-monthly review of progress was published on 25 June 2015.16

The introduction to the Progress Report June 2015 stated that it reflected the significant progress made in implementing the Agreement. The Report detailed preparatory work carried out on a number of areas, but several of the targets set for June 2015 had not been achieved. This reflected the failure of the Welfare Reform Bill to complete passage in the Assembly, which had an impact on other areas in the Agreement.

Finance provisions

A Budget Bill was introduced in the Assembly on 9 February 2015. This passed through all its stages and received Royal Assent on as the Budget Act (Northern Ireland) 2015 on 12 March 2015, with cross-community support. This covered spending in the 2014-15 financial year and the first part of the 2015-16 financial year.

The Budget (no 2) Bill (Bill 53/11-16) was introduced in the Assembly on 16 June 2015. This Bill provided a budget up to 31 March 2016. It passed all Assembly stages and received Royal Assent on 30 June as the Budget (No 2) Act (Northern Ireland) 2015.

A voluntary exit scheme for public servants was launched on 2 March 2015. This was linked to the reduction of Executive Departments from twelve to nine, agreed by the Executive on 22 January 2015. The funding for this would be up to £200m per year in 2015/16, 2016/17 and 2017/18, with a further £100m in 2018/19.

A bill to devolve the setting of rates of corporation tax to the Northern Ireland Assembly was introduced into the House of Commons by the Secretary of State on 8 January 2015. Further details on the background and content of the Bill can be found in a Library briefing paper,

15 Stormont House Agreement, para 56, 60, 62 16 Northern Ireland Office, Stormont House Agreement Progress Report, June 2015.

11 A Fresh Start: the Stormont Agreement and Implementation Plan and the Northern Ireland (Welfare Reform) Bill 2015-16 [Bill 99]

Devolution of corporation tax to Northern Ireland.17 The Bill received Royal Assent as the Corporation Tax (Northern Ireland) Act 2015 on 26 March 2015.

Welfare

Welfare reform has been a matter of disagreement, which has delayed the implementation of other aspects of the Stormont House Agreement. This is discussed in detail in Section 2 below.

Briefly, a Welfare Reform Bill (Bill 13/11-15) had been introduced into the Assembly in October 2012 and had progressed to Consideration Stage. Northern Ireland Assembly Bills are considered during a mandate, which runs between elections to the Assembly, the current mandate running from 2011-2016. Assembly Bills do not fall if consideration is not completed during an Assembly session. The Bill Consideration Stage started again in February 2015, when it passed on to the Further Consideration stage.

However, on 9 March 2015 Sinn Fein lodged a Petition of Concern on the Bill. This entails that any motion or amendment requires cross-community support to proceed (60% of Members voting, with 40% from each community). The Minister for Social Development chose not to move the Final Stage vote on the Bill.

Further discussions took place between the Parties and the Welfare Reform Bill was presented again to the Assembly on 26 May 2015. The Bill was rejected, with all the Sinn Fein and SDLP members voting against it.

The Assembly was able to pass a Budget (no 2) Act on 30 June 2015, which included provision for the use of accrual funds by Northern Ireland Departments. But the parties had not reached agreement on the fundamental issue of how UK welfare reform would be applied to Northern Ireland when the Assembly rose for summer recess on 4 July 2015.

1.3 Political events of summer 2015 A political crisis followed the Police Service of Northern Ireland announcement in August 2015 that they had evidence that members of the IRA were involved in the murder of a former member of the IRA, Kevin McGuigan Snr, which had taken place on 13 August 2015. Mr McGuigan had been a suspect in the murder of Gerard Davison, also a former member of the IRA earlier in the year. The statement implied official confirmation that the IRA still existed.

In August 2015 the UUP withdrew from the Northern Ireland Executive.

In September 2015 the DUP First Minister, Peter Robinson, and three other DUP ministers began a strategy of rolling resignations from the Northern Ireland Executive. An Acting First Minister, Arlene Foster of the DUP, remained in post so that the Executive could continue in existence.

17 Devolution of corporation tax to Northern Ireland, Commons Library Standard Note

7078, 12 February 2015.

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Talks to resolve the situation began, involving the UK Government, the Irish Government and the five largest Northern Ireland parties, on 22 September 2015. The Prime Minister18 and the Secretary of State19 indicated that the all-party talks should come to a conclusion by the end of October 2015.

An independent assessment of paramilitary organisations was set up by the UK Government in September 2015, with a panel of three reviewers. The assessment was carried out using data compiled by the Police Service of Northern Ireland and MI5. The panel reported to the Secretary of State on 19 October 2015.20

It concluded that all the main paramilitary groups operating during the Troubles still existed, and that members still engaged in violence, but that their leaderships were committed to political objectives achieved through peaceful means.21

On 20 October 2015 the DUP ministers resumed their posts in the Northern Ireland Executive.

1.4 Reaction to the Fresh Start agreement The UK Government, the Irish Government, the First Minister and the deputy First Minister welcomed the announcement of the Fresh Start agreement. Sinn Fein and the DUP also welcomed it. The Ulster Unionist Party felt that the agreement was not strong enough on paramilitary activities. The SDLP expressed reservations on what it described as “the DUP/Sinn Fein proposals” and the Alliance Party called the Agreement “another false dawn for victims”.

On 17 November the Secretary of State, Theresa Villiers, said:

This Agreement means that Northern Ireland’s finances can be put back on a sustainable footing, ending the long-standing dispute over the budget. There will be a fresh emphasis on tackling paramilitarism and organised crime and clear declaration that such activity will never be tolerated. And there will be reforms of the Executive and Assembly to make devolution work better.22

The First Minister, Peter Robinson, commented:

At the heart of this agreement is a desire to build a better Northern Ireland for all our citizens. We set out further steps to develop our economy, support those most vulnerable, assist working people and build on the political progress to date. The decision to reduce our Corporation Tax rate from April 2018 to 12.5% will act as a game changer in our efforts to grow the Northern Ireland economy. The additional half billion financial package will allow us to protect front-line services ensuring we become efficient in how we deliver for the public.

The deputy First Minister, Martin McGuiness, added:

18 BBC News, Northern Ireland agreement needed by end of October, 2 October 2015. 19 BBC News, Theresa Villiers tells parties they cannot be in talks ‘until Christmas, 4

October 2015. 20 Paramilitary Groups in Northern Ireland, October 2015. 21 Paramilitary Groups in Northern Ireland, October 2015, paras 2(i), 2(vi) and 2(viii) 22 A fresh start for Northern Ireland, NIO Press release, 17 November 2015.

13 A Fresh Start: the Stormont Agreement and Implementation Plan and the Northern Ireland (Welfare Reform) Bill 2015-16 [Bill 99]

We have secured more than half a billion additional funding for the Executive plus flexibilities that can be invested in growth and public services. We have agreed a package of £585million to support the most vulnerable in society and low income working families.

We also addressed directly the issue of paramilitarism. There can be no place for armed groups in our society. That is why the agreement includes additional resources for policing and mechanisms to challenge armed gangs and criminality.23

In a statement issued by Sinn Fein, Mr McGuiness commented:

The cuts to our welfare budgets, tax credits and our block grant are wrong and unfair. We are determined to do all in our power to oppose this austerity and protect our people and our public services.

He also said:

The legacy of the past remains a huge gap in this work. The onus remains on the British government to live up to their responsibilities to victims, in particular full disclosure.24

For the DUP, the Finance Minister, Arlene Foster, welcomed the inclusion of a commencement date for a Northern Ireland rate of Corporation Tax:

Investment decisions made now often take two to three years to be realised on the ground. We need to make investors, here and abroad, aware of our intentions now so they can factor this positive announcement into their investment planning. This pre-announcement of the April 2018 commencement date will give investors time to respond and ramp up investment.25

But the UUP expressed concern that in their view the Agreement did not deal sufficiently with paramilitary activities:

The Ulster Unionist Party put dealing with paramilitarism at the top of the political agenda. But the agreement reached between Sinn Fein and the DUP totally ignores the elephant in the room. The IRA exists, they still have access to weapons, and the Army Council oversees Sinn Fein strategy. Sinn Fein won`t admit it and the DUP don`t want to talk about it.26

The SDLP stated that it needed more time to consider the text of the Agreement but felt there were gaps in areas of priority. The new SDLP Leader, Colum Eastwood, stated:

The SDLP and the Alliance Party were given less than 60 minutes to read a DUP/Sinn Féin document over 60 pages long. We were then expected to enter an Executive meeting and sign up. That is no way to get an all-party agreement.

23 Agreement provides a fresh start, Northern Ireland Executive Press Release, 18

November 2015. 24 Political institutions the best way forward, Sinn Fein Press Release, 17 November

2015. 25 Foster and Bell welcome 12.5% Corporation Tax rate, DUP Press Release, 17

November 2015. 26 Sinn Fein won’t admit the IRA exists and the DUP don’t want to talk about it, UUP

Press release 18 November 2015.

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The absence of comprehensive proposals on the Past is a very serious failure. Three times before – Eames Bradley, Haass O’Sullivan and Stormont House – negotiations to address the Past did not succeed. Now for a fourth time, victims and survivors will be deeply disappointed. This cannot be allowed to endure. We must get back to this work. Those who persist in impeding truth and accountability cannot prevail.27

The Alliance Party Leader, David Ford, expressed disappointment at the content and stated that his party had asked for longer to consider the deal:

But this deal is far from the comprehensive outcome promised. At this stage none of the main issues from the Haass Talks of 2013 have been resolved: mere promises of actions on flags and parades and nothing on the past. Alliance proposed an adjournment until next week, to allow proper scrutiny of what should be major government decisions that have potentially deep, long-term implications.28

The BBC has also compiled a range of reactions from politicians and other figures in the Northern Ireland community to the Fresh Start agreement.29

27 SDLP will interrogate DUP/Sinn Fein proposals, SDLP Press release, 17 November

2015. 28 Ford says ‘Fresh Start’ deal is another false dawn for victims, Alliance Party press

release 17 November 2015. 29 Politicians and key figures react to Fresh Start Agreement, BBC News 17 November

2015.

15 A Fresh Start: the Stormont Agreement and Implementation Plan and the Northern Ireland (Welfare Reform) Bill 2015-16 [Bill 99]

2. Welfare

2.1 Introduction Section C of A Fresh Start: The Stormont Agreement and Implementation Plan sets out the approach agreed by the Northern Ireland Executive to implementing welfare reforms. Further information on the financial arrangements underpinning the welfare aspects of the agreement is provided in section D of the Implementation Plan.

The main elements are:

• The Assembly to debate and agree a Legislative Consent Motion, no later than the week commencing 23 November, to allow the UK Government to legislate for welfare reform in Northern Ireland.

• A Bill would then be introduced in Westminster, under a fast-track procedure, to enable Orders in Council to give effect in Northern Ireland to welfare changes already introduced in Great Britain by the Welfare Reform Act 2012, and other measures to be introduced under powers the Welfare Reform and Work Bill 2015-16.

• £585 million to be allocated from Executive funds to “top-up” UK welfare arrangements over a four-year period, to include funding to top-up tax credits and to ensure tenants in Northern Ireland are not affected by the social sector size criteria.30

• Establishment of working group, to be led by Professor Eileen Evason, to bring forward proposals on how the additional funding should be used.

Further information on UK Governments’ welfare reforms, and on related developments in Northern Ireland, is given below.

2.2 UK Governments’ welfare reforms The 2010 Government embarked on a significant programme of welfare reform. The main vehicle was the Government’s flagship Welfare Reform Act 2012 which provides the legislative framework for, among other things:

• Universal Credit, which is replacing means-tested benefits and tax credits for people of working age.

• Personal Independence Payment, which is replacing Disability Living Allowance for people of working age.

• Limiting receipt of contributory Employment and Support Allowance to one year for ESA claimants in the "Work Related Activity Group."

• Restricting Housing Benefit entitlement for social housing tenants deemed to be occupying accommodation which is larger than they need.

• A new "conditionality and sanctions" regime for claimants of working age benefits.

30 Also referred to as the “bedroom tax” and the “Removal of the Spare Room

Subsidy.”

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• Limiting the total amount of benefit that can be claimed by a household (the Household Benefit Cap).

• Abolition of the discretionary Social Fund. • Changes to appeals procedures.

In Summer Budget 2015, the incoming Conservative Government announced details of further welfare measures to help achieve a target of additional welfare savings of £12 billion a year. The Welfare Reform and Work Bill 2015-16, introduced following the Summer Budget, covers measures which account for around 70% of the additional savings. The welfare/housing measures in the Bill include:

• Lowering the benefit cap threshold and varying it between London and the rest of the UK.

• A four year benefits freeze. • Limiting support for larger families through Child Tax

Credits/Universal Credit, and abolishing the family elements in tax credits and in UC.

• Abolition of Employment and Support Allowance Work-Related Activity Component.

• Changes to conditionality for responsible carers under Universal Credit.

• Replacing Support for Mortgage Interest with Loans for Mortgage Interest.

• Reducing social housing rent levels by 1% in each year for four years from 2016-17.

Further information can be found in Commons Briefing Paper CBP 07252, Welfare Reform and Work Bill.31 The Bill has now completed its Commons stages and had Second Reading in the House of Lords on 17 November.

With the exception of the tax credit changes, the measures in the Welfare Reform and Work Bill listed above cover matters which are devolved to Northern Ireland – see section 11 of CBP 07252.

Separate changes to tax credits announced in the Summer Budget – reductions in the income thresholds and an increase in the “taper rate”32 – were to have been introduced via regulations (which would also have applied to Northern Ireland), but on 26 October the Government was defeated in the House of Lords. In response, the Chancellor reaffirmed the Government’s intention to continue reforming tax credits but said that he would set out plans for “lessening the impact on families during the transition” in the Autumn Statement on 25 November.33

31 For developments since the Bill was introduced see CBP-07352, Welfare Reform and

Work Bill 2015-16 Committee Stage Report; and Lords Library notes LLN-2015-0042, Welfare Reform and Work Bill (HL Bill 69 of 2015–16)

32 See CBP-7300, Tax Credit changes from April 2016 33 HC Deb 27 October 2015 c177

17 A Fresh Start: the Stormont Agreement and Implementation Plan and the Northern Ireland (Welfare Reform) Bill 2015-16 [Bill 99]

2.3 Welfare reform in Northern Ireland The parity principle Social security34 in Northern Ireland is a devolved matter, but there is a long-standing policy of maintaining parity with Great Britain in this area. “Parity” in social security between Northern Ireland and Great Britain is more than just a convention. The Belfast Agreement specifically cited social security as an area where parity is normally maintained, and the principle is enshrined in section 87 of the Northern Ireland Act 1998. There are some differences in social security provision in Northern Ireland compared with Great Britain, but these are relatively minor and, in regard to the range of benefits available, conditions of entitlement and benefit rates, the two systems essentially operate as one.

The parity principle recognises the fact that Northern Ireland could not fund a social security system equivalent to that in Great Britain without a substantial financial subsidy from the United Kingdom. In short, the UK Government is committed to meeting the shortfall in social security spending in Northern Ireland, on condition that people in Northern Ireland pay the same rate of income tax and National Insurance, and enjoy the same rights and benefits as people in Great Britain. Northern Ireland could decide to follow different policies from the UK Government, but the expectation is that any additional costs involved would fall to be met by the Executive.

Further information can be found in:

• Northern Ireland Assembly Research and Information Service Briefing Paper 99/11, Parity and Social Security in Northern Ireland, 24 May 2011

• NI Department for Social Development, Understanding “Parity”: Departmental briefing paper

• Law Centre NI, Social Security Parity A note for the Social Development Assembly Committee, May 2011

Welfare Reform Bill timeline A Welfare Reform Bill mirroring the provisions in the UK Welfare Reform Bill 2010-12 was introduced in the Northern Ireland Assembly in October 2012.35 Following a difficult and protracted passage through the Assembly, the Bill failed to pass its final stage in May 2015.

A summary of developments during the passage of the Bill is given in the timeline below.

October 2012

The Welfare Reform Bill is introduced to the Northern Ireland Assembly on 1 October 2012. The Bill passed its second stage on 9 October 2012. During the debate, an amendment moved by Sinn Féin to postpone the Bill was defeated.36

34 This does not include tax credits, which are a reserved matter 35 See also Northern Ireland Assembly Research and Information Service Briefing Paper

144/12, A Guide to the Welfare Reform Bill, 4 October 2012 36 Northern Ireland Assembly, 9 October 2012

Number 7389, 20 November 2015 18

On 22 October 2012, the Social Security Minister, Nelson McCausland, said that agreement had been reached with Lord Freud, the DWP Minister, on “operational flexibilities” to the welfare reform programme to reflect Northern Ireland’s unique circumstances and protect vulnerable claimants. For example, the housing cost element of Universal Credit would be paid direct to landlords rather than the claimant, and there would be provision for Universal Credit to be paid twice a month.37

Further concessions were also announced in October 2014. The Minister for Social Development, Mervyn Storey, sent a letter to church leaders which outlined a package of measures to mitigate any negative impacts of welfare reform.38 This included transitional protection measures – to ensure claimants of Universal Credit were not financially worse off, and a fund to protect current tenants from any reduction in Housing Benefit due to the under-occupation deduction (also referred to as the “bedroom tax” and “Removal of Spare Room Subsidy”). Full details are provided below.

Subsequent passage of the Bill

After Committee stage in February 2013, the Welfare Reform Bill stalled due to a deadlock between the political parties. No further progress was made on the Bill until February 2015.

In November 2013, the DWP Minister for Disabled People warned that Northern Ireland would face a £5 million monthly penalty charge from January 2014 if the Northern Ireland Assembly continued to delay the passage of the Bill.39

The UK Government subsequently confirmed that the Northern Ireland block allocation would be reduced by £87 million in 2014-15 for non-adherence to the welfare reform initiative. Continued failure to pass welfare reform would cost £114 million in 2015-16.

On 23 September 2014, the DUP proposed an amendment which called for “the implementation of this revised and improved welfare reform package for Northern Ireland to avoid the unsustainable cost of opting out of welfare reform.” This was narrowly defeated.40

December 2014 – Stormont House Agreement

After 11 weeks of talks, convened by Northern Ireland Secretary Theresa Villiers, agreement was reached between Northern Ireland’s political leaders and the Stormont House Agreement was published on 23 December 2014.

The agreement confirmed that legislation would be brought before the Assembly in January 2015 to give effect to welfare changes alongside further work to develop and implement flexibilities and top-ups from the block grant as part of a package of measures to address local need. 37 Northern Ireland Assembly, 22 October 2012 38 Northern Ireland Assembly, 21 October 2014 39 Welfare reform: Mike Penning warns 'clock is ticking' on NI financial penalties, BBC,

13 November 2013 40 Northern Ireland Assembly, 23 September 2014

19 A Fresh Start: the Stormont Agreement and Implementation Plan and the Northern Ireland (Welfare Reform) Bill 2015-16 [Bill 99]

Implementation of these welfare changes would begin to take place in financial year 2015-16 and implementation would be complete by 2016-17.41

On 23 December 2014, the UK Government responded to the parties’ proposal. They stated that the deduction from the block grant of £114m for 2015-16 remained due as welfare changes had not yet been implemented, but this would be reduced if implementation of welfare reform was completed during 2015-16.42

March 2015

The Bill was due to pass through its final stage in the Assembly on 9 March 2015. However, Sinn Féin withdrew its support for the Bill and, supported by the SDLP, lodged a “petition of concern” in relation to the passing of the Bill. Petitions of concerns must have cross-community support of a majority of 60% with at least 40% of each of the nationalist and unionist designations present and voting.

The motion to pass the Welfare Reform Bill was not moved. The Minister for Social Development Mervyn Storey informed the Assembly that he would seek to reschedule the bill. 43

May 2015

A further petition of concern was presented on Friday 22 May in relation to the passing of the Bill by Sinn Féin and the SDLP, and was also signed by the Green Party.

As a result, on 26 May 2015 the Welfare Reform Bill failed to pass its final stage in the Assembly. A majority of 58 MLAs voted in favour of the Bill and 39 against.44 Due to the petition of concern, the Bill fell despite a majority of MLAs voting for the legislation.

Agreed “flexibilities” and mitigation measures On 20 October 2014, the Minister for Social Development, Mervyn Storey, sent a letter to church leaders which outlined a package of measures to mitigate negative impacts of welfare reform. The full text of the letter is copied below:

I agreed to write to you following our meeting regarding the package of measures which my predecessor had agreed within the Department for Work and Pensions to help shape how welfare reform could be implemented in Northern Ireland and to mitigate some of the negative aspects of welfare reform in Northern Ireland. The package takes account of a wide range of other stakeholder views including those previously expressed by the church leaders with a key objective being to continue to protect the most vulnerable in our society.

The details of the package are as follows:

Transitional Protection

41 Gov.uk, Stormont House Agreement, 23 December 2014, page 2 42 Gov.uk, Stormont House Agreement: Financial Annex, 23 December 2014 43 Northern Ireland Assembly, 9 March 2015 44

http://aims.niassembly.gov.uk/officialreport/report.aspx?&eveDate=2015/05/26&docID=235302

Number 7389, 20 November 2015 20

One of the biggest changes under the Welfare Reform Bill (NI) 2012 will be the introduction of Universal Credit – a single benefit for working age claimants replacing all existing working age benefits as well as Working and Child Tax Credits. Where a claimant’s household is to transfer to the new benefit and will receive less under Universal Credit than they had received under their previous benefits, then they will receive Transitional Protection which will ensure that they are not financially worse off. Transitional Protection will only end if a claimant’s circumstances significantly change.

Frequency of Universal Credit Payments

The Coalition Government’s policy is for Universal Credit to be paid once a month to a single bank account. Concerns have been raised by many stakeholders that the introduction of monthly payments will cause significant difficulties for many people, especially those on existing social security benefits.

I am proposing to introduce the default position in Northern Ireland that all claimants will receive twice monthly payments with the option of moving to monthly payments should they decide they wish to have this method of payment.

Split Universal Credit Payment

The Coalition Government’s policy is that couples living in the same household will make a joint claim for benefit, with Universal Credit normally paid in full into one bank account per household. This would be the default position with any differing arrangement only being available in exceptional circumstances.

I am proposing that in Northern Ireland, no default position be applied; rather a range of options would be available, including:

Single household payment to the bank account of one or other partners.

Single household payment to a joint account.

A split payment on the basis of the main carer and children to be determined by the Department and paid into separate bank accounts.

Direct Payment of Universal Credit to Landlords

In Great Britain the default position for Universal Credit is that the housing element for social and private sector tenants will be paid directly to the benefit claimant with payments made directly to landlords only in exceptional circumstances.

In Northern Ireland, I am proposing that the housing element of Universal Credit will be paid directly to landlords ensuring that people receiving the housing element of Universal Credit remain safe in their tenancies and that social housing provision has a firm financial basis. Households will have the freedom to opt out of this arrangement, subject to them meeting specific criteria primarily around avoiding future arrears.

Social Sector Size Criteria

The Coalition Government has introduced an under-occupancy restriction (commonly referred to as the Bedroom Tax) for both new and existing working-age Housing Benefit claimants living in the social rented sector. Pensioners are excluded from the policy. The focus of the work of my department has been on balancing the need to protect people and communities from the worst aspects of this policy, with the need to ensure that we make best

21 A Fresh Start: the Stormont Agreement and Implementation Plan and the Northern Ireland (Welfare Reform) Bill 2015-16 [Bill 99]

use of the social housing stock and do not implement measures which hinder or even discourage mobility.

It is therefore proposed that the Executive create a separate fund of over £17 million for each of the first years of the policy which will be used to protect current tenants from any reduction in the Housing Benefit for their existing tenancies until a significant change in their personal circumstances or they are offered suitable alternative accommodation. At the end of the 5 year period the policy will be reviewed by the Executive. There are also proposals for new tenants to receive protection in specific circumstances.

Sanctions

A new regime of sanctions has already been introduced in Great Britain for both existing Jobseekers Allowance and Employment Support Allowance claimants, as well as for existing and future Universal Credit claimants. Concerns have been raised about the proportionality of the sanctions and I am proposing a reduction in the maximum sanction period from 3 to 2 years and to remove the civil penalty provisions from the Welfare Reform Bill.

Joint Claims

Universal Credit in Great Britain requires that both members of a couple must sign the Claimant Commitment, which is the agreed contract which details the actions which a claimant will undertake in search of employment. Where one member of the household refuses to accept a Claimant Commitment then the Universal Credit claim will fall.

In Northern Ireland, I am proposing that where one claimant refuses to sign a Claimant Commitment and leaves the household, that person will be excluded from the Universal Credit claim and the household will be able to submit a new claim for remaining members.

Medical Evidence for Personal Independence Payment

I am proposing that the Executive provide additional funding for medical reports as part of the PIP decision-making process. It is proposed that where a medical report has not already been provided, then one must be received prior to a claimant receiving an unfavourable decision (reduction or disallowance) on their benefit.

Lone Parent Flexibility

Concerns have been repeatedly voiced over the possibility that Lone Parents may be sanctioned for not taking up offers for work or training if they cite a lack of available childcare provision as the sole reason. I am proposing that existing protections be carried forward under this Welfare Reform Bill whereby the lack of available childcare provision constitutes good reason and therefore the claimant will not be sanctioned.

Extension of DHP to Social Sector

Discretionary Housing Payments (DHPs) provide financial assistance to tenants who are in receipt of Housing Benefit but where the amount received does not cover the whole of their rent. Currently only private rented sector tenants can make an application for DHP to assist with rent shortfalls.

The proposals to ameliorate and mitigate the impact of the introduction of the Social Size Criteria are centred on the increased use of the existing Discretionary Housing Payment (DHP)

Number 7389, 20 November 2015 22

scheme than was originally intended by extending the right to apply for DHP to assist with rent shortfalls to social sector tenants.

Under the proposals existing social housing tenants in receipt of Housing Benefit affected by the shortfall in Housing Benefit due to the introduction of the social sector size criteria shall be able to apply for DHP and retain this protection until suitable accommodation is made available to them or until they have a relevant or significant change in circumstances.

Discretionary Support Scheme

The UK Government have abolished the Social Fund across Great Britain and have transferred the monies for funding Social Fund in Northern Ireland to the Executive. The Welfare Reform Bill (NI) 2012 will abolish Social Fund here and I am proposing to introduce a new Discretionary Support service, unique to Northern Ireland, which will provide non-repayable grants and interest-free loans to people on low income experiencing extreme, exceptional or crisis situations who have no other means of support.

The new Discretionary Support service will not be restricted to those in receipt of income-related benefits. It will be available to anyone whose income falls below a set threshold, thus opening up the provision, meaning that working customers and those on contributory-only benefits could potentially gain access to grant payments. An additional 49,000 claimants could benefit from Discretionary Support compared to the current number who can apply for the Social Fund.

Contingency Hardship Fund

It is also planned to create a £30million hardship fund which would be used to mitigate some of the most challenging impacts of the Bill.

In sharing the details of the package of measures I hope that we can now have an informed debate about the impact of Welfare Reform and how it can be implemented in Northern Ireland so that we can allay the fears and end the uncertainty for those who through no fault of their own rely on the welfare system.45

Following the December 2014 Stormont House Agreement, the Northern Ireland Executive agreed a new package of measures to mitigate the impact of welfare reform in Northern Ireland. The package comprised five separate mitigation schemes:

• a Discretionary Support Scheme providing emergency assistance similar to that already available under the Social Fund, but available to those on low incomes as well as those in receipt of benefits;

• Universal Credit flexibility; • a scheme to help people affected by the Social sector size criteria; • a Disability Protection Scheme to those moving from Disability

Living Allowance to Personal Independence Payment; and • a new Supplementary Payment Scheme.

45 Letter from Mervyn Storey, Minister for Social Development, to Church Leaders, 20

October 2014

23 A Fresh Start: the Stormont Agreement and Implementation Plan and the Northern Ireland (Welfare Reform) Bill 2015-16 [Bill 99]

The Minister for Social Development, Mervyn Storey, set out details of the package in the Assembly debate on the Final Stage of the Welfare Reform Bill on 26 May 2015.46

2.4 Welfare announcements in the Fresh Start agreement

Implementing welfare reform and associated “top-up” arrangements On 18 November 2015 the Secretary of State for Northern Ireland, Theresa Villiers, wrote to the Chair of the House of Commons Northern Ireland Affairs Committee, Laurence Robertson, regarding the Northern Ireland (Welfare Reform) Bill. She explained:

One of the key agreements reached by the parties in Northern Ireland was for the UK Government to legislate for welfare reform in Northern Ireland and a Bill to be introduced into Westminster as a matter of urgency. Delivering changes to the welfare system in Northern Ireland is essential if the devolved Executive is to have a sustainable budget. So implementing this aspect of yesterday’s agreement is a critical step in securing political stability in Northern Ireland, settling the budget dispute between the NI parties and averting the risk of collapse of devolution.

I intend to introduce a Bill into the House of Commons tomorrow to give UK Ministers a power to legislate for welfare reform in Northern Ireland via an Order in Council. This Order in Council will set out the detail of welfare reform to be implemented in Stormont and will provide the Secretary of State or a Northern Ireland Department, with the power to make regulations.

The Bill does not alter the legislative competence of the Northern Ireland Assembly - welfare is a transferred matter in respect of Northern Ireland. The consent of the Northern Ireland Assembly will be sought for this legislation, in line with the convention that the UK Parliament will not normally legislate on a devolved matter except with the agreement of the devolved legislature. The Assembly have indicated that they expect to consider and debate a consent motion today, Wednesday 18 November.

In order to support this debate in the Assembly I am today publishing both the Bill and the Order in Council in draft. I attach copies of these documents for your information. I will place copies of the draft Bill and draft Order in Council in the Libraries of both Houses and the Vote Office and they will also be published on the gov.uk website later today. I will do the same with the supporting explanatory memorandum in the coming days.47

Section C of A Fresh Start: The Stormont Agreement and Implementation Plan, published the previous day, gives further details:

NI Executive Welfare and Tax Credit Top-Ups

This section sets out the approach agreed by the Executive to implementing welfare reforms.

46 See also “Welfare reform bill: Five schemes to provide financial support,” BBC News,

11 February 2015 47 Letter from the Secretary of State for Northern Ireland to Laurence Robertson MP,

18 November 2015

Number 7389, 20 November 2015 24

Executive Welfare and Tax Credits Enhancements

1.1 The Executive has agreed to allocate a total of £585 million from Executive funds over four years to ‘top-up’ the UK welfare arrangements in NI with a review in 2018-19. This sum incorporates the present discretionary fund.

1.2 The Executive will establish a small working group under the leadership of Professor Eileen Evason [Emeritus Professor in social administration (University of Ulster)] to bring forward proposals within this financial envelope (including administrative costs) to maximise the use of these additional resources.

1.3 The Executive has agreed to implement the findings of the working group within the financial envelope available.

1.4 Within the welfare funding set out above, it has been agreed that the social sector size criteria – the so called bedroom tax – will not apply, as agreed by the Executive.

Legislative Process

2.1 It is agreed that Legislative Counsel in the NI Assembly will work with Parliamentary Counsel at Westminster to prepare the necessary legislation and Order in Council to effect current welfare changes.

2.2 The Welfare Bill will be debated and approved by the Assembly by way of a Legislative Consent Motion no later than the week commencing 23 November 2015. This approval will also cover the draft Order in Council which gives effect in NI to the 2012 welfare changes in GB, the welfare clauses of the Welfare Reform and Work Bill as initially introduced at Westminster and the Executive’s proposals to enhance payments flowing from this Agreement.

2.3 Following Assembly approval, the Bill will be passed at Westminster in order to meet the Executive’s timetable.

2.4 Any subsequent changes to the welfare elements of the Welfare Reform and Work Bill will be brought to the Assembly for debate and approval.

2.5 The welfare and tax credit top-ups will be taken forward by the Assembly.

2.6 The provisions of the Welfare Bill will lapse at the end of 2016.

Advice Centre Support

3.1 The Executive, in preparing its budget for next year, will provide additional funding for independent advice services in recognition of the complexity of welfare and tax credit changes.

Further information on the legislative changes, and on associated financial arrangements, is given in section D of the Implementation Plan:

Welfare Reform

3.1 New arrangements will be made to ensure the implementation of welfare reform as quickly as possible.

25 A Fresh Start: the Stormont Agreement and Implementation Plan and the Northern Ireland (Welfare Reform) Bill 2015-16 [Bill 99]

3.2 The Assembly will approve a consent motion no later than next week to enable primary and secondary legislation to make changes to the welfare system to proceed at Westminster.

3.3 Following this the UK Government will progress legislation which will comprise:

• A Bill in Parliament to allow for changes to the welfare regime in Northern Ireland, including:

• equivalent reforms to those introduced in GB by the Welfare Reform Act 2012, amended where necessary to reflect previous agreements between the UK Government and the NI parties on differences in e.g. sanctions;

• the welfare provisions only of the Welfare Reform and Work Bill as currently drafted; and

• interactions as required which ensure the Executive can implement the range of additional support which it intends to fund.

• A sunset clause will be included in the Bill to bring this arrangement to an end at the end of 2016.

3.4 The UK Government legislation will not diminish the legislative competence of the devolved institutions.

3.5 Although the timetable for savings from welfare reform in Northern Ireland will continue to be severely delayed when compared to implementation in GB, the UK Government confirms:

• welfare deductions for 2015-16 will stop following Assembly approval of the consent motion set out above and the UK Government will refund the proportion of deduction due for the remainder of the year, making an equivalent sum available to the NI Executive spread equally over 2016-17 and 2017-18. The parties have put forward a number of proposals for what this could fund, including construction of the Desertcreat Integrated Training College;

• it will not make any welfare-related Annually Managed Expenditure deductions on the basis of savings anticipated by the 2012 Welfare Reform Act in 2016-17;

• it will support the proposal put forward to address welfare error and fraud in Northern Ireland, and will provide up to £25m of new ring-fenced funding per year for five years to support implementation; and

• any successful bid for a share of error and fraud savings will need to demonstrate forecast savings that can be verified by the Office for Budget Responsibility, in line with the process for assuring similar forecasts by the Department for Work and Pensions.

3.6 The parties project that this error and fraud initiative will generate significant net savings in the next five years, and the UK Government has agreed that half of all savings certified by the OBR can be reinvested by the Executive (for example for integrated health, work and wellbeing interventions; employer support to hiring young unemployed and long-term unemployed).

Number 7389, 20 November 2015 26

Legislative Consent Motion The Fresh Start agreement included provision that the Welfare Reform Bill would be debated and approved by the Assembly by way of a Legislative Consent Motion. This approval would also cover a draft Order in Council which would give effect in Northern Ireland to the 2012 welfare changes in Great Britain. A draft Northern Ireland (Welfare Reform Bill) and draft Statutory Instrument were published on the Northern Ireland Office web site on Wednesday 18 November.

The Legislative Consent Motion was introduced in the Assembly on Wednesday 18 November. Before this motion was debated Jim Allister MLA, Traditional Unionist Voice, proposed a motion to adjourn the debate until the following week, because the text of the Westminster Bill was not available to the Assembly in the Bill Office. Mr Allister’s motion to adjourn was defeated in the Assembly by 33 votes to 58.

The Minister for Social Development, Mervyn Storey, explained that it was necessary for the LCM to be approved to avoid a delay of at least four weeks in the passage of the Bill at Westminster. The Assembly debated the Legislative Consent Motion for six hours and it was approved by 70 votes to 22.48

2.5 The Bill The Northern Ireland (Welfare Reform) Bill had its First Reading on 19 November and the remaining Commons stages are expected to take place on Monday 23 November 2015.

The Bill does not itself contain welfare provisions but is instead an enabling measure providing a power by Order in Council to:

• Legislate for welfare reform in Northern Ireland; and • Confer powers on the Secretary of State or the Department for

Social Development in Northern Ireland to make further provision by regulations and order.

The Explanatory Notes49 accompanying the Bill explain the policy background:

2 The Northern Ireland (Welfare Reform) Bill is a piece of enabling legislation to allow for the delivery of welfare reform in Northern Ireland. Welfare is a devolved matter for Northern Ireland. The Bill is intended to allow the delivery of the Government’s welfare reforms in Northern Ireland, including those made in the 2012 Welfare Reform Act and those proposed in the Welfare Reform and Work Bill 2015, as well as the welfare-related flexibilities included in the Stormont House Agreement (SHA). The SHA was reached on 23 December 2014 following 11 weeks of talks between the UK Government, the five largest parties in the Northern Ireland Assembly, and the Irish Government on matters for which they have responsibility, in accordance with the three-stranded approach confirmed in the 1998 Belfast Agreement. Legislating at Westminster allows for the most rapid means to

48 See also “MLAs vote to allow Westminster to implement NI welfare reform”, BBC

News, 18 November 2015; “Stormont Assembly members approve welfare reform measures”, Belfast Telegraph, 18 November 2015

49 Bill 99-EN 2015-16

27 A Fresh Start: the Stormont Agreement and Implementation Plan and the Northern Ireland (Welfare Reform) Bill 2015-16 [Bill 99]

deliver welfare reform in Northern Ireland. The NI Assembly is expected to pass a motion giving their consent to this Bill.

3 The SHA committed the Northern Ireland parties to passing a Welfare Reform Bill that would implement the 2012 Welfare Reform Act alongside a series of ‘top-up’ measures. However, when it was debated in the Assembly in May 2015, the Assembly Bill did not gain the necessary cross-community support and failed to pass. After recent cross-party talks, it was agreed on 17 November that the Government will legislate for welfare reform in Northern Ireland.

4 The Bill will implement measures in the SHA that are intended to help place Northern Ireland’s finances on a more sustainable footing, and in so doing help ensure the continued viability of Northern Ireland’s devolved administration. In enabling the Government to legislate for welfare reform in Northern Ireland, this legislation will play a crucial role in addressing the Northern Ireland Executive's current financial difficulties. The policy objective of the Bill is to implement the SHA by extending the 2012 Welfare Reform Act to Northern Ireland. There is long standing 'parity' principle that the UK Government will only fund welfare in Northern Ireland up to the same levels as apply in Great Britain. Without welfare reform, welfare payments in Northern Ireland will continue to exceed those paid in Great Britain. The excess over parity levels is currently being deducted for the Northern Ireland block grant which is adding to the pressure on the budget of the devolved Executive. Following the agreement on 17 November, the UK Government is seeking to pass legislation to implement welfare reform in Northern Ireland with the Northern Ireland Assembly's consent.

5 This Bill seeks to take a power that would enable the Government to implement other welfare reforms, such as those contained in the Welfare Reform and Work Bill 2015. The Bill will also enable the implementation of the welfare flexibilities included in the Stormont House Agreement.

6 This Bill will be followed by an Order in Council which will be based on the Northern Ireland Assembly Welfare Reform Bill referred to above. The Order in Council will contain regulation making powers and measures to implement welfare reform in Northern Ireland. These are intended to include the reforms made in Great Britain by the Welfare Reform Act 2012; various flexibilities as agreed between the Department for Work and Pensions and the NI Department for Social Development, and the amendments agreed by the parties during the passage of the Assembly’s Bill; and provisions that allow for the Executive funded additional measures to be introduced. A draft Order in Council has been published.

Fast-track procedure In 2009, the Constitution Committee reported on fast-track legislation, that is:

“bills … which the Government of the day represents to Parliament must be enacted swiftly … and then uses its power of legislative initiative and control of Parliamentary time to secure their passage”.50

50 Select Committee on the Constitution, Fast-track Legislation: Constitutional

Implications and Safeguards, 7 July 2009, HL 116-I 2008-09, para 27

Number 7389, 20 November 2015 28

The Committee recommended that the Government should explain the reasons for fast-tracking legislation; what consultation had taken place with interested parties; the steps taken to maximise parliamentary scrutiny; and mechanisms in place for post-legislative scrutiny. It also recommended that there should be a presumption in favour of sunset clauses in fast-track legislation.51 When legislation is fast-tracked, the Government uses the Explanatory Notes to address these questions.

The Government has announced that an allocation of time motion will be considered on Monday 23 November 2015 to allow all stages of the Bill to be taken once proceedings on the allocation of time motion have been completed. In the Explanatory Notes, the Government stated that “It is essential that the Bill is fast‐tracked in order to facilitate the quickest possible implementation of welfare reform in Northern Ireland. In short, emergency legislation at Westminster as outlined in this Bill offers the fastest, most secure and effective means of implementing welfare reform in Northern Ireland.”52

It said that the Bill “was published in draft shortly before introduction.” The Bill was introduced on 19 November, a draft having been published on the Northern Ireland Office’s website on 18 November 2015.53 The draft bill was not laid before Parliament. It was made available to both the Work and Pensions Committee and the Northern Ireland Affairs Committee but the Government accepted that neither would be able to report before the Bill was introduced. In response to the question about the extent to which interested parties and outside groups had been given an opportunity to influence the policy proposal, the Government noted the talks leading to agreement between the Government and Northern Ireland parties; debates in Parliament about the application of welfare legislation to Great Britain; and extensive support for the Stormont House Agreement in Parliament.

In response to the question on whether the Bill includes a sunset clause, the Government noted that the Bill provides that no Order in Council may be made after December 2016.

Further information on the Constitution Committee’s proposals is given in the Library Standard Note, Fast-track legislation.54

51 Select Committee on the Constitution, Fast-track Legislation: Constitutional

Implications and Safeguards, 7 July 2009, HL 116-I 2008-09 52 Northern Ireland (Welfare Reform) Bill – Explanatory Notes, para 11 53 Northern Ireland Office, Stormont Agreement and implementation Plan: Welfare

Reform, 18 November 2015; Draft Northern Ireland (Welfare Reform) Bill 54 House of Commons Library Standard Note, Fast-track legislation, SN/PC/5256, 22

December 2009

29 A Fresh Start: the Stormont Agreement and Implementation Plan and the Northern Ireland (Welfare Reform) Bill 2015-16 [Bill 99]

3. The Fresh Start Agreement: non-welfare

3.1 Ending paramilitarism and tackling organised crime

Section A of the agreement, concluded between the Northern Ireland Executive and the two Governments, covers paramilitarism and organised crime. It includes several moves to tackle organised crime, to ensure a clear separation of the political process, and to support moves away from paramilitarism. It includes commitments to policy measures, some new institutional architecture, and a strategy to end paramilitarism.

The agreement talks of the “primacy and centrality” of peace and the political process to the continued transformation of Northern Ireland society, through

democracy, inclusion, reconciliation, equality of opportunity for all and the absence of violence.55

The three parties to this section recommit themselves to a list of general priorities, such as partnership government, giving effect to the principles of peace and democracy in previous Agreements, supporting law and order and the justice system, North South and East West cooperation for mutual benefit, maximising political cohesion and inclusivity, and the achievement of a comprehensive peace.

They agree to add to the ministerial Pledge of Office the following new items:

• work collectively to achieve a society free of paramilitarism;

• support the rule of law unequivocally in word and deed and support all efforts to uphold it;

• challenge all paramilitary activity and associated criminality;

• call for, and work together to achieve, the disbandment of all paramilitary organisations and their structures;

• challenge paramilitary attempts to control communities;

• support those who are determined to make the transition away from paramilitarism; and

• accept no authority, direction or control on our political activities other than our democratic mandate alongside our own personal and party judgment.56

This will be added to the Pledge of Office as a requirement of a person accepting ministerial office through an amendment to the Northern

55 A Fresh Start: The Stormont Agreement and Implementation Plan, 17 November

2015, p14 56 A Fresh Start: The Stormont Agreement and Implementation Plan, 17 November

2015, p15

Number 7389, 20 November 2015 30

Ireland Act 1998. There will be a similar undertaking for Members of the Assembly in standing orders.

The UK Government, Irish Government and Northern Ireland Executive will hold a ministerial meeting in December 2015 to agree new measures on law enforcement cooperation to tackle organised crime, including that linked to paramilitarism.57

A new Joint Agency Task Force will be created. This will be led by senior officers from the two police forces and customs bodies, the PSNI and An Garda Siochana, the Revenue Commissioners and HM Revenue and Customs.

The December meeting will set out details, but the agreement states that the Task Force will include a Strategic Oversight Group and an Operations Coordination Group. The former will identify strategic priorities and report on the work of the Task Force to the six-monthly ministerial meetings on cooperation on criminal justice. The Operations Coordination Group will coordinate joint operations and the relevant resources.

The Executive commits to implementing further measures of detail, some of which will have policy and funding implications. For instance, there will be measures on speeding up criminal justice, supporting victims to give evidence, and enhancing specialist capabilities such as forensic accounting. There will be programmes to prevent vulnerable young people from being drawn into paramilitarism, to increase the role of women in community development, and to reduce reoffending. There will also be initiatives to help moves away from paramilitary structures and activity and on reintegration of people involved in the Troubles.

A strategy will be developed to end paramilitarism. The Executive will appoint a panel of three by the end of 2015; this will report to the Executive before the end of May 2016. It will make recommendations for a strategy to disband paramilitary groups.

The Executive will also:

• carry out research into the social costs and implications of paramilitarism and further steps that the Executive can take to promote a more integrated cohesive and lawful society;

• undertake a public awareness campaign to raise public understanding of the harm done by paramilitarism and organised crime and the steps that everyone can take to contribute to the prevention of crime and progress towards the end of paramilitarism in Northern Ireland; and

• report on how efforts to tackle paramilitarism will be linked to wider cross-departmental and statutory agency work programmes aimed at reducing community division and the causes of sectarianism and racism in NI.

57 A Fresh Start: The Stormont Agreement and Implementation Plan, 17 November

2015, p15

31 A Fresh Start: the Stormont Agreement and Implementation Plan and the Northern Ireland (Welfare Reform) Bill 2015-16 [Bill 99]

The Executive will publish a plan to action these measures, with timescales, before the end of June 2016.

A new international monitoring body will be established, consisting of four people of international standing. The two Governments will nominate one person each, and the Executive will nominate two people. This body will have the following tasks:

report annually on progress towards ending continuing paramilitary activity connected with NI (or on such further occasions as required);

report on the implementation of the relevant measures of the three administrations; and

consult the UK Government and relevant law enforcement agencies, the Irish Government and relevant law enforcement agencies and, in Northern Ireland, the Executive, PSNI, statutory agencies, local councils, communities and civic society organisations.58

The reports of this body will inform priorities and commitments of the Executive Programme for Government through to 2021.

3.2 Northern Ireland Executive Financial Reforms and Context

Section B of the agreement gives the Executive’s assessment of its financial reforms. The Stormont House Agreement included public sector voluntary exit schemes in an effort to reduce the pay-bill. The Executive reports that the Northern Ireland Civil Service staff complement is being reduced by such schemes and by a recruitment freeze. Civil service staff numbers are expected to reduce by 5,210 between April 2014 and March 2016, while a further 2,200 will exit the public sector as a whole between April 2015 and March 2016.

There was also an undertaking in the Stormont House Agreement to reduce the number of departments from twelve to nine, in order to reduce the number of ministers, special advisers, permanent secretaries and support functions. This is due to take effect after the next scheduled elections, in May 2016. The Executive acknowledges that it will “have to set challenging cost reduction targets” for each new department.59

The number of Members of the Assembly will be reduced from six per constituency to five. The Assembly was given the power to do this by the Northern Ireland (Miscellaneous Provisions) Act 2014. This change will take effect at the first Assembly election after the next election. The draft Assembly Members (Reductions of Numbers) Bill is reproduced in Appendix F2, starting on page 49.

Corporation tax was devolved to Northern Ireland by the Corporation Tax (Northern Ireland) Act 2015. This is expected to take effect after

58 A Fresh Start: The Stormont Agreement and Implementation Plan, 17 November

2015, p18 59 A Fresh Start: The Stormont Agreement and Implementation Plan, 17 November

2015, p20

Number 7389, 20 November 2015 32

April 2017. This reflected commitments in the Stormont House Agreement. The November 2015 agreement includes a statement of the Executive’s position on corporation tax. The Executive commits itself to “an affordable and more competitive” rate. It also stresses the importance of Northern Ireland bearing the full costs and receiving the full benefits of devolution of corporation tax (in line with EU law on state aid),60 and commits itself to demonstrating that its finances are on a sustainable footing. It commits itself to a commencement date of April 2018 with a Northern Ireland rate of 12.5%, the same as the rate in the Republic of Ireland.

3.3 UK Government financial support Section D of the agreement concerns the financial support from the UK Government.

It reprises the support already agreed to support the Stormont House Agreement. It notes that additional flexibility and assistance may be needed in some cases to enable the Executive to fulfil its undertakings. The UK Government acknowledges “the specific challenges facing Northern Ireland” but also that any support must “reflect the continuing difficult fiscal environment and the need to be fair to all parts of the UK.”61

The support and flexibility related to the welfare provisions of the agreement are discussed in Section 2 of this paper.

Balanced budget In addition, the UK Government welcomes the Executive’s commitment to a balanced budget and its plans to achieve this. These include establishing an Independent Fiscal Council for Northern Ireland, which will make an annual assessment of revenue and spending plans to support the creation of a balanced budget, and will produce an annual report on sustainability of public finances. The Executive will also complete a monitoring round by the end of November 2015, and set out the action it is taking to balance its position for the current year.

The UK Government undertakes to legislate, with Assembly consent, to prevent the Assembly considering spending plans which exceed the block grant or the Executive’s borrowing limits “where planned spending relies on those funding sources.”62

The UK Government will release flexibilities already agreed at Stormont House to enable the Executive to maintain public services while the wider financial reforms work through. In addition, it will allow access to the full amount of additional borrowing to support the voluntary exit scheme agreed at Stormont House even if the Executive does not need 60 This concerns the Azores case, in which the ECJ set out criteria to ensure that regional

differences in direct taxation did not constitute state aid. These include, effectively, that the sub-national unit bears the risk of any loss of revenue.

61 A Fresh Start: The Stormont Agreement and Implementation Plan, 17 November 2015, p25

62 A Fresh Start: The Stormont Agreement and Implementation Plan, 17 November 2015, p27

33 A Fresh Start: the Stormont Agreement and Implementation Plan and the Northern Ireland (Welfare Reform) Bill 2015-16 [Bill 99]

to use all existing borrowing for that purpose. It will allow capital funding for shared and integrated education to be used to support shared housing, and any underspend of the new legacy funding in 2015-16 may be carried forward to 2020-21 (funding for new institutions dealing with the past will be subject to agreement on setting them up).

Funding for action against paramilitary activity There will be additional UK funding of £160m over five years to support the Police Service of Northern Ireland to address national security and to tackle paramilitary activity and criminality. The UK Government will also provide a separate £25m over five years to tackle continuing paramilitary activity, to be matched by the Executive, which will be released once the Executive’s strategy on this matter has been agreed. The UK Government will also support the new monitoring and implementation body up to a total of £3m over four years.

Finally, the UK Government will provide an additional £60m over five years to support confidence- and relationship-building measures delivered by the Executive, with the aim of developing suitable conditions for the removal of peace walls and a “shared future.”63

3.4 Irish Government financial support Section E sets out support by the Irish Government, which is mostly aimed at infrastructure investment to support North-South cooperation, and draws on its Capital Plan for 2016-21, Building on Recovery.

There is a commitment to co-fund the construction of the A5 transport corridor to improve access to Derry-Londonderry and North Donegal, dependent on resolution of planning issues. The Irish Government reaffirms its commitment to provide £50m for the project, and in this agreement commits an additional £25m to enable the project to start quickly once the planning issues have been resolved. The Irish Government and the Northern Ireland Executive have agreed that construction will begin in 2017. The total Irish funding will be provided in three equal annual tranches of £25m from 2017 to 2019.

The Irish Government has provided support for restoration of a portion of the Ulster Canal, and, with the Northern Ireland Executive, it will seek to identify future options for joint restoration, which will be taken to the North South Ministerial Council in June 2016. At the same meeting options will be presented for a Narrow Water Bridge between counties Louth and Down, with the aim of boosting jobs and tourism.

63 A Fresh Start: The Stormont Agreement and Implementation Plan, 17 November

2015, p29

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3.5 Implementing other parts of the Stormont House Agreement

Section F of the November 2015 agreement covers the implementation of other parts of the Stormont House Agreement.64 These were some of the hardest issues during previous talks.

Flags, identity, culture and tradition Under the Stormont House Agreement a Commission on Flags, Identity, Culture and Tradition was supposed to be set up by June 2015. Under the November 2015 agreement the advertisement to recruit eight non-political members will be placed in December 2015, and political nominations from the five largest parties will be invited during the same month. The Commission has a new date of establishment, March 2016.

Parades The Stormont House Agreement included a proposal to devolve responsibility for parades and related protests. Proposals on how to achieve this, including a code of conduct, rights and responsibilities for those involved in or affected by parades and protests, and balancing different interests, were supposed to be brought forward by June 2015.

The agreement states that a discussion paper is being prepared, which the Office of the First Minister and deputy First Minister will bring to the Executive.

The Past The agreement acknowledges that,

While progress has been made on most aspects of the legacy of the past, we have been unable to agree a way forward on some of the key issues.

There remains a need to resolve the outstanding issues and the UK Government and Irish Government will reflect on the options for a process to enable this.65

This part of the Stormont House Agreement, paragraphs 21-55, covered:

• An Oral History Archive • Access to high quality services for Victims and Survivors, for

instance a comprehensive Mental Trauma Service • A new Historical Investigations Unit to take forward investigations

into outstanding Troubles-related deaths, supplanting the defunct Historical Enquiries Team

• An Independent Commission on Information Retrieval to enable victims and survivors to receive information about Troubles-related deaths of their next of kin

• An Implementation and Reconciliation Group to oversee themes, archives and information recovery

64 A Fresh Start: The Stormont Agreement and Implementation Plan, 17 November

2015, pp33-40 65 A Fresh Start: The Stormont Agreement and Implementation Plan, 17 November

2015, p35

35 A Fresh Start: the Stormont Agreement and Implementation Plan and the Northern Ireland (Welfare Reform) Bill 2015-16 [Bill 99]

Institutional reform As noted above, the number of Assembly Members for each constituency will be reduced from six to five by means of Assembly legislation. A draft bill is included in the agreement as Appendix F2, starting on page 49.

A protocol governing the use of the Petition of Concern mechanism, as agreed in the Stormont House Agreement, will be referred to the Speaker of the Assembly within one month of the agreement. It is reproduced in Appendix F3 on page 53. Broadly, this includes a commitment to use Petitions of Concern only in exceptional circumstances, and that Private Members’ motions should be tabled as “take note” motions rather than ones that could bind the Assembly or the Executive.

Arrangements were to have been put in place by March 2015 to allow parties which were entitled to ministerial positions, but chose not to take them up, to form an official opposition. A “Statement of Proposed Entitlements for an Official Opposition” is to be introduced and the Speaker will be asked to arrange for changes to standing orders and other administrative changes. The Statement is reproduced in Appendix F4, starting on page 55.

A bill will be introduced to the Assembly by the end of November 2015 to reduce the number of departments from twelve to nine.

The Stormont House Agreement provided that the parties in the Executive should meet, before the selection of ministers (including the First and deputy First Ministers), to agree a draft Programme for Government. The time period for this, the gap between the Assembly meeting and the d’Hondt process for allocating the number of ministerial posts, would be extended from seven to fourteen days. Legislation will be brought forward at Westminster, as soon as there is a suitable vehicle, to allow the change to the time period.

The agreement talks of workshops taking place to develop a “more outcomes-based approach” to the Programme for Government, with a view to having a framework in place by the end of April 2016.

Some other technical changes are in train, such as a reduction in the maximum consultation requirement on policy from twelve weeks to eight, and the creation of a civic advisory panel to feed into the Programme for Government.

BRIEFING PAPER Number 7389, 20 November 2015

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