Civil servant given emergency spending powers at Stormont

The unprecedented move has been forced by the lack of powersharing executive or agreed budget at the turn of the new financial year.

The permanent secretary of the Department of Finance, David Sterling, will take hold of the purse strings until such time as an executive is formed or the UK government intervenes.

While there is a limit on how much he can spend - 75% of last year's budget total for the first four months and 95% thereafter - significant cuts to public services would only be required if the political crisis stretches beyond Christmas.

It is highly unlikely things will ever get to that point, as the UK government has indicated it will step in, at least to legislate for a budget, even if local politicians fail to establish a new administration.

The setting of a budget means 100% of Northern Ireland's annual funding allocation can be spent by departments.

Mr Sterling said: The powers available are simply an interim measure designed to ensure that services are maintained until such times as a budget is agreed and a Budget Act passed.

At which point departments will have access to the full level of funding available.''

Addressing the Commons on Tuesday, Northern Ireland Secretary James Brokenshire said if there was no agreement by Easter he would move to provide further assurance'' around the region's budget.

Mr Brokenshire's officials at the Northern Ireland Office are in daily contact with their Stormont counterparts to assess the financial picture.

Legislating for a budget at Westminster would not require the full introduction of direct rule, but it would certainly be another step in that direction.

In the meantime, Stormont officials have a scenario planned for the next four months. The Finance Department will issue letters to other departments on Wednesday advising them of spending control targets.

Mr Sterling said the arrangements were not a substitute for a budget agreed by an executive''.

Indeed we are very clear that the prioritisation and allocation of financial resources is a matter for ministers,'' he added.

Departments will not be able to undertake any new initiatives in the weeks ahead, rather maintain services at current levels.

All, with the exception of health, will be urged to be prudent in this interim period when Mr Sterling is at the helm.

Health will be given more latitude to spend as officials envisage a budget, when it is finally struck, would incorporate an uplift for that department.

Departments will write to all government-funded groups in the community and voluntary sector by the end of this week advising them that money will continue to flow during the period without a budget.

Farmers will also receive their Common Agricultural Payments (CAP) as usual.

Annual rates bills to pay for services provided by local councils will be delayed.

But as Mr Brokenshire has made an explicit commitment to legislate for rates if no local administration is in place by Easter the only real impact will be a month delay on the 800,000 bills.

Spending on already commenced capital projects will continue as planned, as will work on the last executive's previously agreed flagship infrastructure builds.

If the interim financial arrangements only last for a month or two, officials do not anticipate any major issues - effectively the only difference will be how departmental money is drawn down.

But the longer departments run without ministers to make policy-based spending decisions the more problematic it will become, underscoring the need for a budget sooner rather than later.

Mr Brokenshire's stance indicates it will be sooner. The coming weeks will determine whether it will be him or local politicians that pass it.