Cameron considers £2bn financial proposal from North parties

Talks at ‘crunch time’, says Villiers, who refuses to predict if Downing Street will accept paper

Downing Street is now considering an agreed financial paper that could have the potential to end the impasse that is preventing a pre-Christmas agreement on a range of disputed issues such as the past and flags.

After a long night of negotiations on Thursday and after further discussions on Friday the five parties have put financial proposals to the British government on how to address matters such as welfare reform and easing the affects of £1.5 billion (€1.9bn) in British government budget cuts over the next five years.

Northern Secretary Theresa Villiers said the talks were now at a "crunch time" but she refused to say whether the British prime minister David Cameron would accept or reject the proposals which some sources said would cost some £2 billion over the next ten years.

“We will look at the paper very seriously. But our response is going to have to take account of the realities of the deficit we inherited from the British government and the limited resources that we have,” she said.

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Ms Villiers insisted that any Treasury movement on finance would require comprehensive reciprocation from the parties on matters such as parades, the past and flags.

“Unless Northern Ireland’s political leaders are prepared to make some difficult choices and difficult decisions this process will not have a successful outcome,” she warned.

Still, there remains guarded optimism that a pre-Christmas deal on a range of issues could yet be achieved as the British and Irish governments and the five main Northern parties continue to negotiate at Stormont.

Minister of Foreign Affairs Charlie Flanagan said that "substantial progress" was made in the talks over the last 24 hours.

“We remain firmly of the view that a successful and comprehensive outcome to this process will be in the best interests of the people of this island and are working to that end,” he said this afternoon.

Sinn Fein Deputy First Minister Martin McGuinness also reflected the lift in mood and the sense that progress is being made with a tweet stating that there has been a "step change in negotiations", while adding the caveat: "Our team focussed but more to do."

The parties are attempting to conclude a comprehensive agreement that would address matters such as the past, parades, flags and restructuring the Northern Executive and Assembly with issues around welfare reform and the Executive’s budget proving the most difficult to overcome.

The reason for the cautious hope was based on the parties agreeing a paper on the financial package that they would require from the British prime minister David Cameron in order for them to strike a deal.

After Mr Flanagan and his Minister of State Sean Sherlock and the Northern Secretary Theresa Villiers left the talks at 6.30 pm on Thursday evening the parties continued negotiating late into the night on a financial paper during which significant progress was made.

Mr Flanagan and Ms Villiers held a roundtable meeting with the five parties - the DUP, Sinn Fein, the SDLP, the Ulster Unionist Party and Alliance on Friday morning after which the parties met again to fine-tune the financial paper which was concluded and presented to Ms Villiers after lunch.

Last Friday morning Mr Cameron and the Taoiseach Enda Kenny left the talks abruptly with the prime minister saying he had put on the table a financial package that was worth up to £1 billion. This was to ease some welfare cuts and budget reductions of £1.5 billion over the next five years.

The parties rejected the financial offering as essentially illusory because it entailed the Executive being given extra loan raising powers rather than more money being forthcoming from the British treasury.

Agreeing a deal is likely to mean Sinn Féin having to step back from its total opposition to welfare change.

Gerry Moriarty

Gerry Moriarty

Gerry Moriarty is the former Northern editor of The Irish Times