Preparations are being made for the UK Government to impose a budget on Northern Ireland by the end of the month, James Brokenshire has said.
The Secretary of State said the move stopped short of direct rule and that he would abandon the idea if the Democratic Unionist Party and Sinn Fein could reach a deal in that time.
Mr Brokenshire said Northern Ireland would begin to run out of money by the end of November.
“No government could simply stand by and allow that to happen,” he said.
“I am, therefore, now taking forward the necessary steps that would enable a Budget Bill to be introduced at Westminster at the appropriate moment in order to protect the delivery of public services in Northern Ireland.”
The DUP and Sinn Fein failed to meet Mr Brokenshire’s original Monday deadline for a powersharing deal, with Stormont effectively in limbo since January.
Mr Brokenshire said he was taking legal advice on whether MLAs should keep being paid.
Last month he said he was considering new laws on the issue of salaries – £49,500 a year, or about £41,250 in the months since Stormont has been shut.
The Secretary of State said important progress has been made in the talks, which are continuing, but the issue of Irish language rights is one of the biggest crisis points.
He said it was unlikely the Stormont Executive could be revived in time for Northern Ireland’s politicians to determine the budget by the end of the month.
Mr Brokenshire said the latest deadline should not be seen as a reason to abandon the negotiations.
“Let me be clear, this is not a barrier to continued political negotiations and the Government will continue to work with the parties with that intent,” he said.
“And indeed, however unlikely, should an Executive be formed speedily enough and a means could be created to provide an exceptional procedure to enable the budget to be passed by the end of November I would be prepared to withdraw the Budget Bill in order for Assembly to legislate for itself.”
Mr Brokenshire urged the parties to secure a deal.
“It remains firmly in the interests of Northern Ireland to see devolved government restored, to see locally elected politicians making decisions for the people of Northern Ireland,” he said. “With goodwill and compromise on all sides the parties can still achieve this and it is what needs to happen.”
Mr Brokenshire stayed in Belfast to outline the state of play and is expected to speak in Westminster on the issue on Thursday.