The British and Irish governments have decided to allow another day of talking to determine if agreement can be reached that would safeguard the Northern Executive and Assembly.
Northern Secretary Theresa Villiers had planned that last night should be the pre-Christmas deadline for the negotiations but, said talks sources, after some progress was made on the key issues of a financial package it was decided to press ahead for at least another day.
Senior sources said there were signs some form of compromise could be agreed on welfare reform. “I think there has been some movement on welfare reform between the parties, and there is some prospect that a deal can be done. But it is still difficult to determine the outcome,” said a talks insider.
For much of yesterday, the parties involved in the negotiations – the DUP, Sinn Féin, the SDLP, Ulster Unionists and Alliance – tried to agree a paper on a financial package for the Northern Executive that they would put to British prime minister David Cameron via the Northern Secretary.
Ms Villiers and Minister for Foreign Affairs Charlie Flanagan withdrew from the negotiations at 6.30pm after meeting the parties in a roundtable session. They decided that, based on the progress they were told the parties had made, there was still some potential for a deal.
"The Irish Government remains committed to a successful conclusion to this talks process and to securing a comprehensive agreement acceptable to all parties. Minister of State [Seán] Sherlock and I will continue to work with the Secretary of State and the parties to this end," said Mr Flanagan.
Mr Flanagan and Ms Villiers are to meet the parties again this morning.
The five parties continued talking late into Thursday night as they tried to agree a paper on welfare reform, budget matters and other financial issues to be presented to Mr Cameron for acceptance or rejection.
Last Friday, Mr Cameron and the Taoiseach exited the talks abruptly after all parties rejected what Sinn Féin had termed a “derisory” financial package from the British prime minister.
Mr Cameron indicated more money could be on the table if the parties would sign off on a comprehensive agreement.
Sources said DUP First Minister Peter Robinson and Sinn Féin Deputy First Minister Martin McGuinness held one-to-one talks at lunchtime to determine if there was any middle ground that could be reached on the budget and welfare reform.
It was hoped if agreement could be reached on a financial package the parties would sign up to proposals on issues such as the past, parading, flags and reducing the size of the Stormont institutions. Progress has been made in these areas although, as one source said, “gaps remain between the parties”.
Agreeing a new financial paper to deliver to Mr Cameron would, however, appear to mean Sinn Féin retreating from its fixed opposition to any welfare changes.
In his most recent blog posting, Sinn Féin President Gerry Adams blamed the British and Irish governments for the political deadlock and insisted an economic package was required to meet Northern Ireland's special requirements.
Meanwhile, Downing Street dismissed a suggestion by British shadow spokesman on Northern Ireland Ivan Lewis that the reason Mr Cameron quit the talks last Friday was because he wanted to return to his country retreat of Chequers for an "Ibiza rave" celebrity party for his wife Samantha.
It was pointed out Mr Cameron could still have been in time for the party had he remained at the talks until Friday evening.
