Northern Ireland's government departments and public services will be increasingly unable to carry out business after January if a budget deal is not agreed by political parties, Secretary of State for Northern Ireland Theresa Villiers has warned.

During House of Commons questions, Ms Villiers said the British Government - whose handling of last week's talks has been severely criticised in Belfast - is prepared to "do whatever we can in the few days left to us".

The “stakes are high”, she said, adding that NI political parties will not be so close to an agreement again for “months, if not years”, while government departments will not “be able to conduct ordinary business”.

Criticising the British Government's "three years of relative disengagement" from Northern Ireland, Labour's shadow NI secretary Ivan Lewis said the North faced challenges caused by the Troubles that require State spending.

However, Mr Lewis said there can be "no blank cheque, or exemptions". Sinn Féin's "refusal to implement any welfare reform is neither credible, nor realistic", he said, during an urgent debate on the outcome of last Friday's Stormont talks.

Corporation tax

Meanwhile, former NI Secretary of State Owen Paterson expressed fears that the North's politicians will let slip the opportunity to cut corporation tax rates, since legislation needs to start its passage quickly at Westminster, if it is to become law by May.

“If they blow this opportunity they will face the obloquy of future generations. They must not fluff this,” said Mr Paterson, who strongly supported devolving powers over the tax to Stormont during his time in office.

Another former NI secretary of state, Labour's Peter Hain, expressed bafflement at prime minister David Cameron's decision to travel to Belfast last week only to then leave abruptly after less than 18 hours.

“I was both troubled and astonished that the prime minister left the summit in the way that he did.”

Rejecting charges that Northern Ireland has been unfairly treated, Ms Villiers said its Treasury block-grant has suffered less than has been felt elsewhere in the UK, particularly since it has increased, if not in line with inflation.

Welfare cuts

Following an earlier meeting at 10 Downing Street, First minister Peter Robinson said Mr Cameron had indicated "he can be of some more help, but not significantly so", and only if the NI Executive accepts the need for welfare cuts.

“We do need to have some realism injected into that debate. Whatever help he can be we will only find out if we can resolve the issue of welfare reform,” Mr Robinson said, after Mr Cameron had met leaders of the administrations in Edinburgh, Cardiff and Belfast.

Top civil servants will step in at the end of January to take over control of spending if politicians have not agreed a budget by then, but they will only be able to use three-quarters of the money that was available in the last 12 months.

Sinn Féin ‘being coy’

Urging Sinn Féin to “stop being coy”, Mr Robinson said: “Unquestionably it is difficult to square the circle of being in Opposition in the South and being in government in Northern Ireland. I don’t think that Northern Ireland should be punished because of Sinn Féin’s strategy to win seats in the Dáil.

“We do need to have some realism injected into that debate. We have to deal with this issue, they have to step up to the plate, they have to be a responsible government partner, they have to reach agreement on these issues,” he added.

Sinn Féin’s deputy first minister Martin McGuinness placed the responsibility at Mr Cameron’s door: “Thus far he has failed that test and I hope that in coming days we will see a much more realistic contribution made by the British Government.”