Northern Ireland Secretary Karen Bradley has said she is "minded" to cut the salary of members of the crisis-hit Stormont Assembly by 27.5%, but will consult the parties before making a final decision.
Mrs Bradley's predecessor James Brokenshire commissioned former Assembly chief executive Trevor Reaney to examine the controversial issue of paying MLAs who are not performing their roles as legislators due to the powersharing impasse.
Before Christmas, Mr Reaney recommended the 27.5% cut, a move that would take the average salary of £49,500 to £35,888 in two stages.
Mrs Bradley told the Commons she would seek to introduce legislation at Westminster that would hand her the power to vary MLA pay.
"Further to that, I am minded to reduce pay in line with the Reaney Review recommendation, but I would welcome full and final representations from the NI parties before I make a final decision," she said.
Mrs Bradley also announced that a cap to stem money paid out through the Renewable Heat Incentive - the botched green energy scheme that contributed to the collapse of devolution - would be extended for another year.
"I also intend to act to extend the cost-capping of the current Renewable Heat Incentive scheme in Northern Ireland, which the Assembly had put in place over a year ago," she said.
"It would not be acceptable to put finances at risk by simply allowing that cap to lapse."
Mrs Bradley said her powers as Secretary of State remained limited, as was the scope of Westminster to pass laws on devolved issues.
She said that meant fundamental decisions were not being taken in Northern Ireland.
Mrs Bradley said it would therefore be "irresponsible" for the Government not to consider "different arrangements" for the region while the impasse continued.
"Alongside this I also continue to keep under review my statutory obligation to call an Assembly election," she said.
"I would welcome the views and proposals of the Northern Ireland parties and others on how such arrangements - providing for local decision-making and scrutiny, on a cross-community basis - might be achieved in the continued absence of an executive. And how any such arrangements might work alongside the other institutions of the Agreement.
"Let me be clear that this in no way affects my commitment to the Belfast Agreement nor my commitment to continue to work to remove the barriers to the restoration of devolution."
Shadow Northern Ireland secretary Owen Smith said Northern Ireland faces a "grave crisis", 14 months on from the collapse of the executive.
He said: "We need to see more than more tireless activity, we need to see some success in the forthcoming negotiations if we're to get to next month's 20th anniversary (of the Belfast Agreement) with a real sense of optimism about the future of the agreement and the future of power-sharing."
Mr Smith raised questions about suggestions of a "shadow assembly" or another form of alternative assembly, suggesting it would create a "very significant risk" of taking the pressure off the parties to re-engage in "meaningful power-sharing".
He went on: "Can I urge (Ms Bradley) to make sure this is the last time we push through a budget in this unsatisfactory process and the last time we see a budget set by this House and not where it ought to be, in Stormont?"