The Northern Ireland secretary told a councillor he was "talking bollocks" to suggest Stormont budget cuts are an attempt to pressure the DUP into restoring devolution.
Chris Heaton-Harris was responding to SDLP councillor Séamas de Faoite after he challenged the Secretary of State on the impact of cuts to children and young people's services.
In a robust exchange at Stormont, Mr de Faoite argued the budget delivered by Mr Heaton-Harris in the Executive's absence was a "negotiating tactic" to persuade the DUP to resume power-sharing.
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Mr Heaton-Harris strongly denied this and told the Belfast councillor he was "talking bollocks".
The exchange happened at Parliament Buildings on Wednesday evening where both politicians were speaking at an LGBT event hosted by Pink News.
A video of the encounter has been seen by Belfast Live.
Mr de Faoite expressed disappointment with the Northern Ireland secretary's response, saying that children and young people are "bearing the brunt of political failure".
He said: "I think it's disgraceful that they are being used in what is very clearly a negotiating tactic with the DUP, and that shouldn't be happening, and that's what I wanted to try and say to the Secretary of State, but I'm very dismayed in what his response was.
"Whenever I tried to talk to him about the issue, he told me that I was 'talking bollocks'.
"I think that's a very harsh way of responding to the concerns that the community and voluntary sector have here and the concerns that parents, families have about the support and provisions for children and young people."
In response, a source close to Mr Heaton-Harris said: "Factually incorrect points were made to the Secretary of State tonight and these were directly rebutted.
"The budget allocations set in Budget 2023-24 have prioritised protecting public services that people most rely on.
"Due to the political stalemate and long-term neglect of the budget in NI it's vital that work is done to balance the books. The best people to do that are the politicians voted for by the people of Northern Ireland."
Since last year the DUP has been blocking Stormont's power-sharing Executive and Assembly in protest against post-Brexit trade barriers under the Northern Ireland Protocol.
The UK Government negotiated the Windsor Framework with the European Union in a bid to address issues, but the DUP has continued to raise concerns.
Mr Heaton-Harris set a budget in the absence of local ministers, with Stormont civil servants left to make decisions within individual departments to balance the books.
It sees Northern Ireland facing significant real-term cuts to public services amid soaring inflation and pressures including public sector pay demands.
Speaking at the Pink News event, Mr Heaton-Harris said the UK has made "huge progress" over the years on LGBT and equality issues.
He referenced regulations he laid in Parliament recently on relationships and sex education classes in Northern Ireland schools, but acknowledged there was "still more to do".
Mr Heaton-Harris added: "Being here in this particular building, it's hard not to address the fact that the Executive and the Assembly are not functioning.
"I remain firmly of the belief that these sorts of decisions are best made by your own locally elected representatives. It should not be left to Westminster to do these sorts of things.
"And my total focus remains on delivering for the people of Northern Ireland who expect and deserve locally elected decision-makers to address the issues that matter the most for them. And I'll continue to do everything I can to see devolved government here restored."
The event included a panel discussion involving the SDLP's Mr de Faoite, Ulster Unionist leader Doug Beattie, Sinn Féin MLA Emma Sheerin and Alliance MLA Eóin Tennyson.
DUP MLA Pam Cameron had been due to attend but "she's very unwell, apparently", panel discussion chair Karen McShane told the audience.
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