DUP minister Edwin Poots has told Brandon Lewis to "bring it on" after the Secretary of State warned he would cut MLA pay if Stormont is not restored.
Mr Poots said docking MLA wages would have "no bearing" on the DUP refusing to resume power-sharing in protest over the Northern Ireland Protocol.
The Agriculture Minister also said the "future looks bleak" if the UK government's proposed legislation is not introduced to override parts of the Brexit deal on Irish Sea trade.
Read more: Brandon Lewis plans to cut MLA pay ‘soon’ if Stormont does not return
MPs are set to vote later on Monday on the controversial bill to decide whether it can proceed for further consideration.
Prime Minister Boris Johnson said the plan could be carried out "fairly rapidly", with the proposals in law by the end of the year.
The DUP has refused to nominate a Stormont Assembly speaker or to form a new Executive since elections in May until its concerns over the Protocol are addressed.
The Secretary of State has said he will introduce legislation to cut MLA pay "fairly soon" if the devolved institutions are not re-established.
Responding to the plan, Mr Poots said: "I'm working six days a week most weeks, so personally I have no issue about taking pay.
"But if Brandon Lewis wants to cut pay, bring it on – that's entirely up to him. That will have no bearing whatsoever on the position that we're adopting. None whatsoever.
"We are standing on a principle. Therefore, pay will not be an issue that will detract us from achieving what we’ve set out to achieve.”
Asked if he feels Mr Lewis is issuing an empty threat, Mr Poots responded: "I don’t care, he can threaten all he likes – this is about a principle. Therefore, if Brandon Lewis wishes to do this, he can do it."
But Mr Poots pointed out that the UK government was not as quick to act in the past when Sinn Féin brought down power-sharing in January 2017 in the wake of the RHI scandal.
It was not until September 2018 when the British government announced plans to reduce MLA salaries, with the cuts occurring in two stages beginning in November that year.
Mr Poots also warned Conservative MPs against voting down the Protocol bill as a way of putting pressure on the Prime Minister, who has been facing renewed calls to resign after the party's double by-election defeat last week.
Asked if the DUP will be any closer to returning to Stormont if the legislation gets through, Mr Poots told BBC Radio Ulster’s Good Morning Ulster programme: "In a sense, yes."
If it does not get through, he added: "I think that the future looks bleak."
He said: "If it gets through today it is a significant step forward and we’d be working with government to see what other steps can be taken in advance of legislation being fully applied."
In a warning to Tory MPs, Mr Poots said: "Any Conservative who has any notion of using this, of having a go at Boris Johnson, are doing the same as the European Union is doing in terms of damaging the peace process and the institutions in Northern Ireland."
But Sinn Féin MP John Finucane branded the bill "shameful" and said it will mean "more instability" for the region.
He told the programme: "It’s very interesting that we are watching a sovereign Parliament debating whether to continue a breach of international law or not.
“As I’ve said, and I think as many others have said on numerous occasions, the introduction of this Bill is shameful. It provides nothing but more instability, especially for people here, especially for our industries and sectors here.
“So the British Government seem to be tone deaf to the majority of the wishes of people here in continuing to push ahead with this legislation.”
On MLA pay, Mr Finucane said: "In principle, I think it’s untenable for MLAs to be paid for the work that they are unable to do.
"I think that what we hear from Brandon Lewis again is rather vague."
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