Official Report: Minutes of Evidence

The Chairperson (Ms Lo): I welcome Leo O'Reilly, the permanent secretary; Anthony Carlton, the director of finance; and Siobhan Lynn from the finance and business planning division. Your paper is very good. I managed to read it, and I know that it has just been tabled for members to look at. Maybe you will walk us through it.

Thank you for preparing a very good paper. You have every sympathy from me. I was so angry reading it, and I am sure that you all are. Leo, if you could talk us through the paper, and then maybe answer questions from members.

Mr Leo O'Reilly (Department of the Environment): I repeat the apology about the timing of this. We were and indeed are, to some extent, still trying to work out a final scenario on this, which is why the paper came unduly late to the Committee. If you want us to come back at another stage once people have had a chance to look at it in more detail, we can do that.

Part of the difficulty is that every Department is different, every Department's finances are different and the way that they are funded is different. The problem is how to explain what it means in what you hope might be a way that most people, apart from my two finance specialists, will understand. We have tried to take it through a logical sequence that starts off with the draft Budget proposals.

The key number in the DFP document is £103·7 million, which is the net departmental expenditure limit allocation to the Department for next year in the draft Budget. The first thing that we did with that figure was to transfer some of it out to local government in respect of the transfer of planning functions and some associated environmental responsibilities. That is how you get to table 2, which shows those figures.

We make the point in paragraph 7 that the councils will, of course, also get the money that we currently receive for planning receipts, which we estimate will be £12·6 million next year. That revenue will transfer from the Department to local government to pay for the staff who will transfer across and the other functions that we will transfer to it.

We then come to the issue of local government grants. Again, we explained that there was a reduced baseline allocation. One of the core issues in the budget is the treatment of the two sizeable grants that we pay to local government. In the case of one of those, the derating grant, we do not have any discretion, because it is a statutory grant that is based on specific rating reliefs. The number is fixed by a statutory formula and, until that is changed, there is an obligation to pay the money to local government. There is a separate rates support grant that is variable, but, as we have mentioned, and as most members will know, it is designed to support councils that have relatively lower levels of revenue compared to other councils.

That gets us to the balance of funding that is shown in table 3. Of course, we do receive income, and the Department charges for various activities and fees. We have estimated receipts at £20·8 million, and there is some more detail on that in annex A. That leaves us with a balance of £80·5 million to spend. Then we, in paragraph —

Mr Weir: Sorry, I want to be clear on one point. Reference is made to the reduction in grants by 15%,and I understand that. That is obviously in line with the overall reduction. I understand that, and in theory there is at least a degree of variability. Were the additional allocations of £2 million that it was agreed would go to local government put back into the figures?

Mr O'Reilly: They were put back in.

Mr Weir: Maybe you will come to that.

Mr O'Reilly: That is in paragraph 18 of the paper.

Mr Weir: I would not say that they are a sort of rebalancing, but at least it is moving a little bit in that direction.

Mr O'Reilly: Income is specified in paragraph 12, and we add that back in again. That is money that we anticipate we will have to spend next year.

We then looked at how we would spend the money that is left. The first thing we have highlighted is staff salary costs, because that is the largest single item of spend out of the money that is left. We have highlighted the key issues. This year, with the reductions, we have already started to reduce the number of staff in the Department through the measures that are mentioned in paragraph 14. We also have up to 120 staff in the Department who are left from the vehicle licensing function and who are based primarily in Coleraine. We are running a voluntary early exit scheme that will hopefully mean that most, if not all, of those staff will have gone by 31 March. There will be a difficulty if they do not. At the moment, the DVLA in Swansea is funding them, but it has said that it will not fund them after March next year.

As I mentioned earlier, we are also moving 400 or so planning and related staff to local government on 1 April, and we have taken account of the money that we need to transfer to local government to pay for those staff. That will mean that we will end up with a balance of staff in the Department at the start of next year — excluding DVA testing staff, who are funded separately through the trading fund — of 1,560. At the end of paragraph 16, we estimate that, to stabilise the Department's medium-term financial position, we need to aim to release around 500 staff. That would, in the medium term, release about £16 million of our costs.

The Chairperson (Ms Lo): How much? £16 million?

Mr O'Reilly: Yes.

We then list other costs, which are detailed in annex B. Those are a diverse range of things, but they are the costs that are associated with running the Department, what it does and the staff that it employs, assuming that we have about the 1,560 staff in place at the beginning of the financial year. It also assumes that country parks and nature reserves will remain open and will be staffed at a basic level to provide basic facilities for services. To come back to Mr Weir's question, as well as the two big grants that we pay to local government, there is a miscellaneous range of other grants that cover construction products, emergency planning, air quality, listed buildings and waste recycling. We pay a diverse range of grants across local government. We have used some of the £2 million that was allocated in the draft Budget to offset some of the reductions in local government grants.

Paragraph 19 shows how much is left after we allocate those various spending assumptions for next year, which is set out in table 5. We flag up separately that we also have the carrier bag levy receipts, which are used to fund environmental programmes. That money will still be there next year for the various primarily community-based environmental programmes that it funds.

The capital budget, in global terms, is not large. A significant amount of it is earmarked for a replacement IT system for driver licensing, waste management and other capital grants. As the budget notes, we also have a large block of money — £50·5 million — in financial transactions capital. That is a special sort of capital that we can discuss as necessary, but it is earmarked for an energy-from-waste plant associated with the Arc21 waste management group.

Taking account of all that, what do we end up with? Going back to table 5, you see that there is a balance of £1·2 million. If you just leave that sitting there, we highlight in paragraph 23 the various things that we fund and do at the moment, the services we provide and other expenditures we have that simply will not have any money next year at the start of April. Nothing has been allocated to those things at all.

That would have a significant impact on what we can do and what we can cover. Also, because of the wide-ranging nature of our grants programmes, that would impact on organisations and bodies that receive those grants, from universities to small local community groups.

Mr Boylan: Just to clarify with regards to paragraph 23, besides that list of groups on pages 9 and 10, are we talking about road safety as well?

Mr O'Reilly: At the moment, yes.

Mr Boylan: How much is that in total?

Mr O'Reilly: For road safety?

Mr Boylan: Right across the board if you were not to fund those groups and all those grants for listed buildings and the whole lot. What total are we looking at if you had no money for funding all of that?

Ms Siobhan Lynn (Department of the Environment): It is in and around £6 million.

Mr Boylan: Yes, that is the shortfall.

Mr O'Reilly: It depends how you add those numbers up.

Mr Boylan: We will come back to that.

Mr O'Reilly: I will make a final point and then answer your questions. We propose to put this information on our departmental website this afternoon, because every Department has been asked to put their assessments of their budget implications for them on their sites. In the course of this week, as you have seen, various Departments are beginning to do that.

The Chairperson (Ms Lo): OK, Leo. This is certainly a budget that it is almost impossible for the Department to try to administer for next year. I am sure that members will have lots of questions to ask you. I will start by asking about staffing. You are thinking of reducing staff numbers by 500, and that may save £16 million. Is that right?

Mr O'Reilly: Yes.

The Chairperson (Ms Lo): Have you any control over who is going to take the redundancy package? I know that OFMDFM has put forward a voluntary redundancy scheme. Can you say which Department you want to go? Is there a priority on that?

Mr O'Reilly: The Finance Minister spoke publicly about that this week and mentioned that a lot of work is being done centrally by DFP on a Civil Service-wide scheme. It has to be managed centrally for all Departments. On the specific point about who might go, in previous voluntary redundancy programmes that we have run in this Department — in respect of planners, for example — we knew exactly how many we wanted to go and at which grades, because we knew what our objective was. In this instance, it is almost the other way around. We just need to save money and, therefore, anyone who wanted to avail themselves of the scheme would be allowed to. The primary objective is to reduce costs as quickly as possible. I suspect that, in practice, a scheme or schemes will be launched and people will express an interest from across all Departments. Once those numbers begin to come together, every Department will know how many people want to go. You then, in a sense, start reverse managing it, as it were; once you know from where the people are going, you will be able to see where the gaps in the organisation would be and how you would fill those. The primary driver is not an HR restructuring, as it was with planning. It is literally to save money, full stop. That is the driver.

The Chairperson (Ms Lo): The proportion is going to be huge for your Department. After planners and DVA staff go, you will be left with only 1,560 staff. You then have to cut another 500 staff. That is one third of the remaining staff. No one will feel safe in DOE anymore. How will that impact on the running of the Department and its services?

Mr O'Reilly: Obviously we have been giving some preliminary thought to this, but it is a pretty big question. To state the obvious, this sort of exercise forces you to stand back and ask: what are we doing, and what is important? In a sense, everything that we do is of importance and has some value, but that is not uniform. We have to start to look strategically at what we do and ask what is really important. We are still developing our thinking. We do a lot of things that are good, but my colleagues and I think that what is really important — this has not been washed through Ministers or anything yet — is environmental regulation and protection. Look at the biggest stories of the last year or two: you have the Mobuoy landfill site and concerns around Lough Neagh. There is scope for improvement in the systems and the way that we and other Departments do the regulations and protections. We could start by saying that those are the really important things and that that is where we want to protect funding and perhaps even direct more funding. However, that has implications. We provide a lot of grants for very good and desirable programmes; you mentioned eco-schools and other activities. As I mentioned, we still have the carrier bag revenue money, which is circa £4 million a year. If we continue —

The Chairperson (Ms Lo): Are you sure that you can get £4 million? Last year, you did not.

Mr O'Reilly: It is getting better. More is coming in.

The Chairperson (Ms Lo): People were slipping back in their habits.

Mr O'Reilly: Most people have reconciled themselves to paying the money.

Mr Weir: The advertising campaign did not correct the bad behaviour.

Mr O'Reilly: On one level, of course, the object should be to have a zero income from the carrier bag levy. However, the scheme is there. It has been set up and put in place legally and the money is there, so we have to use it. That will not replace all the other grants. However, sometimes, with that sort of seed funding, for community groups etc, you get an awful lot for relatively little input.

The Chairperson (Ms Lo): Absolutely. Volunteer hours.

Mr O'Reilly: That is the second strand of what we are thinking about at the moment. Obviously, we need to maintain core services. We have to continue to issue people with driving licences. As I mentioned, part of our capital spend next year is to replace the current driver licensing IT systems, which are a bit of a hotchpotch at the moment. If we get that capital investment, it will allow us to run those systems more efficiently.

If you work out the things you have to do and the things that are really important — although, ultimately, that is a political judgement — you can begin to see how you might manage it. It is going to have very significant adverse impacts on certain things we do at the moment. As we said, it is very difficult, but it is not impossible. Other Departments are facing equally challenging and difficult decisions for different reasons.

The Chairperson (Ms Lo): We also have to bear in mind all the directives. If you do not do things right, you could end up facing infraction proceedings and fines.

Mr O'Reilly: Yes. That brings me back to my point about needing to refocus ourselves on our environmental protection activity.

The Chairperson (Ms Lo): What about the Programme for Government targets you have to meet? Are you going to miss any of them?

Mr O'Reilly: As you know, the current Programme for Government ends at the end of 2015.

Ms Lynn: We are doing a one-year one.

Mr O'Reilly: The current one ends at the end of this year. I think that there are proposals to bring forward a subsidiary set of targets for next year, but I understand that those have not yet been agreed.

Ms Lynn: They have not been finalised.

Mr O'Reilly: They have not been finalised, but that is because people will want to —

The Chairperson (Ms Lo): There must be new targets for 2015-16.

Mr Boylan: I would think so.

Mr O'Reilly: Yes, there will be new targets. I will not get into our targets at the moment, but we know where we are with them.

The Chairperson (Ms Lo): There are targets on renewable energy, cutting emissions and climate change.

Mr O'Reilly: The climate change one is linked to an EU 2020 target, so obviously we will need to look at that again in the medium term. The carrier bag levy is going to be finished in January, once we put in place the final piece of the jigsaw. That target will be complete. The local government one will be complete, provided that you are able to help us on that. We are putting the final stuff through.

As you know, waste recycling has been falling behind a bit on our incremental targets, but, interestingly, it has picked up during the last quarter. I had better be careful; have those statistics been published yet? They are official statistics. Local government is making more progress there. Again, we know where we are and what has to be done. We will seek to continue to work with local government where possible.

The Chairperson (Ms Lo): I will let other members in. I have other questions to ask you at the end. There are a number of other things I want to ask you about the capital as well.

Mr Eastwood: Thanks for the presentation, Leo. I was going to say that there are a couple of things that I am concerned about, but I am concerned about all of it. You are in a fairly impossible position given the cut you have to your budget. The rates support grants are specific to poorer councils, which happen to be in and around my neck of the woods — the west of the Bann, unfortunately — for all sorts of reasons. What impact will that have on councils there? What are we looking at in real terms around the impact of the cut on road safety?

Mr O'Reilly: The figure work on rates support grants is set out in the paper. You can see the opening position at the start of the year; the figure for the current year is £18·3 million. If you apply the 15·1% reduction to that, it is a reduction of £2·8 million to that grant. That would be spread out across the eligible councils.

Mr Eastwood: Have you had any discussions with them as to what that would mean in terms of their cutbacks?

Mr O'Reilly: Not any in-depth discussions. It is only relatively recently that we actually alerted local government to the potential for those reductions. I will come back to why that is in a minute. We have said to local government chief executives that there is a possibility that that grant in particular could be reduced next year, and the reduction would be spread out across the eligible councils.

Mr Eastwood: The councils that need it most?

Mr O'Reilly: The councils, yes. The precise number of councils will change, obviously, with local government reorganisation on 1 April.

On the second question you asked about road safety, the £1·8 million figure that we quote is, at the moment, £1·2 million —

Ms Lynn: No, £1·8 million is the current year budget.

Mr O'Reilly: Yes, but £0·5 million of that is for the development of a new campaign. Take that out, and we are down to core £1·3 million, is that not right? So there is no money at the moment — well, there is the £1·2 million, but we are just sitting with that at the moment to see what sort of response we get from the Committee and others as to what the highest levels of concern are. Obviously, you could perhaps put some money back into that, for example, for road safety. There is a debate that goes on, as you know, as to what the most effective way to spend road safety programme money is. Is it on TV advertising? There is a debate that bats back and forward, sometimes here, as to what is the most effective. Is it education in schools? Is it other forms of raising awareness? Is it, for example, working, as we do, with the young farmers' clubs and the GAA in rural communities? As you know, most deaths on the road are primarily young drivers on rural roads. It sounds simplistic, but that is where the core problem is.

The Chairperson (Ms Lo): But TV adverts will reach the largest audience, there is no doubt about that. Do you have empirical evidence of how effective TV campaigns are?

Mr O'Reilly: There have been various studies, as you can imagine, given the scale of spending. There was one done a few years ago by Oxford Economics which worked out an attributable figure. You can ask how we know it is roads advertising and not better-designed cars, better-designed roads, that people or just being more careful anyway, or that driving test examiners are better.

The Chairperson (Ms Lo): A combination.

Mr O'Reilly: There is a myriad of things. Those are only a few things. The one example that illustrates where road safety advertising was effective was the wearing of seat belts. At the beginning of the 1990s, we had one of the lowest rates in Europe of people wearing their seat belts when they were supposed to wear them. That has changed dramatically; we are now amongst the highest. When you think about it, the design and the technology of a seatbelt has never changed, but people do wear them now. There may be other reasons, but that was cited to me as an example.

Mr Eastwood: Leo, in real terms — so that we know what the money is — what is that actually going to mean? You have spelt out all of the things that you do, but have you done any work on what is getting cut? Is it the advertising? Is it the work with the GAA and the young farmers? Is there any work done on what that is actually going to mean in real terms for people?

Mr O'Reilly: To answer your question simply, in the scenario at the moment there is no money allocated for any of those activities — just to be transparent about the point. The other thing I will say is that it is still developing. We have not stopped looking at other ways in which we can save money. There is obviously a significant imperative on us to cut back wherever possible in other areas. Even though we say that we think we have to spend the money, if there is any scope at all to cut back we will do that. Given the extreme circumstances we are in, if consensus emerges about what we should seek at least to put some more money into then we can seek to do that, following your responses and other responses.

Mrs Cameron: Thank you for your presentation. On the subject of waste and waste reduction, obviously there is a legal requirement under article 29 of the waste framework directive.

What impact will the proposed cuts have on projects such as Rethink Waste, which is providing grants for projects diverting waste from landfill?

Mr O'Reilly: The grant programmes that you refer to are incorporated in the balance of the £7·1 million figure mentioned. Therefore, there is potentially some scope to continue to pay the grants that we pay, particularly to councils, just for waste infrastructure, such as recycling centres and that sort of thing. There will probably be some funding stream for that activity.

The other big issue is the financial transactions capital allocation. At the moment, as we said, that is earmarked for a specific project. To qualify for that money, the development has to be a private-sector-led, or certainly a non-public-sector-led, development. It is not inconceivable that, if other projects were to come forward that have those required characteristics, they could access financial transactions capital. I do not want to use this terminology because it can be misleading, but it provides cheap loan finance to developers who may not otherwise be able to access finance to develop the facilities. It is earmarked at the moment for that, but, certainly, if other proposals were to come forward to us to use the money in a different way, for infrastructure in different shapes or formats, we would be very open to that. That would be for the Finance Minister to determine.

Mrs Cameron: That is useful, because I was coming on to that. We are well aware of the planning approval that Arc21 is seeking for Mallusk. As a representative for South Antrim, I am obviously against that. Is the money earmarked for the Arc21 waste management group reliant on approval being got for Mallusk, or are other identified sites available? Planning approval lies with the Minister, obviously.

Mr O'Reilly: As a Department, we have to overcome some Chinese walls, in the sense that the planning approval has to be kept discrete and decided solely on its planning merits. If there were an inference drawn that we had given planning approval because we had had this big chunk of money that we had to spend, that would lead us into difficult territory. As you know, the planning process is still under way. That planning application has not yet been completed.

Mrs Cameron: Are you aware of any other proposed sites for Arc21?

Mr O'Reilly: At the moment, we are not aware of any specific proposals. As you know, there is one specific proposal for the Bombardier site. I have to be careful here because of commercial-in-confidence issues. My understanding is that it is not anticipated that that project would wish to or need to access the financial transactions capital mechanism, put it that way. If someone were to come forward with a proposal, we would want to look at it very carefully.

Mrs Cameron: How will the cuts or the reductions in staff impact on any work being done on the reduction of waste? What work is being done with manufacturers on the likes of reducing packaging?

Mr O'Reilly: The environmental policy division in the Department has a significant responsibility for waste and waste policy. That also includes things such as packaging, although that tends to be driven largely by EU legislation and directives on what packaging should and should not be. The division also deal with policies on things such as waste tyres, which is an area of concern. The other side of the Department that works a lot on the waste management stuff is, of course, the Northern Ireland Environment Agency (NIEA). The waste teams are increasingly working with councils on the waste strategy and with the private sector. Companies are very often keen to reduce their waste outgoings — indeed, their waste arisings completely — so the teams work with the private sector as well. That work is continuing. As I said, we can never say never, but, in my view, we need to maintain a strong focus on the priority of waste regulation enforcement in the Department.

Mrs Cameron: The plan is to reduce staffing by a third. What are the Department's main concerns? That is a massive reduction in staff. What will that impact on to the greatest extent in the Department?

Mr O'Reilly: There is a concern for the people to whom the message is being directed. A number of general communications with staff have been issued by the head of the Civil Service over the past couple of months, and those have explained that there are difficult issues to be addressed. As I explained earlier in answer to a question from the Chair, this is intended to be, and is, a voluntary exit scheme. Once the detail of the scheme is devised by officials in DFP and approved by the Executive, it will be put to people. It will be their choice, because it is meant to be voluntary, whether to avail themselves of the scheme. We hope that the impact on individuals would be limited.

The impact on the business will really become apparent only once we know where the holes, as it were, are in the organisation. We anticipate that this will not happen overnight. It will be a gradual process. It probably will not all happen over the next financial year. We will want to restructure and redeploy the remaining staff out of lower-priority activities into higher-priority activities. To some extent, we are already doing that in the Department, because we are not filling any posts at all at the moment. We are not bringing any new people into the Department at all.

Mrs Cameron: Does the Department have any indication of where those holes might be? You must have some kind of indication — based on age ranges or whatever throughout the Department — of where the applications for the voluntary exit scheme might come from.

Mr Anthony Carlton (Department of the Environment): The only analysis at this level is coming from the centre. By the very nature of the way in which the compensation scheme is run, it is expected that those employees who are 58 and above will be most likely to avail themselves of the scheme, because it is a 21-month-salary scheme. In addition, a lot of people at AA and AO level might gain because of the attractiveness of the scheme to that age bracket, but it will really be for officers who have 35 years' service and above. That is why it is expected that the age of applicant is likely to be in and around 58.

We would not expect to see 500 voluntary redundancies from the Department of Environment, but we would expect to see a number go from other Departments. We would then have to exit some of our officers to fill those gaps, and that is how we would meet the staffing reductions.

Mr O'Reilly: To quote you a figure on your point about age, I think that I am right in saying that the latest figures have 1,600 people in the Northern Ireland Civil Service aged over 60. If you start with an assumption that those people might be more keen to take up the opportunity of retiring, you have reached half of your 3,000 target already. There are various views and opinions around. It is one of those things that everybody has an opinion on.

The Chairperson (Ms Lo): That is 1,600 across all civil servants.

Mr O'Reilly: Yes. There are 1,600 civil servants aged over 60.

The Chairperson (Ms Lo): But we have 12 Departments.

Mr O'Reilly: Yes.

The other issue for us, and particularly for our Department, is not just the age profile but the professional profile of the staff. Quite a large proportion of our staff are not conventional civil servants in administrative grades. A lot of them are professional and technical (P&T) grades and scientific staff, and, at the moment, a lot of them are planners, but most will have gone on 1 April, so, to some extent, those posts are taken out of the equation. There are quite a lot of scientific staff, particularly in the NIEA. There will be an issue there, not just about age but about whom the schemes are targeted at — professional groupings as well as admin grades in the Department.

Mrs Cameron: You really have no idea what problems you may face until you see the outcome of the —

Mr O'Reilly: Not at that detailed, granular level, but —

Mrs Cameron: You are saying that you could lose specialised members of staff.

Mr O'Reilly: Yes, and as I said earlier to the Chair, the driver is finance. For example, there may be some issues around IT staff across the service, because we are not well supported there. Those grades may be excluded from a redundancy scheme specifically, because the service as a whole cannot afford to lose its IT staff. That is the one area of professional staff in which there is still very strong demand in the external market for people with those skills.

Mrs Cameron: Finally, are you confident that the numbers required for the voluntary exit scheme will come forward?

Mr O'Reilly: I cannot say that I am confident. You hear talk that people will be rushing to take up the scheme. To some extent, some of that may be based on staff's folk memory of how the schemes used to operate. There were pretty generous compensation terms available for people, but, over the past couple of years, the schemes have been changed very dramatically, initially by Treasury in London and then locally. Therefore, the benefits available are not remotely like they used to be, but people will not be aware of that until they see the detail of the scheme and work out what it will mean for them. There may not be just as strong a take-up as some staff perhaps believe there could be.

The Chairperson (Ms Lo): It is unlikely that it will happen right away anyway.

Mr O'Reilly: No, it will not.

The Chairperson (Ms Lo): It could take six months or a year to have all 500 staff released.

Mr O'Reilly: The internal working assumption is that people will not start leaving the system in any sorts of numbers until at least around October 2015.

The Chairperson (Ms Lo): During all that time you still have to pay staff salaries.

Mr O'Reilly: You have to pay people, yes.

The Chairperson (Ms Lo): May I pick up on the point that Pam made? This is on the financial transactions capital, which is the new thing from OFMDFM. Is it not a bit presumptuous to say that £50 million will go to the Arc21 project? It is still awaiting planning approval. I know that, if you do not use that money in this financial year, it will go. Is that right? Will it have to be handed back to Treasury?

Mr O'Reilly: My understanding is that Northern Ireland will have specific tranches of money over the next few years from that Treasury fund, yes.

The Chairperson (Ms Lo): Do you have a plan B if Arc21 cannot get the planning approval or is not able to use the money next year?

Mr O'Reilly: You asked whether it is presumptuous. It is certainly not presumptuous. We are not presuming anything on planning. We cannot do that, because approval has to be determined on planning grounds. However, it is not presumptuous in the other sense, because Arc21, working with the Strategic Investment Board, came forward with the proposal. It has brought forward the proposal for the use of financial transactions capital.

The Chairperson (Ms Lo): Will that put pressure on planners that they have to approve it?

Mr O'Reilly: No, we have to be very clear that it cannot and will not.

The Chairperson (Ms Lo): OK. We will hear from you.

Mr Boylan: Leo, thank you very much for your presentation. I have to accept that the paper was tabled only today, but I will get into more detail once I get time to study it.

I have a few initial concerns. Can you outline briefly how the changes will impact on our original Programme for Government targets?

Mr O'Reilly: I will try to remember most of them off the top of my head. Siobhan will keep me right. She generally keeps me right on these matters anyhow. Our key PFG targets are local government reform — the Committee knows where we are at with that one — and we do not anticipate any of the changes affecting that programme.

Mr Boylan: We will go through them very quickly. The Committee supported ring-fencing the money to support local government though the transition period, so we are happy enough.

Mr O'Reilly: We have done that. I am content that the figures that we quote in there, which include the £6·6 million and the revenue receipts, reflect the functions that we are transferring to local government. Obviously, it is not just our Department, because other Departments are involved in transferring functions as well, and there is still some discussion going on as to what the final figures will be. However, from speaking to —

Mr Boylan: As far as our remit —

Mr O'Reilly: It will cover the functions that we are transferring. Indeed, my Minister was very clear on that point.

I will move quickly on. We also talked about the carrier-bag levy, which is another PFG target. There is the waste recycling target, which is 45% for this year.

Ms Lynn: It is 46% for next year.

Mr O'Reilly: It is 45% for this year and 46% for next year. Our latest position is around 43% —

Ms Lynn: Yes, in and around that.

Mr O'Reilly: — but new figures will be published shortly. Without going too far, we should show an improving trend.

There is the carbon emissions target. The problem with that target is that it is the target for 2020. Is it 2020?

Ms Lynn: Yes, 2020.

The Chairperson (Ms Lo): Yes, 2020.

Mr O'Reilly: Is it not 2025? I thought that it was later than 2020. Sorry. Anyhow, it depends on how you run the numbers. At the moment, we regard ourselves as being a bit behind where we should be with that target. We adopted a very different strategy of proactively working with business, including the agriculture sector, because, very briefly, in Northern Ireland, as you know, greenhouse gas emissions come from a very limited number of sources. There is agriculture, there is energy generation — our coal- and oil-fired stations — and there is transport. If you take those three out, that covers most of our carbon emissions. By definition, we have to work with agriculture. To some extent, the carbon emissions from energy will depend, ultimately and strategically, on decisions on methods of energy generation. The other key one is transport. Again, it is about working to promote lower carbon-emitting forms of transport, and encouraging more public transport and less use of cars. That is what is going on with that one.

What have I not mentioned?

Ms Lynn: Biodiversity.

Mr O'Reilly: Can you say what is happening with that one?

Mr Boylan: The reason that I asked the question was to know how it was reasonably impacting on the environment budget.

Mr O'Reilly: At the moment, I do not see the Budget impacting —

Mr Boylan: The key thing is that we agree targets, and as long as we try to achieve them under the PFG, that is grand. The reason that I asked the question is because, at some point, we are going to have to reprioritise in order to deliver, especially when it comes to local government.

However, more importantly, I have another question. A couple of years ago, we went through the workforce model in planning. We are transferring that over on 1 April. Do we still believe that we have enough staff to deliver the programme when it goes to the local authority?

Mr O'Reilly: Yes. Both measured objectively against the workforce planning model, and that is one reason that I am shaking my head. The other reason is that we are transferring more staff than we need to run the planning system, particularly at a more senior level, for obvious reasons. We have six area planning districts at the moment, and we are moving to having 11. Therefore, we have had almost to double the number of area planning officers to have one area planning officer for each of the new councils. We have done that, put the people in place and allocated the budget to pay for them, and that budget will transfer across to local government in April.

Mr Boylan: Pam asked a question about the 500 jobs. I know that you have to cut jobs. However, if you can cut such jobs, there has to be a question asked about those jobs in the first place. Let us be realistic here. I have serious concerns. I take it that we will need to protect front-line delivery. In your Department, it is hard to define exactly what front-line delivery is. What impact do you feel the removal of certain jobs or packages would have? I am sure that the over 60s would have a case on equality grounds if they were to be let go, but we will not get into equality issues today. How would the removal of those 500 jobs impact on what you perceive to be front-line protection?

Mr O'Reilly: To some extent, you are right. Everyone's front line is probably what they do at the moment. This is still a work in progress. However, as I mentioned at the beginning, if you evolve a strategy, you have to ask, "What are the things that we have to do?" There are things that we are obliged by statute to do. We are losing most of planning, but we still have some planning responsibilities and will have to process planning applications. That is not negotiable. We will have to do that as efficiently and with as few staff as possible. We cannot not do it.

There are other things that we have to do. We have to process licence applications, discharge applications and all that stuff. Those things will have to continue to be done. There are other activities that we should regard as a priority. I mentioned environmental protection activities as being one. If you start at that end of the telescope, what are the other things that we do? The others things that we do are a lot of activities around environmental protection, and that supports various environmental schemes in the Department. We have to curtail our activities in a lot of those areas.

Mr Boylan: Fair enough. Thanks for the explanation.

Mr O'Reilly: I can get more details.

Mr Boylan: It is just a wee bit difficult to quantify, but the way in which you have explained it is 100%. We have duty to protect whatever is in statute, and that is grand. It is just about what the impact is going to be overall.

The Chair keeps mentioning the EU infraction. We could talk all day about EU infraction. The reality is, and I heard the discussion on this on the radio this morning, that we are heavily reliant on public-sector jobs. I make no apologies that that is the case in my own area. Until we have the capacity to grow the infrastructure and attract private-sector jobs, we are going to have to look at protecting those jobs. That is being realistic. It is stark when you start to talk about the number of jobs that are going to go under the new scheme and where the gaps will be as you try to meet targets in the Department.

Mr Milne: The 500 jobs equals the activities that are not now going to happen, no?

Mr O'Reilly: We do not —

Mr Milne: I just do not know how you come to the figure of 500 jobs.

Mr O'Reilly: The 500-jobs figure is based, as I mentioned earlier, on what we estimate we need to —

Mr Milne: You are estimating that 500 jobs is what you need to get rid of in order to reach the savings figure.

Mr O'Reilly: Frankly, it is also to allow us not to have to permanently stop doing certain things. In other words, have to stop, curtail or suspend work in the short term. However, there are things such as road safety promotion and other programmes that we support in local government that we think are vital. This will hopefully allow us to get back to supporting some of those programmes. It is about making the choice and deciding what is the best way to spend the money available. People are in the jobs at the moment, so the money has to be spent on salaries. However, if you can cut back on the number of people whom you are employing, look at better ways of doing things in the Department and be more efficient, by definition, once those people are freed up, more becomes available to allocate back to other outside organisations, community groups, and so on. That is part of the strategy as well. However, because the people are going to be there on 1 April, you have this dramatic effect, whereby you have to continue to pay them until they decide to leave.

Mr Boylan: That is a difficult one, but we will get there as the process continues.

The Chairperson (Ms Lo): That is a good question. May I jump in here? Leo, are you saying that you could work with a staff of 1,000? You could let 500 go and still maintain services.

Mr O'Reilly: I could maintain a level of service. It would not be to the level of what we do at the moment, by definition.

The Chairperson (Ms Lo): You were talking mostly in monetary terms. It is all driven by money. You must shed 500 staff in order to save £16 million.

Mr O'Reilly: It is primarily driven my money. However, we will have to wait and see how it plays out ultimately.

The Chairperson (Ms Lo): How did you arrive at the figure of 500?

Mr O'Reilly: Reverse-engineer back to the £16 million figure. The opening reduction is £13 million. We are aware already of other pressures in the system — I could mention them, but I will not — that are not yet factored into that figure. It is a matter of running through the arithmetic. If you want to begin to restore at least some of the things that we do, in particular things that we do externally, we estimate that we need to release that sort of number of staff to generate the savings. That would allow us to reinstate funding activities in other areas in future, including those mentioned at the end of paragraph 23 in our paper. There is no money at the moment.

The Chairperson (Ms Lo): On top of your departmental staff, what about staff in the organisations that you fund in the community and voluntary sector? How many job losses do you think there may be there?

Mr O'Reilly: I do not have a precise figure, but inevitably our grant payments support jobs in local community groups and probably also in larger bodies such as universities.

The Chairperson (Ms Lo): What about matched funding, ESF funding and all that —

Mr O'Reilly: Obviously, we would seek to safeguard matched funding. If a specific funding stream is drawing down EU money, there is an added incentive to protect that.

The Chairperson (Ms Lo): You need that money to be able to get more money into Northern Ireland.

Mr O'Reilly: Yes, absolutely. That is a good point.

The Chairperson (Ms Lo): That will be drastically cut.

Mr O'Reilly: We will try our best. Siobhan, do you want to say how much money is involved in matched funding?

Ms Lynn: I think that it is in the region of £300,000 to £400,000 for the current year. However, there is nothing built into the 2015-16 Budget for matched funding.

The Chairperson (Ms Lo): There is no matched funding at all.

Mr O'Reilly: Obviously, it is something we want to look at carefully, because we do not want to forgo wider EU receipts. That would be a bit illogical.

The Chairperson (Ms Lo): Totally.

Mr Boylan: I have a couple of quick points to make, Chair. Clearly, what we are looking at will have serious consequences over the next two to three years, or, to be realistic, the next number of years.

Road safety is a major issue for us. The Committee would certainly like to see how we can support whatever new ideas there might be. There is a list at paragraph 23 of things that are supported and that bring big benefits, especially in council areas, which are responsible for growing tourism and everything else. We certainly would support those programmes.

Leo, I have been saying this for a number of years now, and I know that some members agree with it and some do not, but I am going to say it anyway. Last week or the week before, we received a presentation on water quality from departmental officials. They set a certain target. We should be setting targets that are achievable and realistic, but my main point is this: if there is a European directive that we have to comply with as part of a member state, there needs to be funding in the light of your budget constraints. We need to be looking at new and innovative ways of drawing down funding to address those issues. If there is a directive, adhere to it, but there needs to be support for you to do that. Perhaps there is a new way of thinking on the matter.

Mr O'Reilly: You are absolutely right; I agree. This sort of situation does, I am afraid, force you to start approaching things in new ways.

Mrs Overend: A few of my issues and concerns have been touched on, but I have a few more. We talked about salaries, staffing levels and the cuts that you are going to make. If the driver is finance, rather than people, would it not be wise to have a more strategic review and identify those people you need the most rather than just open the redundancy programme to everyone? I know it is a difficult thing to do.

Mr O'Reilly: It does look a bit crude, if that is the right word. The scale of what we are facing makes it difficult to run such an exercise. There are lots of people doing very important things — things that we will have to do even after all this is over.

Basically, when you are running a redundancy scheme, you can go at it in one of two ways. You can seek to introduce criteria: for example, no one in IT can go. That could be a very realistic outcome. You can seek to define other skill sets or reasons why people cannot go. The difficulty with this approach is that sometimes, paradoxically, you end up getting into lots of difficulties with staff who want to go but have been put in a category that you think should not go and are very unhappy as a result. So the criterion in recent years has simply been cost. You will be allowed to go if you want to go and are relatively cheap to let go. To be blunt about it: you will be let go ahead of somebody who would be more expensive.

Mrs Overend: Tell me why someone would be cheap to let go.

Mr O'Reilly: People who are near to retirement age, for example. Although it depends on the scheme, I suppose.

Ms Lynn: I do not know the ins and outs of the scheme.

Mr Carlton: Somebody without the full qualifying service of 35 years might volunteer. They would get less compensation because they have not been in as long — if the scheme goes the way they are drafting it.

Mrs Overend: But that person may not be cheap to let go when you take into consideration efficiency and how good that person might be in their job. It is not going to be cheap in the long run, and that is why I am suggesting a strategic approach.

Mr O'Reilly: To answer your question crudely and from memory, generally speaking at least, the people who are cheapest to let go are people who are at or near retirement age and people who have joined recently and have not accrued much entitlement. The people who are expensive to let go are those in mid-career.

Mrs Overend: Sometimes those people might be the ones who do the job best or can cover for someone else. I know it is a challenge, but there does need to be strategic thinking in that area. It is a difficult one.

The Chairperson (Ms Lo): You need to have very clear criteria, too, if you have, say, 700 staff who want to leave through the voluntary scheme. How are you going to justify allowing only 500 of those to go?

Mr O'Reilly: The cost criterion is used because it is completely objective and easy to understand. But it has the dysfunctional output that the previous member referred to. That is how we did it a couple of years ago in the Planning Service.

The Chairperson (Ms Lo): OK.

Mr O'Reilly: It meant that you were literally able to draw a line on the page and say we can allow x down to that person and nobody above that can go because they are too expensive.

The Chairperson (Ms Lo): Yes. It does not make sense.

Mrs Overend: OK. I will move on to the next point. Road safety is obviously a big issue and has been mentioned by other members. Obviously, it will be disappointing to find out that the funding is not going to the young farmers' clubs and other youth organisations. Does that mean that there is no money going at all in that direction?

Mr O'Reilly: That is not the position yet. We have referred to it because we anticipate it, and indeed there is obviously significant concern in the Department and for the Minister about road safety generally and road-safety issues. We are not saying that there is no money at all going to that. We are saying that, out of the available resources that we have identified so far and anything else that we can identify in the short term, that very well might be a priority in allocating money to residual activities that are not currently earmarked for funding. As I said, we would rely on the views of the Committee obviously and other responses that we receive.

Mrs Overend: If the Road Traffic (Amendment) Bill is passed, surely funding will need to be allocated to get the information out to younger people about those changes.

Mr O'Reilly: Yes.

Mrs Overend: There is an ongoing need for that. Thank you for that.

The other aspect was local government grants. Colum mentioned the reduction in the rate support grant and derating grants being reduced by 15·1%. That is almost £4 million. Are local councils aware of that?

Mr O'Reilly: Councils are aware at a high level because the Minister wrote to them on 30 October to alert them to this issue.

Mrs Overend: How will this impact on councils?

Mr O'Reilly: In simple terms, as most of you probably know better than I do, councils, at this time of the year, will begin looking at their budgets for next year. Of course, that is significantly more complicated this year because of the new structures. Between now and February, they will look at the rate, the penny product and that sort of thing. They will also look at forecast income from grants. That will feed through to their final decision on their rates. The impact is that councils will need to make assumptions — it will be assumptions at the moment — as to how much money they will have available next year, including shortfalls against previous income that they would have associated with various grant schemes from us. There will other income, but it will be a significant issue for them in that sense.

Mrs Overend: Thank you. The final point —

The Chairperson (Ms Lo): And people will see their rates go up?

Mr O'Reilly: Potentially. It depends how you absorb that and make savings. You could cut your costs as well as putting rates up.

Mrs Overend: So, I think that is a yes.

With regard to the current grants programmes that will get no funding — and you have detailed a wide range of them — do you think that that reduction in funding will have an impact on the Department's ability to meet its targets in various areas?

Mr O'Reilly: As we have just discussed, probably not on key Programme for Government targets. It will certainly mean that we have to reconfigure our more general business plan targets for next year, which is a process that we are just starting at this time of the year. It will mean that we will have to formulate different targets from the ones that we have at the moment.

Ms Lynn: It should not have a significant impact on the Programme for Government targets, because the £2 million that was earmarked there for local government grants includes a number of grants which work towards the Programme for Government targets, specifically on waste.

Mr Carlton: It is also worth pointing out to members that this is just a one-year budget, which is, in itself, very difficult for target setting. A lot of the targets have consequences for future years, and we are not expecting the situation to get better in subsequent years, although we have no detail of what the budget is going to be. So we also have to try to anticipate what the subsequent two- to three-year budget is going to look like.

Mr A Maginness: Thank you very much, Mr O'Reilly, for your presentation this morning. This is probably a political question and you may not be able to answer it. Anyway, I will just put the point to you that the overall strategy here is to reduce the number of people employed in the Northern Ireland Civil Service by 3,000. That is the projected figure. The Department is expected to effectively play its role in that overall reduction. The strategy is to reduce the public-sector payroll. In a situation where the economy is not particularly buoyant and is not providing the additional private-sector jobs, is this the most appropriate moment to embark on such a strategy, even if that strategy were desirable?

Mr O'Reilly: That is a wider question, as they say. Gosh.

Mr A Maginness: You can take the fifth amendment if you like.

Mr O'Reilly: The perfect way to do this would be to have some five-year, very gradual rundown of public expenditure at the very same time as you have a five-year, gradual increase in private-sector jobs, so that the two things cancel each other out. Usually, as you know, life does not work like that, so, unfortunately, we are into this cliff of public expenditure.

Mr A Maginness: That is a very interesting way to put it. If I could use a Maoist term, I would say that it is a Great Leap Forward —

The Chairperson (Ms Lo): Into the unknown.

Mr A Maginness: — which, as the Chair would know, was a total and absolute disaster for the Chinese people and economy. I do not ask you to comment on that.

Let us take local government as a discrete area in which the budget impacts. You have already answered questions from Mrs Overend in relation to that. If you take the overall effect of that, you have the derating grant, which effectively has to be paid by local government, whether or not it gets the money. It has to forego the rates. It cannot bill people for rates; that would be wrong. And then there is the support grant, which tries to equalise the difference between better-off councils and less-well-off councils. So it is a double whammy, really, for the councils. They will not have the extra money coming from the support grant; is that not right?

Mr O'Reilly: Yes, that is right for those councils that receive the support grant.

Mr A Maginness: The poorer councils, if I can characterise them as that, will either have to cut their services or, alternatively, put up their rates.

Mr O'Reilly: Yes.

Mr A Maginness: So there will be an impact on local government, probably in its weakest areas. Either it will have to demand more money from local people, ratepayers, or alternatively it will have to say to people: by the way, we are going to reduce your services. Is that the net effect of that?

Mr O'Reilly: Yes. That is not an unreasonable outline of what would happen if this scenario played through into the final outcome. These are still, obviously, draft proposals.

Mr A Maginness: It is not a very endearing prospect for those new councils, is it, in terms of this new role that they have to play for local people?

Mr O'Reilly: Yes. Obviously, when you talk about cuts to local government, you always have to ask what is the overall percentage effect on the capacity to run services. That will vary as well, between different councils.

Mr A Maginness: And it might not endear them to their local electorates either, given the fact that they will be forced either to reduce services or increase rates. That is probably by way of comment, rather than a question.

Mr Weir: An air of panic. Discuss.

Mr A Maginness: I am glad that Mr Weir sees the humour of it.

The Chairperson (Ms Lo): That is making your point.

Mr A Maginness: Mr Weir's local council might not be affected as much as others in the west and north-west.

I have just one last point. I do not want to labour this. In relation to the redundancy package, as it were, I think that £100 million has been set aside by the Department of Finance to finance those redundancies. If you were in the Civil Service and over 60 years of age, has your pension been protected? In other words, the rather adverse pension changes that came into being as a result of pension reform —

Mr O'Reilly: Yes. I am not sure about the precise detail, but there is certainly a lead-in time for application to the new scheme.

Mr A Maginness: If you were over 60, you would probably be all right, in that regard, as far as your pension is concerned.

Mr O'Reilly: That issue is really nothing to do with this budget.

Mr A Maginness: I understand that, but you have to get people to say, "This would be quite a good opportunity for me to leave the Civil Service and retire happily ever after." I will cut to the chase. Do you think that conditions at the moment are conducive to people saying, "This is an appropriate moment for me to retire. I am going to get a little bit of extra money here, and so forth." Is the package so attractive to people, who are perhaps not over 60 but between 50 and 59, to encourage them to retire?

Mr O'Reilly: As I said earlier, there are different views on that at the moment. In a sense, that will not really be known until you actually ask people whether they find it attractive.

Mr A Maginness: What is your impression at the moment?

Mr O'Reilly: My personal opinion is that it may not just be as attractive as people, including the staff themselves, think it would be, because I think that they are working off historic models.

Mr A Maginness: Let us turn, for an analogy, to teaching. At the moment, because of all sorts of changes, teachers over 50, at least, are unhappy about leaving the teaching profession because, clearly, it would be pretty disastrous for them to leave now. So they have to stay on, which effectively means that you cannot bring in young people and so forth. I am not going to go into all that. Is that an analogous situation, where, in fact, it is less attractive now for people to take early retirement?

Mr O'Reilly: It is factually less attractive, definitely, than it was four years ago.

Mr A Maginness: The corollary of that is how are you going to persuade people to take voluntary redundancy?

Mr O'Reilly: By presenting them with the scheme, whatever the final detail of the scheme is.

Mr A Maginness: If the scheme is not that attractive, how are you going to persuade them?

Mr O'Reilly: Well, you will not.

Mr A Maginness: Which leads me onto the other question: if you cannot persuade people to retire voluntarily, does that not mean that you will have to make compulsory redundancies?

Mr O'Reilly: At one level, you would say that that is the logical sequence. However, as you know, Ministers have indicated that they do not wish to impose a compulsory scheme.

Mr Weir: I am sorry to interrupt, but this is important. I think that there is some significance in the terminology. What is being talked about is a voluntary exit scheme; not a voluntary retirement scheme. There is a difference between the two.

Mr A Maginness: Just explain the difference, then.

Mr O'Reilly: Gosh. I am not sure that I am —

Mr Carlton: The fundamental difference is in the word "retirement". A 25-year-old would not necessarily voluntary retire; they would exit and look for other work.

Mr A Maginness: The point is that anybody can take the exit scheme, if you want to call it an exit scheme, and —

The Chairperson (Ms Lo): Is this another voluntary redundancy scheme? Are you talking about the same things?

Mr Carlton: Again, the terminology currently in use is that it is a "voluntary exit scheme".

Mr O'Reilly: There are different terminologies because the schemes are different. When we were doing the planning releases, it was called a "voluntary early release scheme". Now it is a "voluntary exit scheme" because it is different.

Mr A Maginness: The point that I am making is that you are only going to leave, if not retire — if the contentious term "retirement" is taken out of it — if you think that it is attractive; you will get your dough and live happily ever after, or, if you are a younger person, say between 50 and 59, if you are going to go into another job in the private sector or another part of the public sector. However, if the squeeze is on the public sector, it is very unlikely that you are going to get another job there, so you really have to have a fairly buoyant private sector in order to attract people to exit. Is that right?

Mr O'Reilly: Yes. It is interesting because you can compare the experiences that we have not yet had here with the experience of early exits from the Civil Service that they have had in England, in particular. That did work, but the difference, of course, is that you have a very buoyant labour market in the south-east of England, so —

Mr A Maginness: This is, or should be, posited on having a buoyant economy that is able to provide alternative employment for people who are young enough still to work. I just do not see that in the local economy at the moment.

The Chairperson (Ms Lo): Yes, we could find 3,000 people out of jobs with nowhere to go. David Cameron talked about a third recession, and that may happen in Northern Ireland.

I have one last question that no one has touched on: the Executive are proposing a change fund. Now, it is not a lot of money — £30 million — but are you going to bid for it?

Mr O'Reilly: We would certainly consider that seriously. To be honest with you, I have not seen the detail.

Ms Lynn: No, we have not seen the detail from DFP.

Mr O'Reilly: That is always important, because you often see initiatives that can save a lot of money costing a bit of money up front.

The Chairperson (Ms Lo): Invest-to-save type of thinking?

Mr O'Reilly: It is important that those sorts of funds are available.

The Chairperson (Ms Lo): Yes, but with invest-to-save schemes, it can take a long time to see the return.

Mr Carlton: This fund, although we have not seen the detail, is also linked to digitisation. Depending on the terms of the fund, the Department has a number of schemes for which it would like to apply, so we are ready and waiting for the detail.

Mr O'Reilly: I will just make one final point about the Civil Service. You are all aware of this, but it is important to remember that the distribution of civil servants across Departments does not match the distribution of global budgets across Departments. Obviously, the two biggest spending Departments are Education and Health, yet they have only a few hundred civil servants because most of their money goes out into the sectors. It is Departments such as ours, Agriculture and Social Development that have relatively large numbers of civil servants. That is just the way that the public sector is structured.

Mr Weir: If a voluntary exit scheme is being looked at, it is potentially a scheme for public servants not civil servants. We should not focus too tightly on the definition of a particular batch of people, because the bulk of people in the public sector are in public service rather than the Civil Service.

Mr A Maginness: The 2,000 teachers who will get the chop will be able to benefit from this scheme as well, is that right?

Mr O'Reilly: Potentially. I think that there are a number of components, as Mr Weir has said.

Mr A Maginness: Yes; 2,000 teachers and 3,000 civil servants means 5,000 people, so we are into £100 million at maybe £20,000 each.

The Chairperson (Ms Lo): Are we talking about 3,000 roughly in total?

Mr Boylan: It will hit some areas harder than others.

The Chairperson (Ms Lo): If we are talking about 3,000 in total, everyone will get £33,000.

Mr Weir: I think that, to be fair, Chair, we are wildly speculating.

The Chairperson (Ms Lo): OK. Thank you very much, Leo. I am sure that you will have our support in asking for more money. This is very unreasonable, personally speaking.

Mr O'Reilly: If I could just emphasise again, given the late arrival of the stuff, that, if the Committee wants to talk to us again or if members have more detailed questions that occur to them, if you can let us have them, we will provide the information as quickly as possible.

The Chairperson (Ms Lo): OK. Thank you.