Official Report: Minutes of Evidence

The Chairperson (Mr McKay): I welcome Emer and Peter to the Committee. Good morning. Do you want to make some opening comments on the spring Supplementary Estimates (SSEs) before we go to questions?

Ms Emer Morelli (Department of Finance and Personnel): Thank you, Chair. This is the regular occurrence of the Executive looking to progress the spring Supplementary Estimates and the Budget Bill through the Assembly. The Budget Bill gives formal authority for expenditure plans set out in the departmental Supply Estimates for the current financial year. A background paper provided to the Committee last week set out the overall context. I draw your attention to a change in the proposed timetable set out in that document. Subject to approvals, the Second Stage of the Bill will now be taken on 16 February rather than on 10 February, as was originally indicated. That slight delay still allows for Royal Assent by the end of the financial year. We are happy to take any questions that you might have on that paper.

A critical issue, and probably the main reason why we are here today, is the need to seek your agreement to accelerated passage under Standing Order 42 for the Budget Bill. It can be given only on the basis that there has been appropriate consultation. Our main purpose here today, therefore, is to assist you with your scrutiny of the spring Supplementary Estimates and subsequent Budget Bill. This is not the Committee's first engagement on the issue; it is a further stage of the consultation process with you that goes back to the start of the year, when the Main Estimates were produced. The Main Estimates reflected the position in the final year of the Executive's 2011-15 Budget. As you will know, there was full consultation on that Budget back in 2010. The spring Supplementary Estimates also include changes in the subsequent monitoring rounds. Each Committee was consulted on departmental monitoring round proposals, and officials gave evidence to this Committee on the outcome of each round. We have provided a reconciliation table at Annex A, which explains how the Main Estimates evolved during the year until we get to the final sign-off on the legislative authority approval that we seek today. We are happy to talk you through those changes and provide further detail as necessary. As you can see, there has been extensive consultation with the Committee on the evolution of the spring Supplementary Estimates and Budget Bill.

I will now draw your attention to some specific issues, if that is OK. The first is the inclusion of headroom in the Estimates. Members will be aware that a key Executive concern is that, as we approach the end of the financial year, no resources are lost from Northern Ireland and surrendered to Treasury. That would occur if we breached our Budget exchange scheme limit. A mechanism to reduce that risk — the creation of headroom — has been built into the Estimates. That means that, if significant sums of unanticipated capital reduced requirements emerge in the final few weeks of the financial year, they can be reallocated to Departments in Northern Ireland.

Today, in addition to the spring Supplementary Estimates, we are seeking the Committee's approval for the Main Estimate for judiciary pensions. The final issue to flag is the Vote on Account, which is the approval process to give Departments the authority to spend at the start of the 2015-16 financial year. It provides for 45% of what a Department needs to get it through until the Main Estimates approval process, which takes place in June.

Those are the key issues, and we are happy to take questions.

The Chairperson (Mr McKay): Thank you very much. In Annex A, will you explain how the SSEs link to the monitoring round allocations, especially the main movements of money, as summarised through reconciliation between the Main Estimates and the SSEs?

Ms Morelli: I will hand you over to Peter.

Mr Peter Jakobsen (Department of Finance and Personnel): I have all the detail behind those numbers. I can go through all of it if you like. I will stick to the transactions over £1 million, if that is helpful, because there is an awful lot here.

The Chairperson (Mr McKay): Unless there is something that we need to know about.

Mr Jakobsen: I do not want to bore you completely with it.

I will start with allocations and go through the main ones to each Department. For the Department of Agriculture and Rural Development (DARD), it is £9·3 million on the resource side. Most of that — £8 million — is tuberculosis compensation, and there is a small depreciation allocation of £1·3 million. On the capital side, it is £5·4 million. That is £3·1 million for the College of Agriculture, Food and Rural Enterprise (CAFRE) building improvements and £2·3 million for the common agricultural policy reform ICT project.

For the Department of Culture, Arts and Leisure (DCAL), there is £4 million resource. They were all very small allocations for things like the City of Culture legacy, cultural programmes, the revaluation of assets and things like that. On the capital side, it is just over £9 million. Most are small allocations: the City of Culture legacy, museums, maintenance, promoting equality and social inclusion, and other minor bids were met.

For the Department of Education (DE), there is £14 million on the resource side. Most of that — £9 million — is Delivering Social Change, which is allocated from the social investment fund in the centre and is for literacy programmes and nurture units. There was £5 million for the drawdown of schools' end-year flexibility (EYF) scheme, which was a scheme agreed by the Executive in previous years, and they agreed to honour that. The schools have drawn down £5 million of their EYF stock in this year.

Mr Girvan: I appreciate that the finance officers in some Departments think that they are dealing in a black art and that no one else should know where the money is going. Is there any more transparency —

Mr Jakobsen: Behind this table?

Mr Girvan: I am not talking about what we have; I am talking about what the Finance Department sees from the other Departments.

Mr Jakobsen: The figures here reflect a number of allocations for each Department. We have numbers that add up to all these totals. If it would be helpful, we can provide that detail to the Committee.

Mr Girvan: Chair, I appreciate the figures that the Department has provided. However, at another Committee meeting that we both attended yesterday, it was evident that officials from the Department of Health — I use that Department as an example — were slow to provide information. To get information from them about where the money was being spent was like pulling teeth. In fact, the Audit Office did not get the answers and had to assume that the information was right because it was unable to get the evidence. I just wonder whether we are in the same position with some of these figures.

Mr Jakobsen: Departments record, as record lines in the database, where they spend money. So, all the money that is spent should be recorded in our database, in record lines. We have that information, line by line, showing how Departments spend money. If they put a certain record line in the database but spend the money somewhere else, we have a problem, obviously. However, that should not happen.

Mr Girvan: We have no problem with Departments making a spend; it is the lines that they make. Big numbers appear under big headings.

Mr Jakobsen: That is right. Departments can have a very large amount under a certain heading and getting behind that heading can be difficult. We do not have any more information than that.

Mr Girvan: That is my very point. Some may have hundreds of millions of pounds under one big heading.

Mr Jakobsen: That is true. That is when you need to go to the Departments, and they need to explain it to you.

Mr Girvan: They do not want to explain it. Am I right or wrong?

Ms Boyle: You are right. They may have the specific data, but they keep it to themselves and do not disclose it.

Mr Girvan: Nobody is allowed to know that.

Mr Jakobsen: As far as we are concerned, they should tell you where they have spent.

Mr Girvan: They should, yes, but they do not.

Mr Cree: The system should allow for the detail to be seen. I go back to the financial provisions that we tried to change years ago.

Mr Jakobsen: Yes, but there are already thousands and thousands of record lines in the database. If you break it down much more, you will get to millions of lines. It will then become unwieldy and impossible to manage.

Ms Morelli: DFP works with various Departments, particularly the Department of Health. In the coming year, we will work very closely with that Department on where its allocations are going and how they are spent.

Mr Girvan: Two of our biggest Departments are the Department of Education and the Department of Health, and they have two of the highest spends. Both hide under a cloak by putting everything in big blocks. Nobody knows where the money is going. Officials in the two Departments know, but they will not make it known to anyone else.

Ms Boyle: If the data was broken down, it would save them the trouble of responding to freedom of information requests from MLAs. At present, somebody has to be freed up to go and look for that specific detail, which can take days or even weeks.

Mr Girvan: You get back one line, "It is uneconomical to give this answer."

Ms Boyle: If the data is there and could be broken down, it would simplify things for us when we are looking for information.

Mr Jakobsen: Of course, the Departments of Health and Education allocate a lot of money to health trusts and education and library boards. The Department would need to go to them to get a handle on where the money is spent.

Mr Jakobsen: OK. Should I continue working down the table?

Mr Cree: Just before you leave the Education Department, it is interesting, given the movements during the year, that the final out-turn appears to be pretty well the same as the original Budget figure. Is that just coincidence?

Mr Jakobsen: Yes, it is just coincidence. Pick any year, and some Departments will get more allocations than others during the year. Annex A shows the movement from the starting Budget to the end point, after the three monitoring rounds. For some Departments, the transactions will even out, and they end up in nearly the same position as they started.

Mr Cree: Is that allocation of £14 million from resource solely from the social investment fund?

Mr Jakobsen: No, there was a little bit besides. Some £9 million came from the social investment fund for the Delivering Social Change literacy and nursery units, and £5 million was the drawdown of money from the end-year flexibility (EYF) scheme.

Mr Cree: EYF?

Mr Jakobsen: Yes. That is the schools' EYF scheme. It is basically the schools drawing down and spending £5 million of their built-up reserves.

Mr Cree: Thank you.

Mr Jakobsen: I got as far as the Department for Employment and Learning (DEL). Is that right?

Mr Cree: Yes, you were about to start DEL.

Mr Jakobsen: All the DEL allocations are very small. They are mainly to do with Delivering Social Change and Together: Building a United Community.

For the Department of Enterprise, Trade and Investment (DETI), there was £24 million of resource. Most of that — £19·4 million — was for Invest NI. There was a small Delivering Social Change allocation of £1·1 million; a Tourist Board allocation of £1·2 million; and funding for promoting major sporting events was £3·2 million. On the capital side, there was £4·4 million to Invest NI and £5 million for selective financial assistance. That makes up most of the £9·7 million figure.

For the Department of Finance and Personnel (DFP), there was £5·8 million on the resource side. That was £3·6 million for the asset management strategy, and £2·3 million was a bid for depreciation pressures.

Mr Cree: Peter, why would you have a problem with depreciation three quarters of the way through the year?

Mr Jakobsen: It could be an accountancy change, a revaluation of assets or something like that.

Mr Cree: Yes, but the depreciation law has not changed, has it?

Mr Jakobsen: If an asset has appreciated, the depreciation that you need to hold might increase as well. It is a —

Mr Cree: That is an annually managed expenditure (AME) thing, is it not?

Mr Jakobsen: Some of it is AME, and some of it is ring-fenced.
It is the accountancy rules. If you do not maintain a building that is under your control and the asset reduces in value, it might appreciate by less. If you maintain a building and bring it up to a higher standard, its value and the depreciation charge will increase. As that is something that you did to the asset, it scores in the ring-fenced departmental expenditure limit (DEL). However, had you changed it because of, say, market conditions — if the property market reduced and the property value reduced accordingly — that is an external factor, so it is AME.

Mr Cree: I do not want to labour the point. However, if you had a tight budget and were managing a Department, by saving money on maintenance, you would save money on depreciation. Surely that is crazy.

Mr Jakobsen: No, actually, it is the other way round. If you save money on maintenance and do not maintain the asset, it will drop in value, potentially.

Mr Cree: It goes down twice then.

Mr Jakobsen: The depreciation budget is ring-fenced non-cash, so it does not free up any money for you to spend anywhere else.

Mr Cree: No, but it does reduce your AME depreciation.

Mr Jakobsen: It reduces the pressure, but it does not free up money that you can use for anything else. It does not give you extra spending power to do anything else.

Mr Cree: There is a certain reverse logic in it.

Mr Jakobsen: For the Department of Health, Social Services and Public Safety, (DHSSPS), the resource side is £83·4 million, of which £80 million was the allocation in the monitoring rounds for various health pressures, and there was a little bit of Delivering Social change money, £2·4 million, from the centre.

Mr Girvan: Just before we move on — I am trying to look forward to what will happen in 2015-16 — is the £83 million for pressures included as part of its natural budget estimate for next year?

Mr Jakobsen: No, that is a separate issue. Its budget was set as part of the 2015-16 Budget, but that is a completely separate issue.

Mr Girvan: I fear that when you give money to a Department, it ends up creating a tier of expenditure associated with that money that it does not get rid of, and, as a consequence, that becomes part of its bid the following year.

Mr Jakobsen: That might happen in some circumstances, yes. However, its budget was set separately through the 2015-16 Budget process.

Mr Girvan: I appreciate that. I always think that the Estimates are targets that Departments have to make sure that they spend.

The Chairperson (Mr McKay): What proportion or percentage of that £83 million was for front-line pressures?

Mr Jakobsen: My understanding is that it was all for front-line pressures.

Mr Cree: We do not have a definition of "front line".

The Chairperson (Mr McKay): Can you be any more specific about the breakdown of that?

Ms Morelli: It was not for service developments, which is maybe what you were talking about. It was to address the pressures emerging in the system because of demand and volume increases.

The Chairperson (Mr McKay): So the monitoring round allocations were for front-line pressures on each occasion, and there was nothing else included in that.

Mr Jakobsen: No.

On the capital side for DHSSPS, most of the £7·5 million was for medical equipment, ICT and health and safety improvements.

Mr Girvan: Was it medical equipment that they actually use as opposed to just spending money?

Mr Jakobsen: I am sure that they will use it once it has been commissioned.

For the Department of the Environment (DOE), there was £16·6 million on the resource side. Most of that — £12·8 million — was for local government reform, which was a previous Executive commitment. There were smaller amounts for the derating grant and the carrier bag levy, and the shortfall is £0·3 million.

Mr Girvan: Where did the underspend of £20,200,000 come from?

Mr Jakobsen: Which one?

Mr Girvan: Under health.

Mr Cree: There is a £20 million easement.

Mr Jakobsen: Sorry, which one is that?

Mr Girvan: The health easement.

Mr Jakobsen: I will get to the easements after this, if that is OK. You are messing up my order.

Mr Cree: It is part of our tactic.

Mr Jakobsen: I will get to the easements, I promise you.

On the capital side for DOE, there was £2 million for planning poll enhancement and £1·5 million for household recycling measures.

For the Department of Justice (DOJ), on the resource side, there was £19 million for legal aid, £10 million for the PSNI and other very minor allocations.

For the Department for Regional Development (DRD), most of the £15 million resource — £9·5 million — was for concessionary fares. Just over £5 million was for roads maintenance and street lighting repairs. The capital side was just over £48 million, of which £30 million was for road structural maintenance. There were allocations of £4·2 million for the Belfast transport hub development; £3·1 million for coastal defence works; £3 million for local transport safety; £2 million for water treatment works; £1 million for bus and rail infrastructure; £1 million for an Active Schools travel programme; and £3 million for street lighting renewal. That, I think, makes up the £48 million.

For the Department for Social Development (DSD), there was a £3·8 million resource allocation, which was for Delivering Social Change, and a £54·5 million capital allocation. Of that, £23·5 million was for the co-ownership scheme; £13·5 million for urban regeneration; £7 million for social housing; and £4 million for the green new deal boiler replacement scheme, which was held at the centre and allocated to DSD in June monitoring. I think that there was £6 million for Together: Building a United Community. That came from the extra borrowing powers that we got from Treasury and was given to DSD in June monitoring.

For the Office of the First Minister and deputy First Minister (OFMDFM), there was £18·9 million on the resource side. There were lots of small allocations, including £1·5 million for the childcare fund; £3·2 million for Delivering Social Change; £4·3 million for the historical institutional abuse inquiry; and £2·6 million for the Victims and Survivors Service. There are some very minor ones, too. On the capital side, most of the £50 million was the Ulster University financial transactions allocation of £48·5 million. The bid was, strictly speaking, made by the Department for Employment and Learning, but, because it does not have the legal vires to make a loan, it goes out through the Strategic Investment Board (SIB), which is why it shows up in OFMDFM.

I will move on to easements now.

The Chairperson (Mr McKay): I have a general question on easements, Peter. On the capital side, the tally of easements is £330 million; the capital allocations are £226 million. Is that significant in comparison with other years, and is it a good or a bad thing?

Mr Jakobsen: It is significant, and there is a reason why there is a difference. I will explain that first. In October 2013, the Executive did a capital reallocation exercise because they knew that the A5 would not go ahead in 2014-15. To plan properly for using the extra capital that would come back this year, the Executive made allocations of £115 million of the capital spend planned for the A5 this year. Essentially, DRD gave up the £115 million back in 2013, but it was already allocated out then. However, the physical handover of the money will happen in June of this year. So, £115 million of that total is A5 money that came back, and it will have been allocated out. So, it was not available for allocation this year. It sounds a bit complicated, but that is basically how it worked. On top of that, a small amount of £7·8 million was declared by DARD in respect of the HQ relocation project, which was taken back in 2013. Back then, it, too, was allocated out for this year. The money came in and was not available. So, £122 million of the total easements was not available for allocation in this year.

Mr Cree: Has that £7 million from DARD not been spent?

Mr Jakobsen: No, not on the relocation project. It was reallocated

Mr Cree: I have recollection of an answer assuring me that the £7·1 million had been spent.

Mr Jakobsen: DARD might have spent it. I cannot remember what it had in the budget for 2014 for that project. It might have that more than the £7·8 million but could spend only a small amount. It might not have given up all of it.

Mr Cree: It does not get any easier, does it?

Mr Jakobsen: No, it does not. I was just explaining the difference between the amount of easements that came back and the amount that was allocated out. There is a difference of well over £100 million.

The Chairperson (Mr McKay): What is the economic impact of that? You said that all of the £150 million for large-scale capital projects is being spent in-year on smaller projects. Is there an analysis of whether that is better or worse for the economy?

Mr Jakobsen: The Executive took the decision to allocate out in 2013 so that we could allocate to things like the children's hospital. DRD took forward a number of other road schemes. There were allocations to the A26, the A31 Magherafelt bypass, the new children's hospital and the A8 road scheme. All of those allocations were made back in 2013 for taking forward those schemes this year. So, there was an attempt to bring forward some proper schemes as opposed to short-term measures.

I will quickly run through the easements. I have already covered most of DARD's capital. A total of £8·9 million of that was against the headquarters relocation project, of which £7·8 million was not actually available because it was already allocated out.

In DCAL, £63 million was for the regional stadia, and most of that was to do with the Casement Park judicial review. A little was for slippage in the redevelopment of Windsor Park. The £1 million was a City of Culture legacy movement to DCAL.

On the DE capital side, £2·3 million was surplus assets receipts. The £5·6 million was from T:BUC: DE could spend only a little of the additional reinvestment and reform initiative (RRI) borrowing, so it gave £5·6 million back. We are talking to Treasury about re-profiling that for future years.

Most of the £10·9 million in DEL was for the further education colleges' EYF scheme. Their scheme is similar to that in the school sector, but, in this instance, they decided to increase their reserves by £8·3 million as opposed to drawing them down, probably because they were looking to next year and the year after, when things will get tighter.

In DETI, £16·9 million of capital came back. Most of that was the £9·5 million for the project to extend gas to the west. A sum of £5 million for the agrifood loan scheme, which is financial transactions capital (FTC), came back. A little — £1·5 million — came from the Northern Ireland Tourist Board. There were some small easements on the resource side for DETI, mainly depreciation and impairments.

The Chairperson (Mr McKay): What is the situation with the gas extension scheme?

Mr Jakobsen: I am not sure exactly.

The Chairperson (Mr McKay): Has it been put back a year, or is it further down the line?

Mr Jakobsen: It has certainly been delayed for a while, but whether it has started and the profile has shifted slightly, I am not sure. I will come back to you on that, if you like.

The Chairperson (Mr McKay): Yes.

Mr Jakobsen: For DFP, most of that was increased income from land registers and £1 million from the Northern Ireland Statistics and Research Agency (NISRA). There was also a small reduction in staff costs.

For DHSSPS, there was a capital easement of £20 million. Some £10 million of that came from the children's hospital; £2·6 million came from the Fire and Rescue Service; £5 million came from the FTC scheme for doctors and dentists' surgeries, which will not go ahead this year; and there was a small easement of £1·2 million from the Causeway Hospital wind turbine project.

For DOE, there was a capital easement of £2·8 million. Some £0·7 million of that came from Exploris and £2 million from the Driver and Vehicle Agency (DVA) and the delay in a driver replacement system project. On the resource side, the easement was from local government ICT.

In DOJ, there was a £4 million depreciation easement on the resource side. On the capital side, there was a £14 million easement from the Northern Ireland Community Safety College at Desertcreat and £17 million from the Prison Service.

There was a reduction of £28·6 million in DRD's resource budget. Nearly all of that — £28·2 million — was roads depreciation reductions. On the capital side, there was an easement of £158 million. As I explained earlier, most of that came from the A5 road project — £119·5 million — of which £115 million was declared in 2013. It was not available for allocation then; it had already been allocated. There was £17·8 million from the A2 Greenisland road, £3 million from the A26, and £5·1 million from the A31 Magherafelt bypass. There was also some additional EU income that freed up conventional capital DEL, which we surrendered back.

DSD had easements on the resource side of £25 million. Some £12 million of that came from the Social Security Agency due to the delay with welfare reform. There was also £5 million for housing benefit and £3·5 million for housing benefit rates. There were some depreciation repayments, as well, that were cheaper than £3 million. On the capital side, there were easements of £9·7 million, of which £4 million came from housing association grant payments, £3·5 million from additional income from the Northern Ireland Co-ownership Housing Association and an easement of £2 million for social fund crisis loans.

OFMDFM had capital easements of £9·7 million. Easements of £1·2 million for the Crumlin Road Gaol, £1·7 million from the Ebrington site, £5·5 million from the Maze/Long Kesh site and £1·2 million from the social investment fund make up most of that £9·7 million.

Those were the easements. Are there any questions before I move on? I might have a drink of water.

I will move on to the technical transfers. I propose not to go through all the technical transfers. I will explain the types of transfer and pick out a few of the main ones. There are technical transfers between Departments, and it is always net to zero. One Department decides to transfer, say, £2 million to another Department, and that is a minus in one Department, a plus in another and a net to zero. Both Departments always have to agree those transfers. For example, if it is a movement of £1 million from DARD, it will show as minus £1 million from DARD, and, if it moves to DETI, it will be plus £1 million for DETI. That is how it shows up in the technicals. There are also transfers from outside Northern Ireland. A Whitehall Department might transfer funding to one of our Departments, and that will just show up as a plus in our Department and will be a net gain to us. There is another type of transfer when we access the Treasury reserve. Again, that is a net gain to the Department that accesses that fund. There is a slight technicality in the figures, in that some of the funding in the social investment fund that went to DSD and OFMDFM was then moved from OFMDFM or DSD to, say, DE to deliver a project that they were doing jointly. That movement would show up in the technicals, as it is essentially a transfer of funding from one Department to another. The final category that is included in the technicals is headroom. So, the headroom in DRD and DSD is included in the technicals.

I will pick a few of the main ones. On the resource side, DEL had £51·7 million. The main element there is the student reserve claim. We always claim from the Treasury, because there is always a shortfall in the non-cash cost for student loans. Student loans are impaired and are based on a model from 2010 that was, strictly speaking, not correct and did not calculate correctly. That is a problem across the UK. It is a problem for Scotland, Wales and the Department for Business, Innovation and Skills (BIS) in Whitehall. We all go to Treasury to make a reserve claim every year, and we always get it, because they recognise that there was a problem with the model. So, £53·7 million of that is the reserve claim that came into DEL.

There was also £5·2 million in education maintenance allowance (EMA) savings. That was to do with the setting of tuition fees. Most of that pressure was covered by cuts to Departments, but the Executive agreed that some of that would be covered from savings to the EMA budget. DEL was to do some work to try to reduce the costs that were associated with that, and that would cover the pressure that sat in the centre. So, £5·2·million was transferred from DEL as savings that it had made to cover a pressure that was sitting at the centre.

There was £4.7 million of technical transfers on the capital side in DETI. Most of that — it was actually more than that — was a £4·9 million transfer from a Whitehall Department — I cannot remember which one — for the SuperConnected Cities initiative, the UK-wide broadband scheme. So, DETI got funding through that.

In DFP, there was not really anything other than technical transfers. In DHSSPS, there were a few technical transfers and an allocation for the childcare strategy; so a transfer from another Department. There was also not much in DOE.

In DOJ, there was £28·4 million on the resource side. Some £31·5 million of that was the reserve claim, and you will remember that there was a financial package when justice and policing was devolved that allowed us to access the Treasury reserve for security funding pressures and EYF that we had built up in previous years. So, £31·5 million of that came from us accessing that reserve. It was the same on the capital side, and £10·2 million was drawn down in respect of that EYF scheme for security pressures.

In DRD, there was £5·5 million on the capital side. Some £3 million of that was headroom, as we talked about earlier.

There was not really much on the resource side for DSD other than technical transfers. On the capital side, there was £13·2 million, £12 million of which was the DSD headroom that Emer mentioned.

I think that those are all the main ones that I would like to highlight. Hopefully, that answers your question, Chair.

The Chairperson (Mr McKay): Thanks, Peter. In paragraph 16 of your paper, you state that the Committee has a vital role in ensuring accelerated passage of the Bill. Will you outline the steps that you have taken to ensure that there has been appropriate consultation, as is required under Standing Order 42(2), on which the Committee will decide whether it will grant accelerated passage to the Bill?

Mr Jakobsen: As Emer alluded to in her opening statement, there was consultation on the Budget that was set back in 2010, which set the Main Estimates in the summer — that is what the Main Estimates are based on. There was consultation on any changes between the 2010 Budget and now on some of the capital reallocation exercises. We came to the Committee and explained all the changes. There has also been consultation throughout all the monitoring rounds with Committees. As the Departments made their bids and declared their easements, they will have consulted their Committees prior to submitting those bids and easements. So, there was consultation in that respect.

Then officials from the Department come in front of this Committee on the outcome of all the monitoring rounds throughout the year. I think that there has been full consultation in that respect.

The Chairperson (Mr McKay): Just to come back to the issue of headroom again, how confident are you that the moneys will be spent and not returned to Treasury?

Mr Jakobsen: With the £12 million headroom, we are very confident that we will not breach on the capital side. On the capital side, you are always worried, as I have said before, that a large project might be delayed over the last few months of the year. It is always harder to spend capital. We spoke to both DRD and DSD and they are confident that they can spend capital up to the end of the year. So that gives us a mechanism, at least, for avoiding having to hand any capital back to the Treasury.

The Chairperson (Mr McKay): What about the budget exchange scheme limits? Are you confident that those will be adhered to as well?

Mr Jakobsen: Absolutely. That is the whole idea: that we will stick with that on the capital side. Only about £14 million can be carried forward, so it is quite tight, but that headroom gives us the ability to spend a little bit more towards the end of the year, if we think that there are easements somewhere in the other Departments.

Mr Cree: Just to follow on from that, are you saying that the resource on the year-end budget exchange scheme is OK, and that there will be no resource money sent back?

Mr Jakobsen: Absolutely. That is the plan.

Mr Cree: And is it the same with financial transactions capital?

Mr Jakobsen: Yes. That is all allocated out now. There is nothing sitting in the centre.

Mr Cree: All is A-OK.

Mr Jakobsen: It is all going out to the University of Ulster.

Mr Cree: Write that down.

The Chairperson (Mr McKay): Thumbs up.

I turn to the judicial pension scheme, which is at page 18 of the pack. Could that not have been covered simply in the Vote on Account for 2015-16? What additional resources will be required for that scheme during the next financial year?

Ms Morelli: We need a Main Estimate. It cannot be covered by the Vote on Account because the body is just coming into fruition on 1 April, so it needs its own estimate to give it the authority to spend. The scheme is coming from the primary legislation that brought the wider reforms of pension schemes into Northern Ireland. The secondary legislation is now going through, and this is really just the mechanism that will allow the pension funds to be released from 1 April.

The Chairperson (Mr McKay): Will that differ much from other public-sector schemes?

Ms Morelli: No, this is the reform that will bring it into line with them.

The Chairperson (Mr McKay): OK. That is all right. Have members any other questions?

Mr Ó Muilleoir: Could you take us back through the DEL matter of the impairment and student loans and so on, just a bit more slowly?

Mr Jakobsen: OK.

Mr Ó Muilleoir: Tell us about this 2010 impairment and everybody being very understanding and so forth, please.

Mr Jakobsen: The student loan impairments calculations were based on a model called the HERO model. It is a model that takes into account things like the forecast for economic growth, incomes and so on, because students have only to pay back their loans when they hit a certain income threshold. Forgive me if I do not go completely into the detail of the model. It did not miscalculate, but there were elements that the model did not take into account, and that has now been corrected in a new model. When the budgets were set back in 2010, there was recognition that the model had perhaps understated the amount of impairment cover that was needed by DEL in Northern Ireland, and in Scotland, Wales and England. The Treasury recognised that. There was, then, a shortfall in the budget. We get the budget for student impairments separately; it is ring-fenced by Treasury and can only be used for that purpose. Treasury gives us a separate budget for that purpose. Because that was understated back in 2010, we have gone to Treasury every year since to access the reserves to get that extra budget cover. Treasury is fairly relaxed because it is a non-cash cover; there is no cash implication. Treasury has just given us the budget cover to impair the loans to the right amount.

Mr Ó Muilleoir: This is my last question. We understand what that is now. These are loans that have been defaulted; is that what they are?

Mr Jakobsen: These are loans that, it is now projected, will be defaulted or not paid back for various reasons.

Mr Ó Muilleoir: What percentage are we predicting will not be paid back? Is it 5% or 10%?

Mr Jakobsen: I do not know the details, but I think that it is higher than that.

Mr Ó Muilleoir: Is it 80%?

Mr Jakobsen: No, it is not 80%. I know that, but I do not know the detail to be honest. I think that you will have to ask DEL that. It will have much more detail on that.

Mr Ó Muilleoir: I have not had much success at that door, but I will knock on it too.

The Chairperson (Mr McKay): Are members happy enough? OK, Emer and Peter, thank you very much.

Mr Jakobsen: Thank you.

The Chairperson (Mr McKay): Members, I advise you that the Committee's decision on accelerated passage needs to be conveyed to the Speaker by 16 February, which is the date scheduled for the Second Stage.

Are members content that the Committee for Finance and Personnel is satisfied that there has been appropriate consultation with it on the public expenditure proposals contained in the Budget Bill and is content to grant accelerated passage to the Bill in accordance with Standing Order 42(2)?