Official Report: Minutes of Evidence

The Chairperson (Ms Lo): I welcome Leo O’Reilly, the permanent secretary; Ian Maye, a deputy secretary from the planning and policy division; Anthony Carleton, the director of the finance and business planning division; and Siobhan Lynn from the finance and business planning division. Members have a tabled paper from the Department in their pack. It is a pity that we did not get that earlier.

You are all very welcome. Leo, with the debates next week and the following week, we are obviously very keen to get as much information as possible about the Budget. We all know that the Department faces huge challenges with the proposed cuts. I have been getting emails from people in the voluntary sector about those. I pass over to you to give us your briefing. I am sure that members will have questions to ask you.

Mr Leo O'Reilly (Department of the Environment): OK. Thank you, Chair. I will give a brief overview, because I know that members will want to ask questions. On the timing of the paper, we had been working to a schedule of next Thursday, but on Monday we heard that the Committee wanted to consider it today. That is why it was a little later coming through than we would have wanted.

On the content of the paper, we were last here on 27 November, and we took the Committee through the draft Budget position and our analysis of it. As you know, we subsequently published our consultation document on the draft Budget, and that was obviously considered during the consultation period as part of the overall consultation on the main Budget. In a sense, the situation between then and now has not really changed very much. The only, and key, additional allocation that the Department received in the final Budget was £1·9 million for derating grants. That is taken account of in our paper, and I will come back to the overall grants position with regard to local government in a second.

Apart from that, the underlying position on available resources and, hence, the nature of the challenges that we face have not really changed that much. To some extent, the first part of the paper repeats much of the information that was in the previous paper that was provided to the Committee on 27 November. However, it has been updated to take account of the detailed figure work for the Department in the final Budget.

I will very quickly run through the headline points, and then, as I said, we can come back to points of detail as necessary afterwards. The final budget outcome is, as we have highlighted, a reduction of 10·7% or £12·4 million. Table 1 at the bottom of the first page explains how we got to the end figure of £104·2 million. You had this mechanism where there was an overall reduction across the Department and across every Department at the start of the Budget process, so a block of money was taken out, and then money was added back in for various purposes. The allocations are shown there: £2·7 million and £2 million at draft Budget stage and then the final £1·9 million at the final Budget stage. That gives the opening position of £105·6 million.

As we discussed previously, we transferred £6·8 million out for the balance of funding that went to local government for the planning function. Of course, in addition to that, local government get access to the planning receipts. We then have the transfer of functions grant, which is the adjustment that is made by DFP in respect of all other services that are transferring to local government. The money was taken out from all Departments and put into a pot, various adjustments were made by DFP, and the resultant figure that came back to us to allocate to local government was £4·5 million. There is a small adjustment in respect of EU funding, which brings us to the £104·2 million, which is basically our starting point.

In table 3, there is a mention of some ring-fenced resource DEL. That is a technical adjustment primarily in respect of depreciation.

The capital position is discussed at the bottom of page 2. There is a total allocation of conventional capital of £7·5 million, and we have shown how we propose to allocate that in table 4. There is also a reference to financial transactions capital funding for the Arc21 waste facility that is being promoted by Arc21 and its constituent councils.

The Department, of course, also receives income for the various fees and services that it provides, and those are shown in table 5. We estimate — they are always estimates, because obviously we have to wait until we get the income — £27·2 million of receipt income. We have also shown the net carrier bag receipts of £4·2 million. All that gives a gross opening position of how much we have to spend, which brings us to the figure in table 6 of £131·1 million.

We then highlighted what is referred to as "necessary expenditure" in the more detailed table 7 on page 5 of the paper. We shared the previous analysis of that exercise with the Committee in November. We have shown the areas of spend that we think that, at least in the short-term — over the course of the next financial year — we will probably have to meet. They are a variety of things that we think are inescapable, at least in the short term. Obviously, the single biggest item is salaries, and we have detailed a whole range of miscellaneous and relatively small items in their own right and forecast what we will need to spend on those services over the coming year. In the right-hand column, we have included a comparison with what we forecast to spend on those services in the current year so that the Committee can see where we are going with those various services. That brings you to a figure of £125·5 million.

The next section of the paper discusses the position of the three main grants to local government, which are the derating grant, the rates support grant and the new transferred functions grant. The derating and rates support grants were reduced as part of the overall opening reduction in the Department's budget — those grants were included in that calculation of 15·1%. We have exchanged the effect of that, particularly with the derating grant, with the Committee before. The point is that, because that is a statutory grant and the amount to be paid is determined by a statutory formula, we cannot reduce it, so even though our allocation from DFP for a grant that was fixed was cut, we have to restore the balance because it is statutory. That money has to come from elsewhere in our budget, which has the effect of increasing the gross cut to other parts of the budget.

So, as you will see there, we have restored the derating grant to its previous baseline position, which was £25·8 million. However, at the end of that first section, we highlight the point that we estimate that, in fact, there is still an in-year shortfall of funding for that grant of approximately £3 million. That is approximate because it cannot be finally determined until all of the councils have set their rates, and then the very detailed calculations can be done to work out exactly how much derating grant is due to each council. You will notice at the bottom of table 7 that, although the baseline for this year is £25·8 million, we estimate that the actual spend on the derating grant for this year will be £27·3 million. You can already see that there is a gap opening up. That is an additional pressure that we will have to manage in year. In a sense, we have noted it for the moment but have not attempted to address it out of our current allocations.

Similarly, baseline provision for the rates support grant was reduced by 15·1%, down from £18·3 million to £15·5 million. We have had to stick with that £15·5 million in our final allocations of rate support grant to those councils that benefit from it. That has now been confirmed to the local government sector. It was discussed at a meeting of the partnership panel yesterday.

The transferred functions grant is a new grant. As I said, the net figure that has come out of the machine from DFP is £4·5 million. If members wish, we can get into some more of the detail, but basically it is a process of bringing in all of the various sums that have been allocated by Departments for functions transferring, then netting off from that anticipated revenues, particularly from off-street car parking. That gives you the net figure of grant to be paid this year to local government, which is £4·5 million.

After you take account of all of those, you have what we have entitled "remaining budget". In a sense, that is really where the crunch point comes for the Department because, up until now, we have explained what we are doing, and those are the decisions that the Minister has already taken, particularly because of the position for local government. We get then to the remaining budget point. We show in table 10 a whole range of things that we spend money on at present. For the Committee's benefit, we show what we estimate we will spend on those functions this year. You will see that the residual spending this year on those activities comes to roughly £9·7 million, but, when you look at our analysis of our position, you see that we have just £1·4 million left to allocate. In essence, that is what the Minister is still working through. He has not reached a final view on exactly how he is going to manage this position, which, as you can imagine, is quite difficult. For example, buried within that £9·7 million, there is spending this year on road safety of £1·9 million and on education materials of £0·3 million. You have a whole range of things that we are spending money on this year, but very little money left at the moment to pay for the functions.

There is, of course, also the carrier bag levy money left to be allocated next year. We estimate that the amount will probably be roughly the same as this year, roughly £4·2 million. Again, for the Committee's benefit, we have listed the main categories into which that funding has been allocated this year. Again, the Minister is looking at how exactly he will distribute that funding amongst those and any other categories next year. It is just a summary of what those main categories are.

To finish up quickly, the conclusions are set out in the section on where we are. The core problem boils down to the figures quoted in the latter part of the paper, namely the projected spend this year on a range of services for which there is currently very little money left to spend next year. At the moment, in discussion with the Minister, we are seeking to manage this by looking at what we have got, namely the £1·4 million, and then also by looking at the fact that we have carrier bag levy money available to allocate as well. We are seeking to at least shave off the worst effects of this position by prioritising and managing the carrier bag levy money very carefully. However, we are, of course, restricted in what we can use carrier bag levy money for, because it has to be allocated to environmental and community programmes. It cannot be used for anything; there is a restriction on how we can use that money. That also means that we have to be very careful about how exactly we use the balance of £1·4 million of remaining resource DEL to be used. The Minister said that he wanted me to alert the Committee to the fact that he is very conscious of the position on road safety, and certainly he will want to ensure that there is at least some allocation on that area to allow the basic work that we are doing on road safety to continue next year. As I said, he has not reached final decisions, but we expect that to happen within the next week or so. Given the proximity to the start of the new financial year, of course we will come back to the Committee with a final outcome.

A final point that we note at the end of our paper is that our ambition this year is to remove quite a lot of staff from the Department if we possibly can. However, we cannot be certain about exactly how many will go because, as we discussed in November, it is a voluntary scheme, so we have to wait to see who puts their hands up to go. It is a Civil Service-wide scheme, so we have to plug into the whole larger mechanism that will be put in place to manage this. It is still uncertain as to how many staff will go, and we have been told that it is unlikely that staff will start leaving the Department or anywhere in the Civil Service until September onwards, so that is the second half of the financial year. Once that starts to happen, there will be a bit of further easement on our position, because we will no longer have to pay those salaries. Until that happens, we do not feel that we can allocate specific money to groups to spend, because we are not yet certain whether we will have the money to allocate. It does mean that, in the second part of the year, we can, hopefully, attempt to manage some of the worst effects of the position as and when the staff start to leave the Department and we begin to make savings through that process.

That is a quick run through where we are at the moment.

The Chairperson (Ms Lo): Thank you, Leo. That is a quick run through. I am not sure how much of it I have taken in. Where are the areas that are going to see the most severe cuts? The ones with the greatest casualties?

Mr O'Reilly: The best place to go for that is table 10 of the paper. Those are the main areas. Those are the areas where we currently spend money —

The Chairperson (Ms Lo): So it is this year. You are talking about 2014-15.

Mr O'Reilly: Yes. The figures shown there are the amounts that we will spend this year against all of those various activities. Those are listed in millions, so 0·2 means £200,000 and 0·5 means £500,000. Those are the current spend levels, and at the bottom of that table we show that those total £9·73 million. Our prior analysis in the paper shows that we are currently estimating to have just £1·4 million available to allocate to those areas. However, as I have already said, we also have carrier bag levy money to allocate of approximately £4·2 million. With the Minister, we are doing a grid-type exercise to try to cope with the very limited amounts of money available in resource DEL and look at what we should use that for. Again, the Minister has asked me to tell the Committee that he is very conscious of the position on road safety. We will also look at what we can use our balance of carrier bag levy money for, where the particular funding stream qualifies for funding from that source. To answer your question, table 10 shows the main areas of pressure.

The Chairperson (Ms Lo): Most of those that will suffer the most seem to be NGOs, through the grants programmes and others.

Mr O'Reilly: You can see the main groups there. There is a range of grants, which are much smaller grants, that are paid to councils for various activities, and they are listed at the top. Then you have, as you say, a range of NGOs; you have the road safety advertising and other materials, which is quite a large chunk in the middle; and then you have a range of contracted-out services that are not grants but services that we buy from external providers. You can see that those range across, in some respects, other Departments. Sometimes it is academic institutions — Queen's, the University of Ulster — and sometimes it is private contractors. That is the other main category in there.

The Chairperson (Ms Lo): How many of those, under legal obligations, do you have to continue? No, you can just say that you do not want the contractor going —

Mr O'Reilly: It is obviously not the ideal situation. Just after Christmas, we wrote out to all those bodies and associated bodies alerting them to the fact that the Department was in a very challenging position, so we were at least giving them advance notice, formally, that they could not assume either that they would continue to receive grant funding from us next year or, alternatively, that we would continue to buy their services under existing contracts. It was to ensure that they got advance notice of that before we got to the point where we are at now in terms of reaching final decisions. The fact is that, at the start of the year, we will not be able to say to a large number of those bodies and groups that we will be allocating them funding next year. The best we can say is that, as the year progresses, as we continue to look at our other costs and, hopefully, in the second part of the year as staff start to leave, that will free up some more money and, hopefully, we will be able to make some use of that to ease some of the worst effects on the organisations and bodies that are affected as listed in table 10.

The Chairperson (Ms Lo): The last time you talked to us, you said that you would be looking for one third of the staff going in order to balance the books. Are you still in the same position?

Mr O'Reilly: Yes. That estimate was based on the assumption of what we needed to do to get back to where we are now in terms of our external funding programmes. We spend approximately £10 million at the moment across those areas, and we have highlighted the fact that, at the beginning, there is another £3 million that we think will still have to go to derating grant in the course of the year. We will, as always, go to DFP and the Executive, and hopefully we will have some success there. However, I cannot plan to spend money on the assumption that I hope that I might get something from somewhere. I have to plan on the basis of what I know that I have. Hence you have at least a £13 million potential problem in the Department, and hence the forecast of how many staff we need to lose to address the problem. However, in practice, as I said at the beginning, we do not know yet how many staff will leave. The scheme is due to launch on 2 March, and I think that expressions of interest are due to be back at the end of April. Therefore, it will be around that time that a picture will begin to emerge of what is likely to happen in terms of downsizing the Department. As far as we are concerned, we want that to happen as quickly as possible, but we have to move at the same pace as the scheme across the service as a whole.

The Chairperson (Ms Lo): The one-third cut in staff is really based on cost. It is not based on whether your Department can function.

Mr O'Reilly: No, it is cost.

The Chairperson (Ms Lo): It is a crazy way to do things for any Department.

Mr O'Reilly: Absolutely. At the end of the day, difficult decisions have been made. You have got an allocation, and you have to plan to operate as effectively as you can within it.

The Chairperson (Ms Lo): Will there be essential posts where people cannot take voluntary redundancy, or will there be any restructuring of the Department? Well, I suppose by 2016, there will be massive restructuring.

Mr O'Reilly: All Departments are looking at that specific point at the moment. If I can ask the Committee's forbearance; because it is a cross-cutting scheme across the Civil Service, there are negotiations and discussions with trade unions etc. However, I can tell you that the target date for final decisions on any exceptions is currently Friday 13 February. After that date, we will definitely be able to tell the Committee and everyone else whether any specific posts will be excepted from that voluntary exit scheme.

The Chairperson (Ms Lo): Members may want you to come back next week to give us a summary of your final decisions. Is that possible?

Mr O'Reilly: The ideal would be that, when the final decisions are made, it will be a factual position that I am able to present to the Committee.

The Chairperson (Ms Lo): It is just scary.

Mr O'Reilly: As I say, we were working with the Minister, but it would be unfortunate if I came back and we were still looking at this story, which would not be very satisfactory for you or your members.

The Chairperson (Ms Lo): OK.

Mr O'Reilly: I will check when I go back. This is difficult for the Minister, because he is being pulled in lots of directions.

The Chairperson (Ms Lo): OK. I have a full list of members wanting to ask you questions.

Mr Eastwood: Thanks, Leo. No matter how you slice the figures in table 10, you are going to be looking at serious cuts for people. I will come back to the councils in a minute, but the ones that jump out are Exploris, Community Places, the Community Transport Association and Disability Action. We had £2·2 million for road safety. There are listed buildings, Citiwaste and lots of things around environmental crime. You are going to find it difficult to prioritise what you will cut. People need to understand the impact this will have on a lot of those small organisations.

I want to ask you about the council stuff. I suppose we all promised people that the new changes in and around councils would be cost-neutral; that we would be going into a new period when councillors would have more powers, be a bit more democratic and it would not cost the public a fortune. Then we see we are cutting the rates support grant in places like my constituency, where they are struggling enough to raise rates. What is the projected impact on rates in places like Derry or Strabane because of this? The likelihood is that it is going to be higher rates or fewer services. Have you any notion around how that is going to work out?

Mr O'Reilly: Ian, do you have the figures for the rates support grants for the different council areas?

Mr Ian Maye (Department of the Environment): I do not have them with me, but we can share them with the Committee. We can get them to the Committee this afternoon. All the councils that receive rates support grants within the new 11-council structure were notified yesterday of the precise amounts they received.

The impact on the rates and services will be determined by the councils. They will make choices as part of their budgeting process, which they are engaged in at the moment, and in striking their rates as to how they will deal with those and other pressures that they are faced with.

Mr Eastwood: You have not given us the exact figure, but, if you are cutting however much of their budget, it is Hobson's choice, really: increase rates or cut services. There is no third way.

Mr Maye: There is also the opportunity for those councils to use or dip into the reserves they hold and the reserves that are being carried forward from the 26 councils to the new 11 councils, so that adds to the mix.

There is no doubt that it does cause additional difficulties that the Department would have preferred to avoid, but the position is what the position is. It is where we are at the moment. We have tried to work through the process as quickly as possible to provide certainty to councils on the figures, not only for the rates support grant but the derating grant and the other smaller grants that they receive. The key ones are the derating grant, the rates support grant and the transferred functions grant. We have been working closely with the new chief executives and finance officers in the new councils to help them to get to grips with those issues. It is not possible for the Department to give you an indication as to what the potential impact might be, because that will very much depend on local choices by individual councils and how they balance their budgets.

Mr O'Reilly: In terms of the specific areas you mentioned, I am looking at a recent answer to an Assembly question from John McCallister MLA. It is valuable information, because he asked for a breakdown of what percentage of total council budgets the derating grant and rates support grant account for. The answer contains a detailed table. It will obviously be different for the combined councils, but rates support grant in 2013-14 accounted for 2% of Derry City Council's total budget but 13% of Strabane District Council's total budget. So, it is 2% of their budget at the moment and then a proportion of whatever they get to make up that 2%. The net effect of the reduction will be some relatively small proportion of 2%. In the case of Strabane, it will be a small proportion of 13%, but it will still be a few percentage points.

The Chairperson (Ms Lo): Yes, but the effect could be quite substantial and the poorer councils may then have great difficulty in balancing their books.

Mr Maye: The answer will emerge quite quickly because, as you know, all the councils have to strike the rate for the coming year by 15 February. They are all now in the final stages of working through their budgetary issues. We will know what those impacts are likely to be fairly soon.

The Chairperson (Ms Lo): Ian, you said that they can dip into their reserves. You can do that only once; you cannot continue to do it every year if this is going to happen every year.

Mr Maye: You are absolutely right, Chair, but it is a potential source of income that they could use if they choose to do so. It is part of the overall mix. Equally, to deal with some of the pressures and make provision for the longer-term delivery of programmes, particularly capital programmes, they can make use of their prudential borrowing powers and the borrowing powers from the National Loans Fund. It is that total mix that they are getting to grips with at the moment.

Mrs Overend: Thanks for coming this morning. It is hard to get through this detail only reading it as we are here this morning. I am looking at table 10, but it might be useful to see the comparative figures for the previous year so that we are able to see where the reductions are, if I understand it correctly.

Mr O'Reilly: The figures there are what we estimate to be the spend in the current financial year. When we finalise our position, we will be able to put in another column showing actual allocations for next year, so you will be able to contrast what people have received this year and what we are allocating to them next year. There is a further column to go in.

Mrs Overend: That would be good.

The Chairperson (Ms Lo): What you are saying is that the £9·73 million for this year will only be met by £1·4 million next year.

Mr O'Reilly: Yes. I will just qualify that slightly by saying — yes; the simple answer is yes.

The Chairperson (Ms Lo): You are talking about a 90% cut, roughly.

Mrs Overend: OK. I want to ask about the staff reductions again. You are driven to make staff reductions because of cost. You are waiting to see how many decide to take redundancy so that you know how much they will cost. If you are driven by cost, you need to compare the figure that you are saving through voluntary redundancies with the amount that you want to save. You may want to make more on voluntary redundancies to make up that amount because you are focusing on an amount that you want to save through staff reductions.

Mr O'Reilly: You could get to that position, but given our financial situation, I do not think that that will be our problem. I suspect that the problem will be that perhaps not as many staff wish to leave as we would like to enable us to balance our financial position. A good ballpark figure is to say that if 100 staff leave, say, from September onwards, over the year, that will produce a saving of £1·5 million. It is half a year, so it is the equivalent of 50 staff over a full year. For every 100 staff who leave from September onwards, we will free up approximately £1·5 million.

Mrs Overend: I will leave it at that until I get more confirmed figures.

The Chairperson (Ms Lo): How is staff morale in the Department? It must be rock-bottom.

Mr O'Reilly: Obviously, a lot of it has come out over the last couple of weeks; indeed, over the last week or so. When I finish here, I will have a session for most of the rest of the day with all my senior team to go through a range of issues that we have to manage, including budgets and the voluntary exit scheme. Across my Department, we have made a particular effort over the last couple of months to try to give staff as much information as possible as quickly as possible. Once decisions are made, we strive to get the detail to staff as quickly as possible. I think that people understand the wider context. They understand the difficulties. I suppose that people are reassured by the assurance that it is a voluntary scheme. I think that they understand that there is going to be a lot of change over the next 12 months for them and everyone else. These things can sometimes create greater morale problems if people feel that a particular area is being targeted, treated unfairly or disproportionately. However, everyone in every Department is, for various reasons, facing difficult scenarios.

The second thing to mention is that DOE has been through quite a lot of downsizing over the last few years. We must get to the planning staff leaving in April and remove the 300 DVA staff who used to do vehicle licensing. A couple of years ago, you will recall, we also had to downsize by approximately 250 planning staff, so 1,000 staff will have left the Department, for various reasons. People in my Department have become, to some extent, battle-hardened in managing downsizing.

The Chairperson (Ms Lo): Yes, and there will be even more uncertainty in 2016 about where they will go.

Mr O'Reilly: Yes.

Mrs Overend: Do you reckon that you will get enough savings from a voluntary redundancy scheme not to need to make any more redundancies?

Mr O'Reilly: Yes.

Mrs Overend: Right, very good.

The Chairperson (Ms Lo): It is a massive number; you are talking about 500 posts.

Mr O'Reilly: Yes. We will have to wait and see what the number is. However, I have to produce, and the Minister must then agree, a financial scenario that enables us to work within what we know we have to spend, as distinct from what we had hoped for or would have liked to have been able to spend.

The Chairperson (Ms Lo): I heard that Terry A'Hearn is leaving.

Mr O'Reilly: Yes. As you know, he is to become chief executive of the Scottish Environment Protection Agency (SEPA). It is an unfortunate loss, particularly at this time.

The Chairperson (Ms Lo): It is a great loss to us, yes.

Mrs Overend: Can I also ask about the road safety promotion budget?

Mr O'Reilly: Yes.

Mrs Overend: What will its reduction be?

Mr O'Reilly: As you see from table 10 in our submission, the advertising budget is £1·9 million, and then we do other things, such as provide education materials for schools. So, there are two core areas of spend there. Again, I am sorry, but I cannot say precisely what we will allocate against those items in our opening position. The Minister has told me that I can say that he will be allocating resources to those areas, but I think that you can safely assume that it will not be as much as it was for this year.

The Chairperson (Ms Lo): I have sent a couple of questions to the Department to ask whether, if there is not going to be advertising, the Department would consider using social media and other means that would not cost so much. I do not think that I have yet received any response yet.

Mr O'Reilly: I suspect that part of the reason is that people are waiting to see their financial position. It will force us to take a fundamental look at how we get across road safety messages. We have adopted a particular pattern over quite a few years.

As you highlighted, Chair, there are very different channels of communications, particularly with younger people, around social media. Perhaps we need to pause. It is an opportunity in that sense; it will force us to look at whether the way in which we are spending the money the most cost-effective way to get a message across to people.

The Chairperson (Ms Lo): A lot of young people do not watch television now. They do not have television, either; they use social media to get the news and use YouTube and everything.

Mr Maye: We are already using social media: we are on Facebook and Twitter. However, it is still almost in its infancy in terms of our sophistication in how we use that to get messages out to that younger audience in particular. It is something that we plan to focus more heavily on in the coming years. Certainly, in the coming year, we will make more use of that. We also want to transfer our capacity to be able to deliver messages through social media away from our current contractor and into the Department so that we begin to deliver more of the messages on a more routine basis. That is part of our programme for the next year, in anticipation that there will be some reduction to our use of traditional advertising methods.

Mrs Overend: That would be good. Even our young people do not use Facebook as much as the older people do. You really need to be innovative with Instagram and all sorts of different things.

Is the Department still committed to allocating capital spend to the Arc21 project, considering the fact that planning permission has not been agreed for it?

Mr O'Reilly: I recall that we discussed this in November. As we highlight, the block of what is referred to as financial transactions capital funding is in the Department's budget in relation to proposals that are being developed by the Arc21 group of councils, along with, I understand, a private-sector contractor. That has not yet reached a conclusion, and, as I understand it, the commercial negotiations have not reached a conclusion. I stress that the Department is not party to those negotiations, so I can honestly say that I do not know exactly where they are at at the moment.

The other half of the issue, as you highlighted, is the fact that there is still planning approval, which is being considered in a separate stream of work in the Department. It is earmarked at the moment for that project, and we will wait to see what develops over the coming months.

Mrs Cameron: Thank you for your presentation. Sandra asked about the Arc21 proposal. The acoustics are not great in here; I did not clearly hear what you said. Will you explain the process and how the transaction capital funding works, and how that allocation came to be in the budget?

Mr O'Reilly: I qualify my comments by stressing that I am not an expert in this area, which is quite technical. Financial transaction capital funding is a tranche of funding that has been allocated to Northern Ireland largely as a result of a Barnett consequential of similar blocks of capital funding that have been allocated by the UK Government, particularly to large infrastructure projects in the south-east. The critical requirement is that the money is spent to support the private sector, so it cannot be a public-sector body; it has to be private-sector activity. For example, as I understand it, in the south-east, where very large public-sector infrastructure projects are being delivered through the private sector, it was a means to ensure that access-to-capital problems over the last number of years could be eased through making available government-backed sources of financial capital, but it is allocated on a commercial basis and is charged a rate of interest. It means that, in developing very large projects, private-sector investors could be assured that, if necessary, they could access that capital funding stream if it turned out that their more traditional private-sector banks, institutions etc were unable to produce the very large amounts of capital that they would require to spend in developing those infrastructure projects. So, in a sense, it is a tranche of money that has come to us as a result of that process, particularly in the south of England. Our difficulty in absorbing the capital or using it is that we have much, much smaller infrastructure projects and a much smaller number of large infrastructure projects being developed at present. You will know that the Finance Minister alluded to that in the House and in presentations to his departmental Committee.

Mrs Cameron: For clarification, this has come separately from the rest of the budget.

Mr O'Reilly: Yes, it is completely separate.

Mrs Cameron: Effectively, it is a form of a loan fund that could be available if it could be used for that project.

Mr O'Reilly: Yes. Ultimately, the decision on whether and if it is used, or indeed, is required, is for the private-sector side of the consortium, as would be the case in any other large infrastructure project.

Mrs Cameron: How did that come to be in the budget in the first place?

Mr O'Reilly: The Arc21 proposal was identified as a potential object, as it were, of using that finance that is available to Northern Ireland. As I said, there is a limited number of very large-scale infrastructure projects available that provide an opportunity to use those types of funding streams. It was identified as a potential — I underline potential — use for that money.

Mrs Cameron: I get that. To be clear: that was then included in the budget at the request of DOE to DFP.

Mr O'Reilly: I would not say that it was at the request of DOE because, as I stress, we are not a party to that procurement. We have to be careful because, for commercial reasons, we are not a party to the procurement —

Mrs Cameron: OK, but it was identified by DOE as potential —

Mr O'Reilly: As I understand it, it emerged through engagement between Arc21 officials and the Strategic Investment Board, which was tasked with seeking to find opportunities to use that type of funding. It was then identified and, once it was identified as a potential source, the funding that was initially held centrally by DFP had to be allocated to relevant departmental budgets. That is the process. Once the decision was made that that was a potential use of that capital, the money had to be allocated to the relevant Department and, in this case, because of the nature of the project, our Department was the relevant Department.

Mrs Cameron: What happens to that money if Arc21 is unsuccessful and unable to use it?

Mr O'Reilly: To state the obvious, it will not be used for that project. Therefore, another project would have to be identified —

Mrs Cameron: Would that be from this Department?

Mr O'Reilly: Not necessarily; it could be any Department.

Mrs Cameron: So, it would go back to where it came from.

Mr O'Reilly: Yes.

The Chairperson (Ms Lo): Pam, I think that the Minister assured us that identifying Arc21 as a possible organisation to get that money does not mean that it will have any bearing on planning approval being given.

Mrs Cameron: I certainly hope so, Chair.

I have a question on the road safety advertising. Cathal and I raised the question of how effective some of it was. The spend on road safety advertising on TV is very high. I know that a lot of people out there, especially the families of victims of road traffic accidents, are distressed that the advertisements are continuing.

I understand what the Minister has said and that the statistics and whatnot that we have been given show that they are effective and that we are doing the right thing, but, given the financial constraints, I would like to think that the Department would look seriously at how it could get the message across better. If we are targeting young people in particular, I agree absolutely about the use of social media and the other ways that we could look at for getting the message across to them.

I am not sure what Department it came under, but I attended a road safety roadshow in, I think, 2010 at a local school, and it was very much aimed at bringing schools together. The experience I had at that roadshow was incredible. Not every child of the appropriate age is able to access these roadshows. I do not think that they would cost anything like what TV advertising costs, and, in fact, they could be more effective in bringing the issue to the ground level and showing that it is real. People in wheelchairs testified about what happened to them and how their injuries came about; and the effect that had was incredible. We could be using the money better. Of course, it will probably not be available to spend anyway, so you will have to look at different ways of doing this.

I also agree totally with the Chair and her comments about how TV is accessed and used today. I do not watch live TV, so I would never see an advertisement. Anything that I see is probably recorded and watched at a later date. I do not watch advertisements, but skip through them. There are different ways and methods that cost little. I also suggest looking at things like Spotify and different music platforms that are accessed through the Internet and are widely used, and may be more effective in reaching your target audience.

Mr O'Reilly: Once we know what we are spending in that area, Ian's people will launch an immediate review of how we do that and what sorts of methods we use.

The last time we were here, we highlighted the unfortunate fact that a very high proportion of the fatalities on the road are young men driving on country roads. A couple of years ago, an initiative was undertaken jointly by the Ulster Farmers' Union and the GAA, as organisations that have a large presence in the countryside. They undertook joint programmes and roadshows to get the message across to young people in rural area about the dangers of driving on country roads.

The Chairperson (Ms Lo): The question is this: will you have the staff to do these things without having to go out to the GAA and the UFU?

Mr O'Reilly: We will, at least until September.

That is quite a significant point. The amount of money we are spending will reduce, and what we are spending it on will also change significantly. This will mean that our staff will have to work differently. Initially, we will look at using people to look at alternative ways of delivering with a more limited budget but still trying to be as effective as possible. More money does not always equate to effectiveness.

The Chairperson (Ms Lo): No. I know. In a way, it is almost a lazy way. You just put out the television adverts, and that is that.

Mr Boylan: I do not know whether there are any questions left to ask, but I will try to come up with something.

I support the point about road safety, because in light of the rise in fatalities last year, it was suggested that this was the way to go. Do not get me wrong: I support a budget for road safety, but I think that we need to be more creative in how we use it. I have to congratulate the GAA and the Ulster Farmers' Union. It took very little from you to push that out, and they were the main drivers behind it. Programmes like that certainly work. I also want to mention the work of Community Places and all the other organisations you mentioned.

Everybody mentioned this, but I want to return to it. My main point is jobs. Clearly, we are talking about one third of the workforce going by 1 September. Are you saying that you came up with a cost figure and then said, "Right, that is that"? Did you look into the departments. It seems to me that you need to look at what you can deliver. It is all about the service you will be able to deliver with these types of jobs. Is it partly NGO-type support across the board? Can you give me any more detail on the types of jobs you are looking at?

Mr O'Reilly: At the moment, subject to the point I made about exceptions, which will be confirmed later this month, it is all jobs. We are not setting any restrictions initially. The general approach to this across the Civil Service is that everybody, within certain grade bands, will be eligible to apply under the scheme, regardless of where they work, what they do and what their grades are, within parameters. They will be eligible to apply for the scheme. OK?

Mr Boylan: I understand, Leo. The key point is the delivery of the service after all this.

Mr O'Reilly: Yes, that is the point

Mr Boylan: And the point that I am trying to make is that we have a figure of 500 jobs. There will have been some pre-thought put into that, and I am just trying to identify whether it is key to the costs.

Mr O'Reilly: It was a cost calculation.

Mr Boylan: There had to have been some thought put into the type of service that is going to go.

Mr O'Reilly: If, and it is a big if, we get towards that sort of figure, we would have to look fundamentally at the way we do things and how we do them. Again, it will be difficult to get into that level of detail until we know who applies to exit under the voluntary scheme and who will be allowed to exit under it, because the two things will not, or might not, always be the same.

It will be only when we start to see individual names that we can do that. It will start to happen, hopefully, from April onwards, although people will not start to leave until September. At that point, fairly early in the year, we will be able to see where the gaps in the organisation will be and what we need to do. Do we leave a post unfilled, or take someone from a lower priority area and put them into that post? In a sense, we will be able to work through that sort of detail only when we begin to get some details on who is leaving.

Mr Maye: In general terms, Chair, the proposition and presumption we have worked to, in identifying the number of staff that need to leave the Department, is driven partly by the financial position but also to move us back to a position where we can engage, through partners in the community and voluntary sector and other organisations, to help deliver our non-core services to the public. So, it is to begin to restore that balance.

In practice, it means that the core of the Department — what remains after the staff leave — will, of necessity, have to focus on our core, statutory functions, rather than on the discretionary ones. The objective is to try to begin to restore the balance so that we can work with the community and voluntary sector and other organisations to do things around the core functions of the Department.

Mr Boylan: Following on from that, I remember asking about front-line jobs last time and it is hard to define exactly what they are in the Department. Ian, you are well aware of the model they took for Planning Service that time. It was a very difficult exercise.

Mr Maye: It was.

Mr Boylan: I am mindful of that, too. The Department has brought the figures — whether I agree with them is another thing — but I am trying to nail down exactly what we are going to have at the end of the process. Thank you very much for your answers, anyway.

Mr O'Reilly: I want to add the supplementary point that the announcement has been made about the restructuring of Departments which, of course, means that this Department will be, to use the terminology, "dissolved" and its functions will go to three other Departments. The plan is still subject to consideration and approval by the Assembly, but that is to happen by May 2016. So, from the second half of this year onwards, there will be other considerations beginning to play in how we redeploy our workforce in the Department.

The Chairperson (Ms Lo): I come back to your point, Ian. You are looking to the voluntary sector to take over a lot of the work from the Department. You are only really going to do the core tasks. If you are going to cut a whole raft of the voluntary and community sector with this budget, then they are all going to the wall. You are not going to find them.

Mr Maye: The Minister is very conscious of that. That is why he wants to spend time — and he is spending time — to think very carefully about how he deploys the £1·4 million and the carrier bag levy funding, because we have around £3·5 million that can be deployed to support core and critical activities by external organisations . These are exactly the issues he is trying to get to grips with.

Mr Weir: Thank you. I have just a couple of points. First, a wee bit of clarification on the carrier bag levy and the net £4·2 million. You have highlighted, particularly in 2014-15, the range of places where that funding went. I do not think that anybody would suggest that those causes, as with the areas in table 7, are not suitable. To what extent do you see, in light of the pressures that are on what might be described as the table 7 figures, that there is going to be a level of recalibration of where the £4·2 million goes? I appreciate that it has to be something that is directly relevant. Sorry, I should not say table 7 — it is table 10, I suppose.

For example, I agree with the earlier comments about the priority that needs to be given to road safety. I also think there is an opportunity and a driver, if you like, to look at whether we are making sure that whatever we spend on road safety is spent in a better and changing way, because I think that people's habits are changing, and particularly if a lot of this targets young drivers, then, yes, there is a reasonable case that you start shifting some of it towards social media, but let us leave that aside.

Clearly, some of the elements in table 10 are related directly to environmental-type projects. To what extent is there going to be a level of recalibration of some of that £4·2 million to shift it away from current projects to some of the subject matters contained in table 10?

Mr O'Reilly: Just to confirm, that is exactly the exercise we are engaged in at the moment. As I said, there is a three-dimensional grid. We are identifying those areas and how we could allocate the very limited amount of resource departmental expenditure limit that is available, but then looking at how we are currently spending the carrier bag levy money and how that could best be used.

Mr Weir: I know that you mentioned coming back next week on the basis of being much closer to a final position. Maybe it is too short-term, but would that be some of the stuff that is factored into the final position on that?

Mr O'Reilly: Yes, that is exactly what is happening.

Mr Weir: Secondly, on the rates support grant, I suppose there is a slight danger of conflating two issues. There has been an indication that transfers are cost neutral. It is not a transfer issue in one sense. If there were going to be cuts to the rating grant, whether you had 11 councils or 26 councils, it would basically be the same problem. I appreciate the point that, to some extent, there is a disproportionate impact on different councils. What is the figure for the overall spend by councils? Is it about £600 million or higher?

Mr Maye: It is just under £500 million. It will increase to about £550 million when the DSD moves across.

Mr Weir: We are looking at next year's budget being around £550 million, which means that the average impact on a council — in terms of the change as opposed to the overall amount of rates support grant — is about 0·5%. This will obviously vary between councils. For Strabane, it is around 2%, roughly, overall and in others it will be zero.

I got a little bit confused when we got some of the figures. First, in salary reduction, you are talking about some of it kicking in in September. It was on the basis that you will save six months of wages. The only thing about that is that if you have 1,480 permanent staff and a wage bill of £60·6 million, it would make the average wage around £41,000 to £42,000, if my maths are correct. Therefore, if you are talking about saving, say, 500 jobs, which is a little bit over one third — if that is one projection — that would equate to around £21 million or £22 million, how, with 100 jobs, does that come to £1·5 million? Would it not be £2·2 million?

Mr O'Reilly: I will ask Siobhan to come in on this in a moment; she is closer to the detail than I am.

Mr Weir: If you are saying that it is £1·5 million for 100 jobs, then 500 would save you only £7·5 million whereas you are talking about £10 million.

Mr O'Reilly: The ballpark figure I carry around in my head — if it is not accurate, then Siobhan will correct me — is that 30 staff roughly equals £1 million, which is nearer a £30,000 average salary than your £42,000.

Mr Weir: But, with respect, your overall —

Mr O'Reilly: That is the Civil Service number, but it covers a wider range of grades.

Mr Weir: But, actually, your spend on salaries is £60·6 million. You have 1,480 full-time equivalent staff making up that £60 million. The 1,480 staff are detailed in the table in front of me, which is presumably where your salary figures come from. It equates to around £41,000 or £42,000. If you had 1,500 staff and £60 million, it would work out at exactly £40,000, so the figure is higher than £30,000. Presumably, if you are talking about voluntary exit, it is likely that those most likely to be attracted will be, proportionately or disproportionately, those who are closer to retirement and would probably be a little bit higher up on the seniority scale. The actual overall wage cost of people likely to go will be a bit higher than average in that regard.

Mr O'Reilly: That would increase the savings.

Mr Weir: Exactly.

Ms Siobhan Lynn (Department of the Environment): We are working with an estimated £30,000 per head as opposed to the £40,000-odd that you arrived at by way of a straight calculation. If you take roughly in and around £30,000 or £33,000 per head for 30 employees, you are in and around £1 million.

Mr Weir: If there are 1,480 equivalents and a general £60 million wage bill, is that not actually a little bit over £40,000 a head?

Ms Lynn: If you do the straight maths, yes.

Mr Weir: Given the fact that the actual amount in the voluntary exit scheme is likely to be on the higher side —

Ms Lynn: It may be, yes. It depends on who goes.

Mr O'Reilly: I was simply using the fairly crude average figure that people quote for averages across the Civil Service, which is that, roughly, to save £1 million you need to reduce by 30 staff. It is a very crude assumption of a salary cost of approximately £30,000. The circumstances in individual Departments, including our own, would be different. The assumption was based on a cautious assumption of saying that, in the second half of the year, for every 100 staff we were able to reduce after September, which is the equivalent of 50 over a year, that is where you would get your £1·5 million, using the £30,000 average.

Mr Weir: It seems to me that the maths are a little bit out at first glance. I appreciate that you have probably done a lot more work on it than I have.

Mr O'Reilly: Is just that, sometimes, we will not know the actual outcomes and it is easier to make estimates.

Mr Weir: I can understand the in-year position as well. I understand the situation that a lot of stuff will go into the melting pot, to some extent, because it seems likely that the various Departments will be reconfigured in 2016.

If, however, you are projecting ahead, you will have done the savings, roughly speaking, cutting one third for the in-year period, amounting to about £10 million. I know that you mentioned the other £3 million. However, given the fact that you are only making half your savings, then surely if we were simply projecting ahead, it would be prudent to cut as much as one third. That would make an annual average saving of £20 million when you are looking to create a gap. There is about £8·3 million in the figures in table 10 at present. Taking on board what you have said about the other £3 million, that would mean that, effectively, you would be making staff cuts of £20 million to cover an overall annual position of £11·3 million. It is not just a question of saving money for a six-month period and then prudently reinstating people to do that; there will be an ongoing effect.

Mr Maye: Our calculations also factored in the then-proposed reductions to the derating grant and the rates support grant. The rates support grant reduction of 15·1% is still there, so, in addition to the figures in table 10, we have factored in those calculations.

Mr Weir: It strikes me as a degree of overkill. If there were a cut across the board, for instance, the figure bandied around was about 8% or 9% of the overall public sector in voluntary redundancy if you are looking at one third across that. It is about making sure that every penny goes back into the rates support grant, or into a range of worthy causes. You would still have money left over on that basis. That does not seem to be particularly prudent.

Mr O'Reilly: There is a vast amount of uncertainty around what is going to happen in staffing, where people will go from, and all that. As I have stressed, the figure we are presenting at the moment does not make any assumptions about staff savings of any sort, so we are being very careful —

Mr Weir: I understand that. However, if you are looking to take a certain amount of money out, which does not, in the long run, equate with what you need to put back in, it seems that the caveat and assumptions at present do not seem to financially add up.

Mr O'Reilly: The assumptions are assumptions —

Mr Weir: Also — let us be honest — it has already been conceded that, with the £8·3 million gap in the table 10 figures, you are going to at least make a certain level of contribution towards closing that gap by way of a certain amount from the carrier bag levy. I am not in any way trying to prejudge what we are going to hear next week in that regard, but, presumably, instead of the £9·7 million in table 10, you may well be ultimately looking to spend £5 million, £6 million or whatever it happens to be, and that some of the gap will be plugged by the carrier bag levy and some by some level of savings through the voluntary exit scheme.

Mr O'Reilly: That is a fair overview of where we are at.

Mr Weir: I look forward to seeing the more detailed figures. I appreciate that, to be fair, you have come along with a current snapshot rather than the final position.

The Chairperson (Ms Lo): Is it premature for the Department to think about cutting so many staff, given that it will be restructured, with elements going to various Department? The other Departments may be able to absorb the staff over the next few years. I know that you are faced with having to reduce by a huge amount, but you are aiming to reduce staff in this year. Is that not a bit premature? Many of them could be absorbed by other Departments from 2016.

Mr O'Reilly: Regarding the scenario I have presented, you could say, "Let this be the new reality. We'll stop doing all this grant work, and we'll simply cut all that out of our programmes, or a future Department will cut all that out of their programmes", and we would have to reduce by fewer staff, obviously. I am afraid of sounding like a broken record; to some extent, the picture of all this will only begin to emerge as the year progresses. What I have brought to you this morning is the assumption: where we are at, the money we know we have, and the sensible assumptions we can make. We are not yet making any assumptions about vast numbers of staff leaving. We will wait to see what happens and then adjust as the year moves on.

Mr A Maginness: Thanks you very much for your presentation this morning. This is pretty brutal, is it not?

Mr O'Reilly: It is challenging. I suppose that that is the phrase to use.

Mr A Maginness: That is a very nice Civil Service response. I would say that it is very brutal.

Is the net reduction to the Department 10% or 15%?

The Chairperson (Ms Lo): It is just under 15% — 14·9%.

Mr O'Reilly: No, the net percentage is 10·7%.

Mr A Maginness: It is 10%. How does that compare with other Departments?

Mr O'Reilly: I think that it is at the upper end.

Mr Maye: It is the highest net percentage.

Mr A Maginness: You would be forgiven for thinking that you are being victimised.

Mr O'Reilly: At the end of the day, decisions are made, and the numbers play out.

Mr A Maginness: My colleagues around the table are putting forward all sorts of propositions: you do not really need a television advertisement about road traffic accidents, and you could cut that; you do not really need to give grants to certain organisations; you do not really need staff to run the Department; and if you get rid of the staff, you get more money. Those are the propositions that are being put about but, in essence —

Mr Weir: That is an unfair derivation.

Mr A Maginness: It is not unfair at all; it is an accurate description of what colleagues are putting forward. They can respond to that later.

Your Department could lose up to 500 staff members. How can you run a Department with such a massive loss? As the Chair said, this is scary stuff.

Mr O'Reilly: When the Minister talks about the viability of the Department, and in communications that the Chair highlighted, he is talking about the Department's capacity broadly to continue to do the range of things that we currently do. You reach a tipping point in being able to continue to do what you are doing.

Mr A Maginness: So it depends on where that tipping point is, and nobody knows where it is. There is certainly a danger of getting to the tipping point and the Department not being as effective as it should be.

Mr O'Reilly: We discussed that issue in November. We really need to do certain things because they are statutory activities. At a simple level, for example, although most planning functions will transfer to local government, we will continue to make decisions on certain planning applications. We also undertake fee activities. We will continue to issue driving licences and do lots of other things, so you have to cover your bases and ensure that those functions and services continue. There are also activities that are highly desirable but discretionary. I will give you an extreme example: we do not have to spend any money on road safety, but that is obviously a clear priority; it is discretionary but high priority. You start to move down your priorities.

Mr A Maginness: There would be a huge public reaction if you decided not to do anything on road safety.

Voluntary organisations will certainly be badly hit if you do not have the dough to give them as grants. Leaving aside the adverse impact on councils with the support grant, councils will also be constrained in assisting voluntary groups, because they will not have the extra money they need to give to voluntary groups. Is that the position? It is a double whammy for voluntary groups.

The Chairperson (Ms Lo): Yes, I agree with you.

Lord Morrow: The debate seems to be moving from voluntary redundancy to compulsory redundancy. The permanent secretary has made it quite clear that this is a voluntary redundancy scheme. No one will be tapped on the shoulder on a Friday and told, "By the way, don't you come back on Monday. We don't need you any more". It is not going that way. Alban has a good choice of words, and he is doing very well. He talked about its being a "brutal" process. Alban, it is not a brutal process; it is a voluntary process.

I want to ask a few questions on a topic that has tossed around a bit here today. The forecast spend for 2014-15 is £73·6 million, and the inescapable spend for 2015-16 is £60·6 million. That is a reduction of £13 million. You said, Mr O'Reilly, that the redundancies will not kick in until September 2015. Is there still a figure to come out of that £73·6 million between September and the end of March? I know that you cannot be dead accurate and say that 600, 200, 100 or 50 people — whatever the case may be — will be leaving, but does that figure include that?

Ms Lynn: It is £73·6 million —

The Chairperson (Ms Lo): Sorry. Lord Morrow, can I just stop you? We have been told that someone's mobile phone is on, and we are not being recorded. The session is being reported by Hansard. I know that I left my mobile in my office, so it is not me. Has everybody checked?

Mr Weir: We will save money by removing mobiles from the DOE officials.

Mr A Maginness: Maybe we should reintroduce quills.

Mr O'Reilly: In response to Lord Morrow's question, I will just ask Siobhan to —

The Chairperson (Ms Lo): Sorry, Leo. We are pushed for time now.

Mr O'Reilly: I will just ask Siobhan to explain the difference between the £73·6 million and the £60·6 million with regard to salaries.

Ms Lynn: The £73·6 million is the forecast spend for 2014-15, which is the current financial year. That includes all staff in the Department at present, so it is does not include anything —

Lord Morrow: So potential redundancies that come after that are not included in that figure?

Ms Lynn: No.

Lord Morrow: So that figure could be any figure. It could, for instance, be £65·6 million. It is too high, but it will come down, will it not?

Mr Anthony Carleton (Department of the Environment): The £73·6 million will come down because 400 planners are moving to the councils on 1 April. This is just a natural reduction. It is nothing to do with the early exit scheme. The Department is downsizing because planners are moving to councils.

Lord Morrow: We are getting there. So if 100 staff come in, and they go out in September, you have to deduct that figure from that again? Is that right?

Mr Carleton: Yes, from the £60·6 million.

Lord Morrow: Would that not be just as brutal as was first portrayed? Is that not right? I am only borrowing a word from Alban.

Mr A Maginness: Brutal.

Mr Weir: I will be calling an amnesty in a moment.

Mr O'Reilly: As I stressed, the projections and analysis in our paper do not yet assume any savings arising from staff leaving. As I explained, there are reasons why we have to do it on that basis.

Lord Morrow: I understand that.

Mr O'Reilly: We are certainly optimistic and hope that there will be staff leaving, which means that the position will ease during the year.

Lord Morrow: That is a fair point. You cannot presume anything until the real thing comes out.

Mr O'Reilly: Not for financial allocations.

Lord Morrow: However, you will clearly have some idea in your head of what is going on in the Department.

Mr O'Reilly: Quite early on in the year.

Lord Morrow: You also said that your Department will be merging with another one. So even if you come back next week or next month, it will still be difficult for you to give a true picture of the Department's running costs because — not to put it too brutally — the Department will not be there any more. There will also be cost savings there.

Mr A Maginness: It is not brutality: it is annihilation.

Lord Morrow: That is right. I will talk to you after the meeting.

Something that caught my eye is the fact that contracted-out services are going down from £8·3 million to £3·6 million, which is a 56% reduction. What impact will that have on front-line services?

Ms Lynn: The majority of the reduction is to do with NIEA spend on contracted-out services, such as its contracts with Queen's and Ulster University.

Lord Morrow: Will you tell us a wee bit about that?

Mr Maye: It includes a range of services, from delivering archaeological support work through to studies on particular species, including raptors. There is a range of contracts for specific purposes related to the built environment and the natural environment.

Lord Morrow: The idea of 11 councils is based on the presumption that there will be considerable savings. After all, that is why the whole thing is happening. Does the fact that we will have 11 councils in April instead of 26 mean that resources such as property will be owned by those councils — let us take the one that I know best, Dungannon, Cookstown and Magherafelt — that they will be able to dispose of, which are now surplus to requirements and could raise revenue? Maybe that is not the right way to put it, but those are the best words that I can find at the moment.

Mr Maye: That could happen.

Lord Morrow: Would that go some way to offsetting the grant to local government?

Mr Maye: Potentially, yes.

Lord Morrow: I suspect that the support grant will not be as big.

Mr Maye: That is right, although it will still be an overall net reduction in the income of each council that will receive the rates support grant, and councils will then have to balance that out with all the other pressures that they face in the coming budgetary year.

Lord Morrow: Are we saying that it will be this time next year or beyond before you will be able to give a final, final picture of the financial forecast for your Department.

Mr O'Reilly: It will be ongoing throughout the year, particularly as information begins to crystallise on staff exits and potential savings. While staff will not start to leave physically until September onwards, we hope that, from April and May onwards, we will begin to get an idea of who is leaving. At that point, we can begin to say that that means that we will have extra money to allocate. At that point, we could take a decision to start spending money on the basis that someone is definitely going to leave.

Lord Morrow: At the outset of your presentation, Mr O'Reilly, you said that you did not know and could not be sure — that is a fair point; you could not be absolutely sure — of the uptake level of the redundancy programme. However, in reply to another question, you said that you were confident that you will get the number of redundancies. I hope that I am not misquoting you, but tell me if I am. Did you say that?

Mr O'Reilly: No.

Lord Morrow: You did not. Sorry, I thought that you did.

Mr O'Reilly: I may have said —

Lord Morrow: It was not your intention.

Mr O'Reilly: I did not —

Lord Morrow: I am not trying to misquote you.

Mr O'Reilly: Say it is a simple equation: how many people do we think will leave the Department and, therefore, how much extra money will you have to spend next year once they start to leave?

Lord Morrow: Did you not talk about one third of a reduction?

Mr O'Reilly: No. I think that some members were quoting that, which is why I was quoting the slightly high-level figure of 100 staff. For every 100 staff who leave, it will be —

The Chairperson (Ms Lo): You said £1·5 million.

Mr O'Reilly: I had better be careful. It will be a bit more than that, will it not?

Ms Lynn: For every 100 staff, it will be £3 million, so, for six months in 2015-16, it is £1·5 million on average.

Mr Weir: That is what you get on the assumption that £30,000 —

Ms Lynn: — is the average salary.

Mr O'Reilly: If it were 100 staff, it would be £1·5 million. If it were 200 staff, the additional money we could allocate begins to mount up.

Lord Morrow: It will run on past the £1·5 million mark.

Mr O'Reilly: Yes.

Lord Morrow: You are talking, Siobhan, about £3 million.

Ms Lynn: For a full year.

Lord Morrow: I understand that. Are you basing that on an average salary of £30,000? Mr Weir says that it is £40,000. I calculated that it is £41,000, but that is by the way. You are saying that it is £30,000. We could talk about this one all day. I want to get back to the point that you made. I genuinely thought that, as the discussion progressed, you said that you were confident that you would get it now. I am not trying to be facetious —

Mr O'Reilly: I am confident that staff will definitely leave the Department. What I cannot be confident about is the precise number or the precise savings that will be achieved. We can speculate, but the numbers will be what the numbers will be. Once people leave, we will know precisely how much we will save.

Mr Carleton: The ambiguity reflects the fact that this a Civil Service-wide scheme. Numbers might leave another Department, in which case we will hopefully transfer people from the Department of the Environment to another Department, which has lost, say, 1,000 people. That is the group that has volunteered to leave, so there will have to be a shift of staff around the whole Civil Service. The likelihood of 500 people putting their hand up in a Department of 1,500 is very remote. In another Department with considerably more people —

Mr Boylan: That is grand, Chair. We are only going on the statistics that we have.

Mr Carleton: I understand.

Mr Boylan: I thought that you did say that you were confident that you would make it in the voluntary exit scheme. I am not saying 500. Let us be clear, Chair: the figure of 500 is not ours.

Mr O'Reilly: No, it came from us.

The Chairperson (Ms Lo): You are short by £10 million. Is that right? There is a cut of 10% instead of £10 million for next year.

Mr O'Reilly: What you are short of depends on how much you would like to put back in again.

The Chairperson (Ms Lo): Compared with last year's figures, if you still fund all the voluntary organisations, you are short by about £10 million.

Mr O'Reilly: Yes. If we want to do broadly what we are doing this year, that is the figure.

Mr Carleton: The accounting officer also has to take into account the very difficult situation that having only a one-year budget puts us in. We have to look at the economic position two and three years down the line. There is no projection of growth but of possible further reductions in subsequent budgets.

The Chairperson (Ms Lo): Leo, you said that there is some leeway and that the Minister is looking at the £4·2 million from the carrier bag levy. There could be some discretion there, which allows you to fund other voluntary organisations.

Mr O'Reilly: Yes. That is what we are working on at the moment.

The Chairperson (Ms Lo): Table 11 details about seven or eight streams under the carrier bag levy. So the challenge fund and all the other categories could be cut so that you can spread out and fund some other organisations. That is maybe the only way to do it.

Mr O'Reilly: Chair, we are carrying out that exercise at the moment.

The Chairperson (Ms Lo): Ian mentioned professional costs last week, and they are listed in your paper. Professional costs include driver licensing applicants' medical costs of £1·9 million. He said that we should think about doing away with that. Will that be a long process or can you suddenly cut it?

Mr Maye: It would require legislation and full consultation. It would certainly take us out of line with the rest of the UK, where those medical costs are covered as part of the licence renewal process. Our medical costs are proportionately higher than in other parts of the UK, because we have a different system to provide the medical advice required to make a judgment on whether a licence can be renewed. There are a number of issues in there. It is, however, potentially one of the areas that the Department and the Minister would wish to consider with the Committee.

Mr Weir: There is something that muddies that slightly. Is that not one of the main justifications for licence costs being massively higher? I refer to the figures, albeit they relate to income from the licensing of different vehicles. You have about £10·4 million, but I do not know whether that largely comes from licensing. I would have thought that there is an argument about what changes you make in terms of medical costs. If you cut back on the costs and make people pay for that side, there may be a reasonable argument for passing that saving on to consumers, who are maybe being charged roughly twice as much as elsewhere for licensing.

Mr O'Reilly: Another major driver of the cost differential is the sheer scale. There are economies of scale at the centre in Swansea, which issues licences for 50 million people, whereas we are doing it for a small —

Mr Weir: If we got everything of the same type done in Swansea, that might save a few quid.

Mr O'Reilly: I highlight table 4 to the Committee. Of course, we earmarked £3·5 million capital investment for a new driver licensing replacement IT system. That is designed to cut costs. That investment of £3·5 million is intended to secure significant savings in the number of staff we have to use to run that system. It is just about the timing of the investment; it is still happening.

The Chairperson (Ms Lo): I want to welcome the children who are in the Public Gallery. I am told that you are from St Oliver Plunkett Primary School. We are talking about departmental budgets. These are senior staff from the Department of the Environment telling us how much money they have to save in the budget for next year. It is very serious stuff. Are you an Eco-school?

Mr Maye: All schools are now Eco-schools — every one.

The Chairperson (Ms Lo): I thought that it was 98%.

Mr Maye: We are now up to 100%.

The Chairperson (Ms Lo): One hundred per cent — fantastic. Well done to all of you. I am told that you are the school council, which is excellent. You are all very important people.

Mr Weir: Maybe you should be sitting here, and we should be sitting there.

The Chairperson (Ms Lo): Thank you for coming to see us.

No more questions, members? Would you like the Department to come back next week to tell us very briefly about the staff position and whether there will be any leeway through the carrier bag fund, or they could send us an update paper?

Mr Weir: It may be useful to have the officials back, but only when the decisions or proposals are clear. There is no point in bringing them back to tell us that they are still in discussions with the Minister and need a bit more time or whatever. If it is clear that there is more information, fair enough.

Mr O'Reilly: With your agreement, I will suggest what I think would be useful for the Committee. We will not give you another 12-page paper but will take the material in tables 10 and 11 and show how that money has been split up. I think that that is the main area of concern at the moment.

Mr Boylan: Show us how brutal it is. Do not make any decisions on Friday 13th.

The Chairperson (Ms Lo): When do you think that you will be clearer and that you can come back to us?

Mr O'Reilly: We will be able to tell your staff by Friday of this week at the latest — tomorrow. I will come back on that.

Mr Weir: Do you want to check the data to make sure that it is 100% correct?

Lord Morrow: If it is any consolation, we have all been there.

Mr O'Reilly: I need to check with the Minister to see what timescales he would feel comfortable with.

The Chairperson (Ms Lo): I am also a bit sceptical about table 7 and the inescapable spend for 2015-16. You are paring more than £20 million from your current spend. How realistic is that?

Mr O'Reilly: Remember that, as we said already, Chair, that includes the salaries of the people moving out to local government. Those costs will have gone from the Department from April onwards, so it is not as bad as it looks.

Lord Morrow: It is not as brutal as that.

Mr A Maginness: Slightly brutal.

Mr Boylan: Total annihilation.

The Chairperson (Ms Lo): It is brutal. Whether you call it "challenging" or "brutal", it is both. Thank you very much for spending so much time with us. We will talk to you soon.

Mr O'Reilly: Thank you.