Official Report: Minutes of Evidence

The Chairperson (Mr Irwin): I welcome from the Department Gerry Lavery, deputy secretary; Tom Kennedy, assistant secretary; Mark Wilson, principal officer; and Jim McGuinness, accountant. I ask you to take up to 10 minutes for your presentation, after which we will ask questions.

Mr Gerry Lavery (Department of Agriculture and Rural Development): I thank all of you for affording us the opportunity to brief the Committee on the outline business case for the relocation of the departmental headquarters to Ballykelly. I am the senior responsible owner (SRO) for the programme. Tom Kennedy is the programme director, Mark Wilson is the programme manager, and Jim McGuinness is one of our departmental accountants. He was instrumental in preparing the outline business case.

When we met you last, on 18 November, we briefed you on the full implementation programme, including the Ballykelly relocation, so, this afternoon, it would be good to concentrate on the outline business case, of which Committee members have a copy. The key purpose of the outline business case is to present an appraisal of the options to deliver fit-for-purpose accommodation for DARD headquarters functions at the Minister's chosen location, the former Shackleton Barracks at Ballykelly, in a manner that will allow us to deliver all our functions successfully.

The business case is about the best way of putting a departmental headquarters on the site. That site being chosen resulted from the Minister's decision following a careful examination of 23 locations, weighed up according to nine socio-economic factors. What we were faced with in drawing up the outline business case was the question of how we put the headquarters on the site. The issues that we looked at were whether it was better to do a new build or to refurbish existing premises on the site and whether it was better to go for a Big Bang approach or a phased approach. The outline business case has taken us in the direction of a two-phased approach: a 400-seater to be ready for December 2017; and a 200-seater to be ready in 2020. It has directed us towards a new build, and we now have design consultants working on the outline design for the building and the preparations for getting the access road and the necessary planning permission. Work is under way on getting the site access agreed. Having given that preamble, I am very happy to take questions on any of the matters in the outline business case and on the relocation programme.

The Chairperson (Mr Irwin): Thank you for your presentation. I see that the figure for the purchase of the land is £400,000. I understood that you owned the land down there. What is that figure in connection with?

Mr Lavery: It is for the land that we will require to put a new access road into the site. The access road that was used for Shackleton Barracks runs from the middle of the village through what was the main gate to the site. It is constrained by housing on both sides. We envisage heavier traffic for the DARD headquarters and, eventually, for the entirety of the site, so it will be better for local residents if we can get a new access road. At the moment, we have Land and Property Services (LPS) negotiating with the landowner. The figure of £400,000 is a notional figure. We will wait and see what the landowner negotiates.

The Chairperson (Mr Irwin): What size is the land involved?

Mr Lavery: It is half an acre.

The Chairperson (Mr Irwin): I wish I were the farmer. You said that you will have a two-phased approach to the build project, with 400 workstations to be built in phase 1 and 200 workstations to be built in phase 2. Has the assumption of having a building hosting 600 workstations been revisited in the light of the plans to reduce staff numbers by 300 in 2015-16?

Mr Lavery: We have not. From the outline business case, you will see that we took the view at that time that there was no firm basis for envisaging a reduction in staffing levels. Since then, we have had the planned reductions that are to take place in the next financial year. Alongside that, however, departmental restructuring is now planned to take place, synchronised with the next Executive, in May 2016. That would make us a larger Department than we are at present and would increase the demand for corporate services. Given that, we are saying at the moment that it will be a headquarters building and that there will always be a need for a headquarters for the Department. It is unlikely that the demand for top management and corporate services, which form the bulk of phase 1, will be less than it is at present. It is not an exact science, but that is where we are at.

The Chairperson (Mr Irwin): OK. Before I open the meeting up to members, I want to ask what the plan for Dundonald House is at this point.

Mr Lavery: We have asked the Department of Finance and Personnel about what is planned for Dundonald House, but we have not had a firm answer yet. We have an obligation, which is covered in the outline business case, that, after we eventually vacate the building entirely, we will continue to be liable for the full rates for, I think, two years. That is the extent of our obligation. It is an important piece of real estate in many ways.

The Chairperson (Mr Irwin): I asked the question because, if I recall correctly, we were told initially that one reason for moving was because Dundonald House was at the end of its working life and was no longer fit for purpose.

Mr Lavery: At the moment, I can say, hand on heart, that there is a convention of white vans around Dundonald House. Last week, we had no water and, as a result, lost half a day of production. We had to vacate the building, or, rather, allow staff to leave the building. That is not acceptable, and we are making representations to DFP on the basis that we cannot go on like that. The previous time that I was here, on 18 November, I referred to the lack of toilet facilities that had occurred just before I gave the presentation. There is a continuing — I do not want to say "drip feed" — erosion of the standard of accommodation in Dundonald House that is making life difficult for us and, more importantly, for our customers and stakeholders.

Mr Poots: I have always thought that Dundonald House is quite Stalinist in its architectural design, and it strikes me that the conditions there for staff are quite like that, if it is the case that they do not have good sanitary facilities and running water. In any event, you are saying that it would cost more to refurbish Dundonald House per square metre than it would to move elsewhere.

Mr Lavery: The first difficulty with Dundonald House is that we have around 750 out of the 850 staff in the building, so we do not occupy it entirely. All the time, in the outline business case, we are talking about a proportion of the building, but, of course, you could refurbish it only in its entirety. Secondly, the building is a creature of its time. It was built when office workers tended to work in individual offices. We are now in an era in which it is more normal for people to work in open-plan offices in teams and to form those teams flexibly when required. The building does not lend itself to that. The advice from our properties division was that, if we were to go for the refurbishment option, they would want to make Dundonald House an open-plan building, and that would mean removing interior walls. That would be an expensive thing to do in a building of that age.

Mr Poots: Are they solid walls?

Mr Lavery: Many of them would be solid, yes. We would also have to vacate the building for a couple of years while the work was being done. All of that would add up to a substantial cost.

Mr Poots: The exterior requires complete refurbishment as well. There is a lot of concrete cancer.

Mr Tom Kennedy (Department of Agriculture and Rural Development): No, although there are some problems with the cladding. One of the things that we have been told is that the whole building would have to be evacuated to go completely through it. There is no partial way in which to tackle it.

Mr Poots: Is there asbestos in the building?

Mr Lavery: We have tackled asbestos in the building from time to time, so I do not think that there is a future problem.

As I said, refurbishment would be very substantial cost that would amount to in and around the same cost of putting a new building on that site or on another site. In our case, the other site is intended to meet the Minister's policy objective of having a rural location.

Mr Poots: For the new building, I see capital costs of £30 million and resource costs of £134 million, and the total cost is £182 million. Is that right?

Mr Lavery: That is over a protracted period.

Mr T Kennedy: The business case is over a 25-year period.

Mr Poots: With an £80 million deficit.

Mr Jim McGuinness (Department of Agriculture and Rural Development): You need to distinguish between the different costings in the business case. There is what is called a net present cost (NPC), which measures, in economic terms, the total cost of each of the options. Within that total cost, you include the current cost. Later in the business case, you will see the incremental costs, which are significantly less.

Therefore, for the NPC, in economic terms, you are looking at the total cost so that you can measure the three options. However, when you move on to what is called affordability, you are looking at the incremental costs. Those are the costs that the Executive will have to find funds for when the building starts.

Mr Poots: You have a big affordability gap for the next financial year.

Mr J McGuinness: We have estimated that, for Ballykelly, the capital costs will be just over £1 million in the next financial year. Those funds have been allocated.

Mr Poots: Earlier, I saw something about your affordability gap position, which indicated that it would be somewhere in the region of £8 million for 2015-16.

Mr J McGuinness: Sorry, in the business case, there is an affordability gap of a much higher figure, but that is not in the current year. Sorry, within affordability, there is an affordability gap of —

Mr Poots: It is just short of £8 million. It is £7 million.

Mr J McGuinness: Sorry?

Mr Poots: I spotted somewhere that it is just short of £8 million for 2015-16.

Mr T Kennedy: That would fall into 2016-17.

Mr Poots: Oh, 2016-17.

Mr Lavery: We will incur the bulk of the building costs for phase 1 in 2016-17. We brought that to the Executive's attention in June and advised them that, if they were to go ahead with the project, they would have to agree to fund it and that we could not expect to fund it from, for instance, the capital that is available to the Department of Agriculture and Rural Development. It was agreed that it would be met in those terms.

Mr Poots: The money will have to be found from other projects to fund this project.

Mr Lavery: Capital is always zero-based. You always start out by asking what you are going to invest your funding in. It is coming not from other projects but from the regular capital allocation.

Mr Elliott: I have a couple of questions. Thanks for the presentation. Gerry, you said that, after "careful examination" of 23 potential locations, the Minister decided on Ballykelly. What did that careful examination involve?

Mr Lavery: The obligation on us was to look at different factors, such as the distribution of public-sector jobs, local unemployment, youth unemployment and the demography of the area. We then looked at each of the 23 local government areas that were identified in the regional development plan. We tried to look at where a departmental headquarters might do most good in impacting on deprivation and unemployment, might have a workforce in the future and might benefit from an infrastructure that could support it. Those were the sorts of factors that were applied. The top two areas that came out of that, Strabane and Limavady, were both in the north-west.

Mr Elliott: Do you have a detailed analysis of the work done on those 23 locations?

Mr Lavery: Yes, and I think that we made it available to the Committee. However, I am happy to send it to the Committee again.

Mr Elliott: It is not included in the business case.

Mr Lavery: No, the business case started from the point that the decision had been made on location and focused on how we relocate most cost-effectively. I am happy to make the earlier work done available again.

Mr Mark Wilson (Department of Agriculture and Rural Development): There is a summary of that work in annex A to the business case, along with the shortlisting criteria that were used.

Mr Elliott: Tell me again what criteria were used.

Mr M Wilson: Nine criteria were used altogether. They were the multiple deprivation index; availability of jobs; availability of public-sector jobs; earnings; employment deprivation; home/work locations of Northern Ireland Civil Service (NICS) staff; home/work locations of NICS staff working in Belfast; demography; and population trends.

Mr Elliott: Where were the 23 locations roughly? I assume that they were all over the Province and all over Belfast.

Mr M Wilson: They were in 23 of the 26 district council areas.

Mr Elliott: Did cost and financial sustainability not come into the criteria anywhere?

Mr M Wilson: No, it was about ranking the 23.

Mr Elliott: I am saying that costings and financial sustainability did not come into that criteria anywhere. Is that right?

Mr Lavery: I suppose that the —

Mr Elliott: Is that right or not?

Mr Lavery: It is right, and I will explain why they did not come into it. The cost of putting a new building on any of the locations would be more or less the same.

Mr Elliott: Those are up-front costs, but resource costs and financial sustainability did not come into it.

Mr Lavery: No.

Mr Elliott: Therefore, a decision was taken — not by you, but by the Minister — to locate the headquarters in Ballykelly without any consideration of the costings or financial sustainability.

Mr Lavery: That is a bit of a leap, if you do not mind me saying so.

Mr Elliott: It is just what you said, Gerry. You accepted that there was not any consideration given.

Mr Lavery: I said that, in the papers in front of the Minister, there was no reference to financial sustainability. However, in making her decision on Ballykelly, the Minister has always been clear that she took into account the fact that the Executive had a very substantial landholding at Ballykelly and that, as a result, the land would be free for the departmental headquarters. We have now earmarked 14 acres at Ballykelly. She took into account the fact that the land was already owned by the Executive.

Mr Elliott: As a matter of interest, on that issue, no financial deficit goes against DARD for the transfer of the land, is that right?

Mr J McGuinness: There will be no financial liability in the NICS.

Mr Elliott: No, in the Department of Agriculture.

Mr J McGuinness: In line with the protocols, the Department of Agriculture will fund the purchase of the land from OFMDFM to DFP, but there will be no net cost to the public sector.

Mr Elliott: But there is a cost to DARD. It must come from the DARD budget.

Mr J McGuinness: There is a budgetary cost, yes.

Mr Lavery: We expect that to be funded through the Executive making funding available. As Jim describes, there is an accounting treatment but no additional cost.

Mr Elliott: You will be expecting additional funding from the Executive to do that. Has that been agreed?

Mr Lavery: Yes, it is agreed in the Executive paper.

Mr J McGuinness: Action has to be shown to be at arm's length, but it has no net cost to the sector.

Mr Elliott: I am just trying to get to the practicalities.

Mr Lavery: It will surface in our accounts.

Mr Elliott: But there is a £400,000 deficit for the purchase of additional lands.

Mr Lavery: We will have to purchase additional land for the access road, which is outside the Ballykelly perimeter. That will surface in our accounts and will be funded by the Executive.

Mr Elliott: I notice that there is still a proposal in the business plan to continue to locate 100 DARD headquarters staff in Belfast. In other words, there will be two headquarters, one to accommodate 600 or 700 in Ballykelly and one to accommodate 100 in Belfast.

Mr Lavery: There may be half a dozen headquarters by the end of the process. We will, of course, have the Forest Service headquarters in Enniskillen — the apple of my eye.

Mr Elliott: That is not the DARD headquarters.

Mr Lavery: It is.

Mr Elliott: That is a service headquarters.

Mr Lavery: Fisheries division will be headquartered in Downpatrick.

Mr Elliott: That is fisheries division; it is not DARD headquarters.

Mr Lavery: And, of course, we will have the Rivers Agency, which, hopefully, will be part of the new Department for Infrastructure headquartered in Loughry.

Mr Elliott: Absolutely — another division.

Mr Lavery: We will have a DARD headquarters with the top management team and the substantial group of headquarters staff in Ballykelly. What we are talking about are those posts that require to be in Belfast to interface with, for instance, this august body and will have to be headquartered here or have, at least, a touch-down base here. We have still to work our way through that.

Mr Elliott: It does require two separate headquarters.

Mr Lavery: I have not yet worked out the semantics of whether you would describe that as a headquarters or an office.

Mr T Kennedy: The other thing, as we move through and get the staff transition plans, is that we will be very clear as to the exact number that we will need there. We may not need that number, but we will want to make sure that we can handle the flexible working that we talk about. When we get the staff transition plan for Ballykelly, the exact numbers will be very clear. We may not even need that.

Mr Elliott: Going back to the original criteria that were used to determine Ballykelly, were the views of current DARD staff taken into consideration? Was that part of the criteria.

Mr Lavery: To the extent that we took into account the home and work locations of staff.

Mr Elliott: Were staff and their views taken into consideration?

Mr Lavery: I do not recollect that we actually consulted staff at that point. What we were looking at was, potentially, locating anywhere in those 23 locations.

Mr Elliott: So, you were going to build a new headquarters somewhere in Northern Ireland without giving any consideration to the current staff in the Department.

Mr Lavery: Bearing in mind that the new headquarters, if it lasts as long as Dundonald House, will have a life expectancy of 50 years, and that for some of us, our life expectancy is not that great, it might be seen as slightly short-termist to take into account exactly the views of current staff and where they would like to be located.

Mr Elliott: OK. If that is your position, no consideration was given to current staff. That is what you are saying.

Mr Lavery: We have been up front with trades union side and staff, since the decision, to take their views into account on the how —

Mr Elliott: Since the decision?

Mr Lavery: Yes.

Mr Elliott: But not before it.

Mr Lavery: Not before it, to take into account their —

Mr Elliott: No consideration at all.

Mr Lavery: — views on how we deal with the issues for them, which are the issues in our equality impact assessment and which are, largely, about how they can continue with their careers and their work while we develop a headquarters at Ballykelly. So, we are taking into account the impact and implications for staff now.

Mr Elliott: Yes, now; but not before a decision was reached.

Mr Lavery: I would be cautious about taking the views of staff as a determining factor in a decision like this.

Mr Elliott: You do not see it as an essential criterion.

Mr Lavery: No, I do not. I see it as something to be mitigated and dealt with but, at the end of the day, where a headquarters —

Mr Elliott: Do you not feel that that is not giving consideration to your current employees?

Mr Lavery: No, I do not. It is quite proper to give consideration to them, particularly once it is established what government want to do. Once that is established, there is a lot of work to be done to try to mitigate the impact. The Minister was very clear on day one that she wanted this done without forcing existing staff to have to move home and without major disruption to their working lives, and she has maintained that stance throughout. She has, quite properly, taken into account the existing workforce since making the decision.

When we did the work to decide where the DARD Direct offices would be, one of the important considerations was our customers and how we would service them; it was not, "Let's look at what our staff want." I would be cautious about building too much into where our current staff live or what our current staff's wishes are. On the other hand, I respect our current staff. I have always said that I would rather face the future with our current staff than with an unknown staff. However, dealing with that issue is downstream of the decision. It is a matter of working our way through the implications for the current staff, bearing in mind that I do not think that anybody working for the Department today will be working for it in 50 years' time, at the end of the working life of the building.

Mr Elliott: You have indicated quite a focus on no staff having to move. However, it says in the business case that, in actual fact, it may not be possible to facilitate all those staff, so staff may have to move.

Mr Lavery: There are a couple of points on that. The first is that the business case is now about a year old.

Mr T Kennedy: Yes.

Mr Lavery: A year ago, we did not have the benefit of the surveys that we have done of how many staff in the Civil Service have expressed an interest in working in Ballykelly. At that point, we allowed that a number of staff might have to travel to Ballykelly. We now have the reassurance that about 1,500 Civil Service staff have expressed a wish to work in Ballykelly. The other aspect is that, at the extreme, some staff will choose to travel. For instance, senior staff will choose to travel for a period and then perhaps relocate to the north-west. However, we now predict that the vast bulk of jobs will be taken by people who are already resident in the north-west and who travel from the north-west to other locations.

Mr Elliott: Finally, do you, the permanent secretary and senior staff in the Department of Agriculture, agree with the ministerial direction?

Mr Lavery: We have complied with it.

The Chairperson (Mr Irwin): The last time we discussed this, it was noted that expressions of interest regarding the Ballykelly site had been made by other bodies and organisations. Can you update us on any of those developments?

Mr Lavery: I would like to, but it really is a matter for OFMDFM, which is the owner of the site, and it has not imparted a lot of information to us. It has indicated that its soft marketing was successful —

Mr T Kennedy: Yes, very.

Mr Lavery: — and that it has advanced the expressions of interest. OFMDFM will be looking to dispose of areas of the site in the near future, but it has not told us precisely who is interested in the site.

The Chairperson (Mr Irwin): OK. There are no other questions. Thank you very much for your presentation.