Official Report: Minutes of Evidence

The Chairperson (Mr Nesbitt): We welcome Lawrence Hyland, who is head of the social investment unit; Ricky Irwin, who is the director of the social investment fund (SIF) and of victims; and Dr Mark Browne, who is deputy secretary at the Department. Mark, you are an old hand at talking to us about non-financial matters.

Dr Mark Browne (Office of the First Minister and deputy First Minister): Yes, it has put years on me already. Thanks very much for the opportunity to update you on the social investment fund and the progress that we are making in delivering projects on the ground.

I was keen to attend today so that I could place on record before the Committee as early as possible how important the social investment fund and its successful implementation are to me, as the newly installed director for what we are now calling the finance, strategic planning and social change directorate, under which SIF now sits.

Members will be aware that in 2011 the Executive set aside £80 million, split equally between capital and revenue, for a social investment fund that was designed to deliver social change through tackling poverty, unemployment and physical deterioration. Members will have been previously briefed on the extended time frame and the delays with the social investment fund, and we acknowledge that there have been issues. However, I want to highlight today where we are now and where we hope to be in 12 months' and 18 months' time.

Progress has been made and continues to be made. We have committed funding to 33 projects across all nine social investment zones to a value of approximately £53 million, which represents two-thirds of the total available budget of £80 million. Those projects are a mixture of capital and revenue.

Focusing first of all on revenue projects, of the £40 million available, £26·8 million has been committed to 12 projects. Five projects worth £11·9 million are already up and running, and it is anticipated that by the end of July that will have increased to eight revenue projects worth £18·5 million and that by September we will have 11 revenue projects worth £24·6 million up and running.

Some examples of revenue projects that are up and running include the Derry/Londonderry zone's community works programme, which is a £3·3 million employment project that provides long-term placements that are targeted at the young and the under-25s who are long-term unemployed. We have the Belfast south zone's early intervention project, which is a zone-wide project worth £800,000 that provides interventions and family support from pregnancy through to primary school. The third example is the western zone's Work Ready West project, which is a £2·2 million employment programme that provides paid employment opportunities for 120 people.

On the capital side, of the £40 million available for capital projects, commitments of some £26·9 million have been made to 21 projects. Of those, 13 projects to a value of almost £20 million are at the due diligence stage. Four projects worth £2·1 million are at the next stage, which is the stage of appointing design teams. Two projects worth approximately £1·5 million are at construction stage. The two projects that are at construction stage are, first, the northern zone's Causeway rural and urban network (CRUN) project, which is expected to be completed in August this year and which will be a one-stop shop for charities and community groups. It will be Coleraine's first charity hub. The second project is Belfast east zone's Bryson Street surgery, which is estimated for completion in December 2015. The £1 million award from the social investment fund will create a 680 square metre state-of-the-art doctor's surgery on the lower Newtownards Road.

That still leaves us with a cohort of 22 capital projects that were prioritised by steering groups but that have yet to be approved. Those projects are a priority for me and my team, and one of my first actions was to take steps to boost the rate of approval. To achieve that, I have established a dedicated business case approval unit in the SIF team comprising finance and economist staff, along with staff from the SIF team and the Strategic Investment Board (SIB). They are all located in the same unit. That brings a multidisciplinary focus to the assessment of business cases and speeds up the resolution of issues. I encourage the team to be proactive and to get out and liaise closely with project promoters by getting out on the ground, meeting promoters, gathering information and providing advice and assistance on the project ideas. That is all designed to try to help this batch of projects to move towards approval as soon as possible.

We have set ourselves a target of having all these projects at the point of approval by early autumn 2015. While that is a very challenging deadline, it is one that the team is working hard to meet. It will then allow SIF to move to full delivery on all the projects from autumn onwards. We have also looked at the post-approval process on the whole area of procurement, for example, and we have sought to reduce the times that are taken by undertaking tasks in parallel, for instance, to enable projects to get to procurement stage in a shorter time frame. It is difficult to push that process too far, because some of the stages of that process are predetermined by other agencies. The Committee will also wish to note that we have introduced an outcomes-based accountability framework for SIF that will see impact data captured for all projects under delivery. That will clearly set out what difference the project has made to people in the areas that they live in. The Committee may wish in a future session to take a briefing from our Northern Ireland Statistics and Research Agency (NISRA) colleagues, who have been leading on this approach.

We have made funding commitments to 33 projects with costs in the region of £53 million or two thirds of the available budget. Projects are now delivering on the ground, and more will do so in the coming months. We have taken steps to increase the rate of progress being made, and we will continue to drive the process to ensure that the full budget is allocated as soon as possible and delivers benefits to those most in need. We will, of course, keep the Committee updated on progress as we move forward. I hope that that has given you a good overview. I am happy to take questions.

The Chairperson (Mr Nesbitt): Thank you very much, Mark. I appreciate that. I acknowledge that you feel that you are setting yourself an ambitious target of final sign-offs or decisions by early autumn 2015. However, if you look at the Programme for Government, you see that there are no milestones for this financial year, because the £80 million was supposed to have been fully expended by 30 March 2015; in other words, in the 2014-15 year. As you say, a third — £26·5 million — is unallocated in this social investment fund. Can you persuade me that that does not signify a significant failure?

Dr Browne: There is no doubt that the process that we have been engaged in was designed to ensure input from community and grass-roots levels. It involved the establishment of nine steering groups, input from the communities and the development of those ideas by consultants to a point where there could be a business case for the Department to consider. While ensuring community involvement in the shaping of proposals, which I think is important, that process has brought with it a significant and difficult workload.

When they came in to the Department, many of the proposals were not at a very well-formed stage, even after the investment appraisals had been done. They had significant information gaps and difficulties. That has meant that a large part of the work that has been done in the Department has been trying to, first, clearly understand what was intended by the steering groups that brought the proposals forward and, secondly, get the business case into shape with the appropriate information on sustainability, outcomes, funding and funding sources to ensure that it is in a position where it could be approved. The process has real strength in the community involvement and in the ideas coming from the grass roots, but that brings with it a very high overhead. Others who have been involved in this process for longer than I have can comment. To be fair, while that was a real strength, it did bring with it an overhead of work that perhaps was not anticipated initially. We have been working hard to try to deal with those kinds of issues.

The team is working very hard to try to deal with that. There is a lot of learning, and we are now in a clear position where we have clear time frames and milestones for the remainder of the project right through to completion. We have those time frames set out. We have teams working on the various aspects of it, including the approval stage. For revenue, teams are working on the processes through to the project being up and running, and, on capital, they are working on the process from approvals to construction stage. All those are set out. There are three different elements of the team all working on that, and we have a clear process to get to the point of delivering all the programmes.

The Chairperson (Mr Nesbitt): What is the end point? Is there a date?

Dr Browne: Yes, there is a date. Our plan is that we will have all the outstanding business cases, of which there are 22, approved by early autumn. Of the revenue projects, we have 11 letters of offer issued, five of which are at delivery stage. In six months' time, that will have increased to 22 letters of offer issued, with 11 in operation. Within 12 months, in other words, by May 2016, all 22 of the revenue projects will have letters of offer issued and will have a service delivery organisation appointed. We are planning that all the revenue projects will be operating by May 2016.

On the capital projects, we have 19 letters of offer issued and two at the construction stage. Within six months, we hope that that will increase to 34 letters of offer, with four at construction stage. Within 12 months, we anticipate that that will rise to 34 letters of offer, with 17 at construction stage. Within 18 months, by November 2016, we are aiming to have all the letters of offer issued and all those capital projects at construction stage. That is the plan that we have set out, and we have more detailed project plans underneath each of those to try to ensure that we can meet those time frames.

The Chairperson (Mr Nesbitt): Thank you. That is very useful. On the input, which, as you explained, led to some of the delay, one of the advisory zonal groups that you wanted to get on board was the business community. I think that, when we received the briefing in October, there were issues on the Belfast west, northern and Derry/Londonderry zones. Did the business community come on board?

Dr Browne: I will let Ricky pick up the detail on that.

Mr Ricky Irwin (Office of the First Minister and deputy First Minister): I have been involved with SIF for some time, and we have had mixed levels of representation on the steering groups since they were formed in 2012. It is fair to say that, on the business level of representation, it has been challenging to maintain their participation on the steering groups. I do not have the exact picture on representation with me today, because it still changes quite often. A number of political nominees have come and gone, and some community reps have stepped down, so it is a constantly changing picture across all nine zones.

The Chairperson (Mr Nesbitt): I am not clear whether all nine zones have business representation.

Mr R Irwin: They do not all have business representation at this time.

The Chairperson (Mr Nesbitt): Are there any of them that have never had business representation?

Mr R Irwin: We will need to come back on that. I cannot answer that today.

The Chairperson (Mr Nesbitt): OK. Thank you. Can I ask a couple of specifics before I bring in other members? My constituency falls within the south-eastern zone. I see that there is nothing for Strangford or Newtownards in terms of capital projects. There is one revenue project initiative for the whole south-eastern zone. It is:

Will you tell me some more about how that works?

Mr R Irwin: Chair, you said that there is nothing for Newtownards. The Committee has all the projects that are at the letter of offer and committed stage. There are other projects that have not been approved yet that bring in Newtownards for capital development.

The Chairperson (Mr Nesbitt): Yes, but this concerns what is agreed. What is this transitions/early intervention project?

Mr R Irwin: I do not have the detail of exactly what it is. It is a £2·6 million revenue programme. The summary pretty much sets out the broad overview of the project for:

It is a zone-wide project. I believe that it is —

Mr Lawrence Hyland (Office of the First Minister and deputy First Minister): It is out to tender, which is due to close on 2 June.

The Chairperson (Mr Nesbitt): So, will it be all schools in that area?

Mr R Irwin: Not necessarily every school would be involved in that delivery.

The Chairperson (Mr Nesbitt): Right. How would you select the schools?

Mr R Irwin: That is part of the tender process. The specification for that project would arise from the agreed business case. That specification would then be put out to the market through the Central Procurement Directorate (CPD) for a service delivery organisation to come forward, having worked with a number of community organisations and schools in the area, to put a bid in to deliver that programme.

The Chairperson (Mr Nesbitt): So, it is not out to tender; it is in some sort of development phase.

Mr R Irwin: It is out to tender.

Mr Hyland: The tender closes on 2 June.

The Chairperson (Mr Nesbitt): Surely the tender would have to give the criteria for selecting schools.

Dr Browne: Chair, we can give you the detail of what is going out. What tends to happen in these projects and not only in this specific one is that they target a client group. They look at children in the most disadvantaged families and those who have most difficulty. The method of identifying those children is usually through referral, which could be through schools, the PSNI, social workers or whatever. A mechanism is then set up to provide the services to those young people.

Mr R Irwin: Where the schools that are involved are concerned, the criteria for the fund set out a number of levels, the first being super-output areas (SOAs), which are within the top 10% most deprived. There are then others in the top 20% of the five key domains, one of which is education. So, it is likely that the schools in that zone would have to come from SOAs in those multiple deprivation measures.

The Chairperson (Mr Nesbitt): I have a question on east Belfast. Mark, you mentioned the Bryson Street doctor's surgery. That is the only project, capital or revenue, that is currently fully green-lighted for east Belfast. It is very welcome, but how many people from east Belfast do you think will benefit from the Bryson Street community doctor's surgery?

Dr Browne: I do not know what the numbers on that would be. I would have to come back to you on that.

Mr Hyland: There are about 5,500.

The Chairperson (Mr Nesbitt): Sorry?

Mr Hyland: The surgery will have a patient list of about 5,500.

The Chairperson (Mr Nesbitt): How many doctors will there be? Two? Three?

Dr Browne: Five or six doctors.

The Chairperson (Mr Nesbitt): Five or six doctors? The average number of patients per doctor in Northern Ireland is 1,600. Are you going to halve that for Bryson Street?

Dr Browne: It is about providing the infrastructure for an existing practice, as I understand it. The actual number of doctors and the size of their list is really a matter for the practice. We are trying to put the surgery in a key building that is derelict and to provide the improved infrastructure in which that surgery will operate. The actual number doctors and clients —

The Chairperson (Mr Nesbitt): It is totally out of kilter with the Northern Ireland average. If you have six doctors, you should have a patient list of 9,600.

Dr Browne: I do not know the details of that. Perhaps the demands coming from the local community in that area are different from the average across Northern Ireland, or there could be other specific circumstances.

The Chairperson (Mr Nesbitt): Presumably it is in the business case. Is it?

Mr Hyland: The number would be in the business case.

Mr R Irwin: The other thing to add is that further projects are approved in east Belfast where the letters of offer have not been issued yet.

The Chairperson (Mr Nesbitt): Yes, but if you have five or six doctors and you have only 5,500 patients, that is fantastic for them, but what about the rest of the country?

Dr Browne: The reasoning behind funding the project is to do with addressing dereliction, addressing the inadequate facilities that the surgery is operating in and moving it to a point where it can better provide for the community. That may or may not have an impact on the patient list. The actual decision on the number of doctors and the size of the list is one for the surgery and the health service.

The Chairperson (Mr Nesbitt): I thought that it was in the business plan.

Dr Browne: There may be information in the business plan about the size of the list and the number of doctors to inform what square footage the actual building ought to be so that the relevant facilities can be provided. However, the actual patient/doctor ratio would not be a matter for the SIF programme; it would be a matter for the health service.

The Chairperson (Mr Nesbitt): It might be an issue for some sort of equality impact assessment if the Northern Ireland average is 1,600 patients per GP and you are offering something that might be half that figure.

Dr Browne: Again, Chair, I do not think that we are offering it. That is what the surgery is already providing, and what we are doing is improving the physical infrastructure within which that surgery is operating.

The Chairperson (Mr Nesbitt): The 2011 census says that there are 92,221 residents in east Belfast. This SIF project is going to benefit 5,000 of them only. Is that good?

Dr Browne: This is the only project at the minute that is funded. A range of other projects will be coming forward for the area. This is one of the areas of highest deprivation. This is a surgery that serves both sides of the community in that part of the street.

The Chairperson (Mr Nesbitt): I have no difficulty with the surgery, Mark. However, there are 92,211 people in east Belfast, and, according to the business case for the one approved project, 5,500 people will benefit. What about the other 87,000?

Dr Browne: For those who are in areas that meet the criteria for the fund, that is, those who are most deprived and who will not necessarily cover the entire area, the other projects coming forward will be those that the steering group has deemed necessary, and they will impact on a much larger community than the 5,000 that you referred to. That is only one project.

Mr R Irwin: It is important to say that we are working on another five projects in east Belfast, of which we have around £800,000 worth of approvals achieved, and we are working on letters of offer for them. We have a couple of revenue projects that are being scoped out that will be right across the east Belfast area when they go out to operation. There is also a capital cluster project that will benefit around 10 different capital builds right across east Belfast through refurbishment and renewal. That is all going to happen.

Mr Spratt: Thanks for the presentation. Mark, you said that there was a lot of learning. I want to put on record the good work that the team has done on many of these projects prior to taking over this end. Maybe I could move to the south. I have some concerns about some of the stuff, particularly in the south area. My understanding with the revenue programme is that it has been approved or that a preferred bidder has been chosen. I am not sure whether the training projects have actually hit the street yet.

Mr R Irwin: That is about the £2·2 million employment programme in south Belfast. Lawrence, maybe you could answer that.

Mr Hyland: They are in the process of getting it up and running. GEMS NI has been —

Mr Spratt: Is it going to hit the street shortly?

Mr Hyland: Yes. The preferred bidder has been identified and appointed.

Mr Spratt: Yes, I understood that that was the case.

Ricky, you may remember from the last time you were here that there were a number projects, particular the Taughmonagh project, which is a very important project for day care, and the Sandy Row project. However, there was an issue with the rating revaluation. I just wonder where that is. I know that DFP has been helpful and that Land and Property Services (LPS) has been helpful in moving fairly quickly to sort the problems out. However, I understand that there is another issue with VAT.

Mr R Irwin: Yes.

Mr Spratt: Where are those projects now? It is all very good saying that we have this amount of money, but nothing has happened yet, as far as I know.

Mr Hyland: The Taughmonagh project is to extend the nursery and healthy living centre. We have identified that the Diageo drinks company has a charge on the strip of land in the car park that we need to build on. We are trying to get it to release that charge. Until Diageo releases it, we cannot proceed with the project.

Mr Spratt: Everything else has been sorted.

Mr Hyland: Yes, everything else is sorted. As for Sandy Row —

Mr Spratt: Lawrence, how long is that project likely to take? I assume by the way in which you said it that there is some agreement with Diageo.

Mr Hyland: Diageo has said that it will release the charge, but, until we get that in writing, we cannot proceed with the project. We are on with Diageo nearly daily.

Mr Spratt: That is being pushed fairly hard.

Mr Hyland: Yes.

Mr Spratt: This is a very important project for the area.

Mr Hyland: I think that the problem is that Diageo is in the process of moving premises, so that is its main concern at the minute. We have —

Mr Spratt: Sometimes, things take time to get sorted out. I accept what you say, which is that it is being talked about daily. Where are we with Sandy Row and with the possible regeneration of the Lanyon tunnels?

Mr Hyland: We have had the revaluation done. It was revalued at £450,000, which the vendor is happy with. We are trying to establish the title. They are providing the title documentation for that. We have included VAT in the £1 million. There is a possibility that VAT may not be payable, but, if it is, we have accounted for it.

Mr Spratt: If it is a new build, it would not be payable, would it?

Mr Hyland: It is not a new build; it is a refurbishment.

Mr Spratt: It may well be an issue.

Mr Hyland: It just depends on their VAT status, but we have accounted for VAT.

Mr Spratt: Was it included in the initial figure? There is some suggestion that that was not the case. Are you telling me that it is the case?

Mr Hyland: Yes.

Mr Spratt: That is good. What about the early intervention that has been approved? Where is it at the moment?

Mr Hyland: Do you mean for the Lanyon tunnels?

Mr Spratt: Yes. Is there a preferred provider?

Mr Hyland: No. It was in the second tranche, so we are working through the tender specification and stuff. That is where it is. It is getting ready to go out to procurement. It was among the second batch of letters of offer. Belfast City Council has just granted planning permission for Lanyon tunnels, and we are in the process of establishing costs and working up that proposal. As you know, there was a contamination issue.

Mr Spratt: I was going to ask you about that.

Mr Hyland: Contamination reports have been done. I believe that planning was granted last week. We can now establish the costs and move forward with the project.

Mr Spratt: In fairness, the whole community uses that area: the Markets and area around it.

Mr Hyland: It is currently one of the 22 projects in the approval process.

Mr Spratt: The money is hitting the ground in all of the projects. I must say that I am pleased about that, Chair.

Mr Lyttle: I declare an interest as a member of the east Belfast area steering group. Thanks for your presentation and update. As the Chair mentioned, the milestone for 31 March 2015 was to have achieved and evaluated £80 million of programme expenditure from the social investment fund. Can you update the Committee on how much expenditure has been achieved at this point?

Dr Browne: Yes. Last year, £900,000 was spent. This year, at the moment, £147,000 has been spent. We project a total spend of £12·4 million for the rest of this year.

Mr R Irwin: That is split between £7 million capital and just over £5 million revenue.

Dr Browne: The profile beyond that is of £26·3 million for 2016-17 and £26·7 million for 2017-18.

Mr Lyttle: I appreciate that this was before you commenced work on the project, Mark, but, by 31 March 2015, there was approximately £1 million of expenditure.

Dr Browne: Yes, that is right. The discussion that we just had with Mr Spratt illustrates some of the issues that we face: contamination, valuation, ownership, access and planning permission. The number of issues that come up in these kinds of projects is legion. Some of our learning in this is to try to anticipate the issues coming up and allow time for them, and, when projects like this come forward and ideas are identified, the issues should be cleared at a very early stage by those coming forward with the proposals. That is the reason for the long lead-in. I was trying to get across to the Committee — I hope that I managed to do it — that we have a clear plan and momentum. You will see an increased pace of projects coming on to the ground this year and next year. I accept that there has been a long lead-in, but you will see the pace of progress lifting.

Mr Lyttle: Obviously, £1 million compared with the target of £80 million is a significant underachievement. For that reason, I imagine that that, in no small part, fed in to the need for the gateway reviews to be conducted. In your correspondence to the Committee today, you advise that the gateway review reports are confidential, but it is my understanding that other Committees have received such reports. Will you clarify today, in light of the fact that gateway review reports have been provided to other Committees, that you will definitely not provide those to the Committee, and will you explain why?

Dr Browne: The purpose of gateway reviews is to enable a detailed, frank and candid assessment of progress and of what future actions are required. They are carried out in a personal way for the senior responsible officer so that he or she can take the necessary action to address any issues. On that basis, we have not made the report available to the Committee. If these reports come into the public domain, that runs the risk of having a less candid and less useful discussion. What I can tell you is that the issues identified have been dealt with. The report has been very helpful in identifying actions that could be taken. Those have fed into the milestones and rates of progress that I identified at the start of my presentation. The Committee will see those coming through at a faster rate. You referred to the £1 million that has been spent, but there is £12·6 million to be spent this year, which we hope will ramp up next year to £26 million. The programme has taken a while to wind up because of all the problems that we identified early on, but it is now starting to play through. A clear pipeline and clear processes are in place, and there will be increased progress and clear delivery on the ground as we go forward.

Mr Lyttle: I appreciate that response and the forecasting, but you will appreciate that our role, as a statutory Committee, is to scrutinise milestones set by the Department. That was a very clear milestone for the end of the last financial year. Do you not think that public concern about that scale of underspend is significant enough to demand more transparency about what exactly went wrong for only £1 million to be expended against an £80 million target?

Dr Browne: I will make three comments in response. First, the £80 million commitment from the Executive remains. When we say "underspend", it may not have been spent in the particular year in which it was provided, but the commitment to provide £80 million for the SIF programme is there, and, in that sense, no money has been lost to it. We have identified to the Committee some of the issues that we faced. Today's discussion has identified some of the issues that have emerged around the projects and that we continue to deal with.

They are not peculiar or specific to the SIF programme. Any significant capital or revenue programme runs into these issues: planning permission, contamination, valuations, ownership and legal title all come into play.

Another aspect to make clear is that, where the budget allocation made available each year — currently £14 million revenue and £15 million capital — has not been spent on SIF projects, it has been made available to other projects within the Delivering Social Change programme. It has been spent on identified projects that are meeting a real need. No money has been lost to SIF in the longer term, and the money that has been made available each year has been used on other worthy and important projects in the Delivering Social Change programme.

Mr Lyttle: I appreciate that there has been no loss, but I disagree with you that £1 million expenditure against an £80 million target is "not peculiar". Are you concerned that the likes of the Audit Office or the Public Accounts Committee might become concerned with that?

Dr Browne: I think, Deputy Chair, that the Audit Office will do what it chooses. As a Department, are we concerned at the rate of progress? Yes, we are. Would we like to have done it more quickly? Yes, we would. Did we make every effort to do it more quickly? I think that the answer to that is also yes. We have put resource into this project.

I mentioned earlier — I think that the point has been made before — that OFMDFM was not set up as a delivery Department. We do not have legions of people who are capital or revenue experts to deliver this programme, so we have had to develop that expertise. We have drawn on assistance from other Departments in doing that, but we have learned the lessons and are now set up in such a way that we are able to deliver. Yes, the £1 million is not what we would like that figure to be, but, looking forward, I have set out for you a plan for how we will achieve the spending that we need to achieve under this programme. We expect all revenue projects to be up and running within a year and all capital projects to be in construction within 18 months. That is still a stretching target, but we are fully committed to trying to achieve it.

Mr Lyttle: Yet, if things go to plan, the delivery of the social investment fund will, under the Executive's reform of Departments, go to the Department for Communities in 2016. How much of a challenge will it be to transfer the learning and delivery to that Department, or will staff be on another journey?

Dr Browne: The working presumption in the restructuring of Departments is that staff will transfer with the function. So, the expertise in OFMDFM will be available to the new Department for Communities. The other point to make is that the Department for Communities will also have a significant number of staff from the Department for Social Development, which also has significant expertise in these areas. So, it is not as though the function will go to an area that has no expertise at all. It will go, with the staff who deliver it currently, into a Department with quite considerable experience in this area.

Mr Lyttle: There are people who have argued that it should have been in the Department for Social Development from the start.

Dr Browne: I do not share that view. I think that I mentioned this when here talking about the Programme for Government: some of the learning for us, and for everyone in this, is that when trying to develop a large-scale programme from scratch, you need to allow sufficient time to get the resources and expertise in place before you can start delivery. That was, perhaps — no, clearly — underestimated in this case.

Mr Lyttle: OK. Thank you very much.

The Chairperson (Mr Nesbitt): Mark, may I go back to the gateway reports? You have given us a very articulate, logical explanation for why you believe that they should not come to a Committee like this or go into the public domain, and yet the Finance Committee has received the gateway reports. How is that?

Dr Browne: I am not aware of the thinking behind that or the decision about the reports going to the Finance Committee. My understanding of the position on this is that these are very detailed reports that are given in confidence to the senior responsible officer to enable that individual to act on them. That is the reason why they are confidential: to allow that degree of candour.

The Chairperson (Mr Nesbitt): So how come another Committee got sight of it?

Dr Browne: I cannot answer that, Chair.

The Chairperson (Mr Nesbitt): Who would have signed off on that? What level would they have been at?

Dr Browne: I do not know which gateway report that was or which —

The Chairperson (Mr Nesbitt): Do either of your colleagues know anything about it?

Mr Irwin: Is this in relation to SIF?

The Chairperson (Mr Nesbitt): No, the gateway reports. We were told —

Dr Browne: I have no knowledge of DFP gateway reports.

The Chairperson (Mr Nesbitt): No, I am asking about gateway reports being given to the Finance Committee.

Dr Browne: I am not aware of that, Chair.

The Chairperson (Mr Nesbitt): Could you look into that? It is very serious. I take you at face value, Mark, when you say that it is very important that these are confidential documents. The fact that they have been given, presumably, in your view, in error —

Dr Browne: I would not say "in error". Clearly a different judgement has been arrived at, but my understanding was the line and the approach that I described.

The Chairperson (Mr Nesbitt): "The line"?

Dr Browne: Our view.

The Chairperson (Mr Nesbitt): Do you endorse that view?

Dr Browne: It is important that you can get the help that you need, and sometimes the help that you need, for it to be effective, has to be truly candid. That is best given in a confidential situation. That is my view. Some may take a different view.

The Chairperson (Mr Nesbitt): I accept that. My difficulty is that, clearly, somebody in your Department has taken a different and entirely contrary view.

Dr Browne: I do not think that it is our Department; it may be a different Department.

The Chairperson (Mr Nesbitt): There is obviously a lack of coordination across government.

Mr Moutray: In relation to the southern zone and capital build projects in Markethill and Lurgan —

Mr R Irwin: In Markethill and — ?

Mr Moutray: Lurgan.

Dr Browne: Is that the new YMCA and the new directions project?

Mr Moutray: Yes.

Dr Browne: Lawrence, can you give an update?

Mr Hyland: We sought validation of the costs from the Central Procurement Directorate (CPD), and they have come in showing quite an increase from our estimate.

Mr Moutray: Is that the Markethill one?

Mr Hyland: Yes, we are revising the business case because of the increase in costs.

Mr R Irwin: There has been a significant increase in the overall project cost. In that scenario, we use the CPD to do an accurate validation of what it would actually cost to build that building. When the cost goes beyond 10% of the overall project, we need to look at whether we need to secure new approvals for it so that work can go ahead.

Mr Moutray: How long do you envisage that taking?

Mr R Irwin: We are looking at that now.

Dr Browne: Right now.

Mr R Irwin: There have been cost increases in other projects in the southern zone, which has put pressure on the delivery within that zone's allocation. We are looking at that right across the board now, so it would be difficult to put a time frame on that.

Mr Moutray: Are you confident that the Markethill project and the YMCA in Lurgan will be able to go ahead?

Mr R Irwin: We are confident that, after a wee bit of scoping of the project and downscaling the specification, it could still go ahead.

Mr Moutray: Thank you.

Mr D McIlveen: I will resist the temptation to continue our tour of the constituencies by talking about North Antrim. [Laughter.]

I will try to stick to a more general point.

I am a little bit torn on the underspend, to be honest, and I am still trying to get my head around it. On one hand, I would be the first to criticise you if, to meet a deadline of the end of March, there had been a lowering of the threshold to get the money spent for the sake of it. That would have been a massive failure on the part of the Department, and I am glad, in some ways, that it resisted the temptation. On the other hand — despite my upbringing, I seldom bring religion into politics — may I suggest that, if you read nothing else today, you read Matthew chapter 25? The 10 talents is a famous story in which a man who was told to go away and make money for his boss buried the money and waited for him to come back so that he would not lose any. When you were explaining what had happened, I had that story going around my head. In the private sector, what would happen if somebody was asked to deliver a project within so many months or years but came back after that time having not only underdelivered but delivered — I think that £1 million is roughly 1·25% of £80 million —just 1·25% of what was anticipated?

This is not just a little bit of an underspend; it is an underspend of epic proportions compared with what we were hoping to achieve.

Mark, you helpfully explained that there was more administration than expected and more challenges in how the applications were assessed. I respect that, but I need to get my head around how this went so wrong. I could understand if we had spent half, and we could probably stomach the argument that there were some unforeseen circumstances, but the concern is that you got it so wrong.

I refer you back to the biblical story: is the Department becoming so risk-averse and so afraid of sitting in front of the PAC that it does not make the right decisions and does not come up to the mark and say, "Do you know something? We're going to spend some of this money. We're going to take a few risks here." This money was meant to benefit the community, and the community has not got what it hoped for and expected. Those are the people whom we have to answer to. We are where we are. What environment caused this to go so epically wrong?

Dr Browne: I will make a couple of comments. First, I am looking forward, and I have set out how we will move the projects on and get that spend on the ground. That did not just happen in the last wee while: for part of the time when there was no spend, all the necessary preparation was happening, and there was a lot to be gone through. I mentioned all the sorts of issues that emerge in these kinds of projects. They have to be untangled, but many are outwith the power of the Department to resolve. Whether it is a legal title that has to be sorted, planning permission that has to be granted, evaluations that have to be obtained or individuals who have to decide whether to accept a price for a property, all are outwith the Department's power. Those unforeseens fed into this.

I understand fully and accept the point that you make. We wanted spend to be much, much higher. It has not been anywhere near what we wanted, and I have set out the reasons for that. We have set out how we will try to achieve that spend, have all of the revenue projects on the ground within a year and have the capital projects on the ground within 18 months.

I do not want to get involved in biblical analogies — it might test my knowledge too far — but I do not think that it is a question of us burying the money and then coming back and digging up the same amount. When the funding that was made available for SIF could not be used for SIF, it was diverted to the other key projects and programmes under the Delivering Social Change umbrella, which is the point that I was making to the Deputy Chair earlier. So, other worthy and important projects that we needed funding for benefited from the funding. It was not lost to key Delivering Social Change programmes; it was diverted to there.

There are lessons to learn, and we have talked about them. When announcing a major programme such as this and setting time frames, we need to have a better assessment of capability, skills and expertise. Also, we need to learn from the pros and cons of the way in which the projects were identified and brought forward. Bringing them from the grass roots, having community involvement and involving all the various parties in identifying them is a good way of ensuring that you meet the community need, but it can also lead to a project that has not dealt with all the issues that need to be dealt with. There is no doubt that there were many unresolved issues, some of which, when we looked at the projects, were showstoppers. However, in other cases, issues simply had not been resolved, and we have been trying to get the necessary information to get them resolved.

So, we have tried to be true to the bottom-up, community-led approach, but that has led us into a very, very significant programme of work, which I do not think that anyone could have anticipated when these projects first came forward. It was in trying to do the right thing in the right way that we have run into all these issues.

Mr D McIlveen: This question probably requires a yes or no answer, but it touches on an issue that you did not touch on. Innovation requires risk: are you afraid of risk?

Dr Browne: No, we are not afraid of risk. We assess risk, and we do so within the Department's framework. For SIF, we have what is called a risk appetite, and we are prepared to take risk in areas of innovation like SIF. The other side of that, though, is that we are bound by common government processes such as having a business case and being able to demonstrate value for money and clear outcomes. When we get into procurement, for example, we are also bound by certain time frames and having to go through certain processes. So, there are some areas that you can take some risk in, but you have to weigh that up against the processes, and some processes are outwith your control.

Mr D McIlveen: I mentioned the Public Accounts Committee as an example, and I have heard senior officials in other Departments say privately, "We did not do this because we did not want to risk putting ourselves in front of the PAC", even though, if a risk was taken for the right reasons and it did not work, most people would look on that sympathetically. Is there anything that we can do on this side of the table to make your job as an innovator easier and help you in making the public sector better?

Dr Browne: It has been helpful to have a discussion and an appreciation of the fact that there are risks and that we operate within constraints. That understanding and appreciation by the Committee is helpful. From our perspective, we need to look continually at whether we are getting the balance right between risk and the opposite of risk, whether that is certainty or whatever. We have to make sure that we spend taxpayers' money effectively and efficiently and get outcomes, but, sometimes, the processes around that can be such that they set the bar very high, which slows things down and can reduce the risk being taken. It is about constantly providing that balance, and an interplay between Committees, the Civil Service and the Audit Office will help to change that context.

The Chairperson (Mr Nesbitt): I think that we are done. Sorry about the confusion about DFP, but it would be interesting to know whether there is a common policy on these matters, as there should be. Lawrence, Ricky and Mark, thank you very much.