Official Report: Minutes of Evidence

The Chairperson (Ms Lo): I welcome Leo O'Reilly, the permanent secretary; Anthony Carleton, director of finance and business planning; and Siobhan Lynn of finance and business planning division. We have your papers. Thank you for coming, especially on a Tuesday. We could not accommodate meeting you last week. If you want to start by giving us a brief account of your paper, afterwards members will ask questions.

Mr Leo O'Reilly (Department of the Environment): Thank you, Chair. Two papers were sent through to the Committee: a short note on the provisional out-turn position and an update on the in-year financial position on June monitoring. I will run briefly through the key points in both papers and, then, as you say, we will have an opportunity for questions and discussion.

The provisional out-turn figures are summarised there. The headline figure shows a net overall underspend of £1·03 million, which represents 0·78% of our final resource expenditure budget. As the note explains, that underspend is accounted for primarily by additional receipt income received in the final months of the year, particularly from the planning income, and also some additional carrier bag levy income, offset to some extent by higher than anticipated expenditure in a few areas, particularly in relation to some environmental programmes. The overall position is primarily because of additional income that was received at the end of the year, which has fed through to the underspend figure that is shown as a whole. The capital position, as you see there, is an underspend of £0·345 million. That is accounted for primarily by the Exploris situation, where, as you know, the work that was anticipated last year — the capital investment there — has not yet begun. That is something that we are continuing to work on with the council in respect of the current financial year. There was a small underspend in relation to some capital investment in heritage-led developments. That is the underspend position from the last financial year.

With regard to the in-year financial position on June monitoring, we are bringing you proposals today which, as you know, have to be sent to DFP by Thursday 4 June. I should emphasise two interrelated points at the beginning. The first is that this assessment of a position is based on our opening position for the present financial year. Therefore, as we said at the beginning, it leads directly back to the previous assessments that we did of our position, both at the end of last year with regard to the draft budget and then at the beginning of this year in relation to the final budget position. I say that because obviously we are all aware of the current uncertainties around the budget position across all Departments. There are various reports as to what might or might not happen during the remainder of the financial year. We do not know what will happen yet, so for the purposes of our current financial planning, we have simply continued to rely on the firm position as we know it, which is the Budget as approved by the Executive — and indeed the Assembly — and the figure work within that set of material.

For context, we will repeat some of the headlines that we have discussed previously with the Committee. We have just provided an update there on the voluntary exit scheme, which shows that 459 staff in DOE made an initial application under the scheme. We know that, at the moment, 156 staff will be made a conditional offer of voluntary exit at the end of September 2015. I say "conditional" because, again, there is currently no final certainty as to the funding position on the voluntary exit scheme. Therefore, the system as a whole has decided to make conditional offers. The offers are conditional on the funding position being confirmed. We know that 156 of our staff will be made an offer of being able to leave at the end of September. The remaining people who expressed an interest will also receive a letter saying that they are still in the pool to be considered, but have not yet been selected on the value-for-money grounds. We explain there that if we make an assumption that, say, 70% of those people finally accept the offer to go, that will produce an in-year saving in the order of £2·2 million, which will be used to offset other pressures. There are no other reduced requirements at the moment in the Department.

At paragraph 8, you have a summary of the bids that we are proposing to make to the Executive. I will not go through them one by one, but members may want to ask questions about specific bids. At the end, we highlight three technical adjustments. Earlier, I mentioned the carrier bag receipts, which are part of our underspend. Because of the nature of that scheme, we will seek to have that money — £270,000 — brought back into our budget this year. We are also making a bid for increases in employer superannuation contributions. Finally, we are due to receive another £650,000 for the coastal communities fund for 2015-16. As you know, that is a ring-fenced fund that is provided for us separately by the Treasury. The funding is allocated on a year-to-year basis, with intra-year adjustments being made available to us.

That is all that I think I will say by way of introductory comments. I am sure that you and the other Committee members will have questions of detail and other points to make. Thank you.

The Chairperson (Ms Lo): Thank you for your presentation. Given the time restriction, we will just spread out the questions. We need to try to keep it quite tight. First of all, I want to ask you about the out-turn for 2014-15. You are not surrendering any money; there is no reduced requirement for the Department. Is that right? As I understand it, you have a £1·03 million underspend and £0·23 million is going to go to environment programmes. Is that right? That is the additional carrier bag levy.

Mr O'Reilly: Yes.

The Chairperson (Ms Lo): That is going to environment programmes. Can you maybe explain to me where exactly this is going to go? Another thing I want to ask you about is the capital investment. There is an underspend of 2·8%. Is that not over 1% of your capital underspend overall? The underspend is £0·345 million overall, and that represents 2·8%. Can you keep that? Can you explain those issues?

Mr O'Reilly: I will answer those questions in sequence. As I mentioned, there was additional carrier bag levy income received towards the end of last year of £230,000. Subject to DFP approval, we want to add that back into our available funding for the current financial year, and that is what we are asking to do in June monitoring. Once that money is added, it will add to the pool of the funding available for carrier bag levy expenditures. As you know, we are currently receiving a range of bids for expenditure of that money. That money will add to the pot of money already available for allocation from the carrier bag levy in the current financial year.

The Chairperson (Ms Lo): OK, but you already said that you have £1·25 million for the natural environment fund. Is that £0·23 million going straight into that pot?

Mr O'Reilly: I cannot say yet because obviously, first of all, we need to have the sum confirmed to us by DFP. When it is, it will be for the Minister in the first instance to consider how he wishes to distribute that additional carrier bag levy funding amongst the various uses that, as you know, have already been reported to the Committee.

The Chairperson (Ms Lo): OK. What about the capital underspend?

Mr O'Reilly: The capital underspend it — sorry, the question was the —

The Chairperson (Ms Lo): Can you keep it?

Mr O'Reilly: No.

The Chairperson (Ms Lo): I thought that you cannot.

Mr O'Reilly: We can seek to reinstate it, if I can put it in those terms. For example, as I explained, most of the underspend is because of probably unavoidable delays in the capital investment programme at Exploris. The money was not spent last year, but we already have an allocation of £700,000 in our budget for Exploris in the current financial year. First of all, we will want to try to ensure that the council can get plans in place to spend that money in the current financial year. If it were to turn out that the council could even spend the other £200,000 this year, we would seek to have that reinstated later in the year. The basic message is that the Exploris programme will not be affected by this delay in beginning to deliver the expenditure.

The Chairperson (Ms Lo): So if there is an opportunity to spend it, you can ask for that money.

Mr O'Reilly: Yes, and we already have £700,000 allocated at the moment to that project.

The Chairperson (Ms Lo): I will then go on to ask you about the £2 million bid for the natural environment programme. As I said, you have already announced that you have £1·25 million for the new environment fund. I think that previously the Minister said to us that he had reserved £55,000 for the challenge fund. We saw a press release yesterday from the Minister to say that the challenge fund now has £300,000.

Mr O'Reilly: That is correct, yes.

The Chairperson (Ms Lo): That was a press release yesterday from DOE. If you get the £2 million, how will you spread it? Will you also look at the two projects from Queen's? Queen's has asked for £170,000 to keep the Centre for Archaeological Fieldwork (CAF) going until the end of this financial year. Quercus has said that, contractually, you cannot get away from continuing to fund it under the Natural Heritage Research Partnership. From what I see from your bid, you are saying that you are going to apply for £2 million under the natural environment programme, £1 million is going to go to the challenge fund and another £1 million is going to go on general environment funds. Is that correct?

Mr O'Reilly: Yes, and, as you see, some of the potential uses for that funding identified include activities that we previously funded. We provided funding to Queen's through the Natural Heritage Research Partnership to support certain of those activities. Certainly, if we received some or all of that funding, we would want to look at continuing to fund, through that source, some of the activities identified there, including activities that were previously funded through the Natural Heritage Research Partnership.

The Chairperson (Ms Lo): So that would be for the two projects from Queen's.

Mr O'Reilly: I cannot state that specifically, partly because we have to wait and see what we get, but also we have to look at our priorities. Obviously, there are certain activities that we will treat as priorities for continuing work. We highlight there the requirement to continue to monitor the situation in respect of modiolus in Strangford lough, for example, and various other priority projects and activities.

The Chairperson (Ms Lo): And there is no guarantee that you are going to get it, so what is the contingency plan if you do not get £2 million?

Mr O'Reilly: It is subject to what happens in the out-turn of June monitoring, and we will obviously reassess the position after that, but at the moment that means that the position will remain as it is now, which is that the contracts will not be renewed after their current expiry date of 22 June.

The Chairperson (Ms Lo): Yes, the end of June. That will be the end of the two projects, if you do not get that £1 million from the bid.

Mr O'Reilly: The contracts that we currently have will not be renewed.

The Chairperson (Ms Lo): OK. It is very bleak, is it not, Leo? I will bring other members in.

Mrs Cameron: Thank you for your presentation. In relation to listed buildings grants, you are bidding for £1·4 million for unfunded commitments to the end of June. How will the Department meet the commitments if the bid is unsuccessful?

Mr O'Reilly: The situation with listed buildings grants is that we have a number of previous offers that were made to occupiers of property subject to funding being available. As you may recall, we allocated a small amount — £500,000 — of carrier bag levy funding to some listed building projects. The remainder — the £1·4 million that we are bidding for — is the sum that we will need to follow through on the offers that have been made previously. That is the outstanding offers, and that is the amount required. If we get some or all of that funding, we will use it to authorise further work at particular locations. If we do not get additional funding we will just have to keep the position under review and roll those offers forward for the remainder of next year, and potentially into the next financial year, because we have made the offers and we are not going to renege on them, but the timing will depend on when resources become available to us to make good the offers.

Mrs Cameron: The offers will remain, but they will move forward if that bid is not met.

Mr O'Reilly: Yes. We used a little bit of carrier bag levy money to meet some of the immediate pressures in that area, but we have held back on the remaining balance. If and when we get additional resources, either from June monitoring or potentially from other sources, either this year or in future years, we will strive to meet the commitments that were made previously in terms of offers made to the individual householders. The key thing is that, when the offers were made, there was no specific timing on when the offer would be followed through in terms of a commitment to a specific allocation at a certain time. That is what we are working through at the moment.

Mrs Overend: I want to ask about the voluntary exit scheme. A total of 156 people have been made an offer. How did you identify those 156 out of the 459 who applied?

Mr O'Reilly: The overall numbers were identified on the basis of our share of the total allocation across all Departments. As you know, the offers are being made to, I think, about 2,800 people across all Departments. The initial tranche will not be 2,800.

Mr Anthony Carleton (Department of the Environment): No, that is in total.

Mr O'Reilly: As we have explained before, the selections were purely based on the value-for-money calculation or, in other words, who offers best value for money in terms of the cost of letting them go expressed as a proportion of the first year's annual salary saving after they have gone. A very simple value-for-money calculation determined the 156 individuals.

Mrs Overend: Have you identified what areas in the budget the reductions will be made from and what sections of the Department they will be from?

Mr O'Reilly: The 156 were chosen purely on the basis of the value-for-money calculation. There was no regard to where they are working at the moment.

Mrs Overend: How does that work out?

Mr O'Reilly: In practice, those individuals, who I think have been advised today, will, by 15 June, receive a final calculation of the package that will be available to them personally. They will then have 10 days — that is, until the end of June — to make a final decision as to whether or not they want to go at the end of September. When they make that final decision at the end of this month, we will know for certain for the first time which individuals are leaving the Department at the end of September, subject to the overall funding being available from the Treasury. At the end of this month, we will have certainty for the first time as to which individuals are leaving the Department. At that point, we will have to, over the following three months, address the issue that I suspect you are asking me about, which is how we will manage the Department after those people leave. We will have to sit down and decide which areas of work we can remove people from and in which areas we will have to, because of their priority, consider whether vacancies arising there will have to be filled by redeployment from other parts of the Department.

Mrs Overend: OK. So, the exits will be realised in three months' time.

Mr O'Reilly: At the end of September — three months after the end of June. There is a three-month notice period, and that is also the period when we will have to focus on the implications for the Department of those people leaving. Once we have those final figures at the end of the month, we will probably not be able to give the Committee the actual names, but we will certainly be able to give you the fine detail on the grades and which parts of the Department they work in.

Mrs Overend: So money will be saved as a result of this.

Mr O'Reilly: Yes.

Mrs Overend: Will there be a reduction in requirements?

Mr O'Reilly: We have made a ballpark calculation. Because this is voluntary, we still have to wait and see if the people definitely go, but we have made a working assumption that at least 70% of them will confirm that they wish to go at the end September. As we have calculated, that could initially save about £2·2 million in-year.

Mrs Overend: Is that for the rest of this financial year?

Mr O'Reilly: Yes. It will come into play from September, and there will be £2·2 million for the remainder of the financial year.

Mrs Overend: Will you be able to keep that money and spend those savings elsewhere?

Mr O'Reilly: It will become available to us to address the range of pressures in the Department, all of which are reflected in the June monitoring bids.

Mrs Overend: So you will be able to transfer it — no problem.

Mr O'Reilly: I would not go so far as to say "no problem". First, we will have to confirm that the scheme is going ahead. Secondly, we are making a working assumption, as I explained at the beginning, that we are still working off the opening position for the year. The second key assumption is that we, as a Department, will be allowed to retain those savings in our budget. If those two conditions are met, that £2·2 million will become available to address the pressures identified in table 1 of today's paper, along with any other resource that we might or might not get following the outcome of June monitoring.

The Chairperson (Ms Lo): Previously, you had thought of a reduction of 400 staff. Will you be thinking of the next tranche, with a further 250 or so staff going?

Mr O'Reilly: Yes, if there is a further tranche in this scheme, which, I think, would mean staff leaving at the end of November, the end of February and the end of March, we would be able to factor in potential additional savings, once we know the numbers. As you know, the scheme is being managed centrally. We will be able to factor in potential savings once we know how many people have chosen to leave and how that will impact the Department. As the year goes on, the extent of the savings declines because there is less time left at the end of the year in which to make good the savings from people leaving the Department. The answer to your question is yes, it is a potential source of further easements later in the year.

The Chairperson (Ms Lo): They will be picked from all of those who have expressed an interest.

Mr O'Reilly: Yes, from the 459. As discussed previously at a Committee meeting, we had guesstimated that there would possibly be up to 400, but, as it turned out, 459 people expressed an interest in the scheme. That means that not everyone who has expressed an interest will get an offer to leave the Department.

The Chairperson (Ms Lo): Others want to ask a question on the same issue.

Mr Boylan: I apologise for missing part of the briefing. I take it that you have looked at a workforce model or delivery model in parallel with all of this. You say that it is value for money, which is what you are looking for, but, clearly, there will be a delivery model after that. Have you looked at what staff will be left to deliver the programmes in the Department, or are you simply saying that, because you have to deal with the cut in your budget, this will save so many millions? Have you at any point looked at a workforce model and the future delivery in the Department?

Mr O'Reilly: We are looking at where our priorities will be in the future, including during the remainder of this financial year. We are already looking at areas in the Department where, if necessary, we will scale back or cease activity to allow activity in other areas to continue. As I explained previously, we have looked at the activities in the Department that are statutory obligations: for example, we have to process licence applications, driving licence applications and permit applications. As referred to in previous Committee briefings, there are other activities related to our environmental programmes. There is an obligation on us to continue certain levels of activity. We must continue water testing for statutory and, of course, safety reasons: our water-testing programme and the monitoring of water quality across the area must continue. So, all those activities will be prioritised.

We will still have to make savings, so we will have to stop doing other desirable but discretionary activities, including promotional activities, access activities and opportunities for people to visit buildings. We will probably have to curtail or cease those activities. At the same time, we recognise that it is important that we continue to do certain things, such as keeping all the country parks open with their current opening hours, which we have committed to seeking to do for the rest of this year. However, we will not run many supplementary activities there during the year. In other words, we will maintain the facilities, keep them open and maintain public access, but we will have to curtail the other discretionary activities.

That is the range of work going on in the Department as we seek to build up a picture of what will have to continue and what can be reduced or terminated, if necessary. Once we get a firmer fix on the numbers and the areas from which people are leaving, we can begin to redeploy staff accordingly. Obviously, with a further 156 fewer people in the Department by the end of September, by definition, certain things will not happen in the way that they happened before.

Mr Boylan: That is grand. I am just trying to get a better picture of what is coming down the track. If you are saying that you will carry out your statutory duty, that is fine. However, we might be taking away money from some of the groups that we have invested in for a number of years: groups in which you invest £1 and get £10 back. My only problem with all this, and every Department is facing these budgetary challenges, is the knock-on effect and the impact over time. If you are working with other Departments on certain things, infractions and all of those challenges lie ahead. That is why I asked the question in that context.

Mr O'Reilly: You mentioned infractions. Just yesterday afternoon, we had several hours of discussion about the Department working on an exercise, which we will, no doubt, advise the Committee on shortly. The exercise involves precisely that: sitting down and determining the absolute must dos and things that we must address. Obviously, any issues or activities that relate to ensuring that we comply with our statutory obligations will be pivotal and key. Also key will be activities that support organisations that can generate significant voluntary effort in the community and activities that generate significant additional match funding. We are very conscious of the point, which has been made to us in a number of forums, that some of our money can trigger, or enable access to, other funding streams, whether they are local or European.

Given the pace at which this has been happening, frankly, we have had to make some rapid and therefore blunt decisions on funding. For the remainder of this financial year and in the longer term, we want to look to ensure that, while we have to reduce spending, we do so in a way that minimises unintended or highly undesirable consequences.

Mr Milne: I have a short point. I do not want to go over old ground. The Chair asked a question that I was going to pose. You are saying that, for the foreseeable future, due to the current financial pressures, the target is still to cut up to 500 jobs through voluntary redundancy, is that right?

Mr O'Reilly: I hesitate —

Mr Milne: You were talking about the activities that will come under pressure. Can you imagine what it will be like if you let go up to 500 people, which is a third of the workforce?

Mr O'Reilly: I do not think that it is —

Mr Milne: That was the figure mentioned in one of your previous presentations.

Mr O'Reilly: I think that the figure is 360.

Ms Siobhan Lynn (Department of the Environment): In the initial presentation, it was 500. That was reworked down to 400.

Mr O'Reilly: I think that it is now 360.

Ms Lynn: Yes.

Mr O'Reilly: We continue to refine it downwards, particularly as we get to know the number of people genuinely interested. It would be unrealistic of me to say that this exercise will not have an impact — it will. We will have to stop doing things, and we will have to do things differently. That is a certainty. We are contributing to the overall Civil Service target of reducing by 2,800 the number of staff in the current financial year. That is our contribution towards that overall figure, but it will have an impact.

The Chairperson (Ms Lo): Is it wise to cut so many staff when you are about to merge with DARD and will have to fight your corner to keep your duties and work going?

Mr O'Reilly: There are two sides to the coin. Cutting the number of staff is a way of releasing resources. If we did not plan to cut staff, we would probably have even fewer resources available for reallocation to other purposes, in DARD this year and in the wider agriculture and environment Department next year. It is not, in itself, a desirable thing to be doing, but we recognise that there are wider issues and that wider targets have been set for each Department to contribute to.

Mr Middleton: I have a quick question on the specifics of the capital bid proposals. I see that enhancements and capital repairs to country parks and the Roe Valley hydroelectric scheme are mentioned. Will you expand on those proposals, the Department's funding commitments to them and whether the likes of Forest Service or DETI has a role to play in funding them?

Mr Carleton: At the minute, the capital bid relates solely to our Department. The Roe Valley hydroelectric scheme has been going on for a number of years, and we are gradually looking to improve the capital asset. My understanding is that one of the difficulties was that, as the engineers opened up the hydroelectric complex, there were particular difficulties with the electrics. That is ongoing work and will carry on for quite some time.

The capital bids for country parks are really about trying to improve the estate infrastructure and some of the internal fabric of its buildings. We have a general programme of capital works that we will undertake should any funding become available. Over the years, the availability of capital funding is becoming less and less, but, with those assets, the priority is becoming greater.

Mr McElduff: I see that the biggest single resource bid proposal is to do with the rates support grant. If that bid was met, who would be the beneficiaries and how would they benefit?

Mr O'Reilly: The beneficiaries would be the councils that currently receive the rates support grant. I am sorry that I do not have that list with me.

As the member may recall, the £2·8 million is to reinstate the reduction made at the start of the year. Due to our overall budget position, we reduced the rates support grant by 15%, which was £2·8 million. So, the bid is to reinstate that strand of funding to the councils, and those that receive the rates support grant would then receive a higher level of that grant in-year than they would otherwise have done.

Mr McElduff: OK. How come there is an in-year shortfall of £1·3 million in the derating grant, given that, at the final Budget stage, £1·9 million was received?

Mr O'Reilly: At the final Budget stage, we reinstated the derating grant to what we refer to as the baseline provision. That is what we started this year with, but we estimate that the actual amount that will be needed this year is some £1·3 million higher than that. It was higher than the baseline figure last year by that amount.

Ms Lynn: Yes, by around £1·3 million.

Mr O'Reilly: This formula, without going into the details, is based on a combination of DFP policy on derating and an individual council's final rate calculation, so the actual amount is never known until you get into the financial year and councils have finalised all of their rate figures. We are pretty sure that there is a shortfall of around £1·3 million. As we explained to the Committee before, it is a statutory formula. Therefore, we have to pay the precise amount to the councils that are affected. That amount would be spread across all councils because all benefit from the derating grant.

The Chairperson (Ms Lo): Colum, do you want to come in?

Mr Eastwood: Not on this, but I have a question on the voluntary exit scheme. Sandra asked whether you will be able to keep the £2·2 million, and I think that you said that you assume that you will.

Mr O'Reilly: That is our assumption at the moment, yes.

Mr Eastwood: I am not arguing against you getting the £2·2 million, but is that a fair assumption, given that it is a centrally coordinated scheme? I do not know exactly what it is designed to do, but part of this is supposed to be about saving money for the Executive. Is it a wise assumption that the money will not go back to the centre and then be spent in the way that the Executive decide?

Mr O'Reilly: There are two things. First, the intention is that the savings made by releasing staff through the voluntary exit scheme will become available for other pressures, but, at the moment, pressures are defined by individual Departments. I am pretty sure that all Departments in this scheme are making the same assumption as we are, which is that the savings that arise in-year will be netted off to reduce their other pressures. It is a reasonable, but perhaps not wise, assumption to make. However, as we know from recent events, many things happened that we had not anticipated, so I enter that caveat. At the moment, for financial planning purposes, we assume that the money will be available to us to address at least some of these pressures in-year.

Mr Eastwood: I was under the impression that this was designed across the Civil Service to save the public purse money, not that it would be done in individual Departments. I know that it is not of your design, but we should be able to say, "Right, we do not need x amount of staff here, but we need them there". It should be workforce management that designs this scheme, but it is not. It is being driven by financial constraints. However, it is supposed to be the financial constraints on the Executive as a whole, not necessarily on DOE or any other individual Department. I am just saying that I would not necessarily make that assumption. You should get the money, but maybe you will find that other pressures in other places end up being seen as more important than yours. I just wanted clarification. Thank you.

Lord Morrow: Mr O'Reilly, do you think that it will be clearly understood that you are bidding for £0·75 million under capital and handing back, also under capital, £0·345 million? Can you see any irony in that?

Mr O'Reilly: Yes. There is always an element of irony because we work on a system of annual budgets, so, from one year to the next, we seek to spend, as far as possible, our precise allocation. It is an annual system, particularly for capital spend, that tends to be more volatile and can be subject to shifts and unexpected events. Sometimes, capital spend does not happen to the precise level anticipated in one year, which means that we have to reinstate or seek to reinstate the funding in the following year.

There is an element of irony in that, if everything went exactly as we hoped and planned, this would not happen. It happened this year for the reasons we have explained.

Lord Morrow: It is not the case that Departments are strapped for cash; it is just that they cannot spend the cash in some cases.

Mr O'Reilly: In this instance, we had an allocation for Exploris last year that we were unable to spend.

Lord Morrow: I am not sure that the watching public will fully understand that.

Mr O'Reilly: Probably not.

Lord Morrow: You say, "On the one hand, we have no money, and, on the other, by the way, there are millions that we do not need, take them with you".

Mr O'Reilly: You could put it that way. I would say that it is not so much that we do not need it but that when precisely we need it has shifted.

Lord Morrow: You have flagged up for quite some time now — I suspect for a year at least — that you anticipated around 350 to 400 people expressing an interest in the scheme. There is nothing comes as a shock to you here.

Mr O'Reilly: No.

Lord Morrow: Yet, you can offer it to only 156. I think the words you used — I would like you to explain them to me — were "value for money". Could you tell me who that is value for money for?

Mr O'Reilly: The value for money is from the scheme as a whole, and the measure, as I explained, is the return on the investment in the scheme. In other words, we pay someone to leave, thereby giving them more money than they would otherwise receive. The only reason for doing that is the financial return from them leaving the organisation, and that calculation is done as an expression of the cost of letting them go as a proportion of the amount the Department will save from reduced staff costs in the subsequent full year after they have left. In a sense, it is value for money for the system as a whole as a return on the scheme.

Lord Morrow: Everybody goes away happy. The Department is happy, and the member of staff walks down the steps for the last time with a handsome cheque in their pocket, and they are happy too. That is the purpose of the scheme, is it not?

Mr O'Reilly: Well, I suppose you could say that in a sense, particularly since it is a voluntary scheme. At the end of the day, the benefit is that we would have more money for public services than we would otherwise have. The downside is, of course, that there are fewer people around to exploit those benefits, but it is designed to deliver a benefit overall. We would not be doing this if it was going to deliver a disbenefit or a disadvantage overall to our budget and to the resources available here for public services.

Lord Morrow: And to the member?

Mr O'Reilly: To the individual? Well, individuals benefit. They benefit in the short term, obviously, from an upfront sum of money, but they are also leaving employment and will not therefore benefit from their salary in future, which is the benefit to the system.

Lord Morrow: I am sure you have said this and I have missed it: how much will be generated from the 156 who will receive an offer?

Mr O'Reilly: The calculation we have made in the paper is that, if we assume that 70% of them actually go, the estimated saving will be circa £2·2 million in-year this year. In a full year, it would be twice that; it would be around £4·4 million. It is half a year's saving.

Lord Morrow: It might be more realistic to assume that it would be — I have made a very quick calculation, which is not pure science — just in excess of £3 million.

Mr O'Reilly: In a full year? If the 156 —

Lord Morrow: No, the 156.

Mr O'Reilly: If all 156 went, I am sure it would be —

Ms Lynn: It would be £3·12 million.

Lord Morrow: That is exactly the figure I had written down here. You are being ultra-cautions. Maybe you have to be that way because you are the accounting officer for the Department. I do not deprecate your position and the duties and responsibilities attached to you in any way. You are the call-in man at the end of the day. It is your head that everybody would come looking for. However, in relation to the 156, I have listened to you in the past, and you have always been reluctant to put a figure on any of this. I think you have now said that we are within a month of knowing the actual figure, is that right?

Mr O'Reilly: Yes.

Lord Morrow: The next time we hear from you, you will be telling us that there are 156.

Mr O'Reilly: Or whatever the number is.

Lord Morrow: No?

Ms Lynn: It might not be 156.

Lord Morrow: Why would it not be?

Ms Lynn: The letters of offer were issued this morning, and it is probable that not every one of the 156 will accept. That is why we were working on the assumption of 70%.

Lord Morrow: Why did you not offer it to more people?

Mr O'Reilly: The number of staff is not dictated by this Department; it is an outworking of the overall scheme across all Departments.

Lord Morrow: But surely —

Mr O'Reilly: We could not —

Lord Morrow: There is obviously something that I am missing. You have a figure in your head, and you are trying to generate it. If I were doing this — I am not, and you are a better man at doing it than me — I would be saying, "I want to get £X here". Bear in mind that your target figure is 400 and that, in response to a question of mine in the Assembly, I was told by the Minister that over 7,000 people had declared an interest in the voluntary exit scheme. That was far above expectations. We seem to be reticent about the real figures. I am not saying this in a deprecating way at all, but we have to record our sincere regret about some of the stuff that I have before me today. I, for the life of me, cannot get my head round why there is reluctance by the Department to come clean and say, "Look, we always knew that we were going to be dealing with, at the very minimum, 300 members of staff and potentially 400". I am no prophet, nor am I the son of a prophet, but I suspect that it will be nearer 400 than 300. Time will tell whether that is right or wrong. We still cannot get a figure from the Department for the amount of money that will be generated. It would have released cash.

We had two meetings where we had different groups and agencies that were virtually out of business. I do not think I exaggerate when I say that. Everybody heard it. Why can we not be more positive here? You said that the offers went out this morning.

Mr O'Reilly: Yes.

Lord Morrow: What will those offers generate?

Mr O'Reilly: We have estimated that, if 70% accept, it will generate full in-year savings of £2·2 million. If all 156 accept, it will generate savings of £3·12 million — or is it £3·16 million?

Ms Lynn: It is £3·12 million.

Lord Morrow: That, Mr O'Reilly, would make a massive difference in your Department if you were to get, for instance, the 156. That is difficult to understand, but you have your reasons for doing it that way. Wouldn't it?

Mr O'Reilly: It would certainly be helpful in addressing our in-year pressures.

Lord Morrow: Why did you not offer it to 200, for instance?

Mr O'Reilly: I completely understand everything you are saying. I fully acknowledge the points you make , which are very well made and absolutely correct. I stress to you that it is not reticence on our part; we simply do not have certainty. It is not that we are being reticent. We are giving the information as we know it at the time, but the nature of the scheme is that it is highly uncertain in the way it is operating because it is being coordinated centrally. Therefore, it is driven not just by the issues for this Department but the issues for every Department across the Civil Service. It is not reticence; it is uncertainty. I will be pleased when we can bring you the firm and final figures at each stage of this process because it will remove all the uncertainty. For example, you mentioned the figure of 400, but you also helpfully highlighted that this 400 is a composite of a total interest across the Civil Service of over 7,000. The 400 is part of that overall 7,000 figure. There are only an estimated 2,800 people who will benefit from the scheme this year. Therefore —

Lord Morrow: Did that have any influence on your 156 in the last statement that you made?

Mr O'Reilly: No.

Lord Morrow: What did influence it?

Mr O'Reilly: The figure of 156 was generated from the central determination. It is determined centrally how many people will be released at each tranche and then the numbers are disaggregated across Departments. So, we received the figure of 156; we did not produce it. The figure was given to us from the centre, and a number has been given to every other Department as well. That is our share of the total number who will be released in the first tranche at the end of September.

Lord Morrow: That is helpful, but what is the age profile and the status profile in relation to those who have applied?

Mr O'Reilly: I do not have that data available to me.

Lord Morrow: The Department would have done all that before it sent out 156 offers.

Mr O'Reilly: The 156 are given to us — the names of the people to whom we make offers or, indeed, the central DFP system makes offers. It is given to us. We do not look down a page, tick a box and decide that it is X, Y and Z. We are given a list of the people who have come out of the value-for-money calculations. First, we are given the 156, and then we are given who the 156 are. That is given to us. We do not generate that.

Lord Morrow: Yes, but, Mr O'Reilly, you know who they are.

Mr O'Reilly: It can be known who they are.

Lord Morrow: You know where they are coming from, you know what rank they hold in your Department and you know where the holes will be when they are gone. Therefore, you know that information.

Mr O'Reilly: We have information by definition because individuals have received offers. We know who they are and, by definition, we know precisely what their grade is and where they work.

Lord Morrow: There are no 20-year-olds in it, I would imagine.

Mr O'Reilly: I do not have a breakdown of the age profile available to me, but it could be made available.

Lord Morrow: I am surprised at that, but I will take your word for it. You do not know, and that is it.

Mr O'Reilly: I do not have it in front of me, but I can certainly find out. I suspect, not based on a factual analysis but it is highly likely, that given the way the value-for-money calculation system works, the people most likely to come top of the value-for-money calculations are those who have been in the Civil Service for a very short time and, for some reason, wish to go. The pension cost of letting them go is relatively low. The other group most likely to predominate at the moment is people who are nearing, or over, the age of 60, which is the minimum retirement age. In those cases, the additional pension cost of letting them go is relatively small because, by definition, they will already have received a normal pension, if I can call it that. So, I suspect it is predominantly an older age group at the moment with a very small number of younger people.

Lord Morrow: In the June monitoring round, the Department —

Mr O'Reilly: I am just checking. We can, within a day or so, give the Committee that breakdown.

Lord Morrow: That might be useful. What would be even more useful, Mr O'Reilly, would be if you could let us know when you are in a position to state categorically how many of the 156 have said: "OK. I like this; I am going to take it." When will you be in such a position?

Mr O'Reilly: At the end of June. People must confirm by the 30 June deadline. Within a few days of that, we will know precisely how many have accepted the offer.

Lord Morrow: And you will let the Committee know?

Mr Carleton: Yes. Just to be clear, that is for acceptance of the conditional offer.

The Chairperson (Ms Lo): I must ask you this question. As you are the accounting officer, should you not have factored in this potential saving from the beginning of your budget, rather than telling the voluntary sector on 25 March that you are going to cut this or that amount of money, and then drip-feed them by saying that there may be more money coming in?

Almost month by month, we are hearing a different figure that you are going to have for the voluntary sector and the general environment projects. By the time September comes, when you think you are going to have an extra £2·2 million, a lot of the voluntary organisations may have gone, and you may not be able to resurrect them. Is that a fair point? As accounting officer, you should have the expertise to say that you expect £3 million from the voluntary exit scheme and should put that in at the very beginning of your budgeting.

Mr O'Reilly: I have a couple of points to make about that. The key word you used there was "potential". Even now, we still do not know whether the scheme will go ahead. Therefore, it is a potential saving. I think it would be incorrect of us to offer false hope, if you can call it that, that funding is going to be made available. Throughout this process, we have sought, and have made a quite conscious decision, to be absolutely unambiguous in the risks and problems we face. Otherwise, we would have ended up, as we did to some extent, last year, suddenly cutting budgets sharply in-year. That is equally unfair to people who, perhaps, have had an expectation raised that funding could be made available. The other generic point I would make is that, as you have highlighted with regard to the voluntary and community organisations, there are many other pressure areas across the Department which the Minister will want to have regard to before he makes final decisions on how to allocate any additional resources that become available to us in-year. I do not pretend for one second that this is not a very undesirable situation to be in, but it is, to some extent, where we are and most other Departments are, in different ways, in similar difficulties.

The Chairperson (Ms Lo): Colum, do you want to come in?

Lord Morrow: I thought that you were coming in on a supplementary. I want to ask a final question. It is in relation to the £1·4 million of unfunded commitments to the end of June. In the June monitoring round, before you make any bid for additional finance, there is this figure that potentially generates — let us not get too optimistic — from the £1·56 million. Have you allocated that figure?

Ms Lynn: I am sorry. I do not know what figure you are talking about.

Lord Morrow: I am talking about the 156 employees who will, potentially, take up the offer of voluntary redundancy. Have you that money allocated, potentially?

Mr O'Reilly: No. We have not allocated it to anything yet. It is highlighted for the Committee.

Lord Morrow: Will you have your eye on it, Mr O'Reilly?

Mr O'Reilly: I will have my eye on it, but I suspect that, first of all, my Minister will have his eye on it, and I am sure that this Committee and others will do likewise.

Lord Morrow: All right. There are other questions, but I will finish for the present.

Mr Eastwood: Just for clarity: is this scheme being administered by DFP?

Mr O'Reilly: Yes, centrally.

Mr Eastwood: So DFP decided the number of people, the 156.

Mr O'Reilly: It fell out of a machine, from a formula.

Mr Eastwood: I think that answers a lot of questions that Lord Morrow had. Maybe some of those questions could be best put to the Minister of Finance and Personnel.

Lord Morrow: It is DOE staff that we are talking about.

Mr Eastwood: I know, but people are making the point that the Department is reticent around the numbers and all that sort of stuff. I am not here to do Leo's job, but they are numbers that have been handed to the Department. There is an amount being handed to the Department, along with the number of staff and the potential savings, so I do not know how the Department is supposed to make presumptions based on things it has no control over and no involvement in, other than whatever involvement you had during the process. If there are questions about how the scheme is being run, those questions should be put to the Department of Finance and Personnel. That is an obvious observation.

The Chairperson (Ms Lo): Leo, can I ask you a question about the number of enforcement staff, given the fact that the Audit Office report was quite critical of the lack of rigorous investigation the Department may have had in the last years? Are you bearing in mind, when you let staff go, that you are not going to reduce the number of enforcement officers?

Mr O'Reilly: There was a recent Audit Office report on the situation at Strangford lough. There was also a more recent Criminal Justice Inspection report, if that is what you are referring to.

The Chairperson (Ms Lo): Yes, both.

Mr O'Reilly: That report raised some issues, but, on the other hand, it also highlighted some positives. However, your fundamental point is absolutely right. I personally regard our enforcement capability and inspectorate capability as something that not only needs to be protected but probably needs to be further enhanced in the Department as far as possible in the present climate, because, at the end of the day, those are the things that really impact on people's lives, environments and communities, particularly if we do not control illegal activity.

The Chairperson (Ms Lo): Yes, and there is more of the DOJ inspection report that we need to bear in mind. OK. I have just one quick last question on depreciation. You are bidding for £200,000 for the depreciation of the IT system, which was originally due to expire in 2019. Why are you bringing it forward to replace it in October 2015?

Mr Carleton: That is the planning portal and the considerable capital investment that was made to allow it to work with the new councils. The Department put in capital investment for that, and along with that capital investment comes the depreciation charge on an annual basis; so that is an additional depreciation charge over the remaining life of the current contract for that. It expires in 2019, so we have four years to depreciate the enhancements to the planning portal. You will remember that the Committee had a fine discussion, the last time we talked, about the benefits of depreciation; so it is an annual issue that we come along and bid for depreciation.

The Chairperson (Ms Lo): OK, thank you. All of the questions have been asked by 2.00 pm. Thank you very much, and best of luck. What are the main bids you hope to get and that you must have?

Mr O'Reilly: First, there is the derating grant, which is a statutory commitment in a sense. Obviously, we would also like to be able to do something more around the natural environment programmes, because we would like to at least be able to do something more on some of the issues we mentioned about the work that the universities in particular have been doing for us and to at least maintain some of that activity through the remainder of this year.

The Chairperson (Ms Lo): OK. Good luck, and you will come back to let us know, obviously. Thank you very much.

Mr O'Reilly: We will come back to respond on the issues that were raised concerning the composition and the numbers around the 159 staff with the information that we have at the moment.

The Chairperson (Ms Lo): Sure; thank you.