Official Report: Minutes of Evidence

The Chairperson (Mr Nesbitt): Sinead McCartan joins us, as do Stephen Boyd and Mark Browne, who was here in a non-figures capacity last week but is back to talk about money.

Dr Mark Browne (Office of the First Minister and deputy First Minister): I have many faces, Chair. I am pleased to be here. Thank you. We are here to update the Committee on the Department's budget position for 2015-16 and the June monitoring proposals. I apologise for the late delivery of papers to the Committee.

I will deal first with provisional out-turn. In 2014-15, the Department maintained expenditure within budget and reported an overall out-turn of 1% below budget, thus achieving its target of maintaining resource expenditure within a 1·5% underspend. The Department reported provisional out-turn underspend of 0·4% on total net current expenditure. That is a significant achievement, given that the majority of the Department's budget falls within that category. The Department recorded a provisional out-turn underspend of 2% on capital expenditure. The capital underspends related to delays in a number of business plan projects at Ebrington, project delays at Crumlin Road Gaol and a small capital reserve held by the Department that was not in the end required. The Department was notified too late about the capital underspends from Ebrington and Crumlin Road Gaol for them to be included within the January monitoring exercise, and, as a result, it missed its capital underspend target of 1·5%. A series of actions have been taken to address the issues in both areas. They are designed to ensure that greater focus is placed on effective financial management in 2015-16.

On the savings delivery plans, the Department developed and published a series of savings plans to deliver savings and to provide additional spending capacity for priority programmes within the constraints of the 2010 allocation for OFMDFM. In 2014-15, OFMDFM achieved total savings of £11·9 million. That is £1·5 million in excess of the total annual proposed savings of approximately £10·4 million, equating to an additional saving of about 14·6% when compared with the original savings delivery plan. In that regard, we have overachieved in 2014-15. Over the four-year period from April 2011 to March 2015, the Department achieved total savings of £38 million. That is £2·7 million, or about 7·7%, in excess of the total target savings of £35·4 million set out in the original savings delivery plans.

I now turn to June monitoring, and I will start by giving you a little bit of background on the Department's 2015-16 budget position. I advised the Committee previously of the Department's 2015-16 budgetary position, and I will recap briefly to contextualise. The final Budget settlement for 2015-16 provides OFMDFM with a total resource budget of £67·9 million, which is an increase of 3·2% on the opening 2014-15 baseline. Within that total, some £6 million is set aside for the historical institutional abuse inquiry and for EU funds. The settlement also includes additional resources of £4·5 million, which had been identified for the Victims and Survivors Service (VSS). Outside of those areas, the budget represents a reduction of 12·8% in the resource baseline for the Department's activities on the opening baseline for the previous year.

The Department has been allocated a capital budget of £4·2 million for 2015-16. Of that budget, £2·8 million has been allocated to Ilex, £700,000 to Crumlin Road Gaol and £700,000 to the Maze/Long Kesh. The final budget maintains an allocation for the central initiatives, including the Delivering Social Change (DSC) initiative, the budget for which is set at £14 million resource and £15 million capital in 2015-16. That will support the roll-out of the social investment fund (SIF), the DSC signature projects and the childcare strategy.

Baseline pressures since the start of the year of some £600,000 remain for the international relations branch and the Beijing office, and a number of other pressures have arisen for which the Department intends to bid in the June monitoring round. We intend to put forward a bid of £600,000 for the new China office and the international relations team to cover the full-year running costs of the office, including the funding of any visits in 2015-16. A bid of £311,000 was met last year by the Executive in June monitoring to support the in-year establishment of the office.

The Department has, in addition, already notified the Department of Finance and Personnel, through separate exercises of specific funding requirements in 2015-16 under the Stormont House Agreement, for £0·405 million to cover the cost of the voluntary exit scheme (VES) in two of our arm's-length bodies, the Equality Commission and the Northern Ireland Commissioner for Children and Young People (NICCY), and for £1·018 million to fund a range of legacy issues.
The Department proposed to submit two ring-fenced resource bids totalling £1·565 million on behalf of other Departments. Those comprise a bid of £0·4 million for the early intervention transformation programme (EITP) to provide early intervention services for young families in need of support. That bid will commence the roll-out of the Executive's commitments under the Delivering Social Change programme, co-funded by Atlantic Philanthropies, which was approved in May 2014. The Atlantic Philanthropies programme funds total £58·4 million, of which £24·65 million comes from Atlantic Philanthropies, £11·25 million from Departments and some £22·5 million from the Delivering Social Change central fund. Total funding of £1·165 million is required to continue full implementation until the end of the 2015-16 financial year of the Delivering Social Change literacy and numeracy signature programme that was announced by the First Minister and the deputy First Minister in October 2012. The current programme has allowed for some 232 full-time equivalent teachers to be employed to deliver one-to-one tuition to children in primary or post-primary schools who are struggling to achieve even basic education standards in English and maths. The current programme is due to end in August 2015, and the current bid seeks to extend it until the end of this financial year.

On the capital side, the Department is profiling expenditure of £7·5 million and is declaring a reduced requirement on Executive funds for the social investment fund of £5 million. The Department is seeking a capital reallocation from the SIF reduced requirement to Together: Building a United Community (T:BUC) of £3·19 million. We intend to make a capital bid on behalf of the Department of Education, the Department for Social Development and the Department of Justice totalling £3·19 million. The bid is split into three sections: £1 million for the creation of 10 shared education campuses; £0·09 million to enable the removal of peace walls or interface structures; and £2·1 million to take forward the development of urban villages.

Finally, through June monitoring, the Department proposes the drawdown of central funds under DSC and T:BUC to a number of Departments. For Delivering Social Change, SIF and the childcare central funds, a drawdown of £11·45 million resource and £2·49 million capital is proposed for June monitoring, with the balance of the 2015-16 allocation to be drawn down in future monitoring rounds. To date, Ministers have approved allocations from the T:BUC central fund of some £8·756 million for this year, and it is proposed that £8·046 million of that will be drawn down in June monitoring. Again, the remainder will be drawn down in future monitoring rounds.

I hope that that has been informative. I appreciate that there was quite a lot of detail in what I have just said, and I am happy to expand on that and take any questions that there are from the Committee.

The Chairperson (Mr Nesbitt): OK. Thank you very much. Obviously, we are trying to absorb all that detail, and the papers came relatively late.

May I pick up on the social investment fund, Mark? Last week, we heard that you could not spend the money. I think that only £1 million had been spent on the ground. From not being able to spend it, you are now handing it back. Who is losing out? Who was earmarked to get the £5 million of capital spend that you are handing back?

Dr Browne: We are talking about putting back the funding that had originally been profiled for the social investment fund and seeking it for the T:BUC capital bids that I mentioned. Although spend on the SIF so far this year has not been what we would have wanted it to be, we do have some £53 million committed to 33 projects, which is 67% of the total budget, and we are profiled to spend some £12·4 million over the year. The SIF programme has been slower than we would have liked it to be in getting to where it is now, but it is starting to develop momentum, and spend is starting to come through.

The Chairperson (Mr Nesbitt): I want to make a distinction between the SIF capital and the SIF resource. Looking at the reduced requirement of £5 million, I see that the reason for resources being surrendered is given in annex A as being:

Is that over the financial year 2015-16?

Dr Browne: Yes, that is the profile over the current year.

The Chairperson (Mr Nesbitt): However, there will be additional SIF spending on resource.

Dr Browne: There will be.

The Chairperson (Mr Nesbitt): Of how much?

Dr Browne: I do not have the precise figure for spend on SIF revenue projects.

Mr Stephen Boyd (Office of the First Minister and deputy First Minister): We estimate £4·768 million this year.

Dr Browne: On revenue?

Mr Boyd: Yes.

Dr Browne: That relates to 11 letters of offer that have been issued and five projects on the revenue side that are at the service delivery organisation stage.

The Chairperson (Mr Nesbitt): Therefore, at the end of this financial year, there will be £4·8 million of revenue spent and £9·5 million of capital spent, and you already spent £1 million in 2014-15. That is £15·3 million out of £80 million, a full year after you were supposed to have spent the £80 million. Wow, that is slow.

Dr Browne: At the previous hearing, we went through this in some detail and explained that the spend has not been at where we would like it to be. That happened for a range of reasons, including the need to work with communities and the steering groups to develop the projects. A range of issues has emerged as those projects have come through, on things such as the ownership of land or contamination. A whole range of such issues had to be sorted out. It has therefore taken time to get the systems and the processes up and running and to get the spend where we would like it to be. The spend is starting to come through: the momentum is increasing, and we have two thirds of the capital projects committed. The Committee will see revenue and capital spend coming through, in this year and the coming years.

The Chairperson (Mr Nesbitt): I accept, Mark, that we go into it some detail. However, the additional information that we are getting today tells us that, although the plan was for £80 million to have been spent by 30 March 2015, by 30 March 2016 — a year later — £15·3 million will have been spent. That is slower than even I thought it would be. Can you identify the projects that are not coming through on time? Those are capital projects in areas suffering dereliction, presumably.

Dr Browne: I will take the Committee through the revenue and the capital projects. For the revenue projects, the situation with the SIF at the moment is that we have 11 letters of offer issued, worth £24·6 million. Five of those are at the stage of the service delivery organisation being appointed, which is the point at which it starts to deliver. Those letters of offer are worth £11·9 million, but, obviously, that is over the three years or so that they will be in place for. In six months' time, the number at the stage of appointing the delivery organisation will have increased to 11, worth £24·6 million. A year from now, we expect to have 22 appointed, to a value of £39·9 million, which is the full revenue allocation. Therefore, we hope that, by next year, we will have all the projects that will spend the full revenue starting to be in operation. The expenditure will then roll out over the next year or two.

On the capital projects, we currently have 19 letters of offer issued, at a value of £23·2 million. Two of those are at the stage at which contractors have been appointed and the projects are on the ground, to a value of £1·5 million. Six months from now, we expect that number to increase to four, worth £2·6 million. A year from now, we hope that that will have increased to 17 at the contractor stage, worth £18 million, and, 18 months from now, we plan for all 34 projects that we have on the capital side to be at the stage at which contractors are appointed and there is £46·8 million value beginning to be constructed under the SIF. That is the time frame that we have for the SIF.

The Chairperson (Mr Nesbitt): On the £5 million that you are surrendering, you state:

Can you tell us what the "some" are?

Dr Browne: I will have to come back to you on the detail of those, Chair. We have the list of all the projects, but I do not have all that detail with me, although I do have a lot of detail with me.

The Chairperson (Mr Nesbitt): You are handing back £5 million but asking for £3·19 million of it back for T:BUC.

Dr Browne: Yes.

The Chairperson (Mr Nesbitt): As I have said before, it seems to me that it is Tommy Cooper economics: T:BUC, SIF, SIF, T:BUC.

Dr Browne: The important thing — I think that I said this at the previous Committee meeting — is that the Executive commitment is to £80 million expenditure, of which £40 million is revenue and £40 million is capital. That has not changed. That commitment is still there. What is happening is that, at the moment, we have not been able to meet the profile of that expenditure. Therefore, each year, the expenditure is being allocated to other critical projects under the Delivering Social Change programme, so it is not being lost to the SIF. It is being used for other key programmes that come under that umbrella, hence the suggestion in this case that some of the funding is reallocated to Together: Building a United Community. The expenditure is going to worthy and important projects, and there is no loss to the overall SIF programme.

The Chairperson (Mr Nesbitt): Is everything on course with the Beijing office?

Dr Browne: The Beijing office was approved by the Executive under the international relations strategy in February 2014 and was established last September. We have an officer out there who has been developing formal relationships with the Chinese Government. That has coincided with the establishment locally of the Chinese consulate. The Chinese consul general arrived at the end of December 2014.

The officer in Beijing has been making contact with Departments there and also with a number of the local provinces, including Shenyang in Liaoning province. Part of the agreement with the Chinese Government was that we would develop partnership arrangements with a Chinese province that they identified. Substantial work has been ongoing there to make contacts on the education side, the business side and the culture side. There have been a number of visits already from some of those provinces to Northern Ireland to try to develop those relationships.

We have negotiated and secured agreement to three economic and three Government-led visits from China to Northern Ireland. They are this month, next month and the month after, so good process is being made. There is also a lot of work being done on the agriculture side on pork inspection visits. The Agriculture Minister is going out later this month to meet some of the agricultural bodies in Beijing, so there is quite a lot of activity, and good progress is being made there. We have only one officer out there and one locally engaged member of staff, but we work with Invest Northern Ireland and other bodies from here with connections out there, such as the University of Ulster and Queen's, to develop those relationships. That is going well.

The Chairperson (Mr Nesbitt): That sounds positive.

There is a bid of £400,000 for the Atlantic Philanthropies signature programme. Presumably, that is because you put the money in, and that levers money out of Atlantic Philanthropies. That is for the whole range of new signature projects that we discussed last week.

Dr Browne: That particular bid is to match the Atlantic Philanthropies funding for a range of projects, called the early intervention transformation programme. There are three work streams with nine projects, worth about £21·5 million. That is the first element of that.

The Chairperson (Mr Nesbitt): There is a bid of £1·165 million for numeracy and literacy under DSC.

I will move on to Together: Building a United Community. We were talking about shared education campuses, the removal of peace walls/interface structures, and urban villages. Do you have the detail of which education campuses, peace walls and villages?

Dr Browne: There are currently five urban villages announced: one in Colin; one on the lower Newtownards Road; one in Ardoyne and Ballysillan; one in the Markets, Donegall Pass and Sandy Row; and one in the Fountain and the Bogside up in Derry. We are seeking funding, under the T:BUC bid, for some early actions on the capital side to help to help make some early progress in those areas.

For the other areas under T:BUC, such as interface barrier removal, the Department of Justice is the lead Department in that area. At the outset, there were 59 interface barriers, 22 of which were owned by the Housing Executive. Work to date has reduced that number to 52. Engagement is ongoing with around 40 of the 52 remaining areas. DOJ continues to work with us, Belfast City Council, the Housing Executive and the International Fund for Ireland to remove those barriers.

I do not have the list of the 10 shared education campuses, but the first call was made in January 2014, and three projects came forward and were announced. Project boards for the three schemes have been established and have met. The second call for applications opened in October 2014, with a deadline of the end of January this year. Six proposals, covering over 20 schools, were submitted under the second call. Those are currently being assessed. It is hoped that the successful projects under the second tranche will be announced in June 2015. The three shared education campuses that have already been announced will be in Moy, Ballycastle and Limavady.

The Chairperson (Mr Nesbitt): How many of the bids are inescapable pressures?

Dr Browne: "Inescapable" would mean a situation in which we are contractually committed to a project or a project to which funding has already been committed and, without it, the project would end. We have someone out in China, and we want to maintain that presence. Is that inescapable? If that bid were not met, I think that, if we could, we would find funding from somewhere else in our budget. If we could not do that, it would create real difficulties for our international relations with China. Therefore, that bid would be close to inescapable. We are not contractually committed to it, but there are other reputational issues that would lead to us wanting to ensure that it was covered.

The numeracy and literacy project is not inescapable. Without funding, we would not extend the project, so it would come to an end at the point that it is at at the moment.

Regarding Atlantic Philanthropies, we would be unable to provide the funding for the Department of Health to carry through on its commitment to get that started. It is still at an early stage. The Department has entered into a letter of offer, which is contractual, so that would be inescapable. The capital bids for T:BUC are not inescapable, because they are developmental. The £400,000 is inescapable, and without the £600,000 for the China office, there would be significant reputational damage. To that extent, the bid could be deemed to be inescapable.

The Chairperson (Mr Nesbitt): The final question from me is on the voluntary exit scheme. Are you budgeting for that at this stage? How is that working?

Dr Browne: We are. From our perspective, the voluntary exit scheme relates to two of our arm's-length bodies — NICCY and the Equality Commission. We have some funding set aside and are bidding for funding. We expect to hear fairly soon whether that has been successful.

Mr Boyd: We have approved the business cases for both schemes, but that is subject to funding becoming available through the monitoring round process.

The Chairperson (Mr Nesbitt): And subject to the scheme going ahead.

Dr Browne: Yes.

The Chairperson (Mr Nesbitt): Members, are we content?

Mr Attwood: I have some questions. If capital moneys are not required for the SIF and a lot of them are being reallocated to T:BUC, where is the money going to come from for the SIF capital when it is required?

Dr Browne: The Executive commitment is £80 million for the SIF as a whole. We are in regular contact with DFP on our level of spend on the SIF. The funding for the extra moneys that were not yet expended on the SIF to get it up to the £80 million will have to come from a central fund in DFP, as agreed by the Executive. It is a future cost.

Mr Attwood: Is that going to come from a central DFP fund or is it going to come from monitoring rounds? If you are not spending £5 million capital now but think that it will all be spent in 18 months, which is what you said, where is that £5 million going to come from over the next 18 months?

Dr Browne: The current commitment from the central funds is for £14 million resource and £15 million capital. We are working on the assumption that that will continue year on year, but DFP has not given an indication of how long it will continue. That will have to be decided as part of the next comprehensive spending review. At the moment, there is that regular £14 million and regular £15 million coming in. We are working on the basis that that will still be there, and the first call on that will be for the SIF and for childcare. To the extent that any of those projects are not spending up to that amount each year, the money will either be surrendered or be available for other capital projects within Delivering Social Change, and that will continue. In some cases, we may bid in-year, as you suggest, where there is a shortfall.

Mr Attwood: According to what you have said, some of the spend for the SIF will be after the next CSR, because it is going to take at least 18 months. I think that we would be lucky if it were only 18 months, based on the form of the scheme to date. What certainty is there, given that you are not spending the money in this CSR period or in this one-year Budget period, that there will be any moneys in the next CSR, given that the moneys are being surrendered in this financial year?

Dr Browne: There is no guarantee of expenditure on the SIF or, indeed, anything else as we look forward to the next comprehensive spending review, and that is an issue for all Departments carrying forward programmes —

Mr Attwood: However, in that context, are you able to enter into contractual relationships for projects that are not yet —

Dr Browne: We enter into them on the basis that the Executive commitment is to £80 million, and we have not yet expended £80 million. Therefore, we will work to that £80 million total. Obviously, the timing of that will change, because originally that had been intended for the first four years. That is now stretching out over a different period, and, in the interim, where the annual money cannot be spent, it is being spent on other worthy projects, but that is what we are working to.

Mr Attwood: If some of the SIF spend has to go into the next CSR period — in my view, it will go well into it — are you saying to groups that might have been expecting an allocation this year that the funding will not now be allocated? Are you saying that they cannot enter into contractual relationships with you because the CSR is not concluded yet?

Dr Browne: No, we are working, with Ministers, to the Executive commitment of £80 million. We are making letters of offer, which are a contractual commitment, setting out what the spend will be and profiling that over that period but doing so in the knowledge that the backing and the support for that comes from the Executive commitment of £80 million. We are making that explicit to DFP and our Ministers as we take that forward.

Mr Attwood: You are entering into commitments even though no CSR has been concluded and there have been no budget allocations from DFP for the period after 2016.

Dr Browne: That will be the case in a whole range of areas and a whole range of Departments, because not every programme will simply stop at the end of a year. Most of them have a tail and carry on through. There has to be some working assumption made, and our working assumption is that there is a long-term commitment of £80 million and a regular flow of £14 million revenue and £15 million capital. That is our working assumption until we are told that that is not the case.

Mr Attwood: Are any plans being developed for SIF 2?

Dr Browne: Not that I am aware of.

Mr Attwood: Does that mean that there are no plans being developed for SIF 2?

Dr Browne: I am not aware of any. At the moment, we are working to run through the current programme.

Mr Attwood: Given the strategic responsibility that the Department has for childcare, has there been any discussion at First Minister and deputy First Minister level, in the event that a Department of Education bid comes forward for early years money for pre-preschool places that were cut from its budget, of OFMDFM backing or supporting any DE bid for pre-preschool childcare places?

Dr Browne: I think that the First Minister and the deputy First Minister will always look at the bids that come forward and express their view through the Executive on what should be supported or not supported. They will do that in the context, as you say, of the wider childcare strategy and the importance of preschool education.

Mr Attwood: Are you not aware at the moment whether that would be supported if that were the bid coming from DE?

Dr Browne: I am not aware of any scrutiny of specific bids, but that will happen in due course through the existing process as papers come to the Executive.

Mr Attwood: Is it £1·1 million that has been allocated to the past? It is over £1 million anyway, arising from Stormont House. Can you explain what that money is for?

Dr Browne: There is a range of commitments that OFMDFM has to take forward. At this point, many are in the early stages, so we are making a very rough estimate of what might be required in 2015-16. I can certainly give you a breakdown. For the proposed commission on flags, identity, culture and tradition, we have identified expenditure next year of £293,000. For the research project on the history of the Troubles, we have identified £30,000. For the proposed implementation and reconciliation group, we have identified £30,000. For research and advice costs for the development of a pension for severely physically injured victims, we have identified £30,000 for initial scoping. For high-quality services for victims and survivors, we have identified £200,000. For access to advocate and counsellor assistance, we have identified £20,000. For mental health trauma provision, we have identified £390,000, and, for the appointment of a director designate of the proposed historical investigations unit, which OFMDFM is taking forward, we have identified £25,000. That is a total of £1·018 million.

Mr Attwood: My final question is this: is it right to conclude on the basis of the June monitoring paper that the VSS is not flagging up to you at this stage any in-year pressures in its budget allocation on moneys accessed by victims and survivors?

Dr Browne: As you are probably aware, the VSS budget for this year is £13·2 million, which is an increase on the £12·6 million last year. It is the biggest budget that there has ever been for the Victims and Survivors Service. We are not aware of it indicating any major pressures. It has been moving ahead and allocating its funds. It has been making letters of offer to funding groups and taking forward the individual needs programme, and it is quite well advanced with its budget. It has been out of the blocks early this year in getting that funding out, and it has not identified to us any significant pressures.

The Chairperson (Mr Nesbitt): All done. Sinead, Stephen and Mark, thank you very much indeed.