Official Report: Minutes of Evidence

The Chairperson (Mr Givan): I invite Deborah Brown and Lisa Rocks from the Department of Justice to give us an overview of the October monitoring round. I think that the technology should be working now. Hi, folks.

Ms Lisa Rocks (Department of Justice): Hello. Can you hear us OK?

The Chairperson (Mr Givan): We can. We have started the session. We are ready to hear from Deborah.

Ms Rocks: OK. Deborah will join us in a brief moment.

The Chairperson (Mr Givan): When you are ready. We are live and broadcasting. Take your time.

Ms Deborah Brown (Department of Justice): Sorry, Chair. Good afternoon. Thank you for the opportunity to update the Committee on the Department's October monitoring round position. As you said, Chair, I am joined by Lisa Rocks, the Department's finance director.

When we were at the Committee in June, we noted that the Department's budgets were in a state of flux and that it had been a uniquely challenging period for finance, as with everything else. We noted that we could not offer the same level of certainty as usual this year. Since then, in the context of that uncertainty, we have sought to keep you updated on the position on cost pressures arising from COVID-19 and how those have changed over time. We also provided updates in areas such as the Main Estimates and the review of financial processes. I hope that you will take our approach as a clear signal of the value that we place on the supporting role of the Committee. We want to ensure that you are kept up to date with the financial issues that we face. We welcome your views and hope that the briefing and the presentation are helpful to the Committee. We want to update you on where we are with the current financial year as part of the October monitoring round, which will also include where we are on the pressures arising from COVID-19. We will also touch on a proposed approach for the reporting of monthly forecast out-turn.

Before getting into the detail of that, let me first talk about the next Budget. We have come through a prolonged and sustained volume of work because of the continued challenges of COVID with the October monitoring round, and we are also planning ahead to the next Budget-setting period. It is anticipated that that will set the Budget from 2021 to 2024 with regard to resource, and a further year, to 2025 in capital. You will recognise the challenges that that creates amid the uncertainty around what Budgets will look like in the coming years. It is also a challenge in a complex Department with five agencies and eight non-departmental public bodies, where it will take some time to prioritise in line with the Minister's priorities.

DOF commissioned an exercise in mid-August, with the returns due last week. We continued to work on the exercise until early this week, which is when we submitted a first response following an early discussion with our Minister. In making the response, we have highlighted the fact that the information will continue to be refined in the coming weeks. We have scheduled an oral session with the Committee for 4 November, in which we will discuss the departmental position more fully once we have had an opportunity to refine this work further. We will provide a written briefing in advance to give the Committee the opportunity to identify the areas that it wants to explore further.

The main area of discussion today is the October monitoring round, which includes an update on COVID-related costs. When we last attended the Committee on 4 June, the June monitoring round had been completed before we could fully understand the impact of COVID. At that time, we highlighted £1·9 million of resource easements and £1 million of capital easements, which helped to reduce the impact of absorbing some of the COVID pressures.

We subsequently wrote to the Committee on 5 August and provided an update following the initial COVID-19 exercise. The COVID pressure of £17·3 million was submitted to DOF, and £13·5 million of funding was allocated by the Executive to DOJ, which left a remaining pressure of £3·8 million. Given the uncertainty around COVID pressures in this area, it is deemed prudent to confirm the actual allocations as part of this October monitoring round.

The Committee will be aware that a further COVID-19 allocation of additional funding exercise was commissioned by DOF, and the Department submitted further bids of £5·6 million in resource and £1 million in capital. On 9 September, the Department wrote to the Committee to highlight the fact that the resource bids were not successful. They were deemed no longer required due to changes in our assessment of the financial position since the original bids were submitted. In addition to that, there was a reduced capital requirement of £5·5 million, which was notified to DOF.

That is a further sign of the uncertainties that all areas are facing across the financial year. Those changes were as a direct result of COVID uncertainty in the income of the courts and police recruitment with regard to resource terms, and they were driven by issues with the PSNI's supply chain and its reduced capacity to deliver on capital projects.

As part of the October monitoring round exercise, all pressures and easements were reconsidered by the Department. Several of the pressures that were identified in the COVID-19 exercise were reduced, while other areas emerged. In addition to funds that were held for reallocation to pressures, easements totalling £1·5 million were identified across a range of areas in the Department. Based on more up-to-date assessments on COVID pressures, funding of £3 million was released back to legal aid where activity was greater than originally anticipated. Funding of £4·7 million was released to the Prison Service to maintain critical services and for the anticipated impact of the working time directive. Funding of £7·5 million was released towards court pressures, which was as a result of a loss of civil fee income. We have been able to allocate an additional £1·5 million to legacy inquests.

As part of the October monitoring round, we are highlighting the need for an additional £4·5 million for EU exit. You will be aware, from the June monitoring round briefing, that DOF has already been informed of this bid. We understand that work is ongoing between HM Treasury and DOF, and an outcome is awaited. That funding relates to 308 officers and staff who are already employed and who were funded last year. We do not anticipate any issues, but we continue to press as the PSNI requires this funding.

With regard to capital, additional requirements of £1·3 million have been identified. The majority of that relates to the Prison Service for learning and skills at Maghaberry prison, a perimeter wall at Magilligan prison and investment in the women's facility. That can now be funded from the internal easements that have arisen.

As mentioned previously, you will be aware that, as part of the most recent COVID-19 exercise, a reduced requirement of £5·5 million was reported to DOF. That is now formalised in the October monitoring round, and the surrender was made with the caveat that the PSNI EU exit capital bid of £1·1 million will be met. Overall, taking all that into account, the Department leaves the October monitoring round in a manageable position, taking account of current known unmet pressures that we need to manage.

I will move briefly to the monthly forecast out-turn for 2021. You will note from your written briefing that we are suggesting that any significant variances in our forecast out-turn against budget will be reported to the Committee in tandem with the Committee for Finance. I would welcome your views on that approach. You will note that, in the monthly forecast out-turn 2020-21 for July, there was a variance of £5·3 million in capital. The reasons for that were mainly due to slippage in the PSNI budget of approximately £3·6 million relating to vehicles; approximately £1·3 million in respect of IT in the Prison Service; and around £0·5 million in respect of IT and some buildings in the Courts and Tribunals Service. I want to provide a health warning on that: it is a variance in a monthly forecast rather than an overall budget variance, which, of course, is of much more significance. Therefore, for example, if we were to expect a significant capital spend in one month but it fell into the next, there would be a significant variance to report under that mechanism, but, overall, there may be no issue in budgetary terms. I would welcome your views on the proposed approach to reporting of forecasting variances. We are happy to provide whatever is most helpful to the Committee.

In conclusion, I hope that I have provided a useful overview of where we are now with the Department's financial position. We continue to operate with uncertainties around COVID-19, and our budget remains subject to more flux than would usually be the case. We will continue to keep the Committee updated as our position develops. I thank you for the opportunity to brief the Committee. We very much value the Committee's role and will continue to engage with you. We are, of course, happy to take any questions.

The Chairperson (Mr Givan): Thank you, Deborah. That is very much appreciated. I have a couple of questions that relate to the October monitoring round templates. Previously, we had received the June monitoring round templates that had been provided to the Department of Finance. Will we get the October monitoring round templates from the Department?

Ms Rocks: Yes. They are due for submission today, so we are happy to share them with the Committee.

The Chairperson (Mr Givan): Thank you.

Ms Brown: This is, obviously, an opportunity for you to feed back to us and raise any issues. The submission is not due until tomorrow. Once the templates are submitted, we will, of course, provide them to the Committee.

The Chairperson (Mr Givan): Have the criteria for a significant monthly variance been outlined?

Ms Brown: No. We do not have specific guidance from DOF. Basically, we will supply that to Finance, and, if it has a particular query or whatever, it will come back to us. There is no set percentage. Therefore, what is more important is the impact of that variance on the overall profile that you see until the end of the financial year, and whether it has any budgetary consequence. That is what we are most focused on. I am sure that you appreciate that, in the current climate, it has been very difficult to predict the profiles of our spend because we cannot go by past experience. COVID is changing the way in which we operate and the timing of what we can do.

The Chairperson (Mr Givan): It will be important to identify the criteria and what triggers telling the Committee that there is a significant variance. We will need some clarity on that and — you are right — how it relates to the overall budgetary position. Putting it into that context is important. I appreciate that things can fluctuate on a month-by-month basis.

Deborah, with regard to funding and easements, how much money is being held centrally by the Department?

Ms Brown: We are holding easements of around £2 million centrally. However, you will notice that we allocated only £7·5 million to the Courts and Tribunals Service for the reduction in its income. It was forecasting that it would need a little bit more — around £1·4 million more. That £2 million will be held so that we can contribute towards that.

We have a few other unknown costs. We have supplied laptops, screens etc to people working from home. We are looking at whether we need to provide other equipment — desks, chairs and things like that. We are setting aside a little money just in case that comes through.

In the case of legal aid, you know that, from the last round, we were anticipating around £15 million of easement, which brought its budget down to £69 million. However, as we looked at the profile of how that has panned out with COVID, we realised that it may need some more money. That is why we are putting £3 million back in. In addition to that, some exceptionality cases are coming up in legal aid, so it is prudent that we have that little bit, £2 million, that we can pull on should any of those things materialise. That is our situation at the moment, and we think it a prudent one.

Ms Dillon: Thank you very much for the presentation. The Chair has asked some of the questions I was going to ask. They have been covered, and I will not go back over any of them.

In relation to the funding envelope, 2021-24 for resource DEL and 2021-25 for capital DEL, I accept that there are challenges, given the particular circumstances that we are in. Do you not agree that it is a good position? It is the position that Departments and organisations within them have been asking for for years. Do you think that it is a better position to be in than where we were previously, when it was year-on-year, where I do not believe that you can plan strategically? I could not plan strategically in my home with that kind of budget.

Ms Brown: Absolutely. The Department took a position, about a year ago, that we were starting to look at our future planning on a much longer term. We started to work on three-year planning for resource and 10 years for capital. That really helped us when this exercise started. We were able to draw on some of that material, but then had to look at it in the context of COVID. It would have been a very challenging timescale in ordinary times, but even more so because we are operating in a very different way with COVID, with quite a number of our staff working from home. Interactions are very different from what they would be in real time, when people are back in the office.

We have made our initial return, but we want to spend more time with the Minister working our way through that and refining it. Hopefully, by the time we come before you on 4 November, we will have a more settled position. However, it will be settled only in the context of what we know of COVID at the moment, and we just do not know how things will change. Every day, a different dynamic presents challenges for us around COVID.

Ms Dillon: You missed the deadline for the Budget information-gathering process. Are there any implications to that? You said that you want to come to the Committee, and the Committee appreciates that, because we like to see as much conversation about and engagement on all these processes. However, that is not until November and, as you have already missed the deadline, that extends the period by another month. Are there implications to that?

Ms Brown: We have submitted our initial return. That went in on Monday, after we had had our discussion with the Minister. Just as other Departments have done, we have made DOF aware that we will continue to refine this as we move through the process. DOF is also organising bilaterals between individual Ministers and the Finance Minister. That will inform some of the discussions around this. I see this very much as an iterative process. There is plenty of time to refine and reshape as we take on board comments and are clear about what is achievable in the timescales.

Mr Frew: Thank you very much for your presentation. The next Budget in 2021 may be for one year or three years. However, I want to know more about the process in this year. Am I right in saying that you have submitted something to the Department of Finance?

Ms Brown: Yes.

Mr Frew: When exactly was that?

Ms Brown: That was on Monday. We met the Minister that morning and went through the figures with her. She agreed that that could be submitted to DOF, with the caveat that we reserve the right to be able to amend as we work our way through it. After this meeting, I am on my way to a strategy session with the Minister. That will help us to focus on the priorities and look at our bids to see how we might prioritise them in the event that we do not get everything.

Mr Frew: What is your understanding of the process from this point? Has the Department of Finance given you key dates?

Ms Brown: The bilateral is being organised, and then we are in front of the Committee. I am not sure. With the autumn Budget being postponed, DOF has said that we should stick to the timelines that it gave us. I am not sure whether there is anything more that we can say at this stage.

Ms Rocks: As Deborah said, it is determined by what is done in the UK. The assumption was that Northern Ireland might get the block budget towards the end of October, but it very much depends on what happens there. The bilaterals are another step in the chain of understanding those responses. That will kick off only the Northern Ireland process, more so when we know what the envelope is.

Mr Frew: With your plans and the submissions that you made to the Department of Finance, were you given guidance, or did you use guidance around a Programme for Government, albeit it in draft form?

Ms Rocks: Not as part of the initial stage of the information gathering, although my understanding is that an ongoing process is seeking, as part of New Decade, New Approach (NDNA), to align the multi-year Programme for Government to the Budget by next April. That will continue to develop and, I assume, become part of the DOF Budget plans — but not at this stage of the process, no.

Mr Frew: Has the Department of Finance given you guidance as to what a monitoring round will look like in a multi-year Budget?

Ms Brown: DOF has not said anything specific, but our understanding is that it will be as it has always been and that the monitoring rounds will follow the same pattern as previously.

Ms Dolan: If in the case of a deadly second wave of COVID, we see the need for a temporary resting place — hopefully, we will not — will additional costs be associated with that?

Ms Brown: We have secured that through a licence with the MOD in the event of a pandemic, so costs are covered for this year. We are further scoping how that will pan out.

We are working with a range of partners, including local government, funeral directors, the Public Health Agency (PHA), the Department of Health and the funeral sector to plan for a potential increase in deaths. Given the rising number of cases, and the risks associated with the winter season, plans are in place to retain that resting place throughout the pandemic. We are looking at options to ensure that, as part of our civil contingency arrangements in Northern Ireland, there is a resilience capacity for the longer term.

Ms S Bradley: You mentioned £7 million of capital easements and that the PSNI accounted for £5·5 million of that, which was surrendered. I can understand the supply chain and capacity to deliver on new police cars. What I do not understand is the assumption that is made after that. The Department's finance update to the Committee states that the Department surrendered that £5·5 million, which would have been for capital projects:

Are those two the same thing? What was the intention of the spend around that £1 million for the EU exit bid?

Ms Rocks: The EU exit capital bid related to the cost of the protocol. That is being dealt with separately through the Treasury, so it is a different funding stream. We are handing back the block money of the £5·5 million with the caveat that the PSNI would still need capital funding under the protocol.

Ms S Bradley: So that EU money was in the £5·5 million. You handed back one amount of money that was for one thing, but you are basing it on the fact that you have capital money coming for an EU exit bid, which seems to be another stream. Would it not have been earmarked for different things?

Ms Brown: The £5·5 million is a reduction specific to, as you say, the supply chain and procurement etc. So, that is an easement and is surrendered. The other part is to do with the EU protocol, which is the £1·1 million needed for that. That is a separate pot of money, and therefore we have said to DOF that we are surrendering our ordinary pot of money on the assumption that we will get the £1·1 million out of the EU funding pot. That is our understanding, as it is on the resource side, of how, because it is a separate pot of money from the EU money, this works.

Ms Rocks: So, that looks to the bid for £4·5 million in resource for the 308 officers and staff.

Ms S Bradley: OK, but would that money not have been due to you anyway? That £1·1 million bid would have been made anyway for EU exit.

Ms Brown: Yes.

Ms S Bradley: So, had those easements not happened in-year, what would that money for the EU exit bid have been directed towards?

Ms Rocks: Had the PSNI needed the £5·5 million for vehicles and been able to spend it, it still would have needed the £1·5 million on top. So, the two things are —.

Ms S Bradley: Yes, that is my understanding. I still do not follow how it was on the basis of receiving that money.

Ms Rocks: Technically, we could have said that we would give back only the net amount. However, because the money came from two separate funding pots, DOF would have asked us to treat the two things separately. We highlighted the risk when surrendering the £5·5 million. We said that it was on the understanding that we would still get the £1·1 million because, arguably, we could have netted. However, on DOF advice, we are treating them separately because they are completely distinct funding streams: one from Treasury; one from DOF.

Ms S Bradley: OK. I am concerned that there may be, then, a need for EU exit money that is not there because it has been used to fill a gap in operational capital that should have been coming from another stream. On that same thread, do you anticipate there being any other significant surrenders of money between now and November?

Ms Brown: We have spent a lot of time on the capital. Back in the June monitoring round, we pushed everyone on COVID, asking, "What are the implications for your capital? Surely it will have an impact". Some business areas were able to come back and say that they had a few small projects that they were going to bring forward but, if there were problems with procurement etc because of COVID, they could manage them. We have continued to push on that, and this is the latest position. We do not know how COVID will pan out over the next number of months. At this point, on the basis of all the information that we have, this is what we think our position is, but I absolutely cannot say that it will not change. The world is changing at a pace and in a way that none of us could ever have imagined.

Mr Dunne: Thanks very much for your information. A quick summary in annex 1 shows a total figure of £54·8 million. Has all of that money been committed in expenditure or was that an estimate of costs?

Ms Brown: The £54·8 million figure refers to the costs over the 2019-2020 and 2020-21 period. It is the figure that appears in the Audit Office report and was calculated at a point in time. We reported to you in 2020-21 pressures of £51·8 million. Since then, those costs have come down by about £11 million, which is to do with the police's estimation of overtime and the refinement of some of our costs relating to the prisons and the courts. Some new pressures of £5·6 million relating to the working time directive came up. The COVID pressures in 2020-21 look like they are more around £46·3 million. Of course, we continue to keep those under review as the period progresses.

Mr Dunne: So, that is the expenditure from about February 2020, when the whole thing kicked off, to date. Is that fair?

Ms Brown: Those are anticipated costs to the end of this financial year — since COVID hit in March right through to the end of this financial year, March 2021.

Mr Dunne: OK. It is interesting that the costs for the prisons are £11·5 million, the costs for the courts are £12·1 million, the costs for the police are £13 million, and the costs for PPE are £11 million. They are all similar values.

However, you would assume that the police have a lot more activity, given that they interface with the public and all the pressures that come from doing that. In the Prison Service, the number of prisoners was reduced. I appreciate that it has other pressures from trying to keep COVID out of the prisons, which it has done very well, but you wonder whether all of that money is fully justified. I know that he pressure is on, and the risk is still there.

Has a stock of PPE been built up across the organisation? As you rightly mentioned, the uncertainty is still out there, and the risks are high, but will there be further demand for PPE to be purchased?

Ms Brown: There are stocks of PPE in each of those organisations, and the Central Procurement Directorate (CPD) is doing a piece of work Civil Service-wide. All of our business areas continue to engage with CPD on securing PPE to ensure that we are well stocked. I do not have any figures on that, but the indications are that there is not an issue with the supply of PPE.

Mr Dunne: OK, so the bottom line is that we are likely to spend £50-odd million extra, and all that money is for additional running costs as a result of COVID. Up to the end of this financial year, we will spend £54 million. Is that fair to say?

Ms Brown: Yes, about £46 million. Not all of that money is for running costs. Due to COVID, we do not think that the courts will be able to bring in the level of income that they normally would. That is a consequence of courts not being able to conduct their business as they did previously. That sum is not all down to running costs because of COVID; it is also for dealing with the consequences of COVID. Similarly, there will be a downturn in the activity of the Legal Services Agency due to the reduction in the need for legal aid because of the activity elsewhere.

Mr Dunne: Are we likely to see a stepping up of activity in the courts system? There is a slowness in the system, and there is not the same effectiveness or efficiency as there was. Obviously, COVID is a major factor in that. Are we likely to see an increase in court activity in the next few months?

Ms Brown: Court activity has increased. I think that eight venues are now open across Northern Ireland — sorry, I do not have the figure in front of me — and other areas are looking at "Nightingale courts" to see what can be done to get some business back up and running.

Mr Dunne: OK, thanks very much.

Ms Rogan: Other than the capital bid submitted by the PSNI in relation to Brexit, will the Department outline any other significant pressures that are likely to arise from Brexit, given that we are 91 days out from the 31 December deadline?

Ms Rocks: The main one for us is the PSNI bid in relation to the 308 officers and staff who have been in its employment for the past couple of years. That is what the PSNI has identified as the cost in relation to the protocol. At this point, nothing else has been identified as being significant.

Miss Woods: On the topic of Brexit, I have asked about departmental budget planning for the various scenarios that are possible after 31 December. Have there been any discussions on or scoping of the additional costs that Brexit without a deal, or with a deal, would have on the Department, apart from those that relate to the PSNI?

Ms Rocks: Planning was done previously on the no deal scenario. Linda Hamilton is probably best placed to give the up-to-date position. Coming through as part of our information-gathering exercise are the costs of the protocol.

Ms Brown: The Department is working through that, and if there are any changes to any of the costs, we will take those on board. Rachel, I am happy to come back to you on the specific questions that you asked.

Miss Woods: Thank you, I appreciate that. As Emma said, we are 91 days out. At the briefing from the Chief Constable last week, it was clear that a no deal, which we would rather not have, would inevitably create slowness in the system for issues such as aspects of cross-border justice, the European arrest warrant, data sharing and so on.

If that does happen, will there be any extra expense for the Department? I cannot see that in the paper. I appreciate that work is ongoing and would appreciate any updates on that, if there are any.

Has the PSNI made any bids to get to the 7,500 level that was promised in New Decade, New Approach?

Ms Rocks: No, not as part of the current year budget, but it plans to increase to 7,000 officers before the end of the current year by reducing overtime costs. In future years, that will be picked up as part of an information-gathering exercise, which will be based on strategic outlines cases presented by the PSNI.

Miss Woods: OK. Thank you.

Paul touched on the very elusive Programme for Government, which, as far I can see, is still outstanding. We do not have a Programme for Government; we have a New Decade, New Approach wish list and an old Programme for Government. You mentioned discussing the Minister's priorities. Does she have a list of priorities outside a Programme for Government, in the absence of one? How are priorities being decided? I do not know how finances would stack up against a list without there being a Programme for Government. Is there an elusive list?

Ms Brown: There is no list. We will talk through with the Minister what she sees as priorities over the next year to two years, and that will help to inform how we shape where to direct funding. Of course, NDNA will be in there, along with the Gillen review etc and things that are in the Programme for Government, including outcome 7. We will want to make sure that our focus is on all those things, but it will be a question of what we can do within those periods and whether it is realistic with the amount of money that we would be asking for etc. We are trying to work through all of those. Your points are very well made. It is a huge challenge for us.

Miss Woods: OK. Thank you.

Lastly, your paper records £1·1 million for tackling paramilitarism. Is there any indication of what that is for?

Ms Rocks: The £1·1 million drawn down as part of the October monitoring round is in addition to the £6·6 million drawn down in the June monitoring round and is consistent with the prior year's spend, in which the lion's share of the total funding of £7·7 million was the £5.5 million to the PSNI for the Paramilitary Crime Task Force. Another significant element is the £1·3 million to the Probation Board for the Aspire programme.

Miss Woods: Thank you.

The Chairperson (Mr Givan): No other members have indicated that they wish to ask a question. I thank Deborah and Lisa for their presentation. The Committee will want to ask a number of other questions and will follow up on those in writing. For now, I give you my appreciation.

Ms Brown: Thank you very much, Chair.

Ms Rocks: Thank you.

Ms Brown: Sorry about the start.

The Chairperson (Mr Givan): That was not your fault, and I am sure that Lisa could have held the fort rightly for you.

Ms Rocks: I was about to launch in [Laughter.]

Ms Brown: She can do it next time.

The Chairperson (Mr Givan): Thank you.