Official Report: Minutes of Evidence
Audit Committee, meeting on Monday, 14 December 2020
Members present for all or part of the proceedings:Mr Daniel McCrossan (Chairperson)
Ms Joanne Bunting (Deputy Chairperson)
Mr Jim Allister
Mr Alan Chambers
Ms Emma Rogan
Witnesses:Mrs Lesley Hogg, Northern Ireland Assembly
Mr Richard Stewart, Northern Ireland Assembly
Budget 2021-22: Northern Ireland Assembly Commission
The Chairperson (Mr McCrossan): I welcome our witnesses today: Lesley Hogg, the chief executive of the Assembly; and Richard Stewart, the director of corporate services in the Assembly. You are both very welcome. I invite you both to make a short opening statement. Thank you.
Mrs Lesley Hogg (Northern Ireland Assembly): Thank you, Chair. At its meeting of 7 October, the Committee considered an indicative budget for the Commission for 2021-22. At that meeting, I advised that the Commission would be undertaking a detailed assessment of its requirements for 2021-22 and that I would then report any significant changes to the Committee. The briefing for today's meeting covers the changes that have been identified. Before looking at the actual figures, I again remind the Committee that the budget for 2021-22 is based on the assumption that the operating environment for next year will be more or less back to normal. If that assumption changes, obviously the budget will change as we go through the year.
Probably the easiest way to proceed is to turn to the figures in annex A and work through those. The forecast income for next year has decreased by £109,000. That is largely the result of secondment arrangements that have changed since October. The next change relates to constituency costs. There has been an overall net increase of £208,000 for Members' constituency costs. That is made up of two elements: Members' constituency staff costs and establishment expenses. Members' constituency staff costs have increased by £267,000 to reflect the inflationary uplift for Members' support staff for 2021-22. However, that has been partially offset by a decrease of £104,000, as long-run trends show that not every Member generally uses the full allowance for staff costs. The second element is establishment expenses, which have increased by £45,000. That is because the expenditure in the current year, 2020-21, is likely to be less than anticipated, which means that a higher residual amount can remain to be spent next year.
The next key change relates to Members' other costs. The forecast has been reduced by £43,000 to reflect more up-to-date information on the likelihood of Members retiring on ill health grounds.
Secretariat salaries have increased by £146,000, mainly to reflect the progression of staff up the pay scales next year.
Finally in this category, the last change is in relation to party allowances. That relates to the financial assistance to political parties (FAPP) scheme. There has been an increase of £75,000, which has been included as an estimate for any increase that might arise from the Assembly and Executive Review Committee's (AERC) consideration of payments to opposition parties and a review of the FAPP scheme by the Commission. As neither of those reviews has commenced, the figure of £75,000 is simply an estimate at this stage and therefore has a high degree of uncertainty.
The final element of revenue expenditure relates to depreciation and impairment. It is anticipated that the technical accounting changes for depreciation will fall by £200,000 from the previous estimate. That reflects our most up-to-date calculations.
The net increase in resource DEL is £296,000 from the figures initially indicated to the Committee in October. I should highlight that the "Party Allowance" figure under "Final Budget" in the table reads "721". There have been a couple of drafting errors, and that should read "800,000". Therefore, the total non-ring-fenced resource DEL should be £45,833,000 rather than the £45,559,000 in the table.
The proposed capital expenditure is set out in the following table at annex B. Again, I am happy to walk you through that. Overall, the capital forecast has increased by £299,000 to reflect updated figures for some of the previously reported projects and to include some new projects, mainly in relation to ICT and broadcasting infrastructure investment. You can see the changes that are set out. There has been a slight decrease in the cost for the replacement of the security management system of £40,000 and an increase of £75,000 for the replacement of the TV and distribution system, which reflects our more up-to-date estimates. There has been an increase of £75,000 for our remote access solution to facilitate electronic working. There is a new line under broadcasting, and that is to do with investment in a production gallery for broadcasting, a central technical area and the replacement of small, minor items. There is £104,000 included for that. We think that the replacement of the email firewall will probably be £20,000 more, up to £50,000. There is a new line on provision of internet connections. Some of our Wi-Fi is nearing the end of its useful life, and therefore we plan to replace that at around the end of the mandate. It is likely that maybe half the cost will be incurred in the next financial year, with the other half in the following financial year. Finally, at the bottom, there is £15,000 for portraits of former Assembly office holders. Overall, there is a net increase of £299,000 in capital.
Chair, Richard and I are happy to take any questions that you have.
The Chairperson (Mr McCrossan): Thank you very much, Lesley. Again, you are both very welcome. We appreciate your time this morning. A lot has changed, particularly over the last year, when you consider the challenges for these institutions. Obviously, we are closed to the public, and that will have a direct impact on any potential income through the restaurant or other services in the Building. I am going to touch on that briefly. The changes to the Assembly determination are a key factor in the increase, and there is a need for extra allocated funds to meet those challenges. Many of us have spoken of the critical need to address the issue of pay for Members' staff, whose pay and conditions were very poor, and I am glad that, through the work of the Commission, that issue has been addressed. I can understand the clear links as to how we have reached the situation where there is a need for further allocation of moneys.
There are a number of things on capital expenditure. The new phone system is in and is working very well, and that is very welcome. We need to play catch-up on other elements of the Building, namely the TV screens, which need to be addressed, never mind the practical issues with how technology has advanced in the 30 years since those TVs were developed but even how they look for the Assembly. I would like to think that we are at the races in addressing those issues. I am looking for an update on where we are with that. Will they be rolled out this year or next year?
Disability access has been addressed on many occasions, and the ground floor is very well equipped now. Changes have been made — automatic doors — and I know that there have been further discussions in relation to that. I appreciate that that will all add pressure to the finances of the Building, but I would like an update on where we are with the capital works that are required to make the Assembly Chamber itself much more accessible for disabled Members. I know there is some form of access at present, but what is being done to address that? There has been discussion about it.
There are a number of points in there. On the capital side, there is the upgrade to the TV system throughout the Building. What is the update on that? A lot of money was spent on the roof of the Building a number of years ago. What is the situation with that? Who is liable for the costs of doing the work again? Is there any potential redress by chasing up the previous contractor, given that there are issues with that work on the roof?
Mrs Hogg: First, on your question about the TVs, yes, they are planned for replacement in the current financial year, and a figure of £200,000 has been included. That will be used to replace the TVs and the associated distribution system.
As we talked about last time, there has been some evidence of water ingress through the roof, and there are three main issues with the roof. Initially, some water ingress was identified shortly after the roof was completed in 2015, and there were a few small areas of water ingress in the corridor on the third floor. That problem occurred again in June 2016. What we believed was the cause at that time was repaired, and we thought that the situation was dealt with. However, there has been further ingress in that area. During the heatwave in 2018, there were some issues with the stainless steel guard rails that had been installed on the roof. They had twisted and warped, and the contractor agreed to repair the handrails as necessary and, where appropriate, to make some minor adjustments to the guard rails to prevent a reoccurrence of the problem.
In June 2019, we discovered that some stone spalling had occurred in the roof parapet at the rear of the building, and the subsequent investigation points strongly to there being a direct link between the stone spalling and the handrail issues. Some cracking has been observed at other locations, and that is being kept under review. The investigation also found evidence of water at the handrail uprights, a problem that could not only have implications for the stone spalling but also potentially allow water into the fabric of the building at other locations. Following storm Francis in August of this year, water ingress was encountered in several areas of the third and fourth floors of the Building. Two of those related to areas that had been previously investigated, and the remaining issues related to new problems that are believed to be outside the scope of the roof project and are being separately investigated. There have been a number of discussions with the contractor and the design team, and, at the minute, we continue to work with the design team and the contractor to determine the cause of the problems, agree responsibility for them and identify a methodology to have those rectified to our satisfaction. That is ongoing at this stage.
The final area that you mentioned was in relation to the accessibility works in the Chamber. As you said, some parts of the Chamber are accessible and some are not, and that is quite a big project. Some work will have to be undertaken in relation to upgrading the broadcasting infrastructure, and we will also have to consider, at a similar time, whether there will be further improvements to the accessibility works. Obviously, the Chamber is quite small, and there is not an awful lot of scope to make significant changes to it, but we will obviously be giving that matter some consideration.
The Chairperson (Mr McCrossan): Thank you very much for that. That is very helpful. I have a number of points. On general accessibility to the Assembly Chamber, not just disabled access, COVID has restricted our access to that Chamber this year in many ways, because of social distancing, but I note that other legislatures have put in place teleconferencing into the actual Chamber. For instance, Members of the House of Commons can ask questions to the Prime Minister or another Minister directly from their office as opposed to being in the Chamber. I am conscious that, at a time when the pressure on our services and on people generally in the community is so great, it is very important that all 90 of our Members are accommodated as effectively and efficiently as possible in that Chamber. Nine months on, has there been any conversation about how that could be accommodated? We could be looking at the best part of next year before the vaccine is rolled out in its entirety. Therefore, there will be huge restrictions on our ability as legislators to perform in that Assembly Chamber. Is there anything similar to what we have seen in other legislatures? The House of Commons is the best example, where TV screens have been placed on walls and you can speak directly in the Chamber without having to be in the Chamber.
Mrs Hogg: On the matter of whether that would be installed or not, the Commission would undertake physical installation of TV screens where required, but, ultimately, that is a decision for the Committee on Procedures. It is up to the Committee to decide whether it wants to make appropriate changes to Standing Orders. If those were agreed by the Assembly, the Commission would install the necessary equipment to facilitate that.
The Assistant Committee Clerk: Yes, I will pull that up now, Chair.
The Chairperson (Mr McCrossan): On disabled access, we can appreciate that the Chamber is small, although we have more room now, given that, before the most recent changes at the start of this mandate, we had 18 more MLAs than we have now. We would welcome any progression on that, because it is important that we have a Chamber that is accessible to all our Members comfortably. I would very much like to see that.
The Assistant Committee Clerk: We received a response from the Committee on Procedures on 19 November about hybrid proceedings. The Clerk of that Committee has referred to the amendment to Standing Orders which the chief executive alluded to. Further investment in infrastructure would be required and would be brought to the attention of the Assembly Commission. The Committee was not minded to amend Standing Orders at that stage but would consider doing so should the Assembly agree to introduce hybrid proceedings. However, given the number of MLAs, including Executive Ministers, who have recently either had to self-isolate or have tested positive for COVID-19, the Committee agreed that it would reconsider amending Standing Orders to allow for hybrid proceedings. The Chairperson has therefore written to the Speaker on the issue and commenced informal discussions with Assembly officials regarding the introduction of hybrid proceedings and the potential amendment to relevant Standing Orders, so the Committee is taking it forward.
The Chairperson (Mr McCrossan): Thank you. That is positive. Before I allow other members in, I want to discuss the roof. The issues noticed on the third and fourth floor this year are new problems, I think you said, but were any issues that were identified prior to that to be resolved by the contractor in 2015?
Mrs Hogg: Two of the recent issues were from the original water ingress, and two further issues were identified in August. As I said earlier, the issues had initially been identified in 2015 and 2016. They were investigated, and the contractor made a resolution that we thought would resolve the issues, but then they appeared again in August. You will probably understand that water ingress can be extremely hard to detect, and therefore it is not always straightforward to identify the actual source of the leak from where it appears in the Building, so we continue to work our way through that.
Ms Bunting: Thank you, Lesley and Richard, for your presentation. Just to follow up on the roof issue, in those terms, half the damage was found to relate to previous work undertaken, and we are now five or six years down the line. Work will have to be conducted to try to source the leak and fix it. Who is liable at this point?
Mrs Hogg: Obviously, if it was an issue from the original installation, we would consider the contractor to be liable. We are working through the exact nature and cause of the issues and, ultimately, where liability rests with those.
Mrs Hogg: Not really. We are continuing to work through those. You will probably understand that, when there are issues like this, they can be difficult to resolve for a number of reasons, such as identifying the source of the leak, putting in place a satisfactory resolution and then sorting out liability. We continue to work our way through those, but, if there are issues relating to the original roof project, we will expect those to be resolved as part of that contract.
Ms Bunting: Have you factored anything into your budget with regard to additional things on top of that which will need to be accounted for and paid for?
Mrs Hogg: No, we have not because, at this stage, we are continuing to consider where liability rests and whether that rests with the contractor or not.
Ms Bunting: OK. If, within the course of the financial year, it is found that it does not rest with the contractor, what then?
Mrs Hogg: It is probably unlikely that it will be resolved within the financial year and that we will then incur any expenditure. If it is determined that liability does not rest with the contractor, that will probably be a subsequent year.
Ms Bunting: If I can take you to your report on the budget — I am not sure whether it is your report or ours, actually. The report that we have indicates an increase of £76,000 rather than £75,000 with regard to financial assistance for political parties, bringing it to £800,000. Which figure is it?
Mrs Hogg: It is an increase of £75,000. That is a very recent adjustment. Apologies for that typo.
Ms Bunting: No, that is OK. It is just so that we can understand. That is a significant increase. What are the proposed changes to the FAPP scheme?
Mrs Hogg: That is what I explain in the paper. Changes are likely to come out of AERC's review of opposition rights and any allowances associated with that.
Also, the current FAPP scheme has been in existence since 2016, so the Commission is planning to undertake a review of that. As my briefing paper says, that has yet to commence, and therefore it is difficult to estimate what may or may not be required as the outcome of the AERC review and the Commission's review of the FAPP scheme. The £75,000 figure is purely an estimate at this stage.
Ms Bunting: You are, however, cognisant of what is on the table in that regard.
Mrs Hogg: No. The Commission has not commenced its review —
Mrs Hogg: — and AERC is commissioning an independent review, which has not started yet either. Therefore, it is very difficult to estimate any sort of figure as to what may be the outcome of both of those reviews.
Ms Bunting: What was the rationale for plumping for the figure of £75,000?
Mrs Hogg: That was in and around 10%, which, we thought, might be a reasonable figure.
Ms Bunting: Ten per cent? OK.
May I take you to paragraph 11 of the briefing?
"Based on analysis of historical expenditure patterns for Members' Support Staff costs, it seems unlikely that all Members will utilise the full Staffing Costs provision in the Determination."
The figure quoted is £104,000. That is not a small amount, Lesley, but I presume that you had it in mind that, previously, Members could not maximise their allowance and that a number of Members were not in a position to do so. For Members who came to the Assembly in 2016 and were allowed two full-time equivalents who started at the bottom of the grade and whose increment was a set annual fee, it was impossible to reach a figure of £50,000. Are we sure that in, essentially, giving back that £104,000, we have taken that into account? It was not that Members did not avail themselves of the money but that they could not, whereas they might be able to now, and it is likely that they will. Has that been taken into account and calculated?
Mrs Hogg: We have tried to make our best estimate on that. We have also looked at the current year's expenditure, and, again, it does not look, at this stage, as though all Members will utilise their full allowance. Now, once we have had a few years under the new rules, we will get a better estimate, but we were trying to reflect what we thought were the practical outworkings. Inevitably, some Members tend not to use all of their allowance, and we are saying that, roughly, an average of just over £1,000 per Member might not be spent.
Ms Bunting: It is very useful for Members who are not busy enough to need all their staff allocation.
There are a couple of points that I have put to all the others who have been in to talk about their budgets. The Department of Finance has indicated that it is asking Departments to live within their baseline. There is a difficulty for us: how can we ask Departments providing front-line services to do that but not ask the other groups that we are responsible for to do likewise? That would need to be justified.
In circumstances where you were asked to live within your baseline budget, how would you prioritise your work, and what would be prioritised? I appreciate that there are inescapables because of the determination. However, if you were asked to live within your revised baseline, taking the determination into account, how would you prioritise your work? What would be cut?
Mrs Hogg: Obviously, we would need to sit down and go through that process with the Commission, so I am not able to give you an indication at this stage of exactly what would be cut or not cut. The Commission would need to go through a prioritisation exercise and decide where savings needed to be achieved and therefore what would be stopped.
The Chairperson (Mr McCrossan): May I supplement a few points? Joanne has struck a chord, and no one feels as strongly about the issues that our staff faced as I do. Huge issues were created, largely by the previous panel that made the determination. Staff conditions were not good; they were very bad, in fact, and all sorts of issues needed to be addressed. I can understand the reasoning for the extra cost there, and I do not believe that it is the Assembly's fault. This is a wrong that has been put right, and I know that everyone will agree with me about staffing. I am conscious that this was before your time, Lesley — maybe Richard knows — but, previous to the 2015 determination, which was — was it in 2017?
Mrs Hogg: It was in 2016.
The Chairperson (Mr McCrossan): Previous to the 2016 determination, was there an increasing cost to resource that determination, or was there a decrease on what was there previously? I am wondering what way that went, if you understand me.
Mr Richard Stewart (Northern Ireland Assembly): Probably the best way to look at that is to look at the report that the panel produced. It produced a determination and a report that set out the ups and downs as a result of all the factors in the determination. One of the big ups was an increase in Members' salary, which, obviously, the Commission has no responsibility for at all. There was a series of changes: some increased costs, some decreased costs. That was set out by the panel in its report. A fairly comprehensive report accompanied the determination in 2016.
Ms Rogan: Has there been a significant reduction in revenue due to COVID, in terms of people being able to visit the Building and that type of thing?
Mrs Hogg: There has been a little bit. Our main other revenue streams are from events that take place in the Building and from the likes of the Dining Room being open to the public etc. There has been a small income reduction from gift shop sales to visitors. So, yes, there has been a small increase from those elements.
Ms Rogan: Are there any figures with regards to Ministers who make a contribution to the Commission?
Mrs Hogg: I am unclear —.
Mrs Hogg: That is a technical adjustment with the Department of Finance. Previously, no money flowed; they were really just a book charge to Departments. Now, there is a physical re-charge, and therefore the money will come in, but that is a net increase of zero, if you know what I mean. We incur the cost, and then the money comes in to offset against that.
Ms Rogan: So, one is offset against the other.
Mrs Hogg: Our budget was amended to reflect that.
Mr Allister: Last week, during Question Time to the Commission, we were told that two additional staff members were to be appointed to deal with the Youth Assembly, in addition to the two who have already been appointed. That suggests to me that there is quite a bit of headroom, if, at the drop of a hat, you can make such appointments.
Mrs Hogg: That was already allowed in our budget. The two education officers who work there are working the role between them. Initially, we had identified one member of staff. There was an expression of interest from two members of staff in that role, and therefore they do that job between them. We had budgeted for the two additional members of staff in our budget for this year.
Mr Allister: Was the Youth Assembly mentioned in last year's budget?
Mrs Hogg: Yes, it was. An allowance was made for the Youth Assembly in the current year's budget, 2020-21.
Mr Allister: The Assembly Commission is in a rather luxurious position: no matter what it spends, its bills have to be met. Is that right?
Mrs Hogg: I do not think that it is a luxurious position. It is how, in general, all of the other legislatures work.
Mr Allister: Yes, but the Assembly Commission is in the unique position in these institutions that, if it needs money, the Department of Finance has to produce it.
Mrs Hogg: I think that that is to reflect the constitutional —
Mrs Hogg: — independence of the Assembly.
Mr Allister: — you to explain it; I am asking you whether that is correct.
Mrs Hogg: The Assembly Commission sets out its requirements. The process is that they are scrutinised by the Assembly Commission and then by the Audit Committee. A report is then made to the Assembly, and there is a debate about the Assembly's budget.
Mr Allister: Let us cut to the chase: if the Assembly Commission needs money, the Department of Finance legally has to provide it.
Mrs Hogg: We have a memorandum of understanding.
Mrs Hogg: Those are the current circumstances, as they have been historically. That has been the general position for a considerable number of years.
Mr Allister: Yes, it makes the whole budgetary exercise a bit academic, does it not, if you are in the luxurious position that whatever you need you have to get.
Mrs Hogg: I do not think that it makes it academic at all. It allows a scrutiny process.
Mrs Hogg: I do not think that it puts a face on it. We are obviously going through a governance process. As I said, officials draft a budget. That is scrutinised by the eight members of the Assembly Commission, then by the Audit Committee and then by the Assembly.
Mr Allister: Let us be clear: if, during the upcoming year, for some unforeseen reason, you are £5 million short, the memorandum of understanding guarantees you that £5 million. Is that right?
Mrs Hogg: It has to go through the process.
Mr Allister: Yes, but the end of that process is known from the beginning: is that right? Why quibble about that? That is the reality, is it not?
Mrs Hogg: I am just explaining that due process goes on in the background.
Mrs Hogg: The Commission does not simply pluck a figure from the air. It goes through quite a detailed scrutiny process.
Mr Allister: Yes, but it has that comfort blanket of knowing that whatever it needs it ultimately gets.
Mrs Hogg: I think that that is to reflect the constitutional independence of the Assembly from the Executive.
Mr Allister: Let me link that to the issue of the roof, for example. If it were to turn out that the Assembly Commission had approved a faulty design for the railings that were put into the parapets, causing a water track that is now leaking, and you had no case against the contractor, the Assembly Commission would have to fix it and draw money from the Department of Finance: is that right?
Mrs Hogg: As I said, we are pursuing the defects with the contractor and hope to achieve a resolution through that mechanism [Inaudible.]
Mr Allister: Is there an arbitration clause in the contract?
Mrs Hogg: I am not sure. I cannot answer that, but I would be happy to come back to you.
Mrs Hogg: The roof project works were completed in 2015. I am not sure when the original contract was let. Do you know, Richard?
Mr Stewart: It predated that by two years. I think that it was let in 2013.
Mr Allister: The completion was 2015. Do we know when in 2015?
Mr Stewart: The summer comes to mind, but I will get you the exact date.
Mr Allister: In the summer of 2021, the legal limitation period for suing for breach of contract will expire. That is in six months' time.
Mr Stewart: That is why we are actively engaged with the contractor.
Mr Allister: You told us that three months ago. We do not seem to be making much progress. The clock is running down.
Mrs Hogg: As I explained earlier, these are not easy issues to resolve. We are working our way through them.
Mr Allister: They will not be resolved come June or July if the limitation period is up.
Mrs Hogg: We are actively working to seek a resolution and establish where liability rests.
Mrs Hogg: With any construction project, it is about identifying whether the source of the issue relates to the original contract or a separate issue. I highlighted that two of the recent examples of water ingress seemed to be associated with the original water ingress and two seemed to be new issues and would not therefore be associated with the roof project.
Mr Allister: If, for example, those were in consequence of the railings and the uprights being put into the parapet, causing cracks that allowed water ingress, that flows from the work that was done on the roof. Surely, the only circumstances in which the contractor would not be liable for that would be if the Assembly Commission, in its wisdom, had approved the design of drilling into the parapet. Did the Assembly Commission approve the design?
Mrs Hogg: As I said, these are all very detailed issues and we are working through them.
Mr Allister: Yes, but I asked you that three months ago. It is not a new question.
Mrs Hogg: It is not a new question, but there was a —.
Mr Allister: It is a question to which we are entitled to an answer: did the Assembly Commission approve the design that has now proved faulty?
Mrs Hogg: The guard rail system was specified originally by the design team as a proprietary system. However, the final solution was a hybrid system, and one strand of the ongoing investigation is to review the process that led to that change being approved. As I say, we are working our way through these detailed issues.
Mr Allister: Is someone trying to conceal the fact that maybe the Commission approved that which has gone wrong?
Mrs Hogg: Absolutely not.
Mr Allister: I hope not, but, when you ask the same question three months apart and still do not get an answer, it is not satisfactory.
Mrs Hogg: You raised those issues in October, so it is really only two months at this stage.
Mrs Hogg: Obviously, they are difficult issues to resolve, and it is difficult to establish where liability rests. We have to work through due process, as you will understand.
Mr Allister: I respectfully remind you, again, that the clock is ticking. There is a six-year liability period for breach of contract. We run out of time in the incoming year. We have asked the question before, and I would like an answer to it.
Mrs Hogg: These are matters for the Assembly Commission, and the Commission continues to progress those.
The Chairperson (Mr McCrossan): I propose that we write to the Commission and seek an urgent update on these matters. Mr Allister has a good point, and we are talking about huge sums of public money. What was the total cost of that contract in 2015?
Mr Stewart: It was just over £5 million.
Mr Allister: Is there any estimate of what the repairs will cost?
Mrs Hogg: Not at this stage.
Members indicated assent.
The Chairperson (Mr McCrossan): That is all for today. Thank you very much for your presentation and for taking our questions.
Before you leave, I would like to put firmly on the record my sincerest appreciation to the staff of the Assembly, who have been more than accommodating and very kind and generous with their time in assisting us all in our duties. I wish you and your families well over Christmas. Thank you very much.
Mrs Hogg: Thank you, Chair. That will be very much appreciated by the staff. It has been a long and difficult year.