Official Report: Minutes of Evidence

The Chairperson (Mr Brett): Good morning. I apologise for keeping you waiting. Thank you for making yourselves available. In the interests of time, I will hand straight over to you, if you are content.

Ms Johanna Park (Department for the Economy): Thank you, Chair. I am joined by my colleague Niamh McGarvey to update members on the Department for the Economy's (DFE) 2024-25 budget. The paper that members have in front of them this morning summarises my Department's response to the Department of Finance-commissioned (DOF) information-gathering exercise. In order to complete that work with up-to-date figures, it was necessary to complete October monitoring, even though that has not yet been commissioned by DOF. The paper, therefore, also covers the proposed October monitoring round return, which will be submitted to DOF once requested.

As members will be aware, the monitoring exercise typically occurs three times a year and allows the Executive to realign the Budget allocation on the basis of emerging needs. The paper, therefore, details changes to the DFE 2024-25 allocation due to internal reallocations, bids to the Executive for additional funding and reduced requirements. I will briefly summarise the headline figures.

It is anticipated that the DFE 2024-25 non-ring-fenced resource departmental expenditure limit (DEL) budget will decrease by £1·1 million from £800 million to £799 million as a result of a £1 million reduced requirement, a net reduction from agreed budget transfers between Departments and a £0·1 million reduction due to a Consolidated Fund extra receipt (CFER). It is anticipated that the DFE 2024-25 capital DEL budget will decrease by circa £4 million, due to reduced requirements in earmarked Inclusive Future Fund and Complementary Fund projects.

As Departments can reallocate their non-earmarked resource and capital budgets in order to meet emerging pressures without recourse to DOF, the paper also sets out changes to the internal budget allocations in DFE, actioned as part of October monitoring. DFE has reallocated £4·4 million of non-ring-fenced resource DEL against pressures of £4·5 million. Whilst that has resulted in only a small increase in the overall overcommitment, the proportion relating to non-salary expenditure has continued to grow. To mitigate the increase in the non-salary overcommitment, the £2 million of additional resource DEL allocated to the Department for the Economy at June monitoring has been used to reduce the overcommitment. However, the non-salary overcommitment remains high and is not reducing at the rate at which it has reduced in previous years. That, coupled with current unquantifiable pressures in Skills for Life and Work and apprenticeship programmes, has resulted in DFE declaring an £11·7 million pressure to DOF: £8·7 million to address the current non-salary overcommitment and a further £3 million for Skills for Life and Work and apprenticeships. I will update the Committee if that position changes before October monitoring is submitted to the Department of Finance.

There is only one proposed change to our ring-fenced resource DEL. DFE will submit a bid to DOF to access £1·8 million of centrally held Peace programme match funding.

I move now to capital. Of the £12·6 million internal reduced requirements identified for October monitoring, £3·3 million was used to meet internal bids and £9·3 million to reduce the capital overcommitment to £3·5 million. At this stage of the financial year, that level of overcommitment is considered to be manageable within the overall departmental capital position. As there are £19·7 million of high-priority capital bids relating to further and higher education that the Department cannot fund from its existing allocation, a bid for that will be submitted to DOF. Whilst DOF has confirmed that no bids for ring-fenced depreciation impairment can be made as part of October monitoring, DFE continues to report its £37 million pressure. Finally, DFE will also submit a £0·2 million bid for financial transactions capital (FTC) due to Invest NI receipts being lower than anticipated.

That is a quick summary of October monitoring. In relation to the urgent in-year exercise, the £11·7 million resource DEL pressure was declared to DOF, along with additional information that it requested on non-contractual salaries and expenditure on professional services and government communications. That information is included in your briefing paper.

Niamh and I will do our best to answer any questions that members might have on October monitoring and the in-year exercise and to provide additional clarification. Where we cannot give you precise or complete answers, we will be happy to write to the Clerk with the necessary explanations, and, where a question is specific to a business area, we will ask our policy colleagues for a response.

The Chairperson (Mr Brett): Johanna, thank you, as always, for the detailed presentation.

I want to check something. Yesterday, the Finance Minister said that there were £750 million of pressures across Departments. How much of that £750 million exists in the Department for the Economy?

Ms Park: £11·7 million.

The Chairperson (Mr Brett): So, £11·7 million is from the Department for the Economy. Does that include or project any proposed additional spends that the current Minister may make between now and the end of the financial year?

Ms Park: That includes everything that is in our forecast out-turn for the rest of the financial year. The £11·7 million is the only pressure that we have.

The Chairperson (Mr Brett): It is good that we are making a bid for FTC. Is that the only bid that the Department has made this year for FTC?

Ms Park: Yes. We will have ongoing commitments regarding FTC — we got an allocation in the initial Budget. That is a slight change in what the anticipated receipts were going to be.

The Chairperson (Mr Brett): That is all that I have.

Ms Niamh McGarvey (Department for the Economy): We had a small easement in June monitoring for FTC. Now, we have a small bid.

The Chairperson (Mr Brett): OK. Perfect.

Mr Honeyford: Very quickly. I am involved in the Shared Island Fund. A lot of the cross-border bodies that you meet there argue that their funding has essentially been frozen. Is that the case with InterTradeIreland?

Ms Park: InterTradeIreland and Tourism Ireland are North/South bodies, and both have received the same funding as last year. That is in line with the ratios.

Mr Honeyford: So it has been frozen.

Ms Park: They received the same funding as last year.

Mr Honeyford: OK. How is that funding allocation assessed?

Ms Park: Sorry, in what sense?

Mr Honeyford: How is the amount that they are given assessed?

Ms Park: It is based on the ratios. When they do their business plan, the agreed ratios will be applied against that, and that is what we pay over. There is then jurisdictional expenditure that sits outside the ratios, which is a separate assessment that is done on a case-by-case basis.

Mr Honeyford: When any assessment is done, we are paying an equal share with the South. It is not the case that they are funded more —.

Ms Park: The ratios are set, and I think that our share is one third and the South's is two thirds. That is the agreed ratio. Again, that is based on their business plan. We are meeting the share of the element that we should be, as per the agreement.

Mr Honeyford: I understand. Thank you.

Mr Middleton: Thanks, Johanna, for the briefing. I have a quick question. The Chair highlighted the fact that the Finance Minister mentioned the pressures, and you told us what that means for the Department for the Economy. With the transformation board piece, was there not more scope, given the pressures that exist, to put in further bids in that area? Maybe you cannot answer this, but one of the key bids in there is around post-19 special educational needs (SEN) provision, which, obviously, a lot of us have an interest in. Is there any feedback on where that is?

Ms Park: We received feedback on Monday afternoon, and the post-19 SEN project has moved forward to stage 2. Officials will now work to look at that bid and go on to that next stage. That is good news.

Mr Middleton: On wider bids for transformation, are there any thoughts from the Department on the better use of public money?

Ms Park: The other bid went forward but has not progressed, and they will be looking for feedback on the reasons behind that. The other bid that is still under development is to do with the IT transformation in [Inaudible.]

They are still looking at that, and, with a case management system, that would be considered a transformational project.

Mr Middleton: Thank you.

Ms McLaughlin: I note that the Department will bid for capital of £15·7 million for higher education (HE) and £4 million for further education (FE). Can you give me a breakdown of that?

Ms Park: The HE bid is in respect of quality-related research funding. All universities receive that funding to help them to compete with competitive grants for research. Our universities have worked out that, on the basis of what equivalent universities get, they should get roughly £20 million more than they currently get. They believe that they have a gap that impacts their competitiveness in regard to those research projects. That £15·7 million would narrow that gap, and they received extra funding in the last monitoring round from our baseline as well.

Ms McLaughlin: In what way is that figure broken up in FE and in the universities?

Ms Park: There is a formula that is applied against that. I would need the policy area to provide that breakdown and how that is split across the universities, but it is to do with that. There is a formula around that quality research. In respect of FE, that is additional projects that they could do through their minor works programmes across their various estates.

Ms McLaughlin: Is it possible to get a breakdown across the universities and institutions on the research piece?

Ms Park: Yes.

Ms McLaughlin: Thank you.

Mr McGuigan: I have a quick question on the pressures — the £11·7 million. Those are the issues identified in appendix 4 of the presentation. Am I right in saying that?

Ms Park: Yes. Appendix 4 is a summary of the position and sets out where we were at June monitoring and what has happened since that. That was the information gathering. The detail on where that came from will probably be in appendix 1, which shows the movement, the overcommitment and the things that were carried out as part of the recent exercise.

Mr McGuigan: You expect to get the £11·7 million, but, if you do not, what happens?

Ms Park: That will be a decision for the Minister, who will look at what can be stopped or what is scalable.

Mr McGuigan: Fair enough. Thank you.

The Chairperson (Mr Brett): To be clear, you confirmed that all anticipated future spending in this financial year by the Minister, either announced or soon to be announced as committed, is included in these figures.

Ms McGarvey: Yes.

Ms Park: The only other pressure that we have flagged to DOF — it was included in the briefing — is around FE pay. Obviously, pay awards are outstanding, so, if anything happens with negotiations, that will result in a further pressure. Again, the FE colleges are the employers, so that rests with them.

The Chairperson (Mr Brett): Any announcement that the Minister may make today, this week or in coming weeks on the expansion of Magee has already been included in these figures.

Ms Park: It has.

The Chairperson (Mr Brett): Colleagues, thank you as always for your presentation. I appreciate your time. Thank you.