Official Report: Minutes of Evidence

The Chairperson (Mr Irwin): I welcome Graeme Wilkinson, assistant secretary, and Roger Downey, accountant. You can take up to 10 minutes to make a presentation, and then we will ask some questions.

Mr Graeme Wilkinson (Department of Agriculture and Rural Development): Thank you, Chair and members, for the opportunity to brief the Committee on the Department's January monitoring round proposals. Hopefully, you have had an opportunity to review the paper that was submitted. Roger and I are more than happy to answer any questions that you might have on the Department's monitoring round proposals.

Before turning to the detail of the paper, it might be worth setting out a summary of the context for 2014-15 and the outcome of the October monitoring round. From the start of the 2014-15 financial year, we have been aware that it would be very constrained for all Departments and that there would be minimal allocations through each monitoring round, as well as a need to implement in-year reductions. As part of our financial planning to help fund our known pressures as well as the Executive cuts to the resource budget, we have undertaken a range of cost-control measures across all business areas.

We are very keen to ensure that our strong financial performance over the past number of years is maintained, particularly in light of the very constrained financial outlook going forward. We want to demonstrate our ability to manage our finances effectively and to avoid underspends where possible. At this stage of the financial year, we are aware of a material overcommitment at block level, particularly on resource, of around £25 million. Given the cuts already impacting on Departments, it is very unlikely that any bids will be met in this monitoring round.

It is important to make these comments in relation to the financial context, as the need to absorb pressures internally has been an important influence on how we are managing our financial position. At the October monitoring round, you will recall that we submitted four resource bids, one bid for depreciation and one for capital funding. Those bids were presented to the Executive, and we were successful in securing £8 million for TB compensation, depreciation funding of £1·3 million and additional capital funding of £2·3 million.

The exercise on the January monitoring round was commissioned by DFP on 17 November. As it is the last monitoring round of the 2014-15 financial year, it is critically important, as it is the outcome of this process that will set the final budget position against which provisional out-turn will be measured. Given the extremely tight timescales associated with the outcome of the January monitoring round exercise, the process has been split into two stages. The first stage deals with transactions which do not require Executive approval. They include updates on technical issues and annually managed expenditure (AME). On technical issues, the Department has some de minimis transfers to other Departments in this monitoring round totalling £0·8 million. Those are mainly in relation to the tackling rural poverty and social isolation (TRPSI) programme and include transfers to DHSSPS and DRD, totalling £0·3 million. We also have one IT capital transfer to IT Assist, which totals £0·2 million. There are some minor adjustments to our AME budget of around £0·1 million.

Stage two of the process deals with those transactions that require Executive approval. They include reduced requirements, bids, updates on ring-fenced financial transactions capital and information on any exceptional items to be processed. The Department has identified one small reduced requirement of £0·2 million for ring-fenced depreciation. That has arisen primarily for re-lifing of IT assets. We have not identified any reduced requirements, bids or exceptional items to be processed in this monitoring round.

Our successful October monitoring round outcome provides us with additional funding in each category and a degree of certainty to take forward our financial plan for the remainder of this financial year. Consequently, we have only a few minor adjustments to report in this monitoring round. The Executive are due to discuss the block position at its meeting on 8 January, and that will be followed by a statement to the Assembly by the Finance Minister on 12 January.

That sets out our January monitoring proposals, and we intend to submit these to DFP. As part of the process, we have been asked to seek your views when submitting our final response. That concludes my introductory comments. I am more than happy to take any questions.

The Chairperson (Mr Irwin): Thank you very much for your presentation. We are used to seeing compensation for TB in your monitoring rounds. I know that the money for the compensation has been provided out of the £100 million from the Treasury. Are you confident that that will be sufficient to meet the requirements with regard to TB?

Mr Wilkinson: Yes, Chair. We have been doing our projections, and we think that the additional £8 million that we secured as part of the October monitoring round will meet the requirements for compensation going forward. The Department has a detailed and accurate model for forecasting the level of TB in animals. We use that information, as well the vets' idea of where the TB is going, for projecting. We have a good handle on what the costs are going to be.

The Chairperson (Mr Irwin): It will be down on last year, will it?

Mr Wilkinson: It is down slightly on last year, yes.

The Chairperson (Mr Irwin): Members do not have any other questions. They are very quiet today. This is a reduced and pared-down monitoring round, as we know. Should we expect this to be the shape of things to come?

Mr Wilkinson: In previous monitoring rounds, we have been bringing forward bids. As I said in my introductory comments, the financial climate is definitely shaping fewer bids coming forward. We have no expectation of bids being met, because we are aware of very significant pressures facing all Departments. Furthermore, having engaged with our colleagues in DFP, we are very aware of how difficult the financial climate is. We have had to take significant reductions in-year, and we have tried to manage those. We do not expect bids to be met going forward. Yes, this seems to be the norm going forward, and we are very mindful of that in setting out our budget for 2015-16. That is part of the reason why we have included TB compensation as part of our proposals in 2015-16; that will be a contractual commitment that the Department will have to meet. Bringing forward bids in future monitoring rounds, we do not expect them to be met in future.

The Chairperson (Mr Irwin): There are no more questions. Are members content to approve the proposals for the monitoring round as brought forward by the Department?

The Chairperson (Mr Irwin): Thank you.