Official Report: Minutes of Evidence

The Chairperson (Mr O'Toole): I welcome officials from the Department of Finance: Tony Simpson, deputy secretary, who, to his delight, I am sure, is becoming a frequent flyer; Jeff McGuinness, head of Budget sustainability, who was also here recently; and Wendy Lecky, a director.

I invite the officials to make an opening statement. After that, members are free to ask questions. Tony, the Floor is yours.

Mr Tony Simpson (Department of Finance): Thank you, Chair. I know that you have a busy schedule today so, in keeping with last week's theme, I will keep my comments brief.

I thank the Committee for the opportunity to update you on DOF's role in the Programme for Government (PFG). The briefing paper shared in advance sets out DOF's strategic role in delivery of the PFG, which relates primarily to funding and Budget alignment but also to delivery of the PFG priority on reform and transformation of public services through our work on the interim fiscal framework and the Budget sustainability plan, as well as through setting up and supporting the interim public sector transformation board.

While it is for the Executive collectively to deliver the PFG, the other eight priorities of the PFG are primarily for other Departments to lead on. Of course, core to achieving any of those priorities is the availability of funding. As everyone is well aware, we are operating in a tight budgetary environment. That is why the draft PFG agreed by the Executive is focused on nine priorities and why reform and transformation are very much central to it. As responses from the consultation process become available, we continue to work with Executive Office counterparts on the Department's areas of responsibility and how those can be reflected in a final PFG.

I am more than happy to respond to any questions that members may have.

The Chairperson (Mr O'Toole): Thank you, Tony. That was admirably concise and leaves lots of space for questions. Members, please indicate should you wish to ask a question.

At what point did Department of Finance officials start attending Programme for Government meetings? Have you been involved in them the whole time? Were you, Tony, Wendy — I know that Jeff is relatively new to the role — the permanent secretary or Joanne McBurney brought into the scoping meetings from before restoration?

Mr Simpson: As you are aware, there were conversations before restoration, and the head of the Civil Service met the parties. DOF colleagues were involved in some of those discussions. Drafts were developed in TEO and shared with party representatives. As we approached publication of the final document at the end of July, the First Minister and the deputy First Minister wrote to Ministers to share a draft of the PFG for comment. My directorate took the lead in drafting advice and providing it to the Minister. We provided comments on the draft that we had received. We met Executive Office officials, and, following that, the Finance Minister provided her formal response.

The Chairperson (Mr O'Toole): Is it fair to say that you responded to a draft that was provided to you by TEO and were not involved in the shaping and scoping of the document itself?

Mr Simpson: In the months prior to that, yes.

The Chairperson (Mr O'Toole): This is an honest question: is that a shortcoming in process given that, in many ways, the most strategic Department, perhaps the only Department that has a real strategic purpose that goes beyond its own narrow departmental responsibilities, is the Department of Finance? Obviously, the Executive Office does, but its powers are big theoretically though relatively narrow, largely revolving around what gets on to the Executive agenda. It has a decision-making function, but it does not have a strategic policymaking function. Would it have been more appropriate for Finance to have been brought in earlier in order to say, for example, "This is how we need to think about building in a multi-year Budget process", or, "This is how we need to use some of the discussions that we are having around revenue raising to drive these outcomes"?

Mr Simpson: The timescales are different this year, obviously, with the restoration of the Executive. As I said in my opening remarks, our key input is around the funding envelope and the availability of funding to fund the activities of the Programme for Government. That has been clear since the Executive returned. It is not that TEO colleagues would not be aware of that. We have in place a Budget that has informed all these considerations. I would not suggest that there was any shortcoming or lack of awareness of the Budget context.

The Chairperson (Mr O'Toole): You have indicated that the question of the overall Budget envelope is fundamental to what happens, particularly in a devolved context where the overwhelming majority of finance that is raised comes from a block grant that is given to us. There is a small amount from other funds, such as PEACE PLUS or the Shared Island Fund, and then there is a small strand of funding that is locally raised revenue. All that, however, is in the purview of the Department of Finance. Therefore, I ask this genuine question: would it be better if the Department of Finance was saying earlier, "Hang on: in order to better prioritise to ensure that we deliver the priorities, we need to think about, for example, the financial context or how a multi-year Budget might drive these things"?

Mr Simpson: A number of elements need to be considered. One of those is the Budget sustainability plan, but that has not yet been produced. Consideration is ongoing as to how we work towards broader Budget sustainability, but the Executive's core starting position is this year's Budget, which we have in place. Ministers and the Executive will have to reflect on those wider discussions as we move forward.

The Chairperson (Mr O'Toole): I am glad that you raised the Budget sustainability plan, Tony, because it was not me who raised it. If I am right, it was due on Monday at midnight, but we do not have it yet. You have effectively indicated that the Budget sustainability plan is the main strategic look forward to how we will do public finances differently or improve the processes for public finances. There are different mechanisms, including the Joint Exchequer Committee and the updated fiscal framework. When will we see the Budget sustainability plan?

Mr Simpson: Jeff is responsible for leading that work, so I will bring him in in a moment. Having a new UK Government in place obviously caused a bit of delay, given the nature of the engagement that we were able to have with them, so they were willing to grant a short extension. Jeff, will you elaborate?

Mr Jeff McGuinness (Department of Finance): Yes. It is crucial that we have a collaborative approach to the Budget sustainability plan and that Ministers take appropriate time to consider it. I understand that the Executive are due to meet today to consider it, and I hope to be in a position to update the Committee shortly.

The Chairperson (Mr O'Toole): OK. I appreciate that update. Tony, I also appreciate that there was an election and, as you said, there is a new British Government, but it is worth saying that that was the reason for extending the deadline to the end of September. We hope that the Budget sustainability plan will be published sooner rather than later.

I will bring members in now.

Miss Brogan: Thank you, Chair. Thanks very much to the three witnesses for presenting to us this afternoon. It is really welcome that we have the draft Programme for Government. People have been waiting for it for a long time, and it is the first one that we have had in years, so it is welcome. The nine priorities include so many things that I have been working on, such as childcare and Lough Neagh, so I am delighted to see them made a priority. Ending violence against women and girls is also a key part of it.

Tony, you outlined funding issues and Budget constraints. Is it your intention to align future Budgets with the Programme for Government?

Mr Simpson: Yes. The Programme for Government will provide a set of clear directions for spending decisions and enable the prioritisation of spending. It will be the foundation for decisions.

Mr McGuinness: The public spending directorate is engaging with Departments on the 2025-26 Budget. One piece of that jigsaw will be looking at the draft Programme for Government and trying to align bids to it. I appreciate that the timescales do not necessarily allow us to wait until the Programme for Government is finalised, but the work will be updated in due course when we have the final Programme for Government. That work is ongoing, and we will continue to develop it in future years.

Part of the Budget sustainability plan programme of work will be to look at a Budget improvement plan. We will look at ways to further increase the link between the Programme for Government and the Budget, recognising that the process is iterative rather than something that we get right first time and do not have to change, adapt or improve in any way.

Miss Brogan: That is great. Thank you. That was all that I wanted to ask.

Mr Brett: Thank you for your presentation. Obviously, the Programme for Government will feed into not only the Budget settlement process but the investment strategy that is being developed. Do you see that as an outworking of the Programme for Government that will further develop Budget settlements or as a stand-alone document that will also dictate where Budget settlements are made for the time ahead?

Mr McGuinness: The investment strategy as a stand-alone document? Well, it is obviously a crucial piece of work. Once it is agreed, it will provide the framework within which to look at Budgets. It will look at the longer-term, 10-year piece, whereas the Budget, unfortunately, will focus first on the 2025-26 position, because we have only one year. After that, hopefully, they will go forward on a multi-year basis. We will then be able to look at where the investment strategy starts, see where things have developed since it was published and decide whether any change is needed. It will certainly feed into the wider priorities of the Budget.

The Chairperson (Mr O'Toole): The draft PFG has three missions. Sorry, there are four missions: people, planet, prosperity and peace. Peace is kind of overarching. I do not know whether that means there are three or four missions: maybe it is three and a half, but that is a slightly philosophical question. There are those missions, and there are nine priorities, none of which have a specific budget line attached. Maybe it is a simplistic way of putting it, but it is fair to say that, were a constituent to ask me, "What is the budget for safer communities? Is there a pooled budget to deliver the outcomes under the heading of 'Safer Communities?", there is no specific budget that I could point them to. It could even include a description of the spending that already happens on safer communities — policing, community policing, prisons, diversion and whatever — but we do not have that yet, no? That could just be a presentational thing, but we do not have that in the document.

Mr McGuinness: That is correct. There is no money directly associated with that. It is important to state that there is an awful lot of overlap in the Programme for Government. There is not necessarily a one-to-one relationship with every pound that is spent on public spending, because some of that spending will feed into a number of things. Those are some of the difficulties and challenges with linking the Budget to the Programme for Government and with the things that we will look at going forward.

The Chairperson (Mr O'Toole): That was part of the reason for my initial question. I have a lot of respect for Department of Finance officials because they have to come here and answer annoying questions from me and the other Committee members and they are very able, but would it have been better to have those officials — your team and others from the Department — involved from the beginning of the process?

To express a personal opinion, there is a lot of descriptive text in the Programme for Government. That descriptive text is often interesting and well meaning, but it is not straightforwardly linked to a number. It does not say, "This is the amount of money that is being spent," and it is not always straightforwardly linked to a numerical target or even to a legislative intervention. I wonder whether it would have been better, particularly in the spirit of multi-year Budgets — you said in response to Nicola that the intention is that, going forward, the Programme for Government will be linked to multi-year Budgets — to have your team and the Department in from the beginning to assist with developing the Programme for Government.

Mr Simpson: Jeff raised the key issue. The key challenge with that is the significant overlap. The mission-based approach is intended to set the direction of travel for what the Executive are trying to achieve overall in the long term. The amount of overlap is so significant that it would exceed the Budget to the extent that you could argue that, if you were to try to set a financial allocation to that, it would not be that meaningful. It is not that we are saying that we are spending this amount on a or that amount on x; we are trying to work across government. I am not sure that it would be possible to present the data in that way or, if it were, how meaningful that would be, given that there are so many interlinkages between the missions.

The Chairperson (Mr O'Toole): We talked this week in the Chamber about the Children's Services Co-operation Act 2015. That is the legislative precedent to pool budgets for children's services. It is a big ask for people in that sector, because of the overlaps, to create pooled budgets for spending on specific interventions, whether that is on child and adolescent mental health services (CAMHS), care for kids or educational interventions for kids with additional needs. I suppose that I am saying that this is already embedded. This is the entire thing: it is about breaking down silos. How will we ever break down the silos if the Department of Finance is not in there at the beginning?

The most strategic thing we do here is spend money. Everything comes back to money. All the Ministers whom we hear from in the Chamber bring it back to money. That is a fact of life, but it is also a function of how our government works, because we do not raise that much of our own revenue. I ask this question, or maybe I am making a statement: would it not be better if the Department of Finance took a more strategic role at the beginning?

I will bring in other members.

Mr Frew: I will stay on that train of thought. How does the reform and transformation unit avail itself of and use legislation that is already in place to build a basis for transformation?

Mr Simpson: Sorry, I am not clear on the question. The Chair referred to specific legislation.

Mr Frew: How do you look at the tools that are already in place in legislation? We debated it on the Opposition day. Matthew, help me out with the actual name of the legislation.

The Chairperson (Mr O'Toole): It is the Children's Services Co-operation Act.

Mr Frew: How do the officials who are leading the reform and transformation unit use legislation that is already in place to weld together the transformation that you are trying to achieve? Surely it is not all about dispersing the £235 million in the public sector transformation board.

Mr Simpson: That £235 million is the start of the journey on transformation. Obviously, work is ongoing in TEO to think about the wider structures and the broader approach that is taken to transformation. However, the immediate focus is on how we deploy that £235 million of funding. More thinking needs to be done in TEO around setting the structures for that in place.

Mr Frew: The point that I make is about the legislative tools that you have at your disposal to weld Departments together and for them to spend appropriately together.

Mr McGuinness: I do not want to bring everything back to the Budget sustainability plan — I will sound like a broken record — but it is part of our forward work programme in the Budget improvement plan to look at the options for Departments to break those silos and to look at how we do things in a better and different way. The Children's Services Co-operation Act is one of those. We spoke recently to the head of Barnardo's in Northern Ireland about the obstacles that she faces in dealing with the public sector. That was really helpful in respect of knowing how can we improve Budgets. We want to have those conversations across the board, see what tools we have and develop a plan to help us to maximise the existing legislation and maybe even to think about how Departments can put in new or different legislation to allow them to work a wee bit more effectively.

Mr Frew: You mentioned the sustainability plan. What is the timescale for that?

Mr McGuinness: I do not have a timescale. I cannot put a timescale on it. Once we get the plan approved, we will turn our attention to the two key factors in that. One is the Budget improvement plan. We will quickly put out a road map on that. The other is five-year departmental plans. We are working with Departments on their five-year plans and what those look like for them. We do not have a time frame just yet, I am afraid.

Mr Frew: The Programme for Government, which is, I think we all agree, a very high-level document, states:

Those are all lovely, honeyed words that we like to see and read in a Programme for Government. However, given that it is so high-level, how can you reassure the Committee on what we want to see — it has always been the cry — which is a Programme for Government that is fuelled by a Budget, with the Budget complementing the Programme for Government and the Programme for Government, as the plan, leading to financial decisions being taken in the Budget process. How can you reassure us that this document, which is very high-level, can get down into the nuts, bolts and machinery of government in order to implant fiscal levers and fairness into the system?

Mr McGuinness: I take you back to the Budget improvement plan. One of the first planks of that will be to connect the Programme for Government with Budgets. How do we do that meaningfully? How can we make links between the pound that we spend and the aspiration that we have? That will be an iterative process, as I said. I am not sure that we will get that right first time round; it will take time to develop. However, we need to make a start, and the Budget improvement plan that we will begin to develop will be the first plank in that. As I said, we are starting to make the links between the draft Programme for Government as it stands and the bids that are coming in from Departments for 2025-26. We will then look at how we move that forward a little in the next process.

Mr Frew: So that I am not partisan, Chair, I will pick the Department for Infrastructure. If the Infrastructure Minister bids for money for sewerage improvements, where do you test that? How do you measure it? Where does that sit in the Programme for Government?

Mr McGuinness: I cannot not tell you offhand. We will look at what the link is. I suspect — I am guessing here; it is a hypothetical — that the Executive will link that to the need for homes that is set out in the Programme for Government. We will rank that by where it sits compared with other bids. We will provide the Finance Minister with information for her consideration on a number of budget factors, such as historical spend and where the Department is going.

Mr Frew: I have concerns about how difficult it is to answer that question. One answer could be that you will leave it up to Ministers to present the bid in a way that connects to the aims of the Programme for Government. Therefore, it would be up to the Minister to say, "I need money for a better sewerage plan, and that will help with affordable housing and growing a globally competitive and sustainable economy". It would be up to Ministers to bid for that.

Mr McGuinness: Absolutely. The 2025-26 project that we are doing asks Departments to link their bids to the Programme for Government as it sits in draft. Yes, it will be for Ministers to make the case for how well those bids link to the Programme for Government.

Mr Frew: OK. Thank you.

Dr Aiken: I just have a quick question. We are supposed to have the fiscal sustainability plan on 30 October.

The Chairperson (Mr O'Toole): That is the Budget sustainability plan. For the members who came in slightly late, officials indicated that there may be an Executive meeting to discuss the plan today; they hope that it will be sooner rather than later.

Dr Aiken: My apologies for being adrift. I was too busy sorting out all our MLAs' pensions. There you go: feel happy.

The Chairperson (Mr O'Toole): The point that I go back to and reiterate to get reflections on is this: we have heard, as we have gone along, about the legislative precedent for pooling budgets and the provision for doing so in specific legislation, but we all, as representatives, repeatedly get feedback that the Northern Ireland Executive are far too siloed. One manifestation of that is people talking about "My" Minister; "My Minister wants this", "My Minister did that" and "Your Minister did this". However, there is also a sense that the Department of Finance is already doing a lot of strategic things. Several times, you have, quite reasonably, mentioned the Budget sustainability plan, the Budget improvement plan, the fiscal framework and a range of other strands of strategic work, none of which are less strategic or cross-cutting than the PFG document.

My question is this: is it not a bit of homework for the Department to have an honest, blunt conversation with its TEO colleagues about how the process works? I worry that all that is happening is that the Department of Finance is, effectively, negotiating strategic budget-making with the UK Government directly via the Treasury. That happens only in limited ways for other Ministers, who talk to their London counterparts, and not in as major, determinative and strategic a way as for your Department.

For the final PFG document that we hope to get, the feedback that my party and I — I cannot speak for others — will give is that we would like to see a more upfront approach to that. There is a lot of language in the draft, and Ministers have repeatedly made the political point that they do not have enough money. That is correct, and I do not dispute it, but, although the whole thing is about there being a finite sum of money and how to strategically deploy it, I do not get a sense of join-up, and is that not the basic thing that the Department of Finance should be doing? That is a statement with "Discuss" at the end. I will leave that with you.

Unless any other members wish to ask a question, we will move on. That has been a useful insight. I would like to see much more direct explanation. As I have said repeatedly in my other capacity as leader of the Opposition, it is important that we have much more specificity on targets, outcomes and interventions. Part of that will be about being clear with the public about the financial interventions. That will also mean being clear about where the financial limitations are. Thank you for your evidence, folks.