Official Report: Minutes of Evidence

The Chairperson (Mr Butler): I welcome the following departmental officials: Roger Downey, finance director, and Richard McAuley, deputy finance director. I invite you, gentlemen, to brief the Committee. Thank you.

Mr Roger Downey (Department of Agriculture, Environment and Rural Affairs): Good morning, everyone, and thank you for the opportunity to brief the Committee on the January monitoring round. This is the third and final monitoring round in 2024-25 and will be used to set the final budgets for this financial year, which the Department will report against in the provisional out-turn exercise after the year end. As the Chair said, the exercise is in two stages. The first stage was submitted to DOF last Friday. The second stage is due to be submitted to DOF by 3 January.

The Department has no resource departmental expenditure limit (DEL) or capital DEL bids in this exercise. However, we have one non-cash ring-fenced resource DEL bid for depreciation of £6·6 million. There is also one Consolidated Fund extra receipt (CFER) of £4·1 million, and that is to be transferred to the Consolidated Fund. Therefore, on this occasion, with the exception of the non-cash depreciation bid, the monitoring round is very much a technical, tidying-up exercise to ensure that any transfers into and out of the Department and any reclassifications are processed. More details are set out in the written briefing that was provided to the Committee last week, and we are happy to take any questions on it.

The Chairperson (Mr Butler): Thank you so much. I will open up with one, and then I will open up to the Members, if that is OK.

In the papers that you have supplied, there is, under point 7:

There is one in there that is about £3 million for depreciation cover. Can you give us a bit more detail in regard to how you arrived at that figure and what it covers?

Mr Downey: Yes. That is annually managed expenditure (AME). That is to do with depreciation on any assets that are procured by grant from another organisation or from Europe, just not from the Department. It does not come through DEL, so, under the consolidated budgeting guidance from Treasury, it scores in AME instead of DEL, so we need to bid for AME for that.

The Chairperson (Mr Butler): Thank you. You are also aware that the Minister was with us in the Chamber this week on a statutory rule on the climate budgets. Reference was made to the just transition fund. I am not sure whether it has been detailed enough about what the Minister's requirement will be in the early part of 2024-25 in that regard. Is there money set aside for that, or has there been a request? What does that discussion look like at the moment?

Mr McAuley: For the budget exercise for 2025-26, the Minister has put in bids for a just transition for agriculture, so that is in the mix with all the bids from all Departments. The Executive have not agreed on the Budget for next year. When that is agreed, we will come back and brief the Committee at that stage.

The Chairperson (Mr Butler): OK, thank you. I will come back to you a wee bit later.

Mr McAleer: I see, in paragraph 12:

Can you maybe give further details on that move?

Mr Richard McAuley (Department of Agriculture, Environment and Rural Affairs): The £1·6 million, as you said, is broken down with bird monitoring of £0·7 million, which has been transferred and reclassified into capital under HM Treasury earmarked funding. That is around the environmental farming scheme (EFS) monitoring and evaluation framework, specifically the element around EFS that looks at the biological and environmental monitoring of EFS. That includes the evaluation of the NI bird population and building that up, so that is building up information around that and the future capital benefit that that will bring.

The second one is the common market organisation (CMO), with around £0·5 million being capitalised. That is around funding for the fruit and vegetable aid scheme as part of that — the producer organisations (POs). Public funding is provided at 50% to producer organisations that are approved through the operational programme and is capped at 4·1% of the PO's value of the market production. That is what that element is.

The final one is the carbon footprinting project at £0·4 million. Again, that is around a carbon project to deliver the whole-farm carbon footprint to all farms in Northern Ireland. Funding for 2024-25 is to procure a carbon calculator for the project and to commence and build the IT infrastructure to enable the data flow with the Livestock and Meat Commission and the carbon calculator back to DAERA. That is a capital element of that.

Mr McAleer: On that last point, is that connected to the protected geographical indication (PGI) status for grass-fed beef?

Mr Downey: No, we do not have that detail. We just know what the money is and what needs to be reclassified. We would need to check that detail with the food, farming and rural affairs group. That can be done and that information brought back to you.

Mr McAleer: Thanks very much.

Mr Blair: I have a couple of things. Without going into the detail of what the money is for, the non-budget increases of £7 million for the Agri-Food and Biosciences Institute (AFBI) and £5 million for what is called "movements in working capital" are not inconsiderable amounts of money. Is the AFBI money negotiated internally in the Department before a figure is arrived at? If so, at what level is it negotiated? I would also be grateful for some explanation of the £5 million for movements in working capital.

Mr Downey: As those are not DEL or AME, they come under "non-budget", which is a different classification; it is purely the cash. Once the DEL and AME budgets are approved, we have to make an estimate of how much will be spent in cash in a particular financial year. Around the year end, for various reasons, payments may go out in the last couple of weeks in March or the first couple of weeks in April. That happens at the beginning of the year, as it does at the end of the year, and the non-Budget movements are essentially to allow for that to happen. We make an assessment based on the level of accruals and creditors at the start of the year and the projections for what might happen at the end of the year. We then ask for cash cover for that. It is non-budget and does not affect any of the rest of the budget. It is just the outworkings of the budgets that have been agreed and how the cash may fall in this financial year.

Mr Blair: So it is not, in effect, £7 million in addition to the budget originally given to AFBI.

Mr Downey: No, it is not. It is just to ensure that —.

Mr Blair: It is a process that has to be given for cover.

Mr Downey: It is just to ensure that we can draw down enough cash to allow AFBI, in the first instance, and the Department, in the second instance, to make the cash payments in this financial year.

Mr Blair: OK. Thank you. Is the process for the movements in working capital similar?

Mr Downey: The grant-in-aid is to AFBI for the cash, and movements in working capital are within the Department. They are exactly the same thing, but there is different terminology because that one is within the Department.

The Chairperson (Mr Butler): I hope that it is not unfair to ask you guys this, but we are also interested in the vacancy levels in the Department and the implications that they have for budget, whether the underspend has an impact on efficiencies, what the agency costs look like and whether it balances out. Can you give us any indication of how that is managed?

Mr Downey: I am sorry, I do not have that information with me, because we are up on the January monitoring round.

The Chairperson (Mr Butler): Yes. Is there not an impact with vacancies being held throughout each of the monitoring rounds? I imagine that it is an ongoing monthly or quarterly cost.

Mr Downey: Yes. Staff costs are the biggest element of non-Treasury earmarked funding in the Department. We look at that closely in each of the monitoring rounds throughout the year. You will recall that we made bids in both June monitoring and October monitoring to cover staff costs such as pay. There are no bids in this monitoring round. Part of the impact comes from our being unable to fill vacancies. The money has been there to help to cover a projected pay award and other pressures, and, as a result, we have not had to make bids to the Executive in this monitoring round.

The Chairperson (Mr Butler): No problem. You have already suggested that you do not think it likely that there will be further Barnett consequentials in this financial year.

Mr Downey: The Chancellor made the statement on 30 October. That was supposed to set the budgets for the year. The only thing on that is the non-cash depreciation. Since it is non-cash, Treasury treat it at a later stage, so the Department of Finance has not got that confirmation yet. That confirmation is due to come as part of the spring Supplementary Estimates process in Whitehall. There will be a Barnett consequential from that, and we should get funding to cover our non-cash depreciation pressure in that. That is why we have bid for that.

The Chairperson (Mr Butler): I do not know whether my final question steps on the toes of John's question, but there is:

Will you give us a wee bit more detail about what that signifies?

Mr McAuley: That £4 million is, as Roger said, from when the NI Secretary of State did not include the initial ring-fenced resource DEL. That related to the opening baseline and, predominantly, to IT. There has been £2·6 million above that £4 million, which relates to a mix of new capital infrastructure projects.

The Chairperson (Mr Butler): No problem.

Mr T Buchanan: I know that we are dealing with the monitoring round, but I want to look a little further afield. The Minister has not yet come up with the 2025-26 budget, but I am sure that work is going on behind the scenes on it. What impact do you see the Climate Change Act (Northern Ireland) 2022 and environmental improvements having on the 2025-26 budget?

Mr Downey: Climate change is the Minister's top priority. We have been looking at it as part of the information-gathering exercise we are doing as part of the budget exercise. Until we know our allocation from the Executive, we do not know what proposals we will put to the Minister or how he will decide to allocate funding across the Department. That is still under discussion by DOF and the Executive. It has not come to us yet, but, when it does, we will look at the options and put proposals to the Minister. He will then consider the funding that he wishes to allocate across the Department. As I said, we are happy then to come back to the Committee and talk members through it in detail.

Mr T Buchanan: Fair enough.

The Chairperson (Mr Butler): There are no other points from members. This is like an early Christmas present for you two.

Mr Downey: Thank you very much.

The Chairperson (Mr Butler): Thank you very much for your time. We are not giving you anything other than a "Happy Christmas". Enjoy your Christmas, and we will see you in the new year. We look forward to those further briefings. Thank you.