Official Report: Minutes of Evidence

The Chairperson (Mr O'Toole): I welcome John O'Dowd, the Minister of Finance; Neil Gibson, the permanent secretary in the Department of Finance; and Joanne McBurney, deputy secretary in the public spending directorate.

Are members content that this oral briefing is recorded by Hansard?

The Chairperson (Mr O'Toole): Thank you very much, Minister, for making the time. We genuinely appreciate your giving us a significant slot, and we appreciate the opportunity to ask you questions. We have a lot to ask you, and there is a lot of ground to cover, so we welcome the fact that you are here. Please feel free to make some opening remarks.

Mr O'Dowd (The Minister of Finance): Thank you, Chair and Committee members, for your invite here today. I intend to use my opening remarks to provide the Committee with an overview of my first few months in office. Having served on several Committees, including a short stint on the Finance Committee, I understand and value the role of the Assembly's scrutiny Committees. I entered politics to help improve people's lives, which, I believe, is a goal that we share. I am also a firm believer in the need for us as elected representatives to give people hope.

I have always worked collectively with ministerial colleagues, North, South, east and west, and will continue to do so. Since becoming Finance Minister, I have met Ministers Chambers and Donohoe in the South as well as my counterpart in Scotland, Shona Robison, Mark Drakeford in Wales, and the Chief Secretary to the Treasury. I have also had several meetings with the Secretary of State. I believe that, with the Committee and the Assembly working together, we can make a positive difference. There is no doubt that we face many challenges and that the fiscal outlook is difficult. My focus is on what we can do, not on what we cannot.

I believe that the 2025-26 Budget shows the Executive's determination to do what matters most. We have prioritised the limited funding that we have available in order to make a real difference for the betterment of people's lives across our society. We have directed £215 million towards cutting health waiting lists and supporting investment in elective care. I welcome the Health Minister's statement in that regard, which he made to the Assembly yesterday. We are honouring our commitment to create more social and affordable housing by investing an additional £105 million in waste water infrastructure and £100 million for social housing. We are doubling our investment in the early years and childcare strategy to £50 million, with a commitment of a further £5 million in-year, supporting children and helping hard-working families. Those are just some of the examples of how the Budget will support workers, families and communities.

At the heart of public-sector delivery are our public-sector workers. As Minister with responsibility for the Civil Service, one of my first meetings was with the Civil Service unions. In the past year, my Department has recruited 3,000 staff to support Departments in the delivery of public services. Skilled and motivated staff are essential to drive transformation. I was pleased, therefore, that the unions accepted the 20-month pay offer, which signalled the importance that we place on our civil servants and the role that they play in transforming our services and contributing to the delivery of the Programme for Government ambitions.

The new 2025-2030 people strategy has been developed to support our workforce. It focuses on equipping our workforce to meet current and future demands, creating a supported work environment and fostering strong leadership, inclusivity and diversity. Focusing on those priorities will help civil servants support Ministers, the Executive and the delivery of public services. The Executive want to transform and improve our public services. The reality is that there is need for innovation and transformation to meet the needs and expectations of the kind of public services that our citizens, rightly, want to see, and which they deserve. Significant progress has been made in the transformation fund, with the first tranche of £120 million allocated to innovative projects in health, special educational needs, justice, planning and waste water infrastructure — all issues that affect everyday lives.

In March, I was pleased to hear at first hand, along with the deputy First Minister, the Health Minister and the Secretary of State, from GPs who are working on the front line about the difference that the £61 million investment in primary multidisciplinary teams will make to the communities that they serve.

The process for the transformation fund was a new departure and a novel approach. It has challenged Departments to work differently. The feedback has been positive. I believe that we have strong foundations in place to move forward. I am keen to continue building on the momentum of the programme. It is my expectation that a second call for proposals will take place as soon as possible — by the early summer. While the £235 million of transformation funding will in no way tackle the magnitude of the issues at hand, it will help develop and implement a model of delivery to stimulate the wider transformation of public services.

To support continued investment in transformation, we need a fiscal framework that reflects our level of need. That is why my Department commissioned the renowned Professor Holtham to conduct an independent review of our level of need. It is essential that the Executive are funded fairly and sustainably to enable us to deliver the public services that our people deserve. That is my focus. Professor Holtham's work is pivotal in continuing to make the case to the British Government for a higher relative need factor to be included in our funding arrangements. There is a need for more investment in public services, not just here but — I would argue — in England, Scotland and Wales. That work is close to being finalised in the coming days. I will, of course, share it with the Committee, at the appropriate juncture. I have already engaged with the Chief Secretary to the Treasury in that regard and will engage further immediately on receipt of the report.

I also met the Secretary of State earlier today in relation to the upcoming spending review. The upcoming spending review will provide a three-year budget for day-to-day spending, with a four-year budget for capital spending. A multi-year budget has the potential to be a game changer and will enable Departments to plan on a longer-term strategic basis. Work has started on our multi-year budgets, with DOF budget sustainability teams supporting Departments with their five-year budget plans. The benefits will only be realised if the Westminster Government use the spending review as an opportunity to invest in public services. I have made that clear in my meetings with the British Government.

I also recognise that we have a role to play in getting our finances on to a more sustainable footing. Our Budget sustainability plan reflects the needs to look at all options to deliver efficiencies, generate income, seek alternative funding sources, enhance borrowing powers and examine fiscal devolution. As the Committee will be aware, rates are our primary income-generation source. Last year, Land and Property Services (LPS) collected a record £1·6 billion in rates. That is the largest amount collected by LPS in a rating year. It provided much-needed funding for our public services.

I thank the Committee for considering the Rates (Regional Rates) Order 2025 at pace. Your approval, and the subsequent Assembly approval, meant that rates bills could be issued on time.

Given the significance of the rating system to our public finances, it is essential that it is fair, equitable and progressive and that it aligns with the Executive's economic vision by expanding our tax base and supporting businesses to grow and create jobs. The strategic review of rates that was commenced by my predecessor will continue to be a firm focus of mine. On domestic measures, the public consultation on the early-payment discount and maximum capital value closed on 25 April. Over 800 responses were received. Work is under way on the small business rate relief and non-domestic rating policy reviews. I will keep the Committee updated on those.

I am coming to a conclusion, but the length of my remarks reflects the breadth and depth of the work in my Department. DOF looks after a range of areas, including cyber and IT services; finance; HR; legal and audit services; registration of births, deaths and marriages; mapping; and procurement — all of which will be familiar to the Committee as it does its due diligence on the role of my Department.

I have already touched on our role, as political leaders, to create positive change. My Department is taking through several pieces of legislation that will make a difference to people's lives. I am sure that we will touch on those during today's meeting. As I said at the outset, it is our job, as elected representatives, to give people hope. I want workers, families and businesses to know that the Department of Finance and the Executive have their back. By working together, we can do what matters most and maximise our resources to make a positive difference to the lives of the people whom we serve.

Thank you for the opportunity to make those opening remarks, Chair.

The Chairperson (Mr O'Toole): No problem. Thank you, Minister, for that comprehensive but relatively concise introduction.

The cost of doing business review was released yesterday. What specific actions will follow from that?

Mr O'Dowd: I received the review last week, and I have already forwarded a copy to the Chief Secretary to the Treasury. I pointed out to him that I would like it to be taken into consideration as he moves towards the comprehensive spending review. I met the business sector and the community and voluntary sector yesterday to brief them on the outworkings of the review and listen to their feedback. Obviously, they will study the report more in depth, and I have no doubt that they will have further comments to make on it. However, the review provides a timely insight into the challenges that are faced by businesses here, some of which are unique to here. As I said in my public commentary yesterday, decisions that are being made in Westminster are having significant impacts here. I am confident that, when people in Whitehall Departments make those decisions, they do not take into account the needs of businesses and communities here.

The Chairperson (Mr O'Toole): No one could realistically disagree with that. That piece of work was commissioned by you, or your predecessor, as Finance Minister; I cannot remember which. It was commissioned by an Executive Minister, so businesses might expect there to be a specific Executive policy response. However, if I am understanding it correctly, the immediate response was to forward it to the Treasury.

Mr O'Dowd: Yes. The review came in the wake of the October Budget. It was commissioned by my predecessor to examine the implications of the decisions that are taken in Westminster. It is becoming increasingly difficult, if not impossible, for the Executive to mitigate the decisions that are made in Westminster. Added to decades of underfunding, new decisions that are being made are putting more and more pressure on the Executive Budget. The idea that the Executive are able to respond to Westminster decisions with financial assistance is not plausible any more. I also gave a copy of the report to my Executive colleagues for them to pursue it in relation to their departmental priorities and policies. How they respond to it is a decision for them, as individual Ministers, but the Executive, collectively, are no longer in a position to respond financially to Westminster decisions.

The Chairperson (Mr O'Toole): Business groups might ask what the point was in doing the thing if the immediate response is to, first, share the information with the Treasury, which is not an illegitimate thing to do, and reiterate the message that we disagree — I think that most of us disagree with many of the decisions that have been made — and, secondly, say, "We feel we don't have the power to do anything". For example, the cost of doing business review touches only briefly on rates, which are in your power as Finance Minister. Will you take any action on rates on foot of that review?

Mr O'Dowd: To clarify, I am not saying that we do not have the power to do things; I am saying that we do not have the financial capability to do them, which is different. As I mentioned in my opening remarks, and as you will be aware, we are going through a series of rates reviews and will continue to do so over a period. The response to those will be in line with the Programme for Government: ensuring that we are broadening our tax base; creating and sustaining jobs; and building up businesses. There is a response to the needs of businesses and our economy. The point that I am making is that decisions that are made in Whitehall — the report shows this — can have a more detrimental impact on here than they have elsewhere. If Whitehall is going to make those decisions, there is a responsibility on Whitehall to respond to them.

The Chairperson (Mr O'Toole): Again, I do not disagree with that. The question is this: what is the specific policy response, if we agree that this place does not have enough money and that we would welcome more resource, acknowledging the fact that, last year, there was a record allocation from London, albeit the years before were constrained and the years after will probably be constrained too? Do you, as Finance Minister, draw any conclusions and say, "We have this challenge from Westminster and Whitehall about decisions that are made here. I need to take more responsibility for more revenue raising here and have more powers to chart a different course"? Is that in your thinking?

Mr O'Dowd: Those are all in train. We are looking at revenue raising. Budget sustainability is central, and you will note from my comments that my officials are already engaging with other Departments on their five-year sustainability plan. The cost of doing business review is a study that informs us on the way forward. As I said, I am not saying that we do not have the powers; I am saying that we do not have the fiscal weight to respond every time that Whitehall makes a decision.

The Chairperson (Mr O'Toole): Fair enough. We are all, I think, healthily sceptical. I would not say that I am cynical — hopefully I am not — but, as Chair of the Committee and in other jobs, I have to be sceptical. A lot of reviews are happening. I tried to take a note of them. We have the budget sustainability review, which we might come on to talk about later, and we have the budget improvement work. They seem to overlap with one another. We recently heard of the strategic income review, which we might ask you about later. There is the strategic rates process, the cost of doing business review that has just happened, the public-sector transformation work and the fiscal framework work. Obviously, several of those overlap and interlink with one another. Lots of that feels like necessary preparatory and review work, but, if one were being sceptical, one would ask this: when will it lead to specific policy direction from the Executive that says, "We are going to take this decision to attempt to devolve this tax", or whatever? When will we see the output from all those reviews?

Mr O'Dowd: Last month, the Executive approved and published their Budget, and we will go before the Assembly with it later this month. Earlier in April or in March — I cannot remember — the Executive approved and published their Programme for Government. The nature of government is that reviews will always be carried out, but I accept the point that you cannot constantly review things. I do not think that we are doing that. All the reviews feed into a strategy that is dictated by the Programme for Government. The cost of doing business review is an evidence report that will assist us and other Departments in deliberating. Since I came into the Department, I have emphasised the fact that my decisions will be data-driven and evidence-based. The cost of doing business report is another report to add to that evidence base.

The Chairperson (Mr O'Toole): OK. To summarise, the Budget sustainability plan that was published last autumn was often talked up as a big piece of work that would lead to significant policy decisions on revenue raising. However, the annexed table on the revenue raising that the Executive had to do as part of the restoration plan included things such as car parking charges, which was about not proceeding with something that was in a private Member's Bill that was suspended for a year. By counting as revenue the uprating of regulatory fees with inflation, it also included regulatory income from the Environment Agency; the Agri-Food and Biosciences Institute, which provides services to farmers and agribusinesses; and Ordnance Survey, which, I presume, sells maps to conveyancing solicitors, developers and the like. What do you say to the suggestion that a lot of that was about marking time, that the Budget sustainability plan was just a process of scoring routine stuff by uprating it with inflation and that it did not represent anything genuinely ambitious?

Mr O'Dowd: As I have said, my policies will be driven by evidence and data. It is important for a Department, whether it is mine or any other, to understand its capability in raising its own revenue. In some instances, Departments were charging for services, but the charges had not increased in x number of years. Before we introduce new taxes or levies, we need to fully understand and utilise our revenue-raising powers. You failed to mention that the Executive also increased rates —

The Chairperson (Mr O'Toole): Yes.

Mr O'Dowd: — by 5% for domestic properties and 3% for non-domestic properties, which was a substantial strategic intervention. The Executive have been making the necessary decisions on those matters. I suspect that, if I were to come before the Committee without Departments having carefully examined the revenue-raising powers that they already had, I would rightly be open to criticism.

The Chairperson (Mr O'Toole): No one could accuse your Department or the Executive of under-examining things to do with rates, which brings me on to that subject. I know that there is a strategic rating review, a roadmap and various other things. You must, by this point, have a clear idea of what you want to do with the rating system. Your predecessor consulted on various measures; the Northern Ireland Office (NIO) consulted on measures; and the Department consulted on measures on the instruction of the NIO. This has been consulted on comprehensively. Minister, you must know, by now, what changes you want to make to the rating system.

Mr O'Dowd: I want to make sure that our rates system is fair, equitable and progressive and that it fits with the Executive's strategy, through the Programme for Government, to increase our tax base; create and sustain new jobs; and invest in what matters most to people. That is the overriding strategy. We have completed the consultation on the first two issues: small business rate relief and — sorry, what is the second one?

Mr Neil Gibson (Department of Finance): The cap consultation is complete, as is the early-payment discount consultation.

Mr O'Dowd: Sorry, early-payment discount; yes.

Mr Gibson: The two for this year are the small business rate relief and the non-domestic rate.

Mr O'Dowd: Look at the non-domestic rate issue, for instance. I want to ensure that that does not lead to further dilapidation in our town and city centres. Is that 50% discount a hindrance to investment where it might once have been seen as encouraging investment? We will look at how to use that rating policy to ensure that we drive investment through the reopening of buildings for businesses, housing or other uses. I will have to be reassured that the 50% discount is doing what it is supposed to do. If you were to look at some of our high streets, villages and other areas, you would say, "That policy is having a detrimental impact on our society".

The Chairperson (Mr O'Toole): When will those changes be in front of the Executive for agreement?

Mr O'Dowd: As is my legal duty, we have to consult.

The Chairperson (Mr O'Toole): Some of the changes have been consulted on already. I presume that the domestic cap will be brought before the Executive soon.

Mr O'Dowd: Yes. My officials are analysing the 800 responses to that consultation. I would like to have a paper before the Executive in the summer. You are right to suggest that there needs to be movement on these things. I am keen to do that. I also want to send out a clear message that rates policy and the initiative around reviewing rates policy can create real change. It is a driver not only in collecting rates but of policies that improve people's lives.

The Chairperson (Mr O'Toole): I need to bring in colleagues in a sec. Will there be a paper on increased fiscal devolution before the summer?

Mr O'Dowd: My priority thus far has been — and, in fairness, my predecessor's priority was — to stabilise public finances, get a Budget out and then deal with the spending review. We have stabilised public finances. Public finances are not at the level that we would like them to be, but they are stable. We have produced a Budget. I am involved in discussions almost daily with my officials around how we approach the comprehensive spending review. I met the Chief Secretary to the Treasury during the Easter break. I met the Secretary of State this morning. Once we have the spending review over the line, my next objective will be to bring forward a paper on or look at how we advance fiscal devolution, because it is a crucial lever in improving the lot of the people whom we serve.

The Chairperson (Mr O'Toole): The Fiscal Commission reported four years ago now. Obviously, the institutions were collapsed since then. You want to see greater fiscal devolution. Does that mean more powers or enhanced powers? Are there specific areas that you think that we should look at?

Mr O'Dowd: I want to see all powers: that is my ambition.

The Chairperson (Mr O'Toole): Obviously, you and I want constitutional change, but —

Mr O'Dowd: You can have that ahead of constitutional change. The Welsh and the Scottish took years to achieve it.

The Chairperson (Mr O'Toole): We have been at it for years now as well, surely.

Mr O'Dowd: Well, the institutions were down for a while. We have faced unprecedented challenges. I will study the Fiscal Commission report, talk to my officials, move ahead with a proposal on how we devolve more powers — I accept that it will have to be done in stages — and decide which areas are the priority areas to bring forward for devolution.

The Chairperson (Mr O'Toole): I do not think that you or your Department will be accused of rushing this, I have to say, Minister, but that is fair enough. I have a couple of brief —

Mr O'Dowd: Well, in fairness, anybody who has sat in the chair that I sit in has a reasonable argument when they say that we should have followed the path that we have followed.

The Chairperson (Mr O'Toole): You have the Holtham report. Holtham recommended more than 124%.

Mr O'Dowd: The report is in draft form. I am not in the position to make a public announcement about it. There is still engagement with the professor. The Department is —

The Chairperson (Mr O'Toole): Is that engagement to test his assumptions? Are you questioning his assumptions — or, not questioning, but —

Mr O'Dowd: No. We are doing what any Department would do when it receives a report: we are checking it against departmental knowledge. Professor Holtham is an expert in the field, but he, too, would expect us to check that document. That is what we are doing.

The Chairperson (Mr O'Toole): You are checking the document. When will it be published?

Mr O'Dowd: Professor Holtham still has some work to do. I would expect a finalised report perhaps next week. I will want to take time to analyse that. Then, I will publish it.

The Chairperson (Mr O'Toole): Will it be before the spending review?

Mr O'Dowd: Most definitely. My officials have briefed Treasury throughout the process. I gave the Secretary of State a briefing on it this morning, because —

The Chairperson (Mr O'Toole): You need it to be factored into the spending review. If Professor Holtham is saying that the level of need is higher than 124%, surely you are saying, "Before you give us a settlement for the next three years, you need to know that this guy says that it should be higher".

Mr O'Dowd: I can assure you that the Treasury has been kept briefed on that. The Secretary of State was briefed on it this morning on the basis that I want him to sit at the Cabinet table and defend our corner. In fairness, the Secretary of State has given that commitment.

The Chairperson (Mr O'Toole): I have a final question before I bring in colleagues. You were Infrastructure Minister for a year, and now you are Finance Minister. For the purposes of having a proper conversation, we can accept that you do not want water charges, that I do not want water charges, that the Executive are not going to introduce water charges, and that you and your colleagues are ruling out mutualisation. That is not happening. I presume then that you are going to provide a more generous, multi-year settlement, in which NI Water gets the first call on capital and an increased budget over the next number of years. That would appear to be the only plausible alternative to some other funding model for NI Water. Is that what is going to happen?

Mr O'Dowd: A Finance Minister would be making a fundamental mistake to follow that path. A Finance Minister has to sit down and look at all the functions of all the Departments and at how to move forward with the Programme for Government. Saying what you said may be a political catchphrase, catch media attention or whatever, but it would be a fundamental error of judgement to do what you suggest and look simply at NI Water, Translink, Health or whatever. A Finance Minister takes on the responsibility of having to look at things in their entirety and then make a decision on funding.

The Chairperson (Mr O'Toole): I get all that. Of course, we look at things in their entirety, but, whatever about the internal issues in NI Water that have been discussed, there is almost political consensus that Northern Ireland has historically underinvested in its water. Lough Neagh, which abuts your constituency, is becoming an open-air cesspool, frankly — it is an ecological catastrophe. Belfast lough is getting worse. Development cannot be built. It is a huge, economic, ecological and social issue for this society. I do not think that it is mad to simply say, "If we are going to rule out mutualisation, that is fair enough, but there has to be something". Is that not a reasonable statement?

Mr O'Dowd: There is something. NI Water is directly funded from public funds. The suggestion that there is no plan for NI Water is, frankly, ridiculous.

The Chairperson (Mr O'Toole): There is no plan.

Mr O'Dowd: There is a plan. The Executive have made a conscious decision to fund NI Water from the block grant. That is a decision that the Executive have made, and the decision —

The Chairperson (Mr O'Toole): That is just more of the same, with respect, unless you are saying that we are going to give it a significantly larger increase than we have in the past.

Mr O'Dowd: As I said to you previously, in a three-year spending review, I will make recommendations to the Executive on a three-year budget. I cannot simply pull something out and say that we are going to concentrate on it without looking at the entire public spending profile. I will look at the entire public spending profile, judge that against the Programme for Government and make recommendations to my Executive colleagues. It simply does not stack up to suggest that there is no plan or funding for NI Water.

The Chairperson (Mr O'Toole): There may be funding, but I am not sure that there is a plan, Minister.

Ms Forsythe: Thank you, Minister, for joining us, along with Neil and Joanne, who work really well with us in the Committee. Thank you for letting them engage with us so often.

I picked up the cost of doing business report yesterday evening. I had a run through it, and it is a good, detailed study. It does not bring up anything that we were not expecting, but it is a sound piece of research that raises really important points for local businesses. To build on a point that was made, what exactly will be progressed in this mandate that is within your Department's control? Will we see tangible proposals on rates reform, non-domestic vacant property relief and small business rates relief in this mandate?

Mr O'Dowd: Yes. We are carrying out consultations across a number of those areas, because the business sector has come forward and said that those are areas that it wants us to look at.

It also has to be emphasised, without pre-empting the outcomes of the review, the consultations and Executive decisions, that a review does not mean cuts to rates. Every time that we cut a rate, we have to find money elsewhere, — and we cannot always find money elsewhere — for public expenditure. I am not ruling out cuts in certain areas. I will wait to hear and analyse the evidence. However, look at non-domestic rating, where there is currently a 50% reduction: I think that that is having a detrimental impact on our high streets, villages and cities. The solution there may be to return to 100% rates and to stimulate the regeneration of those properties by bringing them back into use either as housing or businesses. We may have to look at other ways to support businesses to do that. That reduction is a very clear example of a well-intentioned policy that has not had the consequences that it was introduced to deliver.

Ms Forsythe: Thank you, Minister. You mentioned how, as Finance Minister, you sit centrally and try to balance everybody's financial requests alongside the Programme for Government. I want to speak about the accountancy profession in the Northern Ireland Civil Service. I know from a previous session that Joanne heads that up. As the Finance Committee, we are keen to work with other Committees to make sure that everyone gets into the detail and understands the Budget process. Should the accountancy profession in the Civil Service be an isolated function in the same way that economists are, with Joanne or someone else in your Department heading up the accountants, assessing the need across the entire sector and rotating people based on need or on whichever Departments have specific needs at particular points in time?

Mr O'Dowd: I will bring in Neil on the more detailed point. Maybe it was just a turn of phrase, but I do not think that economists are "isolated" from Departments; they are an integral part of Departments, and they provide advice, information and analysis of policies to Ministers. I do not know whether you have a view on that, Neil.

Mr Gibson: It is a really good point. One of the components of our people strategy, which we may touch on later, is a review of all professions. We are examining how professions are best run, what the role of a head of profession should be and how they can look at skills, training and redeployment. We are looking at modernising our workforce into a professional structure with the right training and development and the proper roles and responsibilities for heads of professions. We are also looking at models elsewhere of the structure of professions such as statisticians and economists, which you cited. We are taking a fundamental look at our profession structure. We are taking a look at the role of the heads of professions in that work. With the forthcoming arrival of Integr8 and the new systems, we are looking at having a new structure for how our service is codified. That will make it much easier to run competitions and provide appropriate training.

The truth of the matter is that, across a number of professional areas, we are really struggling to be an employer of choice in a way that we might have been historically. That means restating the value proposition to come and work in public service and providing the right training and development, including to many of our existing staff who will perhaps be looking at retraining or at a new opportunity. It is about giving clear guidance to all professions in the service. We have new policy work on retention and recruitment allowances so that we can look at where we may or may not be able to attract the talent that we need. We have an individual sponsor for each of those. The review of professions work, under Denis McMahon, is one to keep a close eye on, because that is certainly the direction of travel.

Ms Joanne McBurney (Department of Finance): It is as Neil said. I, as head of the finance profession, am engaging with that review. You make an important point, Diane: the economist profession is structured differently from the accountant profession. That will be considered as part of the review. Even if that does not change, we are on a trajectory to do more to bring the accounting profession and the finance profession together. We have finance profession conferences. We are looking at giving staff the opportunity to rotate between roles and gain experience. We are still at the early stages of that, but, regardless of the outcome of the review, there is a direction of travel that will see a more coherent finance profession.

Ms Forsythe: Thank you very much. Minister, I want to ask you about public procurement. I also sit on the Public Accounts Committee. The recent report on public procurement made a lot of significant points about the fact that £2 billion is spent every year on goods and services. Do you have plans to reform public procurement, given the recent increase in delegated limits and in response to the report?

Mr O'Dowd: I have a comprehensive document on the way ahead for procurement that either is with Executive colleagues or will be shortly issued to them. It reflects on the many reports in recent times and not-so-recent times about procurement exercises and processes and how we can improve those.

Ms Forsythe: Thank you. Finally, given that the role of managing the Civil Service HR functions falls to the Department of Finance, do have you any idea of the quantum of sick leave in 2024-25?

Mr O'Dowd: Neil may have the information on that. I suspect that it is collected departmentally rather than centrally, but it may have been collated. Do you want to say something on that, Neil?

Mr Gibson: We have quite a bit of work coming up on sickness absence. Northern Ireland Statistics and Research Agency (NISRA) colleagues are looking at some of the data, which members and others have asked about. We are trying to understand the sickness figures a little better. You would imagine that, our workforce demographic — we have certain groups in our workforce for which the average age is much older than, for example, in private-sector comparators — is likely to have an impact on overall sickness rates. The data clearly speaks to stress, anxiety and mental health. We are looking at that against things such as vacancy levels to see whether the level of stress and pressure is influencing that. Therefore, we are taking a more focused approach to understanding sickness levels. Alongside the strategy and our enabling actions within it, we will have more regular dashboard reporting, which we will make available to the Committee, to track all those measures.

As, hopefully, you will see in the strategy, it is about trying to be empathetic and inspiring. We will not deliver good public services without good public servants, so we need to have their health and well-being at the heart of what we do. That level of understanding will help us to provide the right type of interventions. Catherine and her team will be up in the coming month, and I am sure that she will welcome engagement with the Committee on that. We have already significantly shortened the time that it takes to get occupational health appointments and the right interventions when we need them. We are looking at hotspots to see whether we can understand why they are appearing in certain places.

Without the right analysis, it would be a very crude measure to think, for example, of a target for the sickness level when we do not understand whether it is because of the age structure or vacancy levels, whether it has appeared more recently or how it compares with and benchmarks against other jurisdictions. Therefore, we are getting ongoing work from NISRA on that. We will have a specific action in the strategy on it, and you will see much more proactivity, dashboards and monitoring that the Committee will be able to look at.

Ms Forsythe: Are you taking any steps, Minister, to ensure that the policy of the Northern Ireland Civil Service HR complies with the UK Supreme Court ruling on the legal definition of a woman?

Mr O'Dowd: I will await the report from the Equality Commission before any further action is taken on the Supreme Court ruling. That is the sensible way forward.

Neil's point about the statistics and the need to look not just at the statistics on sick leave for civil servants is vital. Sometimes, understandably, the statistics attract headlines, but we must get beyond the headlines and understand why we have such sickness levels in our workforce. We must delve down deeper into the statistics to understand how we will help to resolve some of those cases. Some cases are long-term sick leave for serious ill health, and we have to be supportive of those colleagues.

Let me put it on record that I find the vast majority of our civil servants to be dedicated, hard-working public servants. They are stakeholders in this society; they live in it and want to do their best for it. In many instances, they work in high-pressure jobs and, occasionally, come into the public eye. We, the elected representatives, have presented ourselves to the public eye, but civil servants have not necessarily asked to be in it. Therefore, we have to approach the issue of sick leave in an empathetic way, one which gets to the bottom of why we are at those levels. We have to be robust in our response in ensuring that all proper processes are being followed, while ensuring that we are not adding to it.

Mr Gibson: I should have made the point that an important structural change to the new people plan and the way in which it is set up is that individual Departments and permanent secretaries will take responsibility for certain areas, recognising that people need to own the strategy to want to deliver change. It is not something that can simply be done from the centre: DOF cannot do it unto others. Therefore, permanent secretaries, myself included, have provided videos for our staff to talk to them about how we want to understand the issues and to try to be as helpful, proactive and ahead of the curve as we can be in understanding where pressure points come.

We have had hugely positive feedback on things such as our support around bereavement issues, which again reflects the age demographic of our workforce. We have been oversubscribed with feedback from staff saying that it has been hugely valuable. That type of empathetic understanding needs to be owned within Departments, as well as our providing the right policy framework and support mechanisms. Each permanent secretary owning the responsibility for delivery within their Department is a small but important structural change. They use the tools that we, as a central, shared service, supply, but they own their Department. The issues are different in Departments; there is a different type of workforce with a different age profile and skill set depending on whether it is the Department of Justice or another Department, so the issue may not be exactly the same and is, therefore, probably not best delivered by some sort of central targeting system. There is, however, personal responsibility for each of us, including me, as an accounting officer, to understand, to be sympathetic and empathetic and to have the right policy environment, the right interventions and the right reporting and accountability.

Ms Forsythe: Thank you, Neil. That was a welcome response. I have asked a lot of questions about that, and most Departments come back by saying, "That's the responsibility of the Department of Finance's shared service". It will be good to see that progress.

The Chairperson (Mr O'Toole): We will want to unpack that, however, because, clearly, there is a need to have a central target.

Ms Dolan: Thank you all for coming in. Minister, you have given a comprehensive overview of what the Department is going to do in the future, but can you give us an update on what legislation the Department will introduce?

Mr O'Dowd: You will be aware of the Deaths, Still-Births and Baby Loss Bill, which the Committee will scrutinise. It has been through Second Stage. We are also bringing forward the marriage and civil partnership Bill, the financial provisions Bill and the Fiscal Council Bill.

Ms Dolan: OK. Thank you. That will keep us busy. That is all from me, Chair, thank you.

The Chairperson (Mr O'Toole): Are we still on track to get the Fiscal Council and financial provisions Bills before the summer?

Mr O'Dowd: I am still working to that timeline.

The Chairperson (Mr O'Toole): Good.

Mr Carroll: Thank you, Minister and officials. Joanne or Neil may be best to answer my question on the Civil Service administrative officer (AO) applications. I am aware of at least two individuals who tried to complete the interview process. Basically, there were two technical issues — that is the best way to describe it. There was also an issue last year, and, if I remember correctly, Joanne briefed us on that last year. Is that issue on the Department's radar? How wide is the problem? Are you aware of that?

Mr Gibson: I am happy to answer that. The competition is nearing completion. You are right about our having used new technology platforms. We have had some feedback on that, as you would expect with any new innovation. We are taking the learnings from that and will be able to fully update you on what lessons we learn about whether the platform works effectively. We have had some feedback about individuals who had some challenges with the system, and we are looking carefully into that, although the system is one that is quite widely used.

As is always the case, the competition has been a mammoth undertaking. There were 10,000 applicants to the AO competition, which is akin to the population of Downpatrick. That is a significant number of applications to process, making sure that they are all handled fairly and equitably. We have a ton of paperwork to do to get all those applications scored, and we have to get that paperwork back. That is being done by existing staff. It is a tough situation to find yourself in: you have to step out of the day job, in which you are desperate to get vacancies filled, and take the time to do all the panels and fill in all the paperwork. Where we have delays in getting that paperwork back, we bring in external panel members to help us to bring that forward. We are hopeful that we will have the merit list in a matter of weeks; certainly during this month.

We are sorry that it has taken a little bit longer than we had hoped. We need to innovate and find ways to make our recruitment faster and more efficient and effective, but, with any new methodology, there will be learning points. This has been our second run of using a digital platform. We will definitely take some learnings from that, and we will bring them to the Committee.

Mr Carroll: I appreciate that, Neil. Is it the same system as the one used last year?

Mr Gibson: Yes, we used the same one. Other products are available, and we are investigating those, too.

Mr Carroll: What system are you using at the moment?

Mr Gibson: I do not know, so I would get it wrong, but I can get that information for you. I do not want to be misquoted. The system has been used in other jurisdictions. A number of platforms are available.

I am sure that this is for another time, but the philosophical question of how to recruit — how applications will be filled in and how people will respond — is changing hugely with what technology brings.

Mr Carroll: Absolutely. Nobody is arguing against technology, but it was an issue last year. It is possible that more people were impacted on last year and fewer this year, but there is obviously a trend, so I am keen to tie into that. I would appreciate your sharing that information with the Committee.

Am I correct in saying that the interviews took place in August? I think that individuals were told that they would be notified by the end of April. That seems to be a really long time — almost a year — after an interview to be told whether they have a job or not. I do not know of any other jobs for which people would put their life on hold for a year. Is that correct?

Mr Gibson: Yes, and it comes back to the sheer volume of 10,000 and trying to do them in the way that we do. One enabling action in the plan is to look at ways to concertina that down. Simultaneously, we have been running a lot of other professional competitions. If you are trying to fill only 10 or 15 vacancies, those can be run a little bit more swiftly. As the Minister said in his opening remarks, about 3,000 vacancies were filled this year. If that was a company, it would be in Northern Ireland's 20 biggest companies. It is a volume of recruitment that places huge strain on my Department, which is under the same financial pressures as other Departments. It is a lengthy period. We are sensitive to that, and we are looking at ways to have a little more pace to that in the technologies that we use, how quickly we can give feedback, and how many panel members we need. There is a whole programme of that, and, I encourage you, when Catherine is next before the Committee, to speak to her in a little more detail about that.

Mr Carroll: I will do. No problem.

Mr Gibson: Colum Boyle, permanent secretary in the Department for Communities, given his HR background, has taken the lead as the sponsor for improving recruitment. Catherine will be able to speak to that.

Mr Carroll: One person in particular went through HR Connect and the process as they were advised but could not complete the interview in retrospect, if that makes sense. Where do I direct that person to go? Is it to the Department?

Mr Gibson: Yes. I will make sure that you get the right details. I do not want to quote the wrong HR email, but I will get that to you.

Mr Carroll: Thanks for that, Neil.

Minister, you mentioned Whitehall and financial decisions. There has been a litany of terrible decisions over the past year, to put it mildly. Keir Starmer appears to be backtracking, certainly on some of the personal independence payment cuts, which were shocking, because, electorally, he took a bit of a hammering in the council elections. Is it your assessment, Minister, that now is the time to launch a counteroffensive, a challenge and rebuttal of the British Government's current economic strategy? If so, what would be your plan to push back on that?

Mr O'Dowd: I am not sure what you mean by "a challenge". We challenge British Government decisions daily. The Executive have taken significant steps to rebut decisions taken in Whitehall. We spend a significant amount of public funds to mitigate decisions taken by Whitehall in relation to the previous set of welfare cuts. Our refusal to privatise water is a rebuttal of the policies of Whitehall Departments. We have stood steadfastly against the privatisation of large sections of public-sector jobs and public transport, to name just a few. The Executive have made decisions counter to what has been seen as policy in London in the past 15 years. Those decisions were the right ones, and we should continue with them. There is no better rebuttal than doing things differently from what others are doing.

Mr Carroll: I asked the previous Finance Minister several times whether she raised specifically the need for wealth taxes. She gave a general commitment to having a fairer system, and you would say something similar, but I am unclear whether she or you raised a demand for wealth taxes. On that point, what is your opinion on devolving corporation tax: is it to devolve it in order to increase it?

Mr O'Dowd: The devolution of corporation tax at this stage is unaffordable, so it is a moot question. It is simply unaffordable, because the Executive have to pay whatever cost is lost to the Treasury as a result of the devolution of corporation tax. Considering the fact that we are hard-pressed at the moment to fund public services, I do not see any opportunity at this stage to devolve corporation tax.

Mr Carroll: Devolve to increase?

Mr O'Dowd: Devolve to do anything with it.

Mr Carroll: Are you opposed to devolving it at this stage for any reason?

Mr O'Dowd: We can try to trip each other up around the matter. The devolution of any tax has to be for the benefit of the people whom we serve. Were we to devolve a tax at this time, we could be losing out on it. Yes, you could devolve it to increase it, but there is no guarantee that you are going to get the return that you expect from that. The Executive would be forced to pay back any loss to the Exchequer.

Mr Carroll: OK. I will move on quickly, Minister. If I am correct, the public-sector transformation board comprises three members at the moment.

Mr O'Dowd: Yes.

Mr Carroll: They are all very capable people, but they are all from a Civil Service background and from high up in the Civil Service. Are you concerned that there is no diversity of experience among those individuals? They are very able and capable, but they come from the same pool.

Mr O'Dowd: I hope to be able to make additional appointments to the transformation board in the time ahead. You are right: the people who are on the board are very capable and have shown that in relation to the most recent funding allocations that we are delivering. They managed that process within a tight timescale. I hope to be in a position to make announcements about further appointments to the board in the short time ahead.

Mr Carroll: Finally, I want to ask you about something that was mentioned earlier. Has the Department of Finance heard any complaints or concerns from members of the Civil Service who may be trans or non-binary about the toxic debate in society and in this place in recent debates? Are you aware of any data or information around that?

Mr O'Dowd: Neil may want to come in on that. I have not received anything in my inbox yet. I am sure, however, that there are many people who feel uneasy about the tone of some of the discussions that have been going on and the terminology that has been used. I do not intend to take any action ahead of advice from the Equality Commission, and I await that advice.

Mr Carroll: Have you had any complaints, Neil?

Mr Gibson: Nothing specific has come to me, but our network and Jill Minne have communicated to staff to reassure them of the welcoming and inclusive nature of the service. Jill and the team will continue to do that. I do not want to say that we have not had any complaints, but they have not come into my inbox.

Mr Carroll: The welcoming message is important. Thank you.

Miss Hargey: Thanks very much, John, Joanne and Neil, for coming in. John, you said at the start that the priority over the past year or so has been around stabilising current budgets. A lot of work has been done over the past year or so, since the Executive got up and running again, particularly on public-sector pay, and that was prioritised in the early days. In the renewed Budget, we surpassed the additional revenue that was part of the financial restoration package. As you said, £120 million was allocated from the transformation fund, with more projects to come forward before the end of the mandate. It is about not going with the concept of austerity and what the current British Government are doing.

There was an additional £24 million last year as part of the fiscal framework, and, importantly, there was a commitment to looking at the level of need, which is the work that you are doing at the moment. In the context of all the challenges, a lot of good work has been done by your Department and its officials. When you came into post, John, you gave a commitment that you would do things differently. Health spend has been ring-fenced as part of this year's Budget, particularly to deal with waiting lists, and that represents a difference in approach. What impact do you think that that will make? What opportunities are there, in the context of getting a three-year Budget and looking at the five-year departmental plans, and what else could we be doing with that difference in approach?

Mr O'Dowd: On financial sustainability, stabilising our Budget has been crucial in allowing us to plan a way forward. It was quite remarkable that, on the day that we agreed the Budget, there was very little, if any, media commentary about it. In many ways, it was remarkable that such a strategic decision by an Executive received so little commentary. You could interpret that in a number of ways. The Budget has been agreed, however, and we ring-fenced funding in a number of areas. The biggest amount was the £215 million for Health. We ring-fenced an additional £5 million for research into Lough Neagh. There was additional ring-fenced funding for jobs and skills and for special educational needs. There was strategic intervention from the Executive on matters, but the Health intervention was particularly strategic. I welcome the Health Minister's direction of travel. In his statement to the House yesterday, he set out his plans for moving forward in tackling the waiting lists. Without the Executive's decision to ring-fence the money, that statement would not have happened yesterday as the facilities would not have been in place for the Minister to make the statement. The Executive have made the collective intervention. We will not resolve the issue in one year; the Health Minister talks about four or five years. If the Executive have to make an intervention over the next CSR period of three years, that would be a worthwhile way forward. We can no longer allow people to languish on waiting lists for years, and the investment will make a real, plausible difference to people's lives. It was the right decision. The Health Minister was at pains yesterday to say that he fully agreed with the Executive's decision to ring-fence the money. People who are on a waiting list and had no hope now have hope.

Miss Hargey: We have had discussions with your officials about planning budgets for five years and looking ahead. With budgets, it is about equality of outcome, not just opportunity. The specific ring-fencing for Health shows that a difference can be made if the direction comes from the Executive.

On the Budget, the CSR period and the EU replacement funds, the community ownership fund, which I have highlighted at Committee, has been very good. There has been only one allocation, and that happened just after the Westminster election last year. Has the Treasury given any information about another phase of those funds coming forward? They have big impacts, in particular, on our community and voluntary sector.

Mr O'Dowd: That is the Shared Prosperity Fund.

Miss Hargey: Yes.

Mr O'Dowd: We have had some correspondence with the Department that is heading that up for the Government. We have submitted a paper from the Executive about the framework under which, we believe, that funding should be delivered. It is worth noting that the Labour Party's manifesto said that the funding should be devolved to the institutions, and that is crucial. While I can see the benefits and attraction of having a Whitehall Department spend money here, it overrides the authority of the Executive. It can duplicate services, and it is not always in line with the Executive's priorities. The next phase of the Shared Prosperity Fund should be devolved to the institutions here. We know best the needs of the local community and how the funding should be committed. I am concerned that we are now running up against a tight time frame. I have asked for a direct meeting with Under-Secretary of State Norris at the Ministry of Housing, Communities and Local Government in order to have a face-to-face discussion. Scotland and Wales have made similar views known to the Government and would like the matter to be resolved as quickly as possible. We need a definitive way forward as soon as possible.

Miss Hargey: How does the Budget that was agreed recently meet the commitments or targets contained in the Programme for Government for this year?

My other point is on the rating policy review. I completely agree that we need to make sure that it is a fair system. The roll-out of the current policy is restricting our town and city centres, and there is a huge opportunity to work with councils on rating policy in order to redevelop our town and city centres, particularly with housing. Historically, that has not happened because of conflict and other issues, but there is a massive opportunity to repurpose derelict and unused premises, and that could form part of the policy review.

Mr O'Dowd: Yes, it can be a strategic intervention.

On the funding from the Executive for the community and voluntary sector, at the end of the day, it will be for the Communities Minister to decide how he uses his budget. I accept that there are also other Departments that have interventions and funding heading towards the community and voluntary sector. It is widely recognised that the community and voluntary sector plays a crucial role in the delivery of public services and is, at times, a backup to absent public services as well.

Mr Tennyson: Thank you, Minister, for your answers so far. I will return to the needs-based factor and the negotiations with the UK Government. It is welcome that you have that report, and I respect the fact that you will not want to say anything or make any announcements on that until your Department has had a chance to go through it in detail. However, you mentioned that your officials have been engaging with the UK Government on an ongoing basis, so what are the key points of contention or challenge or even the key themes that your Department is pushing back on to make a case to the UK Government that that should be higher?

Mr O'Dowd: I caution against using the term "negotiation" when you are dealing with the Treasury. The Treasury — I suspect that it is probably the experience of many Whitehall Departments — is a force of nature and perhaps has its own power base that many find it difficult to get around. However, we are pressing our case. We are making the case that this place is different from other places, particularly, for instance, when it comes to agriculture. I think that we produce 10 times the amount of food that we require here, but we produce it for these islands. Therefore, we are, in some senses, for want of a better term, a breadbasket for these islands. We invest quite a significant amount of our block grant, and rightly so, in our agriculture and agri-food industries, but I am not sure that that is necessarily recognised in Barnett consequentials, etc. We have legacies from the conflict, including physical injuries and mental health injuries. We have higher deprivation levels, for a variety of reasons. While a level of need was proven in the Fiscal Council report, those factors require closer examination, and Professor Holtham has done that. His report will, I think, give added impetus to the arguments that we have been making to the Treasury.

Mr Tennyson: Thank you, Minister. I am conscious that we are drawing an awful lot on the experience of Wales and the original Holtham commission and its recommendations, which were designed largely in the context of Wales. I have asked you this before, but I am not sure that I have ever got a satisfactory answer from you or your predecessor: why did the Department choose to appoint an individual to conduct a review over a short period rather than draw on that Welsh experience and establish a better-resourced commission with a number of individuals and independent secretariat support, given that, as you said, Treasury is a big beast and is very difficult to negotiate with?

Mr O'Dowd: Timescales, by and large. We are dealing with a deadline of 11 June, and that is when the announcement will be made. Treasury will be locking itself down shortly to consider what that comprehensive spending review will look like. When I met the Chief Secretary to the Treasury along with my Scottish and Welsh counterparts over the Easter break, he informed us that he was entering a period in which he is holding, I think, 28 meetings with various Whitehall Departments. He was at the stage of gathering information from his Department. We wanted to make sure that we had — it was set out in the interim fiscal framework — a credible, independent report to add to the other evidence that we had, and Professor Holtham, in fairness, was a star in that field.

The Welsh process proved to be beneficial because it persuaded the Treasury of the case, but, in fairness — you will see this when the final report is published — Professor Holtham has looked at us as a unique case. He has looked at our unique circumstances and taken on board some of the issues that I have raised with you and others — policing and justice being one.

He has looked at them, analysed them and drawn his own conclusions. We are not simply saying, "This is the example of Wales, and this is how life was in Wales. We are similar to that". Professor Holtham is saying, "This is life here". He used various equations etc, adapted them to our circumstances and is reporting on that basis.

The draft report is very interesting. This will be an ongoing conversation. This is one of those funding conversations that will not come to a conclusion on 11 June: further work will need to be done.

Mr Gibson: If I may, I will complement the Minister's comments. We also had to think carefully about how that would be received in a conversation with Treasury. As the Minister has said, with Treasury's bandwidth, this was the situation: if it had been a totally different methodology, the chances of having the bandwidth to go through it and agree it would probably have been slim, given how long it took Wales. Our greatest fear was a cliff edge and that we would fall below a level of need, even if that is still to be nailed down as a number. The officials' greatest concern was that we needed a methodology that was not unrecognisable to Treasury in order to give ourselves a chance of having a reasonable conversation in this time frame. However, as the Minister has said, this will be the outworkings of how the interim fiscal framework's mechanics work. There is still a final fiscal framework to come, and there are still conversations to take place. I am sure that, when people see it, not everyone will think that everything that makes this place unique has been captured. Indeed, Treasury probably will not; it will think that there are counterarguments. It was also about trying to think about something that was achievable in the time frames that we had and given the bandwidth of Treasury, which meant having a recognised methodology. The big fear for us, at official level, was facing a cliff edge. Trying to get anything that we have talked about in this session relating to strategic planning is impossible without some sort of reliable baseline from which to operate. The overriding fear was that that was still up for grabs. That was a big factor in why we felt that this was the appropriate scale of group.

Having had experience in this work, historically and in my previous guise as an economist, I can say that the officials' work — the looking at and sharing of detailed spreadsheets and the methodical work with Treasury and the Fiscal Council — has been exemplary. I would not have wanted any other officials doing that work. The work of Aidan and his team — from the detail shown to the sharing of numbers to engagement — has been first class. I take the point that there might be other conversations to be had, but this had to be able to be landed in the time frame that we had for this spending review.

Mr Tennyson: That is helpful. Thank you, Minister, and thank you, Neil.

I will move on to the strategic review of rating cycles, and, in the interests of time, I will ask a couple of questions together. I have heard three primary concerns from businesses. First, the review, because the Department is taking it forward, is not independent, and there is, therefore, a confidence issue with any recommendations. Secondly, the review is over a 10-year period. The economic environment may evolve in that time. A decision could be made early in the cycle but then need to be undone later in the process. Thirdly, it is not holistic: whilst businesses and households will claim only one relief, they may be eligible for multiple reliefs, and there may be an interrelationship that is not captured by taking those reliefs one by one. Is the 10-year rating cycle quick and urgent enough? Why did your predecessor not opt for an independent arbiter to look at some of these issues?

Mr O'Dowd: On your last point, we are elected to make decisions. That is our role, but, of course, you have to use independent resources and independent analysis at times. Consultations give the public and interested parties a huge opportunity to feed into the process. However, as a Minister, I am appointed to make decisions. That is my role. As I said in my introductory remarks, I intend to make decisions that are data-driven and evidence-based. Consultations will play a crucial part in that.

Why is the review being held over 10 years? I am prepared to look at the timescale of when we carry these out, but Andrew and his team of four people are involved. In fairness to Andrew, he is a walking encyclopaedia on rates. He and his team are very, very good. When I am sitting down with Neil and his senior team and planning a forward work programme, I have to be cognisant of what we can deliver with the resources that we have in front of us. I talk to the senior team about this: now that we have gone through the first phase of the review and received feedback, what have we learned? Can we amalgamate some of those phases more? Can we do the review in a shorter time frame? We are engaging to see how we can do that.

The review can also be responsive. Let us say that it continues over 10 years. The point that businesses make — it is a fair point — is that economies work in cycles and things change. If, at the beginning, you review a certain rate issue but do not review it for another 10 years, that does not make sense. You can review that rate issue twice in those 10 years if you need to. We have not published a list that says, "Right, we'll do this and that this year". We have been choosing the issues as we go along. The review has a flexible approach. We are always learning, and it can be responsive. I assure businesses and domestic ratepayers that we are in listening mode, but I will add that rates pay for public services.

Mr Tennyson: Thank you, Minister. My final question is about something that I have raised with you before: the cost of division. Asking the Fiscal Council to have due regard to the cost of division is one way in which to hold Ministers accountable for the steps that they are taking to integrate not only our community but public services. You take a different view. If not that, what is your plan or intention around the cost of division? Do you have any intention to address that issue over the next two and a bit years?

Mr O'Dowd: My different view is that I should not tell the Fiscal Council what its work programme should be. It has to remain independent, so it should decide that. Without getting into too much detail, you could argue that many, if not all, areas of public administration can be affected by the cost of division. How that is counted in our calculations is part of the discussions that we have internally. Without pre-empting the final report, I think that Professor Holtham touches on it.

The Chairperson (Mr O'Toole): Minister, you said that it is not for you to tell the Fiscal Council what to do. However, your officials are writing the Bill on the Fiscal Council at the minute. It is fair to say that they are writing the legislation that creates the Fiscal Council.

Mr O'Dowd: Yes.

The Chairperson (Mr O'Toole): In that sense, it is your job.

Mr Brett: Minister, thank you for your answers so far. You are clearly substantially across your brief.

The report on the cost of doing business landed with you last week and was published yesterday. Were you surprised by any of the information that was included in it?

Mr O'Dowd: I do not think that I was surprised. I do not think that anybody will be surprised by it. The benefit of the report is that we now have an independent academic report that we can present, as we have done, to Treasury and others. I do not think that there are any real surprises in it.

Mr Brett: It highlights the impact of the Windsor framework on the economy here in Northern Ireland. It states that the slowing of goods moving from GB into Northern Ireland is impacting on our economy. The impact of the framework and the proposed 'good jobs' employment rights Bill from your colleague Minister Archibald are highlighted in the report as being difficulties for business. I am keen to get your view on those.

Mr O'Dowd: I am not sure of the exact terminology that is used.

Mr Brett: On the Windsor framework, it states:

Mr O'Dowd: I know the thrust. I was asking about the term "difficulties". I think that everybody recognises that impediments to trade cause difficulties. There is a responsibility on all stakeholders to ensure that impediments are withdrawn and that none of us presents new impediments. What might have seemed like a good idea eight years ago is, hopefully, no longer seen as a good idea. We all have to approach it on the basis of how we remove impediments to doing business, so let us do that.

I have read the report on the 'good jobs' Bill. The Economy Minister is in listening mode and is engaging with the various sectors. As I said, I have shared the report with all Executive Ministers and have no doubt that the Economy Minister will take a keen interest in it.

Mr Brett: On the rates review, hopefully, I am not misquoting you, but you said that you want to have a progressive and fair rating system. Is it your view that the current system is neither fair nor progressive?

Mr O'Dowd: I want to assure myself that it is, and, if it is not, we have to change it.

Mr Brett: OK, that is fair. The public-sector transformation board still has £109 million left to allocate. How is progress on the next tranche of that funding?

Mr O'Dowd: As I said, I would like to be in a position to go out to bids to Departments in early summer. Is that correct, Neil?

Mr Gibson: Yes, all being well. Ongoing work by Public Digital is looking at the digital bids. What is interesting is understanding whether the mechanism that we used to collate the bids was very effective for digital projects. I am thinking particularly of projects that might be proof of concept or more speculative, the benefits of which are, perhaps, not as easy to articulate as the quantifiable benefits of a standard business case model. Public Digital is looking at those digital projects to see whether the way that we asked for those bids was the best way to ask for speculative bids — speculative may be the wrong word, but bids that cannot fit the standard methodology that we use. We are trying to get that piece of work to inform how we go out again, and we have been making sure that the team — those in TEO and us — is ensuring that Departments are well briefed on feedback on the previous bids and on ways that we, me included, could improve the bids from within our Departments.

Mr O'Dowd: I want to keep the momentum behind that. As I said earlier today, I was on the other side of the fence for the initial funding round. I saw how my officials in DFI reacted to it, and it caused enthusiasm. In fairness, officials have been dealing with very difficult budgetary constraints over the last x number of years. The institutions have been down, and there was literally no good news. When they had the opportunity to say, "We can do things differently here," they went for it. So, I want to keep the momentum behind that.

Mr Brett: You said earlier that you hope to appoint additional members to the transformation board. Are you thinking of one, 10, 20 or how many?

Mr O'Dowd: I favour smaller organisations, so two.

Mr Brett: What skill set you are missing?

Mr O'Dowd: I am not necessarily missing anything; it is about enhancing the skill set and bringing new people on board. Someone commented that they are all from the Civil Service. Was it Gerry?

Mr Brett: Yes.

Mr O'Dowd: That is a fair enough comment. We just want to broaden the board's skill set.

Mr Brett: What is the approval process for that? In the terms of reference, do the nominees to the board have to be approved by the NIO or the Executive?

Mr O'Dowd: I am engaging with the NIO on the appointments. I am not sure of the term "approval", but it is certainly an engagement. I have a good working relationship with the NIO on the matter. We will see what is included in the final terms of reference, which we are literally fine-tuning. The appointments to the board will be my decision.

Mr Brett: OK. They will not be subject to approval by the UK Government or the Executive.

Mr O'Dowd: No. I do not think so.

Mr Gibson: No. As previously noted, for all decisions, the board is there as a mechanism to provide advice to the Finance Minister and, subsequently, the Executive. All decision-making will still be by the Executive; it is just a vehicle to get the right type of advice in the best way that we can from people with the right skill sets.

Mr Brett: Finally, in response to Mr Carroll's earlier question on corporation tax, although it is devolved insofar as being able to vary the rate, your view was that there was no point in having that discussion because we do not have the public finances to do it. Why, then, in response to the Chair earlier, did you say that you are keen to bring a paper on fiscal devolution to the Executive?

Mr O'Dowd: It has to be a decision made in the collective. There has to be a strategy behind the taxes that you are devolving, when you devolve them etc and the consequences of that. You do not bring one tax area out without knowing the consequences of that on other areas. If we are to devolve taxes, we need to look at them in the round, and bringing forward those that we can devolve in stages would probably be the best way forward so that we could fully understand the implications and make those decisions with our eyes wide open.

Mr Brett: Do you still want income tax to be devolved to the Assembly?

Mr O'Dowd: At some stage. There is a huge opportunity for us to increase our employment rates, and, if we are increasing our employment rates, we might not see the benefits of that income tax. Yes, I think that income tax is one that we should be looking at.

The Chairperson (Mr O'Toole): Do you intend to introduce proposals in this mandate to devolve income tax?

Mr O'Dowd: I intend to introduce proposals to devolve taxes in this mandate. At this time, I do not want to pre-empt anything that I will introduce. Obviously, income tax is one that will be high up the list.

The Chairperson (Mr O'Toole): We may come back to that, but I will let everyone get their spake in first.

Mr Frew: Thank you very much, Minister, for your time. I know that your time is precious and that you and your departmental officials are very busy. Thank you for the time that you are taking with us. It is really appreciated.

Mr O'Dowd: My official said that he loves spending time with the Committee. [Laughter.]

Mr Gibson: Joanne said that.

Mr Frew: More of it, Minister, more of it

Three times, I think, in your answers, you raised the issue of non-domestic vacant properties. You said that you think that the policy is not effecting change and that we need to do something to change societal behaviours. Under the 10-year review of rates, however, there was a chance to go with that first, but the Department and your predecessor decided to go with prompt payment discount and the cap on the property valuation scales. Did the Department and your predecessor get it wrong in going for those first?

Mr O'Dowd: No, I do not think so. It is about choices at the end of the day, and all of these issues are deserving of scrutiny. As you work your way through policies, you ca evolve your ideas or change your mind on these things. I do not think that it is an either/or. I think that the decisions that were made were sound decisions. They are significant areas of rates policy. I have come in and had the opportunity to say that this already has been in process. I have had some discussions with officials, and the next step is about where we go.

Mr Frew: The two that the Department selected were two that had most responses to the NIO consultation. They were the two that garnered the most support and attention. I know that the question that your Department is posing is not about retention or removal but about changing. You said that you received 800 responses. The NIO consultation received nearly 1,200 responses for both of those aspects of variation. Why do you think that fewer people have responded to the Department's consultation, given that it was on specific issues and changes, than to the NIO consultation?

Mr O'Dowd: I simply do not know, Paul. I am not in a position to answer that question.

Mr Frew: I know that you are still looking through the responses. The consultation ended at the end of April, which was less than two weeks ago. Can you give us any indication of the level of support for retaining the same levels of discount and the level of support for a change in those 800 responses?

Mr O'Dowd: I do not know whether Neil can respond in more detail. I will give a broader response. Consultations are not a ballot asking whether you are in favour or against. I see consultations as an opportunity for people to express their legitimate views and to come forward with evidence that, perhaps, the Department had not taken into consideration when it was deliberating on its proposal. They are an opportunity to look at aspects that may not have come to the Department's attention beforehand. Have you any information on the breakdown, Neil?

Mr Gibson: I have not seen it yet, and, as a public servant, I am loath to predict. You rightly point out that the consultations that we have read previously were very binary and not the sort of consultations that you would want to use as policy-choosing evidence. Nevertheless, generally speaking, responses are, "If that will affect me, I will not necessarily be positive about it". It goes back to Eóin's point earlier. In one way, it makes you think that you should look at them all in the round, but it then becomes so complex that nothing really gets changed, so, as the Minister said, we are trying to not assess them in that binary way but to see whether there are any subtleties or anything that we have missed or not captured, or, indeed, even any evidence of what benefit that particular relief brings.

The 10-year cycle was mentioned earlier, and one of the things that the business community asks for is certainty, so we also wanted to make sure that it was not surprised by any review that was coming up. That is why the road map is there: to set out, well in advance, what is coming so that businesses can do whatever research they need to do to make sure that they can submit the right evidence. That might be why you commit to keeping something for a longer period. You might think that you want to review it frequently, but businesses will react if they know with certainty. I have not seen the figures from those consultations yet, but, as the Minister said, we are particularly looking for whether we have missed anything: is there another piece of the story, perhaps, a piece of evidence that can be pointed to or a particular sector or subset that we may have missed in our considerations? That is the most important bit that we are looking for from that. We will, of course, write up that consultation report and provide it to the Minister.

Mr Frew: Thank you for that answer. The level of unpaid rates up to December 2024, Minister, was £18 million. What have you done since you came into post to try to change that for the better? Have you seen progress?

Mr O'Dowd: I have engaged on a number of occasions with the rates people at Land and Property Services on the matter. It is a very complex area. That figure was the figure at that time. When you dig down into those things, it is also important to look at how much of that figure is starting to be paid back. One of the strategies in place to ensure that people are returning and paying their rates is that everybody who can pay should do so.

We have to have a double, overarching strategy. We have to be robust in our approach, but you have to understand, particularly when you look at the business rates issue, that we could ruthlessly pursue businesses and put them out of business — I am using businesses as an example here; there are cases of domestic properties as well — or we can pursue people, understand their circumstances and get to a point where they agree a repayment plan that allows them to retain and operate their business and return the rates money to the Executive. I will continue to engage with Land and Property Services around this. It is an important issue. We want to see as much income coming in as possible. However, as I say, we also have to be conscious of the impact that we can have on an individual or a business if we pursue a case without fully understanding the personal circumstances.

Mr Frew: I understand, Minister. Would the human error that put the incorrect URL on rates bills, which affected a third of all rates bills, have occurred had the Department not abandoned the RAPID IT system?

Mr O'Dowd: We have commissioned a review of that, which will look into the lessons to be learned. I do not know whether the review will respond conclusively to that decision, but I do not want to pre-empt its outcome. It should not have happened. It did happen. Obviously, I have also engaged at length with officials about the matter. We are now of the view that the risk was low. We have engaged with all the appropriate authorities about the matter. The site to which people will be directed if they type that into their system is a registered site. It has not breached the terms and conditions of a site, and therefore, it cannot be taken down. We have received one formal complaint in that regard, and calls to our helpline etc are probably, on average, around where they should be. Engagement with the staff suggests that those calls are, by and large, queries such as, "Has my bill been paid?" or "Is the process going OK?" I am not undermining or underplaying it in any way, but there does not appear to be significant alarm among the general public about that matter. We will continue to monitor the situation, and the questions of how and why it happened are under review.

Mr Frew: I do not wish to cause further alarm, but how can you be sure that, if human error caused the URL code to be incorrect, the amounts on rates bills are not incorrect?

Mr O'Dowd: That amount is generated automatically, is it not?

Mr Gibson: It is, yes. Of course, even with the best systems, we will still have challenges. There is a proper process for when a person feels that their valuation is wrong. We have a reporting line for people to call if they feel that their bill amount has been entered incorrectly. I should say this publicly and to the Committee, as I have said to the Minister: I apologise. We are very sorry, and I am sorry, as I am personally responsible for the work of my Department, for any distress or harm that the error might have caused.

As the Minister said, our evidence is that the impact has been fairly limited. You have pointed to the unusual circumstance that, despite the future digitisation journey, we still post letters. One might imagine that we would not do that in the future, but that brings with it its own different cyber risks that have to be mitigated. It is regrettable, and I offer my full apologies for it. From monitoring it, we do not think that the level of harm was significant. We have about 50,000 calls coming in, and most of those are people asking, "Has my rates bill been paid?", or "Can I check it my bill?". We have robust checking processes.

We are doing a learning review. When we look at the level of checking, we see that it is very particular about values, levels, personal data and the stuff that goes on an individual's bill, but the guidance on how to pay perhaps did not have the same level of checking of how everything was typed in. However, we will report more fully on that.

We will speak tomorrow internally at our launch of the new strategy for LPS, and I know that Sharon and her officials will engage with the Committee. Although we are going in a different direction, it is still not an abandonment of a digital future for LPS. It is about couching it in a slightly different way to make sure that we get the right type of technology that helps in the right way.

Mr Frew: The RAPID IT system commenced on 2 August 2021. It cost £3·4 million in capital and £1·2 million in resource before being abandoned. We now seem to have reverted to the old Abacus system with improvements. Can you give us any detail on why we abandoned the RAPID IT system and why we are going to an old model with improvements?

Mr Gibson: I do not want to speak with too much authority; I will leave that to Sharon and her team. I can say this, which is a theme with IT projects: the technology moves so quickly that, very often, things change, whether that is because of the supplier or us There are lessons for us to learn about how to specify a project. It is one of the great challenges in the procurement of IT projects now: do you nail down every deliverable so precisely that you cannot then vary from that, or do you give a level of flexibility that might not specify it as tightly as you might have thought?

We have learned a huge amount in that journey about whether the technological offer that we had hoped to deliver would have been possible. It turns out that much more significant work will be required on the database to make it suitable for that type of product. Instead, we looked at the most important customer benefits that we thought would be delivered by the RAPID project and whether they were deliverable within the Abacus system, which we own and for which we have the intellectual property (IP). We believe that the predominant benefits that the customer would see can be delivered by that system. That looks to be the more appropriate decision. It is the right thing for us to do. As we look through gateways and review our projects, if we feel that they are on the wrong trajectory, we should pivot and do something else.

We have learned a lot of lessons about how to procure those types of projects. The issues are not just in Northern Ireland; we all face issues around how exactly to specify a technological solution when the level of technological capability can change almost before the procurement is done. Even the platform that you might do it in could be completely different. We have learnt that.

One thing that is particularly challenging for rates here is that we are a very small player globally. Off-the-shelf products do not really work, because we have a very particular system of rates and reliefs, but we are not really big enough for there to be sufficient demand to warrant people wanting to develop that type of system. That probably leads us to doing more development of the systems that we have.

Mr Frew: This is my final question, Chair. Abacus was designed for the rates legislation nearly 20 years ago. Regarding Abacus, the incumbent supplier's website states:

How does that stand with our moving forward with Abacus with improvements?

Mr Gibson: If we looked at the IT systems that we use every day, we would find that a lot of them existed in some guise 20 years ago. The questions are these: what does a modernised Abacus look and feel like, what can it do and what can it deliver? Its functionality is definitely dated now. It is interesting, because we get a lot of queries about it from outside this jurisdiction, because it is quite an effective system. It seems odd speaking about that after just clarifying the small error that we had, but, as a system, it is effective at getting bills out, collecting the rates and bringing them in on time. We are often asked, "Could you devolve taxes?". People come to see the rates system as being quite effective relatively speaking, because 93% of the rates are collected. Is it the most up-to-date and modern system? Is it a system that you would design on a blank page? Probably not. Does it do the job? Does it get the £1·6 billion? It does. Could it be better and more efficient? Yes, and Sharon will speak to the digitisation journey. Modernising the system with the functionality that you need may be the right answer, rather than providing a whole new package.

Mr Frew: Thank you very much for your answers.

The Chairperson (Mr O'Toole): Members, we have some time left, so if you have additional points, please come in. I have a couple of points, and Deirdre, Diane and others have indicated that they wish to come in.

Minister, to go back to the point about Health, you talked about the Health Minister's statement to the Assembly yesterday on ring-fencing and waiting lists. You welcomed that statement. I presume that you disagree with the Health Minister's saying that you and your colleagues had performed — I think that he used this phrase — "a three-card trick" in how you described the previous allocation.

Mr O'Dowd: I did not hear the Health Minister use that terminology yesterday, in fairness to him.

The Chairperson (Mr O'Toole): He has used it in the past, though.

Mr O'Dowd: He has, and it is up to him to explain it. I heard him say yesterday that he fully supports the Executive's decision to ring-fence that money.

The Chairperson (Mr O'Toole): It is all sweetness, then. That is fine. Relations are better.

On ring-fencing more generally, you have said that you support ring-fencing in-year in 2025-26 for waiting lists. You also indicated that you support longer-term ring-fencing or that you are amenable to longer-term ring-fencing of Health spending, but, earlier in the evidence session, when I asked you whether you would think about ring-fencing the water budget, you dismissed that idea. You said that that was the wrong way to look at it. What is the difference?

Mr O'Dowd: You asked me to prioritise capital for NI Water. I am talking about ring-fencing the allocation from within the Health Department's budget, which is what we have done. That is different from what you asked me. You asked me whether I would prioritise water spend ahead of looking at the entirety of the Budget. I did not make the proposal to ring-fence Health spending without looking at the entirety of the Budget.

The Chairperson (Mr O'Toole): Forgive me, but that is an extraordinary Jesuitical point that will be lost on most people who are watching.

Mr O'Dowd: I do not think that it will, in fairness.

The Chairperson (Mr O'Toole): I think that it will, Minister.

Mr O'Dowd: I think that you underestimate the capabilities of the people who watch these Committees.

The Chairperson (Mr O'Toole): I am well aware of the intelligent people who watch the Finance Committee with patience. You are saying that it is legitimate to ring-fence spending on waiting lists but that it is not legitimate to ring-fence money to spend on water investment. That is what you have effectively said today, and I do not understand why.

Mr O'Dowd: Again, you are misinterpreting what I said. We did ring-fence money to spend on water investment.

The Chairperson (Mr O'Toole): When I said to you earlier, "Would you look at" — I did not use the word "ring-fence"; I said "prioritising", as ring-fencing is a form of prioritisation, because the money cannot be spent on anything else — "prioritising water through capital investment?", you told me, effectively, no.

Mr O'Dowd: You can go back and look at Hansard to see exactly what you said and exactly what I said. What you asked me to do, as part of a three-year spending round, was prioritise water spending above everything else, and I said that that would be a mistake without looking at all the spending areas in the Budget. I did not make the recommendation to the Executive to ring-fence £215 million in the Health budget without being acutely aware of what was happening across all the spending areas in the Budget. I now have that experience. As we approach a three-year spending review, I think that a wise way to go forward would be to ring-fence funding to tackle our waiting lists in the knowledge that I will have already done it once and that I will have knowledge of the entire spending programme.

The Chairperson (Mr O'Toole): I am a bit baffled by that distinction, but others need to get in. I have to say that I do not really understand, but —.

Mr O'Dowd: You may not understand it. I understand it, and I suspect that many of the people watching will understand it.

The Chairperson (Mr O'Toole): Perhaps, but I just think that people will see that it is fine to prioritise Health. People know that our water service is in crisis. They know that our waiting lists are in crisis. I do not think that they understand why we can ring-fence one but not the other.

Anyway, I will go on to the rates review. You talked about a 10-year cycle. At this point, no decision that has been made in the Department could possibly have been under-reviewed. I welcome the fact that you are thorough about evidence, which is good, but would the 10-year cycle not lead businesses to think, "This is not really a serious review"? You could argue that virtually everything in every business and in many people's life, including where you live, your job, all the fundamentals, is reviewed on a 10-year basis. Minister, you and I both want a constitutional change, and, indeed, there has been talk of having a constitutional referendum by 2030. Is it plausible to say that we will do that but that we cannot review the rating system in the North on anything other than a 10-year cycle?

Mr O'Dowd: I already said that you can review it ahead of the 10 years.

The Chairperson (Mr O'Toole): It should not have been on a 10-year cycle to begin with; it should have been shorter.

Mr O'Dowd: I am not saying that it should not have been a 10-year cycle. When you look at the work that is required to do the review and at the resources that are available and you sit down with your team of senior officials to manage a work programme, you realise just how much the lack of resources in your Department constrains your ability to deliver. Sometimes people look at the Civil Service and see it as an infinite resource, saying, "There are so many people out there that you can do anything", but that is not the case. I have had further discussions with my senior officials, and they have had the opportunity, as have I, to review the past year's work. We believe that we can carry out the review within a shorter time frame, and I will continue that conversation with my officials.

The Chairperson (Mr O'Toole): On the separate subject of charges, I have had correspondence, which I have not had a chance to look at in detail, from the National Union of Students - Union of Students in Ireland (NUS-USI) on university fees. I know that you have been vocal in the past about not raising fees. Is that on your agenda?

Mr O'Dowd: That is a matter for the Department for the Economy.

The Chairperson (Mr O'Toole): You have not had any conversations about that.

Mr O'Dowd: No.

The Chairperson (Mr O'Toole): OK. We await more information on that, but you have been vocal about not increasing fees.

Mr O'Dowd: In fairness, the Executive have a policy on fees, but I have had no conversation with anyone else about it.

The Chairperson (Mr O'Toole): Minister, going back to the question of fiscal devolution, you have said today that you are interested in looking at income tax. I welcome the fact that you are willing to do so. Will you look at another subject that is close to my heart — I have repeated this a lot — air passenger duty (APD)? I want more fiscal devolution, but we have that one badly devolved tax. It costs us between £2 million and £3 million every year to subsidise non-existent long-haul flights. I know that there is talk of long-haul flights coming back at some point, but are you looking at that or will you maintain it?

Mr O'Dowd: As I said, I will look at that in the round as part of how and when we should devolve the various taxes that we all pay or that have implications for how we live our life.

Mr Gibson: The long-haul issue is a reminder of the point that the Minister made about the consideration that has to be given to something before devolving it. Treasury would not be in a position to say, "Devolve it, and, if it does not work, we will take it back". When you devolve a tax, there is a decision to be made with a risk to be taken. Such decisions that have worked in some ways in Scotland have worked differently in Wales. That is a useful consideration as you look at the fiscal risk that the Executive would take on with any other devolution measures.

The Chairperson (Mr O'Toole): That is the case. One point that has emerged today is that people are saying, "On the one hand, but, on the other hand". That is grand because, of course, you have to look at things in the round, but, Minister, you have given a commitment to fiscal devolution. However, we talk about getting into the meat of specific measures. One such measure is corporation tax, and, although I agree that that is a challenge in the current climate because it involves a block grant reduction, is it not the case that we need to break out of the situation that we are in at the minute, which is, effectively, relying on a Government in Westminster? By the way, whether you are unionist, nationalist, left, right or nowhere or do not care about any of this stuff, we have limited ability to influence, and there is widespread agreement on that. In order to change that, we will have to take a step forward at some point and do fiscal devolution. What I am trying to ask is this: when, decisively, are you going to try to make that happen? You said that there will be a paper, that you are looking at it or that you want options, but I would like to know when there will be a decisive policy intervention on it.

Mr O'Dowd: As I have outlined to you on several occasions now, my responsibility and that of my predecessor and the Executive was to stabilise the Budget. We have done that. We have published the Budget for 2025-26, and we have a Programme for Government out. I am still engaging on the comprehensive spending review. When I have completed that and the review is announced, I will draw my attention and that of my Department to fiscal devolution.

The Chairperson (Mr O'Toole): Is there no specific time for when that will happen? It is an aspiration for the future.

Mr O'Dowd: I cannot give you a date on which the Committee will be looking at a paper, but the Committee will be looking at a paper.

The Chairperson (Mr O'Toole): My final question relates to the fiscal framework. You have the Holtham review in your hand. Just to be absolutely clear, has that been sent to the Treasury?

Mr O'Dowd: I have a draft of the Holtham review. Treasury officials are being briefed on it. I briefed the Secretary of State on it this morning. Professor Holtham is continuing to do some work, and my Department is continuing its scrutiny. I hope to have a finalised report next week.

The Chairperson (Mr O'Toole): Just so that we are absolutely clear, has the Treasury agreed with you that it is going to accept the report? Has it agreed to take receipt of it and consider it?

Mr O'Dowd: I think that it is fair enough —

The Chairperson (Mr O'Toole): Or would you say that it is an ongoing negotiation?

Mr O'Dowd: — to say that it has, yes.

The Chairperson (Mr O'Toole): Are we definitely not going to have an outcome on this in the CSR?

Mr O'Dowd: We are going to have an outcome in the CSR, but whether it is the right outcome is another matter.

The Chairperson (Mr O'Toole): There will be a spending settlement. Is there no sense that there will definitely be a final fiscal framework or even an updated needs-based formula in the CSR? I am not saying that this is necessarily your fault, but the Treasury could take all that, stick it in a folder somewhere in Outlook and just give the spending settlement. Do you have an agreement from Treasury that it will consider that document or even that it will update the fiscal framework?

Mr O'Dowd: I am working in good faith with the Treasury in thinking that it will give financial certainty to the Executive, both in the fiscal framework and the spending review. However, as I said to Eóin, this is an ongoing conversation. The draft report that we have from Professor Holtham and the evidence that we have from other sources suggest to me that we are involved in a discussion over a period of time. However, there will be sign-off points in that time, and, in my view, the CSR is one of them.

The Chairperson (Mr O'Toole): That is helpful; thank you. I need to bring in others. Thank you for the confirmation that you have not had conversations on fees. I need to bring in Deirdre Hargey.

Miss Hargey: I want to come in on the back of Eóin's point about the cost of division, John. That feeds into the ongoing discussions with Treasury. It is important that you have those engagements with the British Secretary of State. When there was a meeting in Belfast with him last year about costs, my concern was that he was using the same language that the Tory Government had used, saying that the level of need here is the same as that everywhere else and that, "you are getting more."

The work that Gerry Holtham is doing will be important. I want to make sure that, whatever discussions you are having on the final document, the costs of poverty and socio-economic inequality are stressed. They are much greater, notwithstanding the fact that it is important to address division. Those greater inequalities are the case even in our productivity levels. From sitting on scrutiny Committees, whether they be Health, Justice, Education or this Committee, I know that that is where the pressures are. The public spend on it is over £1 billion per year. You have already said that we are spending over half a billion pounds mitigating the impact of austerity.

In their agenda, this Government have not deviated from that of the previous Government. I want to make sure that that is front and centre, because, as I said, there are good opportunities in the five-year planning of Budgets and how we ensure that there is ring-fencing. It would be good to ensure equality of outcome and that Ministers are directed in the output from the Budgets and ring-fencing. We could be doing more, but it is important to make sure that Gerry Holtham has really understood the extent of the need that comes through poverty and socio-economic inequality. It really impacts on growing the economy. The recent Economic and Social Research Institute report said that there are opportunities to grow the island economy by 2·2%.

However, if we are bleeding at the other end through the demand on public services and increased inequality, we are not really doing much. I want to make sure and have confidence that that will be addressed as part of that needs-based work.

Mr O'Dowd: It is being addressed in the studies and in how those conclusions are reached. The ultimate test is whether the Treasury is prepared to pony up, as they say.

The Chairperson (Mr O'Toole): Indeed.

Ms Forsythe: Minister, following on from the 2025-26 Budget agreement that you got, have all Departments taken their allocations, prepared their operational budgets and confirmed them with your Department?

Mr O'Dowd: We have not had confirmation from all Departments at this stage.

Ms McBurney: Not all Departments. Departments are working on those operational budgets. We have asked them to inform our Budget document by breaking them down by spending area. We have those back from all Departments, and those will be reflected in the Budget document, which we hope to publish soon. There will, however, still be ongoing work in Departments as they fine-tune those decisions.

Ms Forsythe: Finally, in looking for efficiencies and given that there is talk about public-sector reform, have you undertaken any review of the cost of the arm's-length bodies and quangos in Northern Ireland with a view to finding efficiencies?

Mr O'Dowd: I personally have not. My Department is not carrying out a review. That would be a matter for broader Executive agreement. You are absolutely right, though: we cannot look simply at efficiencies in Departments, the Civil Service or elsewhere without looking at arm's-length bodies and the number that there are.

Mr Carroll: I do not want to catch you out, Minister, as you said, but I am looking for clarity on devolving corporation tax. There were New Decade, New Approach (NDNA) commitments, but the British Government would have to take further measures if you wanted that tax to be devolved, so you do not have the full power to increase it in the morning if you wanted to.

Mr O'Dowd: No, not to the best of my understanding.

Mr Gibson: No, you would need a funding mechanism. The principle is there, but the mechanism for the amount that you would be charged for secondary issues is not there. The bill that would be due for any variance, up or down, is still not mechanised, if you will, so there would still be steps to take.

Mr Carroll: There is secondary financing, if that is the correct term, so, in theory, you could make a decision tomorrow, but you are making the point that extra funding would not be there.

Mr Gibson: You do not have even that.

Ms McBurney: There was a requirement in the agreement to demonstrate sustainable finances, so you would need agreement from the Treasury as well before you went any further.

Mr Carroll: You would need that for the full power as well. Finally on that, and maybe you were alluding to it, Minister, this has been well versed, but a cut in corporation tax would lead to a cut in the block grant. Does an increase in corporation tax automatically lead to a reduction in the block grant? To my knowledge, when it was discussed publicly 10 or so years ago, there was no proposal to increase it. I do not know if that directly affects the block grant. Is there clarity on that?

Mr Gibson: It is quite complicated. Even when the discussion at the time was about a potential reduction, there was significant engagement with the Treasury. That is one of the reasons why the funding mechanism would have been complicated by behavioural effects and whether it would cause more firms to incorporate in order to pay tax. You would have the same debate about whether it would cause anybody to unincorporate and go for a different structure so that they did not pay corporation tax. There would still be an argument about behavioural effects. It would not be a simple case of saying, "If the number was higher, you would get to [Inaudible.]

" There would still be negotiation and a conversation with the Treasury. In the same way that the Scots and Welsh had discussions about their devolution, there is a very detailed conversation that is sometimes decades in the making about the exact mechanics of any funding.

Also, given the fact that the numbers are so large, you would have to go into that with a very considered approach, because the scale of the oscillations in some tax bases can be significant. Some point to income tax, because it is slightly more stable, but you would also know their arguments on VAT, and it is then about how you define it. In answer to the question, it would not be as straightforward. You are quite right that, at the time, there was an asymmetry. The maths was looked at more from a reduction point of view, but the process would not be as straightforward as saying, "Higher rate: there's nothing to see here". It would be a calculation.

Mr Carroll: I appreciate that clarity. Could the Minister of Finance, meaning you or a future one, make a decision on that by themselves, or does there have to be an Executive-approved agreement?

Mr O'Dowd: I suspect that it would have to be Executive-approved, because it would be significant and cross-cutting.

The Chairperson (Mr O'Toole): Minister, I have one more thing. We have a few minutes before we have to let you out. We do not want to waste even a second of your precious time. In your last meeting with the Chief Secretary to the Treasury, you mentioned Casement Park. What is your expectation of what will happen with Casement Park?

Mr O'Dowd: I cannot give you an expectation about what finances, if any, will be directed from the British Government, but I can assure you that it is on their radar, because when I mentioned it to him, he was already aware of it.

The Chairperson (Mr O'Toole): He was already aware of it. Does that mean that, at the minute, you cannot give any expectation that there will be an increased allocation specifically for Casement and that you are not in a position to offer or find more money for it yourself?

Mr O'Dowd: As we look at the next three-year Budget, there will have to be an Executive discussion on the financing of all projects, but I am acutely aware of the fact that the Treasury is aware of Casement Park.

The Chairperson (Mr O'Toole): Suffice it to say, if it does not get signed off and progressed in the next few months, there will be big consequences, including for planning.

Mr O'Dowd: The comprehensive spending review is being announced on 11 June. Let us wait to see what is announced on 11 June.

The Chairperson (Mr O'Toole): I have a final point. It is one for the officials, rather than you, Minister. Will there be an updated document? I ask that for the purpose of being constructive. There are some questions about the formatting of the document. For example, the text on economic context at the beginning is consistent, and there is some narrative from the previous Minister. However, when you get to certain chapters, including the chapter from the Department of Justice, you find that it reads almost like an op-ed that has been written against the rest of the document. It states:

Then, in bold text, is:

Anybody who is reading the document will have a sore head and will think, "Is this an actual coherent statement of budgetary policy by an Executive, or is it a collection of incoherent departmental statements?".

Ms McBurney: If you read earlier in the document, you will see that each departmental chapter is written by the Department to ensure that it is properly informing the consultations. That is why the chapters may not read as coherently or consistently as you would want. It is departmental information.

Mr O'Dowd: There will be an updated document. It follows on from Joanne's question: there will be an updated document ahead of the debate on —.

Ms McBurney: On 19 May. It will be issued next week, hopefully.

The Chairperson (Mr O'Toole): May I suggest, in the nicest possible way, that that might be another innovation that could be taken under review? I know that quite a lot of things are under review in the Department.

We welcome your time. I do not want to pre-empt the outcome of the review — that could be a catchphrase for the Department — but that does not mean that we do not believe in evidence. We very much welcome the fact that you came to give us evidence, Minister. There is a lot for us to take forward. Questioning was robust, but it was also thorough. We appreciate your time and your officials' time. There is lots for us to follow up on, annoy you about and hold you to account on in due course. Thank you.

Mr O'Dowd: Thank you very much.