Official Report: Minutes of Evidence

The Chairperson (Mr O'Toole): From the Department, I welcome Gavin Patrick, who is director of finance; Seanin Ferguson, from the financial management branch; Jeff McGuinness, who is head of Budget sustainability; and Aidan McMahon, who is director of the fiscal policy division. I invite Gavin to give us an opening statement, after which members should indicate whether they wish to ask questions.

Mr Gavin Patrick (Department of Finance): Good afternoon, Chair and members, and thank you for the opportunity to provide the clarification that you may need on the initial departmental return for the future-year Budget exercise. Before I start, I will introduce my colleague Seanin, who leads our central budgeting team. Seanin will be able to provide some of the detail as we go through the session. I am joined by Jeff McGuinness, director of the Budget sustainability team, who can provide details on the five-year departmental fiscal plans and revenue raising, and Aidan McMahon, director of the fiscal policy division, who can provide more detail on the fiscal framework and fiscal devolution. I understand that the Committee is interested in the linkages between all those areas and that some queries were raised last week about the return. I will provide a high-level summary of the position and clarify some of the points that were raised, after which we are happy to take any further questions.

A Budget 2026-2030 information-gathering exercise was commissioned by our public spending group (PSG) colleagues on 30 June, and returns were due on 4 September.

The Chairperson (Mr O'Toole): Did they all come back in time?

Mr Patrick: I only deal with the DOF —

The Chairperson (Mr O'Toole): You only deal with the DOF return. That is good. Presumably, yours was on time, then. [Laughter.]

Mr Patrick: It was back with the supply team on time. The formal return was, maybe, a day late, but —

The Chairperson (Mr O'Toole): We will not quibble about that.

Mr Patrick: We had been engaging with the team, so it knew how it was shaping up.

The information-gathering exercise was designed as a first step to help inform the Executive's decisions on a multi-year Budget, reflecting the period covered by the spending review. This will be the first multi-year Budget since 2011. The Minister intends to develop a multi-year draft Budget and bring it to the Executive in time to allow for a 12-week consultation and a final Budget to be delivered in advance of the new financial year. Those Executive decisions on a draft Budget are likely to be made after the Chancellor's Budget statement on 26 November.

The Committee will be aware that agreement was reached on an interim fiscal framework in May 2024. That resulted in a needs-based factor being included in our funding arrangements for the first time. The five-year departmental budget plans form part of the overarching framework to develop the forecast requirements, and our Department's plan is being worked on.

The information-gathering exercise sought information on inescapable resource bids over the years 2026 to 2029, forecasts for 2026 to 2029 for Executive earmarked funds and details of capital departmental expenditure limit (DEL) requirements for four years, from 2026 to 2030. Work was taken forward throughout the summer across all business areas to determine the forecast spend position in resource and capital over those years. Business areas in our Department were asked to live within a flat budget as far as possible, which means the ability to spend to the same level of costs, and therefore no inherent real-term increase, for example, for inflation. Therefore, only bids for inescapable pressures were to be submitted.

The paper that we have provided to the Committee sets out those initial forecast requirements alongside the assumptions that were made across the Department, including a pay assumption of progression and 3% overall revalorisation, and a general 3% inflation increase. That provides an "as is" position, if no action is taken to change our approach around costs. Clearly, that is not a realistic position and, therefore, initial savings of £82·1 million were identified over the three years. Again, those are set out in the paper and include increased income, rationalisation of the office estate, efficiencies and transformation savings.

The Chairperson (Mr O'Toole): Just to be clear, is the Department positing £81 million savings over the five-year period?

Mr Patrick: It is over the three-year period.

The Chairperson (Mr O'Toole): The three-year period. OK. Is that a mix of office disposals and income?

Mr Patrick: It is a mixture of the rationalisation of the office estate — that will be in relation to resource costs. The likes of maintenance and so on will not be required.

The Chairperson (Mr O'Toole): And staff wages?

Mr Patrick: There may be some in there specifically in relation to buildings as well, alongside efficiencies, transformation savings and income generation. Those are real reductions in requirements, made from active decisions, either through efficiencies or transformation.

The Chairperson (Mr O'Toole): You say that they are real decisions. Does that mean that they are decisions that you are making now and are things that will happen, or does it mean that they are things that might happen should the Executive agree this?

Mr Patrick: Those are things that the Department has already made to look —. That is assuming that the likes of office rationalisation takes place as planned. Obviously, they are still forecasted savings, but that is a plan to be taken forward.

The Chairperson (Mr O'Toole): These are plans. This is before we move on to the broader picture in other Departments. Currently, the Department of Finance is penning — not pencilling — in £81 million of savings as a mix of office rationalisation and income generation. You might be able to say a bit more about that. Does that mean fees in some areas?

Mr Patrick: Yes, I was going to come to that, Chair, because that was one of the queries that was raised last week. That is our plan at the moment. We took those into account before we brought the bids. Our bids are based on those savings being implemented.

The resulting pressure after those savings is just short of £19 million in the first year, £34 million in the second year and £34 million in the third year. The bids aligned to those pressures were submitted as part of this exercise and are set out in the paper in thematic groups: transformation projects; digital and modernisation; new services; shared services; and pay.

On the cost of vacancies included in the forecast, I am aware that there were some queries about that during your discussion last week. The cost of existing vacancies is estimated to be circa £16 million, £8 million of which was described as "income-generating", which means that posts being filled have a clear correlation with income being received in that business area. That includes areas such as the Departmental Solicitor's Office (DSO), Construction and Procurement Delivery (CPD), IT Assist and internal audit, which fully recover the cost of their services from other Departments; the Northern Ireland Statistics and Research Agency (NISRA), where staff are outposted to Departments; and Land and Property Services (LPS) in areas where the work is funded by fees, such as land registration and valuation services.

The Chairperson (Mr O'Toole): Largely, the additional income is from other parts of the Civil Service. The other bits are —. Did you say LPS?

Mr Patrick: The outward-facing element of LPS. The rest will be services provided mostly within —

The Chairperson (Mr O'Toole): To conveyancing solicitors, estate agents or whoever.

Is there a specific number for income generation over the next five years from the charges that you talked about, whether internal or external? That will be part of the £81 million.

Mr Patrick: It will be part of the £81 million.

The Chairperson (Mr O'Toole): It is OK. We do not have to hear it. Keep going.

Mr Patrick: The pay bid includes pay increases for existing staff. Staff costs for new services, such as the census, are included in the specific bids for those new services. We continue to work on our charging model — that is in relation to the income — to ensure that there is a robust, consistent and transparent approach that provides a fair full-cost-recovery approach to all Departments so that each is paying the appropriate amount for the services that it receives. That approach is fully in line with 'Managing Public Money' and Audit Office guidance.

The Department's capital requirements have increased significantly for the four years. Details are set out in the paper. The main increases are in relation to the LPS transformation programme and the office estate consolidation.

I hope that that provides some clarity on the queries that were raised last week. We are happy to take any questions.

The Chairperson (Mr O'Toole): That is extremely helpful, Gavin. Thank you. It is probably fair to say that a fair chunk of the questions will be beyond the Department and will be on the broader five-year piece. I do not know whether it is OK for me to start with that. I presume that the broader five-year plans are largely your world, Jeff, and then, as part of that, Aidan, you will be leading on how the five-year plans will incorporate other Budget-sustainability or fiscal-framework work. I might take it in turn, if that is OK, Jeff.

The Department's current plan is that there is to be a five-year Budget for the Executive. When? By the end of this year?

Mr Jeff McGuinness (Department of Finance): It is not quite that way. Obviously, we only have a three-year envelope [Inaudible.]

The Chairperson (Mr O'Toole): In resource?

Mr McGuinness: Yes, and four years for capital. Departments will be putting their five-year plans —

The Chairperson (Mr O'Toole): I said "five-year". I should have said "multi-year". My apologies. I keep forgetting. That is my bad. I mean a multi-year Budget by the end of this year.

Mr McGuinness: Yes, that is still the plan, and Departments will then put their five-year plans alongside that.

The Chairperson (Mr O'Toole): The plan is that there will be a multi-year Budget, which will be allocations that are reflective of the spending review that came in June and the updates to that from the UK Government in November.

Mr McGuinness: On 22 November. Yes.

The Chairperson (Mr O'Toole): In addition to that, there will be five-year departmental plans, which will give an indicative sense of things for, in the case of resource, two years after, and, in the case of capital, one year after.

Mr McGuinness: Yes, you will have, in those five-year plans, the projections of what Departments think that they will spend and what their budget will look like over the five years. That will be in the plans and compared with the average increase of the Northern Ireland block over that period as well. You will get a gap analysis, effectively, at the end of that to say, "Departments' plans are increasing by x; the overall Northern Ireland block will only increase by y; and there is a space between those two".

The Chairperson (Mr O'Toole): I will take capital, first. In a number of areas, there is huge uncertainty around specific capital projects — the A5 being the most obvious, probably, Casement Park another, and, then, added to those, other projects that are in the ether but not agreed, albeit agreed to one extent. Another one could be the York Street interchange, and another the all-island strategic rail review. We do not have the investment strategy either. Are those things going to be specifically dealt with in the multi-year Budget? Are people going to be able to read the multi-year Budget and, assuming that the legalities with the A5 are dealt with, be able to say, "That is how the A5 is going to be budgeted for in the coming years"?

Mr McGuinness: I make a distinction, again, between the multi-year Budget and the five-year plans. The multi-year Budget will be specific capital allocations to Departments, and when Ministers make decisions on those, they will be firm allocations for each Department, and you should be able to see that granularity of detail.

The Chairperson (Mr O'Toole): So, when people look at the multi-year Budget, they will be able to open the page relating to the Department for Infrastructure — and, yes, I understand that there is a difference between the five-year plans and the multi-year Budgets for three and four years for resource and capital — and say, "Right, the Department is budgeting x for the A5 over the forecast period".

Mr McGuinness: It will depend on the level of detail that Departments are putting into the Budget document. We will produce the Budget document very soon after the Executive have decided on a multi-year Budget, and Ministers will need time to understand their allocations and what they will prioritise within their Departments. It might be that the Budget document itself talks about the ambition of the Departments, but it might not be specific on x for this project. That might come slightly afterwards, as Ministers make decisions with that [Inaudible.]

The Chairperson (Mr O'Toole): It might not say that there is a particular amount of money for the A5, Casement Park or extending the rail line to Armagh — I am sure that Eóin would like to see that, but it would take a while to deliver beyond this horizon — but are people going to be able to see the specific updated timelines for when Departments can expect to see those major capital projects crystallised?

Mr McGuinness: Not specifically in the Budget document itself, but we would expect Ministers to have made decisions on that fairly shortly after the Budget and then be able to give certainty. Obviously, it is important to have that certainty and planning in capital. We expect Ministers to make decisions rapidly after having their budget envelope set and to be able to say that it is going to be projects x, y and z.

The Chairperson (Mr O'Toole): OK. Inflation is still running above target. I have to check — the most recent Office for National Statistics (ONS) data showed that it was running at about 4%. Presumably, that is adding a specific pressure to planning for pay in the Civil Service.

Mr McGuinness: Yes. Inflation will add specific pressures across the system. As inflation changes, we do not get an additional amount over and above our spending review envelope, so we still have those parameters to work within. Anything that inflation eats into, effectively, reduces our ability to do different things, or more of the same.

The Chairperson (Mr O'Toole): OK. I will turn to your world, Aidan: the fiscal framework and revenue raising piece. Will there be any revenue raising in this document?

Mr Aidan McMahon (Department of Finance): In the full fiscal framework?

The Chairperson (Mr O'Toole): First, will there be an updated fiscal framework in the multi-year Budget?

Mr McMahon: There is no fixed timeline for a full fiscal framework. A number of factors must be taken forward. We need to do technical work, in the background, on the scope and exactly what we want to be in it and on what the Minister wants to push for. Then, there needs to be engagement on those issues with the UK Government and the Treasury in particular. Given that the fiscal framework is a cross-cutting issue, there will have to be engagement with the Executive. Commitments on the full fiscal framework and some of the things that it will look at were made at the spending review. For example, Professor Holtham's work is to be looked at in more detail, and fiscal devolution is to be thought about. We need to progress those issues both internally in the Department, which we are actively doing with the Minister, and —

The Chairperson (Mr O'Toole): If you are progressing things such as where we go next with Holtham or fiscal devolution in the Department and with the Minister only now, they will probably not be in the multi-year Budget in two months' time.

Mr McMahon: The fiscal framework will be done in parallel with multi-year budgeting. Depending on the milestones or conclusions reached, it will be considered in relation to the multi-year Budget at that point. It will depend on where we get to and by when.

The Chairperson (Mr O'Toole): From what you are saying to me, it sounds as though we should not expect a clear, updated statement on the fiscal framework, including on Holtham and need. Post spending review, the position with the Treasury was, "We do not agree. We have made progress, but we are still agreeing to disagree. We want more of a conversation. We want you to agree to engage with us, for example on the agriculture piece". There is no agreement to deal with that by November, so it is unlikely that it will be dealt with.

Mr McMahon: That is a fair assessment. We are dealing with Treasury, and there is lots of detail in a full fiscal framework. Yes, we resolved some issues at the spending review, but others, we think, need further analysis, investigation and discussion with Treasury. We have secured its commitment to do that as we go forward, but it is fair to say that those things will take time.

The Chairperson (Mr O'Toole): Finally, before I bring in colleagues, I want to be absolutely clear on this. The framework will probably be the most important budgetary document that an Executive have produced in a decade and a half. Will there be any revenue raising or proposals for new fiscal devolution in it?

Mr McMahon: Revenue raising might be more in Jeff's space.

Mr McGuinness: I will jump in there. We are looking at a strategic income review as part of the Budget process, and my team is working on that. That review will look at Departments' existing income and any planned changes and at potential future income within the Executive's remit. We hope to have some of that information ready for the Executive to consider alongside plans for their multi-year Budget. It will be a factor in how the Executive plan their multi-year Budget.

The Chairperson (Mr O'Toole): That is kind of condensed — thank you for that, though — and carefully phrased. Does that mean that the Executive will have some kind of paper to consider on revenue raising but that there will not be a commitment that there will be revenue raising or commitments to specific revenue raising in the multi-year Budget?

Mr McGuinness: We will produce a paper for the Executive that will set out the options, but it will be for individual Ministers to make specific decisions on them. It is not for us to impose anything on Ministers. We will set out the range of options across the system, and, as a Minister understands their budget and what that looks like in the multi-year space, they will be able to make decisions on individual revenue raising —

The Chairperson (Mr O'Toole): I infer from that that there will not be significant revenue raising. If you are going to do significant revenue raising, that has to be part of your multi-year Budget. You would say, "We will broaden the tax base by raising this particular revenue", or, "We will be even more expansive on fiscal devolution". It sounds as though we are not going to go there either, but correct me if I am wrong. If it was going to be significant, you would want to be building it into the headroom in the multi-year Budget, but it is not. It is something that might happen afterwards, where x Minister might say, "We'll charge a few bob for that, and we will have a bit extra.". I think that that is correct.

Mr McGuinness: Yes. If you are thinking about wider fiscal revenue generation measures, part of the fiscal framework, that is not going be resolved in time.

The Chairperson (Mr O'Toole): That is helpful to know. It is good to clarify that. We will not expect either significant fiscal devolution or revenue raising in the multi-year Budget. That is fair enough, but we understand that there are still processes going on and discussions in the background and various reviews.

I have a final point before I bring in others. There has been some discussion at this Committee and elsewhere about where we are with the £50 million for Casement Park. Is one of you able to give us an update on the status of that £50 million of financial transactions capital (FTC) and where the discussions are? Specifically, will it or, indeed, more money be budgeted in the multi-year Budget for the delivery of Casement Park?

Mr McGuinness: No, it is not my area of expertise. We were listening to the Committee earlier, and I can speak to the repayment to Treasury on net and gross basis if that would be helpful.

The Chairperson (Mr O'Toole): It would be helpful to clarify that for the record.

Mr McGuinness: Way back, when financial transactions were introduced, the Treasury put FTC on a gross basis. Effectively, there was an allocation, but that allocation had to be repaid to Treasury over a number of years. More recently, the Treasury has decided to basically factor those repayments in to any allocations that it makes going forward, so we are now receiving FTC net. Financial transactions capital still has to be a loan to, or equity investment in, the private sector here, but, when we get that money back from those loans or that equity investment, we are then free to recycle that within the Executive, and we do not have to repay that to Treasury. We can recycle it into further loans and further equity investment to the private sector going forward. So, it effectively self-perpetuates.

The Chairperson (Mr O'Toole): I think that it is fair to say that we are not any the wiser today about where the £50 million FTC that has been promised but has not crystallised and is not agreed yet exists. The Treasury confirmed that the £50 million will come, subject to its being agreed by the Executive with other funding and an agreed further procurement stage.

Mr McGuinness: That is my understanding. It will be allocated on the basis that the funding for Casement Park, as a whole, is understood at that point. It can be allocated to us at any stage from next year onwards, I think.

The Chairperson (Mr O'Toole): I am sure that there are other points that will occur to me, but I will bring in the Deputy Chair now.

Ms Forsythe: Thanks, all, for coming to brief us on this today. On the initial forecast requirements, where you have built in the 5% annual increase in the office estate rates, does that mean that we should expect to be seeing a 5% increase in rates for each of the next three years? Is that what you are saying is the expected position?

Mr Patrick: I do not think that we can totally correlate that to the rates levels. That is just an estimate that has been used as part of our forecasting assumptions.

Ms Forsythe: Thank you. I just wondered whether a decision had been made, and I had missed it.

There is £12·7 million of increased income charging, and you say that it reflects charges in other Departments. It is not external revenue raising. Centrally in the Department of Finance, are you showing that that is increasing and other Departments are showing that as an increased cost to them? You are not just reflecting increased income, and it is moving around within the system. I am thinking of the bigger pot. We can look at that easily and say that it is increased income of £12·7 million, but, to the block, it is just money moving around.

Mr Patrick: It is not an increase to the block. It involves sharing those costs and making the costs score in the right Department as appropriate. That is in line with 'Managing Public Money' guidance and the Audit Office.

Ms Forsythe: My next question is on office estate rationalisation. Based on a series of briefings, it is my understanding that, when the occupancy rate was assessed, it was pre-COVID, and a figure of something like 40% was floating around at that time. That was on the basis of how much of the estate was deemed as needing to be sold off.

Given that we are running hand-in-hand with hybrid working and getting people back into the office, there has been a bit of a misconception that that property is being sold off and there will be nowhere for people to come back to. I want to confirm, given that you have that item in as savings, that the assessment of the office estate was made pre-COVID and at full operational rates, before people moved to hybrid working.

Mr Patrick: The figures will have been provided by colleagues in properties division. They are managing the estate review and the estate consolidation policy, so they will have taken all those forecasts into account.

Ms Forsythe: Properties division officials have been up before the Committee, and that was my understanding of it, but it seems to have moved into a different conversation space. I just wanted to confirm that, but we will maybe go back to properties division on it.

On the cost of vacancies, thanks for clarifying the figure for income generated, because it was raised last week. A figure of £15 million is included in the forecast. Last time, we discussed at what point those vacancies are reviewed — is it every year or every couple of years? — to see how many of them are actually vacancies. A lot is said here about the move to digitisation of services, which, you would expect, to reduce the need for certain roles. Vacancies may have been sitting for a long period. Have working patterns adjusted and roles evolved over time? Is vacancies just a sitting figure that is carried over? What is the process for looking at that?

Mr Patrick: As we have gone through the process, my team has challenged the business areas on vacancies, and that happens for every one. Some vacancies will have been filled, new vacancies will have come on, and some vacancies may have been there for a long period. I noted in the paper that we will continue to challenge that, because it is a significant figure, especially given the financial position that we may find ourselves in, depending on where the Budget lands.

I am certainly focused on ensuring that, if we are saying that they are vacancies, they are there and we plan to fill them or to see whether we can fill them. That is being done to make sure that that figure is as real as it can be. However, it will depend on the business area. We continue to have good engagement with those areas in order to be sure of the figures.

Ms Forsythe: It is good to know that you are doing that exercise.

I have one final question. You note the efficiencies created from moving to the digitisation of services. I have this concern — it applies across the Civil Service, but obviously this conversation is limited to the Department of Finance: when things move to being electronic, do you assess the accessibility and quality of the service that is received by the public? Although you quantify those as centralised savings, I see a correlation between a lot of services being digitised and an increase in queries, complaints and people coming to my office about those services. My staff and I end up sitting with people to help them to access services online. You quantify it as a saving, but is there any way to capture the quality of service?

Mr Patrick: I picked up the query from last week and checked with my colleagues in LPS, which is our main customer-facing team. They were clear that, in transforming services to digital, understanding how customers are impacted is a key priority. They have ensured that there are appropriate mechanisms to support customers who are less digitally-enabled. That is embedded end-to-end and throughout the service design, roll-out and support. It is absolutely on their radar.

Ms Forsythe: That is brilliant. We like to capture numbers and talk about savings and efficiencies, but it is always important that we stop and remember what the front-line services are and consider what quality of service the public is getting.

Mr Patrick: That is the customer-facing aspect, but I should add that a number of the efficiencies are internal, which is a different aspect.

Ms Forsythe: Thank you.

Mr Kingston: Thank you for your paper and your attendance. I will ask more about paragraph 3 at the bottom of page 5 of your report, which states:

What is meant by "cost of vacancies"? Does that mean that vacancies are being carried at a cost of £15·5 million?

Mr Patrick: There is an assumption in our forecasts that those vacancies will be filled at some point. As we have discussed, we need to determine whether they will be filled as planned and as has been forecast. I will expect business areas, if they notice a new piece of work coming on board, say, halfway through next year, to only include the cost of six months. It is about forecasting the cost of the vacancies being filled.

Mr Kingston: OK, that is good. It is forecast that the vacancies will be filled, and that £7·6 million of the cost is of vacancies that are income-generating so that income will come in. What about income that is being lost because vacancies are not filled?

Mr Patrick: There are a number of vacancies within the Department that we charge other Departments for, such as internal audit, DSO and CPD. In some of those areas, the work can be taken forward only if the staff come in. If staff do not come in, there is no cost, and, equally, there will be no income against it. That would mean that the service being provided would have to be varied to match that.

Mr Kingston: What is the reason that those vacancies exist? Is it primarily a lack of budget, a lack of available and suitable people, or a lack of recruitment exercises?

Mr Patrick: It will depend on the post. I can speak, as we did when we were here a few weeks ago, on the accountancy profession, where it is about recruitment and trying to get people to join us. In the accountancy profession, we have run competitions, but there are still vacancies there. There will not be one specific reason across all areas; there will be a mixture of reasons.

Mr Kingston: Is an insufficient pace of recruitment exercises part of the problem, or is it just about getting the right people with the right skills? Is it about the availability of suitable people?

Mr Patrick: It will be a mixture of reasons. I would not say that it is down to the pace of recruitment alone. It would be better if all Departments could recruit at the same time. We are not able to do that, as our HR colleagues obviously have to pace recruitment competitions. However, that alone will not be the reason. There will be various reasons, such as competition for specific skills with the private sector, elsewhere in the Civil Service and across the public sector.

Mr Kingston: We know that there will always be a churn of people leaving for other posts, retiring or whatever. We were told that the pace of recruitment slowed dramatically during COVID. Has it picked up to a sufficient level since then?

Mr Patrick: My HR colleagues would be better placed to speak on that. We have run competitions on all accountancy grades in this calendar year. We have certainly been able to move forward on those.

Mr Kingston: OK. Thank you.

The Chairperson (Mr O'Toole): No further members have indicated that they want to come in, but I encourage members to ask a question if they wish.

I have a couple of additional points. On longer-term planning, we have made the point repeatedly in Committee about the limitations of Budget-making in the absence of a Programme for Government. There is now a Programme for Government — there are views on how clear and impactful it is, but, nevertheless, it exists. What does not exist, and what is possibly even more important for a long-term Budget-making process, because it has to be specific and isolate priorities, is an investment strategy. Are you asking to see an investment strategy to help you deliver a multi-year Budget?

Mr McGuinness: Yes, we are in regular engagement with colleagues in the Strategic Investment Board (SIB) to try to understand where that is. The A5 ruling may have changed a little bit what the investment strategy for Northern Ireland (ISNI) will look like, so there is a bit of discussion around that. However, yes, we are pressing our colleagues for that.

The Chairperson (Mr O'Toole): Is it that they have not finished it, or is it that the Executive have not agreed it?

Mr McGuinness: I am not sure where it is. That is a matter for TEO to respond to.

The Chairperson (Mr O'Toole): OK, that is fair enough. I am not putting words in your mouth, so correct me if I am wrong, but is it fair to say that the multi-year Budget would be more focused if there were an investment strategy alongside it?

Mr McGuinness: That is fair to say. It would be helpful to have an agreed Programme for Government and investment strategy, sitting alongside each other, as we go into a Budget-setting process.

The Chairperson (Mr O'Toole): I have another question. It is fair to say that there will be a multi-year Budget with or without an investment strategy. Ideally, an investment strategy would sit alongside it, but, in the same way that Budgets in the past have been de facto Programmes for Government, it might end up becoming a de facto investment strategy in a sense, because it will have to provide resources for the A5 and other major strategic projects.

The public-sector transformation board (PSTB), which is the subject of much discussion in this Committee, is currently operating round 2; is that right? The public service transformation board has gone out for bids for round 2; is that right? I am not sure if that is one for Aidan or Jeff.

Mr McMahon: That is probably not on any of our slates at this point. I know that it has gone out for round 2 and that that is ongoing.

The Chairperson (Mr O'Toole): Is it going to ask for another tranche of transformation money like that? Is the NIO going to bid for that? Are you asking the NIO to bid for more transformation money? Are you aware of that?

Mr McGuinness: My understanding is that there is still money in the transformation pot that was unused in round 1. That funding will be used in round 2.

Mr McMahon: Yes, there was £235 million from the financial package, and £129 million of that was allocated to projects back in March.

The Chairperson (Mr O'Toole): OK.

Mr Kingston: I have two questions. The Budget is for three years of resource spending and four years of capital spending, based on five-year departmental plans; is that right?

Mr McGuinness: Yes, the funding envelope that the Treasury provided is for three years of resource spending and four years of capital spending. That is what restricts us in what we plan in our Budget. Alongside that, Departments will be doing longer-term financial sustainability plans, which stretch over five years. Obviously, there is a good overlap between those two things, but you are right.

Mr Kingston: I was thinking about how many years we should label the Budget as covering. Maybe we should just stick to saying "multi-year".

The Budget will extend into the next Assembly mandate. I do not know what happens at Westminster and whether longer-term planning of this scale is done. Do our political arrangements — the fact that we have a mandatory power-sharing coalition that most parties are bought into — make such planning more possible? Equally, however, no Government can tie the hands of a future Government. We are talking about financial commitments for the Executive in the next mandate. How much certainty can Departments and the public have about the financial plans that are made in a multi-year Budget?

Mr McGuinness: Our Minister and other Executive colleagues have been clear that putting in place a multi-year Budget is a really important stepping stone for us in that it provides financial certainty going forward.

You are right: when that Budget steps across mandates, there is the ability for an incoming Executive to rewrite or adjust the plans. If they want to do that, it is their right to do so. That should not get in the way of establishing a multi-year Budget now that provides as much certainty as possible for capital planning and understanding the longer-term resource. The Executive committed to implementing multi-year budgets where possible as part of the Budget sustainability plan. That is the trajectory that we are going on. However, in recognition that a new incoming Government could change that, there is the option for them to reopen it at that stage.

Mr Kingston: The fact that, by and large, the same parties will be in the Executive hopefully provides a bit more certainty than might be the case elsewhere. That is a political question though.

Mr McGuinness: Yes, thank you.

The Chairperson (Mr O'Toole): OK. The point is that they can make decisions, but those will still be within the headroom of the spending review that was given by the Treasury in June. A new Executive, even one that is composed in a slightly different way, cannot —.

Remind us of the figure for revenue raising. Some of us made points about the revenue-raising exercise contained in the Budget sustainability plan. There was a requirement to raise revenue of £213 million over two years — no?

Mr McGuinness: It was £113 million over two years.

The Chairperson (Mr O'Toole): Sorry, £113 million over two years, which has now been delivered effectively. That was over 20—

Mr McGuinness: That was over 2024-25 and 2025-26.

The Chairperson (Mr O'Toole): When I say that it has been delivered, I mean that it has been implemented in the two Budgets. Whether every penny has been collected yet is another matter, but the decisions have been taken.

Mr McGuinness: Yes. We did an update with Departments in August, and we estimate that there is just over £135 million of new additional revenue over that period.

The Chairperson (Mr O'Toole): Is that in the documents that you have given us, or is that new information?

Mr McGuinness: That is just something that —

The Chairperson (Mr O'Toole): A comment that people made — by "people", I mean me

— was that lots of the revenue that was raised was not exactly, to put it mildly, the result of materially new decisions. It did not require ministerial decisions, with the exception of the increase in rates. There were lots of increases in fees, such as Ordnance Survey charges, that, in taxation terms, are called valorisation or indexation — that is, the charge rising with inflation — and those were counted. Is there anything in the £135 million that is a new charge of any kind?

Mr McGuinness: They are all in that same package. We provided details as part of the Budget sustainability plan. One of the issues that we had at that stage was that it was very much time-bound. Implementing new or novel revenue raising would require us to go through the legislative process, and, by the time that we would have had it implemented, we would have missed the target deadline from Treasury.

The Chairperson (Mr O'Toole): Yes. Whether the specific revenue-raising idea is good or ill, it does not look as though there is any specific commitment to raise additional revenue for this multi-year Budget, if I understand you correctly. The Executive are not currently planning to say, "This is the headroom that we have over the next three years in resource and the next four years in capital. We are not satisfied with that. We want to raise additional revenue by using existing powers that we have or by seeking, per a fiscal framework discussion, new powers to raise new revenue in specific areas, because we want to add £50 million, £100 million, £500 million or £5 billion to our spending power in a given year or over the course of the forecast". I think that it is fair to say that that is not going to happen.

Mr McGuinness: Part of that strategic income review will be to provide the Executive with the range of options that are available to them. Should they wish to implement those, they can do so as part of the multi-year Budget or beyond, depending on how long it takes to implement.

The Chairperson (Mr O'Toole): This is not statement aimed at Jeff, Aidan or any other officials, because I am sure that you are providing robust advice, but, from my perspective, there is no clarity that the Executive are going to or are minded to make that decision or that the Finance Minister wants them to make that decision.

Whatever you think about this UK Government — there are lots of legitimate criticisms — and all Governments, including the Dublin Government, who are about to do a Budget next week, they make decisions on increasing and decreasing their revenue within weeks. The Executive are now 18 months in, and they are still having discussions about discussions about potential future reviews. That is more of a statement than a question. I do not think that it is credible that they are in any way minded to do anything significant on revenue raising or fiscal devolution, because we would have heard that by now. All we have heard — again, this is a statement, not a question — is discussions about discussions and potential future reviews and strategic reviews and cycles of decades, if not lifetimes. I do not see any evidence that we are going to see any meaningful revenue raising or fiscal devolution. That is regrettable to the extent that it means that there will not be as much ambition as perhaps people would like. That is a statement from me.

There are no other questions from members. There are probably lots that I have forgotten to ask, but thank you for giving an update on the departmental side and the broader multi-year Budget plans. Thank you very much.