Official Report: Minutes of Evidence

The Chairperson (Mr Frew): The Department of Justice officials who are providing evidence today are Richard Logan, finance director; Andrea Quail, head of financial planning, strategy and support; and Louise Blair, head of financial planning and support. You are very welcome to the Justice Committee. I am sure that you are no strangers to the Committee, although I am, having just taken up the role of Chairperson. Without further ado, I invite you to make an opening statement.

Mr Richard Logan (Department of Justice): Good afternoon, folks, and thank you for the opportunity to update the Committee on finance-related matters in the Department. I am joined today by Andrea Quail, head of financial strategy, and Louise Blair, head of financial planning. We have already shared with the Committee a detailed written briefing on the areas that we will cover today. Therefore, I intend to provide a brief overview in order to highlight some of the key points.

I am pleased to report that the Department's annual report and accounts — the 2024-25 statutory accounts — were successfully laid in the Assembly by the summer recess deadline of 4 July 2025, with an unqualified audit opinion. That was a significant achievement in the Department fulfilling its statutory reporting duties and ensuring compliance with governance and accountability responsibilities for the 15 organisations within the departmental boundary. I can also confirm that the Department successfully met the 3 October 2025 deadline for submitting whole-of-government accounts to the Department of Finance.

The final out-turn position for 2024-25 was submitted to DOF on 19 September 2025. The Department achieved an underspend of £2·8 million against our main £1·34 billion budget for non-ring-fenced resource departmental expenditure limit (DEL). That means that we spent 99·8% of the available budget, which reflects a strong and effective financial management exercise by the Department in maximising its budget.

I will now turn to the 2025-26 financial year and in-year monitoring rounds. June monitoring was agreed by the Executive on 30 June 2025, which provided the Department with additional funding of £15·4 million. Despite the welcomed additional allocations, however, that still left the Department with significant pressures to manage: namely, £32 million in stabilisation costs and £22 million in exceptional items. The Executive also agreed in June monitoring that the Department would be given first call on up to £7 million in funding in future monitoring rounds towards PSNI workforce recovery costs in 2025-26. Although the next monitoring round has not yet been formally commissioned by the Department of Finance, the Department of Justice has already undertaken an updated assessment of its in-year position.

Whilst there are stabilisation pressures across a number of areas, the PSNI remains the largest, with approximately £22 million in pressures. The Committee will also be aware that the Department faces exceptional pressures of £227 million due to legal claims relating to the data breach, holiday pay and McCloud. At this stage, the costs associated with those exceptional pressures are best estimates, as there will be a range of potential outcomes, depending on the eventual settlement costs of those legal claims. When those claims will be settled is also still uncertain. Further engagement has continued at official and ministerial level between DOJ and DOF to identify and secure the necessary future funding that will enable those claims to be settled. That funding, however, has not yet been secured.

Once the next monitoring round has been commissioned by DOF, I will ensure that the Committee is provided with full details of the Department's submission at the same time as it is shared with the Department of Finance. Given the significant pressures that remain across the block, however, it is likely that there will be very limited funding, if any, available to the Executive for reallocation during 2025-26. The Department's budget will therefore require continued careful management and difficult decisions in order to reduce the risk of an overspend. All DOJ business areas will be required to continue to implement cost reductions and efficiencies to reduce the level of remaining pressures and live within their budget allocations.

The Committee is already aware that the Department was successful in securing transformation funding of £22·6 million for two projects in the first tranche of bids for speeding up justice, transforming the criminal justice system and modernising electronic monitoring. The Department received £5·1 million in its 2025-26 budget allocation for those projects. Work on both is progressing.

The second tranche for transformation bids was launched on 23 June. The Department subsequently submitted three bids, together with a further bid from the cross-Executive programme for tackling paramilitary activity and organised crime. The Executive Office notified the Department that two of our bids — for ending violence against women and girls and the PSNI Relativity platform — were selected for further consideration by the board. As part of its consideration, the board has requested further information on our two other bids: the enhanced combination orders (ECOs) and the trauma-informed-approach delivery team. We remain actively engaged with the board and its secretariat to assist in its considerations and await the outcome of the decision-making. We will, of course, as we did with tranche 1, inform the Committee of the outcome when it is provided to the Department.

Should the bids not be successful, further funding will be required to ensure that the critical transformation work identified can still move forward. Given the level of the Department's pressures, additional funding to facilitate the delivery of transformation is a key priority to ensure that the Department can continue to deliver on its demand-led services in the most efficient and effective way possible.

For future years' Budgets, the Committee previously received the Department's full submission to DOF on 4 September for the Budget 2026-27 to 2029-2030 information-gathering exercise. In its return, the Department reported non-ring-fenced resource DEL stabilisation pressures of £141 million in 2026-27, £242 million in 2027-28 and £341 million in 2028-29.

On planning assumptions for funding allocations, DOF advised Departments to use the Budget 2025-26 position for all three years for resource DEL budgets. The indicative June 2025 monitoring allocations agreed by the Executive at opening budgets were not included in the planning budgets, as per DOF guidance. For DOJ purposes, our planning was therefore based on a budget of £1·35 billion for the next three years. The Department also took into account confirmed Treasury allocations for transformation, protocol and Windsor framework, and PSNI additional security funding, in order to establish the level of pressures in future years.

At operational level, the budgetary pressures are due to a combination of factors, including a continually increasing prison population, additional demand on police and court services, increasing legal aid requirements, pay and pension increases and inflationary costs. The pressures also reflect the currently unfunded costs relating to the PSNI workforce recovery plan. Given the constrained financial position and the demand-led nature of Justice expenditure, there is no scope for the Department to absorb pressures of that magnitude within its existing budget.

The Department also submitted the bids to DOF to provide details of the transformation tranche 2 bids that were submitted to the board in August 2025. The capital DEL requirements for the Department, including those capital elements of bids submitted to the transformation board, are estimated at £230 million in 2026-27, £264 million in 2027-28 and £320 million in 2028-29 and £260 million in 2029-2030. Those bids are considerably higher than the Department's capital budget of £100 million for 2025-26.

I have just outlined that the Department has identified significant financial pressures for resource and capital requirements. However, until such time as the actual budget settlement is known, it is not possible to determine the full extent of the funding gap and the action that the Department may need to take. In the meantime, the Department will continue to engage with Department of Finance colleagues throughout the budget-setting process.

The Executive's Budget sustainability plan, published on 3 October 2024, included a key commitment that the Executive agree to a future work plan to help secure and maintain sustainable finances. One of the key ways in which that will be taken forward will be through the development of comprehensive, five-year financial sustainability plans for each Department. The five-year plan is therefore key in setting a strategic direction for the Department. We will bring together all the key elements that will impact on resource and capital budgets over the next five years.

This is the first iteration of the departmental plan. We expect that it will be further developed and that, going forward, it will be updated annually. As no decisions have yet been taken by the Executive on setting final budgets for DOJ or for other Departments, it is intended that the plan will remain in draft form until multi-year budgets are set. The Department's five-year plan is being finalised, and full details of it will be provided to the Committee at the same time as it is submitted to DOF.

I trust that I have provided you with a helpful but candid overview of our current financial position. We continue to operate in an extremely uncertain financial environment, and the Department's position on managing the budget remains very challenging. Thank you for the opportunity to provide a briefing; we very much value the role and views of the Committee and are happy to take any questions.

The Chairperson (Mr Frew): Thank you very much for being concise, Richard; I appreciate it. I will ask one question before going to members. Why, in the written submission that you provided and in your presentation, have you not told us about annually managed expenditure (AME)? The £446·6 million underspend equates to 63·6% of that.

Mr Logan: In June, I gave the Committee an overview of the provisional out-turn, and that has, broadly, stayed the same. The Department has £7·3 billion in pensions liabilities and £1·1 million in general provisions, and that all counts towards AME. The £400 million is approximately 5% of the total AME that we manage. We have built headroom into our estimates to allow for any variations at the end.

The Government Actuary's Department provides valuations for the pensions schemes, and we have found, in previous years, that a 1% or 2% change in its assumptions for future life expectancy or something like that can have an impact of £100 million or £200 million. Rather than risk an excess vote on AME, we deliberately built in headroom.

In other areas, such as the compensation services, we changed the statutory discount rate, factoring in certain assumptions to err on the side of caution. I acknowledge that it is a significant amount, but it is not our direct, day-to-day budget. We manage it carefully. We try to manage the £8 billion within a tolerance level of plus or minus 5%. It is significantly higher than the DEL elements.

The Chairperson (Mr Frew): So, you are managing about £8 million. Let us say £10 million.

Mr Logan: It is £8 billion.

The Chairperson (Mr Frew): Is it £8 billion? Sorry, I thought that you said "million".

Mr Logan: There is £7 billion for the police pensions schemes —

The Chairperson (Mr Frew): Right, OK.

Mr Logan: — and £1·1 billion of provisions. That includes legal aid provisions, the litigation claims — legal claims that include injury on duty awards for police and Prison Service staff.

The Chairperson (Mr Frew): You say that it is £8 billion, so you are looking at a budget of £702·2 million for the annually managed expenditure in order to give you that headroom.

Mr Logan: Yes, that is to allow for movements in year.

The Chairperson (Mr Frew): When you say "movements", does that include McCloud settlements?

Mr Logan: It includes elements of McCloud. If there are any elements that affect police pensions, they would be built into the AME for police pensions, and if there are any legal claims from McCloud, any in-year movements in respect of those claims would be counted as AME. For the settlement of any of our provisions, the use of provisions, non-ring-fenced resource DEL takes the hit, whereas the movement in AME each year, whether an increase or decrease, will be the increase or decrease in provision.

The Chairperson (Mr Frew): OK. Are legacy civil cases included in that AME, or is that from resource budget?

Mr Logan: The initial setting up of the provision — whenever police are aware of a case, they will provide for that — would hit AME in the first instance. As and when cases are settled, that becomes resource DEL.

The Chairperson (Mr Frew): OK.

Mr Beattie: Thank you, Richard. It is as well that you understand what you are talking about, because an awful lot of it flies over the top of my head. At the start of the budget, you said how much you will put towards legal aid. Say that was £80 million, but, because legal aid is demand-led, it goes up to £120 million. Does that mean that that £40 million could come out of AME? Could you allocate that from AME in order to cover that demand-led shortfall? Demand is what AME is for.

Mr Logan: There are two elements. When a claim comes in for legal aid and an award is issued, it is set up in the first instance as a provision, but it specifically cannot count as AME. Treasury rules do not allow that to count as AME. The legal aid situation is similar for the Ministry of Justice in England and Wales. Legal aid is, essentially, under the Department's control as regards criteria etc, and it is expected to manage that. It is different from benefit and welfare payments, which are pure AME and are completely outside our control. We are expected to manage legal aid. The provision, when it is set up, is AME, but when we pay the cash out the door, it is resource DEL. We set up an AME budget at the start of the year. The budget for legal aid this year was £120 million.

There is no doubt that there is uncertainty around the timing and value of claims that come in and out. That is one of the areas that we have to focus on in forecasting. We need the claims to come in. At the moment, we believe that that £120 million will be sufficient for this year. However, we cannot control the number or the value of claims that come in. There are historical trends, however, and we do forecasting. We want to focus on that and manage it in order to make sure that there is no risk of overspending or, more importantly, not fully utilising our budget, and that we balance it.

Mr Beattie: I get that. That is why I said that legal aid is demand-led. You literally do not know what the receipts are going to be at the end of the financial year. That is why I was wondering whether you were able to use AME. You have clearly answered no, you cannot, and I am happy enough with the answer. I was just investigating it.

Mr Logan: It would be great if we could. Compensation services and criminal injuries are similar, albeit on a smaller scale. There is a smaller budget, but the same principle applies. We have to wait to see what happens. When we get to the end of the financial year, and we are looking to maximise our budget, there is a risk for the Department that claims will come in and have to be paid right up until 31 March. When we talk about effective financial management, that is one of the risks that we have to manage.

The Chairperson (Mr Frew): When did you relinquish the £446·6 million? When in the year?

Mr Logan: We did not. That is the out-turn that was reported at the end of the year. As I said, we deliberately take a cautious approach on that, so that we do not have an excess vote. We discussed that with DOF, which is content. That is clearly different from the resource DEL, where we are absolutely capped to the budget that the Executive allocate to us.

Mr McGlone: Thank you very much for that. I have a couple of questions, the first of which is on the issue of £228·2 million for compensation for the data breach, and then there is the exceptional pressure of £100 million for PSNI settlement of legal civil cases. Where are we with the data breach, legally? How did you come to that figure of £228·2 million?

Mr Logan: The £228 million covers three sets of legal claims — the PSNI data breach, holiday pay and the McCloud settlements. The figures are based on discussions and advice with the legal profession in order to understand what the claimants are asking for and the potential settlements. That is where those figures are at. They all have business cases, and it is well documented that we have been able to approve business cases on value for money where we think that those are the best settlement terms. We are, however, still outstanding on the affordability position.

Mr McGlone: Are you saying that the £228 million for the settlement of the data breach is a notional figure?

Mr Logan: It is a best estimate, based on the current information that we have. It will depend on whether the cases are settled ahead of a court hearing. That is factored into our estimate. If it proceeds to court, there is the potential for higher settlement costs and additional legal fees. There is a balance there in financial management.

Mr McGlone: So, could it be more?

Mr Logan: Potentially, yes.

Mr McGlone: The case is against the PSNI for the data breach.

Mr Logan: Yes, indeed.

Mr McGlone: At what point do you liaise with PSNI on settlement figures?

Mr Logan: We are in constant contact with colleagues in the PSNI. The normal protocol, whether in this instance or for other areas, is that the organisations that caused the data breach in the first instance are expected to fund it. Clearly, that figure is not affordable within PSNI's current budget. The PSNI accounts for about two thirds of the Department's budget, with the remaining being set aside for prisons, courts and legal aid, so there is no additional scope in the Department to fund those additional costs. That is why, from the outset, we have engaged with the Department of Finance to try to secure the additional funding to meet those exceptional costs. If there were a settlement of £1 million for a normal claim, Departments or organisations would, rightly, be expected to fund that themselves, but the quantum of PSNI claims is such that we just cannot cover it from our existing budget.

Mr McGlone: I understand that. I am trying to drill down. For example, if the court cases run on a bit, as a lot of them do, and come to a point at which the settlement figure is either being contested by the applicants or has been arrived at, does the Department, which is bound up in paying for it — maybe as an intermediary, if the money is coming from the Finance Department — have any input to instruct the police to settle?

Mr Logan: We would have discussions with the police or any other organisations to try to manage the budget. Accounting officers have the clear responsibility not to overspend, so we try to balance any legal requirements to settle claims with our obligations to not overspend. We therefore have a continual conversation with the PSNI and any other areas that have such claims.

Mr McGlone: You do not have the power to instruct them. All you have is the power to say, "Look, we are divvying up the money here".

Mr Logan: The claim is against the PSNI in the first instance. I would like to think that we will get to an agreed position. It is an arm's-length body in the DOJ, and we work in partnership with it.

Mr McGlone: OK. Is the £100 million for the PSNI settlement of legacy civil cases a notional figure as well?

Mr Logan: That is a newly emerging pressure. We have not reported on that to the Committee previously. That was reported formally to the Department for the first time as part of the future years information-gathering exercise. The PSNI has identified £100 million each year over those years. We are probably at the early stages of understanding the breakdown of the costs. I am due to meet PSNI, Legal Services and the sponsor team from the Department in November to drill down into the figures and see the basis for that total, how it was calculated, how realistic it is that it will be paid and whether it is evenly spread over every year or whether there are options for it to be phased.

Mr McGlone: I know that it is early yet, and we have not seen the final legislation — it may be amended — but are you keeping an eye on the proposed changes for legacy legislation in case it starts to be padded out to such a degree that there may be more draws on compensation as a result of legal actions? Can I take it that that is a factor?

Mr Logan: From the outset, in any engagement with NIO officials on that matter, we have made the point that we do not believe that Justice or the block grant was ever funded for the legacy costs. They are unique costs to Northern Ireland. They did not form part of the devolution Budget settlement. The costs are emerging. The Chief Constable says that he has no specific budget for that, and the same applies to the Department of Justice: the costs always sat outside our budget.

Mr McGlone: Just to round that off, are you getting any positive vibes from the NIO that, if that money is required because of legal actions or settlements on the back of the proposed legacy Bill, it will pony up?

Mr Logan: To date, no. There has been no positive feedback on that, but that does not mean that we stop there. That is something to continue to challenge to see what can be negotiated in future for those costs.

Mr McGlone: OK. Thank you.

Mr Kingston: I am surprised that we were not given an explanation of the 63% underspend in AME funding in the notes, because it is the standout statistic. Run that past me again. Is it mainly pension payments, or is the allocation a ceiling figure for an unpredictable cost?

Mr Logan: The provision is an uncertainty. We do not know the timing of when it will be paid or the amount that will be paid. Typically, it relates to legal claims, but pension liabilities and our injury-on-duty awards are also key areas. We account for only the increase or decrease each year, and that is scored against AME. In cash terms, there is no impact on the Department, the block budget or any of our organisations. It is a non-cash transaction, reflecting that, at some point in time, we will have a liability. It will not hit the real budget, so, as regards press coverage and what affects the delivery of services across organisations, that is not AME. Apologies for not including it. We covered it in the questions that were asked at the June meeting, but I am more than happy to outline that again.

Mr Kingston: So, it cannot be reallocated in the Department then. It is not part of the DEL budget.

Mr Logan: No. There is no loss to the Department or the block budget at all. Nobody loses out as a result of it.

Mr Kingston: I turn to paragraph 18, which is about the transformation fund bids. There is £4·8 million for speeding up justice and £0·3 million for GPS-enabled tagging. Will the Department be able to produce figures for ongoing savings coming from the transformation fund investment, given that the idea of it is to produce a recurring saving?

Mr Logan: There is a formal reporting mechanism through the transformation board. Both of those projects, and all the projects that were successful, have to report to it. The projects will report against the benefits that are realised and things like that. We expect the efficiencies and all the other benefits to come through in that.

Mr Kingston: Will the projects need to identify a figure? Will they aim to identify actual savings, rather than just saying that they are more efficient?

Mr Logan: Yes. If things are more efficient, that figure could be cash or non-cash. Part of the challenge for all Departments is the fact that inflation and pay awards increase our costs automatically. If we could even manage to cover some of those inevitable increases, although it might not reduce the costs for our starting point, that would be an effective saving. It is a combination of those things. That is key. The transformation board has been very certain in saying that it wants those regular updates. That is part of the whole process and structure for the transformation board.

Mr Kingston: OK. Thank you.

The Chairperson (Mr Frew): What is a "Relativity platform"?

Mr Logan: It is an IT solution to reduce the amount of paperwork. It involves scanning. It will allow for more secure redaction and transmission of information. It is primarily an IT solution to make things more efficient and effective and to reduce the number of manual hours that are needed. It will open up opportunities for analysis and to make more of information. That is what it is. "Relativity" refers to the name of the bespoke software or something like that.

The Chairperson (Mr Frew): Is it an internal platform for the police, or will an element of it relate to evidence in the criminal justice system?

Mr Logan: In the first instance, it has been developed by the PSNI, but it has said that there is a potential to expand it wider, even throughout the public sector. We will wait until it does the full proof of concept and develops the platform, but that option is one of its selling points. In the first instance, it is for the PSNI, but there is the potential to roll it out further.

The Chairperson (Mr Frew): I do not want to prejudice your bid to the transformation board, but why did those two projects come out just in the second tranche? Why were those bids not put in during the initial tranche? Why did we not put in the bid for the Relativity platform and the joint bid for ending violence against women and girls measures before?

Mr Logan: Last year, the Department submitted the ending violence against women and girls bid in the first tranche, but the transformation board decided not to progress that bid. The Relativity platform for the police is a new bid this year. I imagine that the police will have said that they need investment to do that. That is part of the expected benefit from the transformation board. Departments, not just ours, have really good ideas for transformation, but they need upfront funding to develop those or additional staff to free up the experts in business areas to let them develop new ones or to engage outside firms or technology. The key limiting factor in the past is that those things need additional money. Rather than just sitting down and saying, "Look, we are going to change how we do it and move people around", which can be done at negligible cost, this requires upfront investment to achieve the most impact.

Miss Hargey: Thanks very much for the update. I want to ask about the equality screening assessment. The initial assessment showed that there would be a potential equality and/or good relations impact, with a more disproportionate impact on those from marginalised or disadvantaged groups. Obviously, huge numbers from that section of the population are in the justice system. Why did the Department feel that a full equality impact assessment (EQIA) was not needed? If we move to a three-year Budget cycle — I know that we have to wait until the Chancellor's announcement in November and that it may be next year before we see the Budget — will you conduct a full EQIA on your three-year budget?

Ms Andrea Quail (Department of Justice): We are looking at the three-year budget. We have gone out to the business areas and asked them to conduct screening in the first instance. We are in the process of bringing that information back into the Department, after which we will summarise it. We have a return due with the Department of Finance on 24 October. We hope to have all the information collated and assessed at that stage. That will give us a better indication of the next steps that are required.

Miss Hargey: So no decision has been taken on whether to do a full EQIA on a three-year budget.

Ms Quail: There has been no decision at the moment.

Miss Hargey: OK. The bid for GPS electronic tagging with the new contractor, Buddi, is in the Department's normal contract, and then there is the transformation part of that. I am keen to get an update on it, because there were issues with the previous contract holder. My understanding from previous presentations was that it would take some time for GPS-enabled tagging to be implemented. I know that it is not a finance point per se, but I am keen to get an update at some point on where that contract is, how it is working and how the main contract in the Department sits with the transformation bid moneys in order to look at the outcome.

On ending violence against women and girls — again, this is not a finance point primarily — I am keen to know the structure of the Department's engagement with the Department of Health, which will be a key player in that, and the PSNI, and how those relationships will be managed if the bid is successful.

You said that the bids for trauma-informed practice and the Probation Board were not successful. Did you get any update from the transformation board on areas of those bids that need work and whether they are likely to be considered again, given that, I know, the budget is limited in this monitoring round?

Mr Logan: It has not been decided. We have not been told that those two additional bids have been formally ruled out. The board has asked for more information, and the business areas have provided that. We have two bids that are definitely through. On Monday 6 October, presentations were given on those two, so we await the outcome of that. We have been told that the other two bids — for ECOs and trauma-informed practice — are still in the mix and have not been formally ruled out.

We are more than happy to provide summary updates on financial bids, but the experts are in the business areas, so they will be able to advise the Committee much better than I can on the work that they have done and will be doing.

Miss Hargey: There was a call for Justice to have the first call in the monitoring rounds because of PSNI resource pressures. Have you been looking at any bids, other than for PSNI costs, as part of October monitoring?

Mr Logan: October monitoring was not formally commissioned. We are probably looking at a December monitoring round, which DOF might commission at the end of October or into November. We need to see the parameters of the ask. Decisions that the Executive take in the interim will be reflected in the formal commissioning note. We get monthly formal updates from business areas, and our Finance business partners are in daily contact with all their areas, so we have a good handle on our pressures. The main pressure that we face is still the police, but there are other potential areas. At June monitoring, we put a bid in for legal aid. As I said, we can manage that at the moment, but we carry a risk for the remaining part. We will certainly put in bids, including for the PSNI.

Miss Hargey: There is £32 million in overcommitments. How do you manage those pressures while waiting for a monitoring round that has been pushed towards the end of the financial year?

Mr Logan: That figure is coming down. We have been clear that business areas should not expect future allocations to come through. Some areas drop off naturally, where, for example, we got a heads-up that a cost might come through, but it does not materialise in the current year. The business areas are actively managing the cost areas, but, although the £32 million is coming down, we will still have pressures that cannot be funded from the existing DOJ budget.

Miss Hargey: OK. Thank you.

Mr Beattie: I will follow on from that, Richard. If there is no October monitoring round, are you hoping that you will get the £7 million that was promised for the Chief Constable's recovery plan in December?

Mr Logan: October monitoring has not been formally commissioned, and, given that today is 9 October, I cannot see that happening; that is why we deliberately refer in the written paper to the "next" monitoring round. There is uncertainty for all of us about when it will be. My guess is December.

Mr Beattie: The £7 million is still only a promise. What if that does not materialise? We have obviously been bounced into December for a reason. Maybe that monitoring round would not have had the funds for it. Is there a danger that the money will not be available?

Mr Logan: Until we get formal notification that it has been confirmed, there is always a risk that money will not come through. However, we will work on the assumption that it will come through.

Mr Beattie: You were working on the assumption that it would come through in October.

Mr Logan: Yes.

Mr Beattie: Now you are working on the assumption that it will come through in December.

Mr Logan: That ties in with the uncertainty that we have, as a Department, in trying to live within budget. It is about finding a balance. There are certain things that we can control, but the list of things that we cannot control is much bigger.

Mr Beattie: That is fair enough.

I have one more question. It is on a different area. I will go back to the legal aid budget, if you do not mind, because it taxes me a little bit. When is that audited?

Mr Logan: It is audited at the same time as other Departments and agencies. The audit generally starts in January each year and finishes at the end of June. Years ago, the Legal Services Agency did not meet that target of summer recess, but, for the past seven or eight years, if not more, it has done so, so it is fully up to date.

Mr Beattie: The audit from last year gives us a figure of about £2·8 million for fraud and error. What are we looking at for fraud and error this year? Will the accounts be qualified again?

Mr Logan: My expectation is that the accounts will be qualified, because the Audit Office regularly qualifies accounts with that sort of fraud and error figure, but that the improvements that have been made in reducing it will be recognised. A number of years ago, the criticism in the qualification was that the Legal Services Agency could not put a value on legal aid.

Mr Beattie: I remember.

Mr Logan: That was the starting point. We have made significant progress since then. The Department for Communities standards assurance unit is doing independent sample testing, so work is progressing on that.

Mr Beattie: Are you as comfortable as you can be that fraud and error are still reducing?

Mr Logan: I am hesitating because it depends on the sample. If 1,000 claims were picked, one could be a value of £100, and another could be a value of £5,000. It depends on what the sample is, but the trend is that fraud and error are being addressed and are reducing. Training has been put in place. Proactive measures are being put in place to address fraud and error.

Mr Beattie: Richard, are we doing recovery of that fraud and error? Are we doing 100% recovery of fraud and error, or 60%? Where are we on that?

Mr Logan: My understanding is that, where specific cases of overpayment are identified, that is being recovered, and that, if underpayments are identified, that, similarly, is being addressed. I am not so close to it, but that is my understanding.

Mr Beattie: Thank you.

Ms Ferguson: My question is about the budgetary future. Will you explain how a multi-year budget might be able to put the Department on a more sustainable footing? If you had a multi-year budget, what difference would it make?

On tangible benefits, you mentioned a cost-realisation plan and said that that could be cash or non-cash, etc. Although we do not have a five-year Budget at this stage, we have plans in that regard. What work have you done to scope out the level of demand for services and of efficiencies over a five-year period? What wider work needs to be done when you are forecasting? I am keen to seen efficiencies. Likewise, if you are speeding up justice, what are the forecasted savings? Maybe there is not a cash benefit from that. How does the Department work through longer-term planning?

Mr Logan: For the past 10 years, there have been only single-year Budgets, so this is new territory for everybody. The expected benefit is that it will give us assurance of what our budgets will be, so that we have certainty and can plan ahead. However, that might just confirm that we have a deficit for the next number of years; we might just have a confirmed shortfall. Once we know, we will be able to plan better. That will allow us to make decisions on things that affect not just next year — 2026-27 — but years down the line. We need to know what those values are going to be for the budgets.

When the likes of prisons do their costings for the future, they make assumptions about the number of prison places and things like that to see what the demand will be and how that will affect the cost of running the prison, the accommodation needed and other such costs. Legal aid will look to see what impact any changes coming from the ongoing reform programme will have. Courts will do similar. Each organisations has assessed and costed the demand in its particular area. We have done the future-years information exercise. The five-year plan is, essentially, the same information; it is just rebadged and presented in a different way.

For the likes of speeding up justice and some of the work that courts are doing, it could be towards the tail end of the three- or four-year period before some of the efficiencies come in. It takes a number of years to achieve efficiencies. We will be looking to raise additional income. Courts are considering increasing fees, so there could be cost recovery from that. That will be factored into it as well.

In planning, our two main assumptions are about the level of pay awards and the level of inflation. The pay awards are broadly in the range of 3% to 5%. That is not to prejudice any final decision. DOF has given the Northern Ireland Civil Service (NICS) parameters to work within, which are its best knowledge at this time of what the pay will be, including for anybody who is under a specific pay award. At the moment, our pay bill as a Department, across all the organisations and non-departmental public bodies (NDPBs), is approximately £1 billion. For every 1% pay award given, that will cost the Department £10 million. If there were a 5% pay award, it would be £50 million. Based on those projections and estimates, when we get to 2029-2030, our pay bill will be in the region of £1·3 billion, at which stage 1% will be £13 million. The other parameter is the rate of inflation, which is sitting at 3% or 4%. That is tens of millions of pounds as well. Each business area will provide assumptions and forecast individually, but, at a strategic level, the pay award assumption is the key one that has the biggest impact on our budget.

Ms Ferguson: If you look after the pennies, the pounds will look after themselves. I am keen to know what early-intervention work will is being done, because we want to see a reduction in the number of people going through the courts and prisons. I get that inflation and pay are fixed, so it is a bit easier to forecast what they will be in five years' time, but is any early-intervention work being done on a cost-benefit realisation plan where it is built in over maybe five years?

Mr Logan: That probably links into the speeding up justice transformation bid. There five pillars: early engagement, out-of-court disposals, committal reform, the remit of Magistrates' Courts and the digital strategy. Those key elements are about getting the more serious crimes into court earlier, and to speed up the work for courts down the line. That is probably the primary area in the speeding up justice transformation bid. The speeding up justice team will have a business case that will set out the benefits that can be expected over the years. That is probably the key thing.

Ms Ferguson: I would love to see that from a financial point of view. We can see the trend of all the costs increasing, but what is being done within the Department to reduce costs so that those can be seen over a five-year period? It is difficult to do it over one year, but, at the end of five years, it would be good to be able to say that we are saving because we have been able to reduce need across the justice system. That is an area of work that I would really like to see presented in plans, if we get into a multi-year Budget cycle.

The Chairperson (Mr Frew): Let me bring you back to the this year: the Department's overcommitment. In the absence of an October monitoring round, what work is being done to bring that overcommitment down?

Mr Logan: That is the work that we are doing day-to-day with our business areas in trying to get cost reductions and efficiencies to bridge the gap. The £32 million is reducing. We will now see whether we can reallocate any easements that come out of any business areas in order to offset costs and pressures elsewhere. We talked about the £7 million, which is an element of that. However, the final bit is the £5 million or £10 million or so, which is under 1% of our budget. Our budget is £1·4 billion, so 1% is £14 million. We are very close, but it is just about taking that final step to ensure that we do not overspend.

The Chairperson (Mr Frew): How does a first call in a monitoring round work? Is that a new thing? Have you guys, as financial directors, been pushing for that? How is it that we now have £7 million ring-fenced as a promise for Justice?

Mr Logan: I imagine the basis of that is that there was not the money for it in the June monitoring round, but, it was said that, whenever we came next time, we would have the first call. We would have much preferred to have got it in June monitoring.

The Chairperson (Mr Frew): Of course.

Mr Logan: Given that we did not, that was probably the next best thing. We know that resources will be limited in-year and that other Departments will put bids in. The Executive agreed at that time that we would have first call. We certainly pushed for that.

The Chairperson (Mr Frew): Do you think that the practice of first calls will increase if there are multi-year Budgets and more in-year monitoring rounds?

Mr Logan: The complexity will increase with regard to Programme for Government allocations, Executive priorities or issues that come up unexpectedly. There will be no simple way of managing the Budget. There are so many complexities in our Department and across all Departments that it will be a case of managing those as best as possible.

The Chairperson (Mr Frew): OK.

Mr Kingston: Will the pilot on domestic abuse protection notices and orders, which is part of the transformation fund bid, require legislation, or can that be advanced under existing legislation?

Mr Logan: My understanding is that that business area has looked at other areas to see how to undertake a pilot there. The outworkings of that will determine what needs to be done regarding any additional legislative requirements. I honestly do not know, but that will be part of the outworkings of the pilot.

Mr Kingston: It sounds positive anyway.

The Chairperson (Mr Frew): Thank you, Richard, Andrea and Louise for attending and answering our questions. We will see you in the future no doubt.

Mr Logan: Thank you.