Official Report: Minutes of Evidence
Committee for Finance, meeting on Wednesday, 10 December 2025
Members present for all or part of the proceedings:
Mr Matthew O'Toole (Chairperson)
Ms Diane Forsythe (Deputy Chairperson)
Mr Gerry Carroll
Miss Jemma Dolan
Miss Deirdre Hargey
Mr Harry Harvey
Mr Brian Kingston
Mr Eóin Tennyson
Witnesses:
Mr O'Dowd, Minister of Finance
Mr Neil Gibson, Department of Finance
Ms Joanne McBurney, Department of Finance
Ministerial Briefing: Mr John O'Dowd MLA, Minister of Finance
The Chairperson (Mr O'Toole): I welcome John O'Dowd, Finance Minister. We very much appreciate you making the time to be here. We also have Neil Gibson, permanent secretary in the Department of Finance; and Joanne McBurney, who is deputy secretary in the public spending group and a frequent attender at the Committee. We welcome you all and, hopefully, we will have a useful session. There are no dark clouds outside, Minister, and hopefully —
The Chairperson (Mr O'Toole): Indeed, absolutely. We intend to shine a light, positive or just in general, on the public finances. There is lots to talk about, so thank you for your time. We would welcome an opening statement. Members should indicate if they wish to ask the Minister a question.
Mr O'Dowd: OK. Thank you very much, Chair, Deputy Chair and members of the Committee, for inviting me along today. As you said, there are several areas that we want to cover, and I thought that it would be helpful to cover some of those in my opening remarks.
I begin with the December monitoring round. I was pleased to secure Executive agreement yesterday for the £104 million towards pay awards for healthcare workers, police, teachers and infrastructure workers, demonstrating the priority that the Executive attach to them. The Justice Minister has confirmed that she will now be able to fund this year's police pay uplift in full. The ministerial direction agreed by the Executive for health worker pay parity will also ensure that there is no delay in the implementation of that award to health workers. I have asked all Ministers to endeavour to find further efficiencies to help fund the pressures facing Departments. I have also committed that, should any further Barnett consequentials arise in the Westminster Estimates in January, I will move quickly to bring recommendations to the Executive to allocate that funding towards those costs.
As members are aware, significant capital allocations were made totalling £160 million. That included meeting a £29·8 million bid for social housing, in line with our commitment to build more social and affordable homes. That investment and others announced yesterday will be a huge boost to the construction industry and, indeed, the local economy by sustaining and creating jobs. Capital allocations will also see further investment in our schools estate, education colleges and higher education institutions. There were also capital funding allocations in water, roads and rail infrastructure.
The Committee will be aware of the forecast out-turn position and the fact that the financial situation is extremely challenging. It is likely that there will be an overspend, despite my repeated advice to Departments on the need to live within their allocated budgets and the consequences of any overspend. Given that any overspend this year will be deducted from the Executive's funding in 2026-27 by the Treasury, every Minister must redouble their efforts to identify efficiencies to help manage the overall financial position. I am determined to continue working collegially with every Minister to find a way forward.
I know that you are interested to hear and ask questions about the multi-year Budget. Since the spending review in June, there has been extensive engagement with Departments as we have worked through the multi-year Budget process of information gathering. The autumn Budget on 26 November confirmed the totality of our resources funding from 2026 to 2029 and our capital funding from 2026 to 2030.
I welcome the £370 million of additional Barnett consequentials announced in the autumn Budget. While that may sound like a substantial allocation, in reality, when taken over a four-year period, it falls far short of what is needed. The Chancellor could and should have gone further. The additional funding provided will not undo the damage caused by the years of British Government underfunding of our public services, and it is insufficient to plug current and future funding gaps. The multi-year Budget will, however, give Departments the certainty that they need to plan for the longer term. It will make much-needed transformational change in the delivery of public services, despite the Chancellor not providing the investment required to accelerate the pace of change. The multi-year Budget will shape our public services for years to come.
It is important that we are honest about the scale of the challenges facing us. As I have said many times, with the demand for services outpacing the funding available, continuing to do as we have always done is not an option. Transformation and innovation are essential. I know that change is difficult, but we have to do things differently if we are to change our public services for the better.
The COVID-19 pandemic has fundamentally changed how we use our government estate. My Department is progressing an ambitious office estate strategy aimed at reducing the in-scope Civil Service office accommodation by approximately 40% by 2028. We have divested 17 properties from the Civil Service estate. That will result in annual rates and rental savings in the region of £3·7 million per annum and reduce maintenance costs and energy consumption. My Department is also progressing the sale of three service office properties in Belfast, namely those at Clarence Court and 34 College Street and Fermanagh House. The intention is to dispose of those assets at pace to reduce the operating costs, reduce the Department's carbon footprint and generate additional capital funding for allocation to Departments. I urge public bodies that own properties that are no longer in use and have no identified future use to work with my Department's Land and Property Services (LPS) to dispose of them. That is important not only to achieve a capital return but to ensure that properties are not left to decay.
By harnessing the power of technology we can drive efficiencies, reduce costs and deliver smarter, more responsive public services that truly meet the needs of our citizens. The Infrastructure Minister has announced that new technology, such as digital surveying equipment, will be used to assess road conditions. That is the type of innovation that we need to deliver sustainable services that meet the needs of our citizens.
In my Department, the Integr8 programme will integrate finance and HR services for the first time in the Civil Service. That, coupled with the delivery of our new people strategy, will enable us to deliver modern, flexible and customer-focused finance and HR services.
One of the areas in which my Department has been trying something new is recruitment. Since April, my Department has filled over 2,400 vacancies to support Departments. One of the criticisms often levelled at my Department is the time it takes to recruit. On 28 October, my Department launched a new pilot recruitment initiative for administrative officers (AOs) in the north-west. That pilot marks a shift away from traditional, annual recruitment campaigns towards a more agile and dynamic approach. Almost 900 individuals were interviewed over three days — on 26 and 27 November and 3 December — with the results issued to candidates within days of their interviews. Those being considered for vacancies have already started the onboarding process. Recruitment of that size and scale has never been done over such a short period. Of course, as it is a pilot, there will be learning from Departments, participant feedback, trade unions and elected representatives, but we will listen, learn and, where needed, improve and go again. It is important that civil servants are given space to innovate and try new things. If we keep doing the things that we have always done, we will get the same outcomes.
It is essential that the Executive are funded fairly and sustainably to enable us to deliver the public services that our people deserve. That will remain our focus. Professor Holtham's report was invaluable in our negotiations with Treasury, which, as Committee members will be aware, led to our securing £1·4 billion in additional funding. Again, however, the autumn Budget let everybody across these islands down, which, in my view, has further strengthened the argument for fiscal devolution. Having greater fiscal devolution will allow us to make different choices, change behaviours, spur economic activity and generate income for public services in a fairer and more progressive way. Last month, I presented a paper to the Executive setting out my approach to progressing discussions on that with the Treasury. I am fully aware of the different political views on the matter, but we can work together and use the evidence base provided by the independent Fiscal Commission to agree where greater control over fiscal powers could deliver real benefits. We have to approach it with our eyes wide open. I am not for one second saying that it will be a panacea for all our problems, but the Executive, the Assembly and this society will have to take on the challenges and opportunities of that fiscal offer.
I have no doubt that colleagues will ask questions on the strategic review of rates, the wider role of DOF and our legislative programme.
I welcome the scrutiny of the Committee. In particular, I mention again the work of the Committee on the Deaths, Still-Births and Baby Loss Bill in the Assembly last week and over several months during its scrutiny of the Bill. That proved that, when we work together in the common interest, we can deliver good for all the people whom we serve.
The Chairperson (Mr O'Toole): Thank you, Minister. We all share that view on the Bill. We were keen to have baby loss certificates in the Bill, and we appreciate working with you on it.
Virtually all the members have indicated that they wish to ask questions. On the December monitoring round and the Budget position, you have indicated that there will be an overspend in 2025-26. We also know that we will start 2026-27 overdrawn, effectively, because of some of the issues that we are pushing into next year. Can you tell us what the overspend will be for 2025-26?
Mr O'Dowd: It is currently at a round figure of £387 million. That is a pressure at the moment. Obviously, we await the provisional out-turns from our Departments, which will change, hopefully for the better, over the coming months. I have engaged with my Executive colleagues and others on that. The constant message to them has been that we need to drive down that potential overspend, as, due to Treasury rules, it will result in our losing that amount from next year's Budget. Next year's Budget is particularly tight. That means that Executive colleagues and their accounting officers have a lot of work to do to drive efficiencies.
The Chairperson (Mr O'Toole): We are sitting at an overspend of just under £400 million. I presume that that is all resource departmental expenditure limit (RDEL).
Mr O'Dowd: At the moment, the main drivers are Education and Health. This month, we are seeing a forecast for the Department of Health of around £208 million — apologies: it is £139·4 million — and for the Department of Education of £247 million.
Mr O'Dowd: It is not all pay, no. Departments forecast overspends for a variety of reasons. A significant chunk of it is pay but not all of it.
The Chairperson (Mr O'Toole): Departments will see most of that as being inescapable, I presume. How realistic is it that that will be managed down? If Departments are saying, "This is inescapable; we have to spend it", and you have already said to Health, "Use the money for the pay increase", which I agree with, what, realistically, will they be able to do to manage those overspends?
Mr O'Dowd: I cannot micromanage each Department, nor is that my role. Ministers and their accounting officers will know better than me the areas in which they can bear down to seek efficiencies. It is up to Ministers to continue to engage directly with their spending areas. I also encourage all Ministers to engage with my team and use its skills and assets to assist them in driving down costs and ensuring that there are efficiencies in the system. You could argue that my Department is mainly people-based, which means huge inescapable costs, but we are coming in on budget. I accept that Health and Education staff are literally on the front line — they are in the classrooms, the hospitals and the care homes — but decisions have to be made at ministerial level and local level on how to live within budget.
The Chairperson (Mr O'Toole): You guys, collectively, must have a view about where the overspend can be managed down. We are now three months from the end of the financial year. Rather than imploring finance directors and Ministers to live within their means, do you have a specific view on where they should live within their means and which things should be managed down?
Mr O'Dowd: The Executive is made up of individual Ministers who have responsibility for their Departments. They have to take on the responsibility of living within their budgets. That is their role and responsibility. I doubt that there are many around the table who would want me to take on more powers. If people want to give me more powers, I probably —.
Mr O'Dowd: There may be a difference of opinion around the table on that. The Ministers around the table are the best people to manage their Departments. Their accounting officers should be working hand in glove with their Ministers on their budgetary responsibilities. They know their Departments better than anyone, so it is up to them to manage their budgets.
The Chairperson (Mr O'Toole): All of that is understood, but you are the Finance Minister: you presented the monitoring round yesterday, and you are, ultimately, responsible for going to the Treasury and saying, "I'm sorry, but we will be £400 million overdrawn at the end of this financial year". If that overspend is not managed down, it will have to come off the block grant in 2026-27. In addition, we will have the pay pressures that we have already agreed. I will try to simplify it: in effect, we have said to Health, "You can have an overdraft of £100 million. You can start behind, as it were, in order to absorb that pay pressure". We therefore add an extra £100 million for Health. We heard today from the Justice Minister that the Executive have agreed that the £120 million or thereabouts for the data breach will also be met next year. That leaves us getting on for £600 million of pressure before 2026-27 starts.
Mr O'Dowd: The projected overspend at this stage is £387 million, which is down from last month. As I said, it is up to Ministers and their accounting officers to manage their Departments. I may have views on where pressures should be met or what is a priority in each Department, but that is not my role.
Mr O'Dowd: It is not my role. I am not the referee or the VAR.
Mr O'Dowd: You are not being cheeky, but I am outlining my role. Obviously, like everybody around the table, I have political views and views on where priorities should rest, but it is not my role to go to the sideline, watch a replay and say, "Well, I think this is what should have happened".
The Chairperson (Mr O'Toole): I totally get that, but, as Finance Minister, you have said and put out on social media that you have allocated £300 million for public services. Some people might ask, "If you are allocating £300 million for public services and taking the credit for that, are you not also responsible for managing the pressures?".
I want to ask about one particular pressure for next year. The Justice Minister is saying that the Executive agreed yesterday to fund the data breach payments, and lots of PSNI officers will be pleased to hear that. Is that your understanding?
Mr O'Dowd: I have heard reports of what the Justice Minister said, but I have not heard the media interview. I am not in a position to discuss Executive business. It is clear that the Executive will have to deal with the data breach payments. First, the data breach should never have happened. The proper processes and protocols should have been in place within the PSNI to ensure that a data breach did not happen and did not place added pressures and concern on officers and civilian staff. At this stage, my understanding is that those cost pressures will not crystallise until the next financial year.
Mr O'Dowd: The 2026-27 financial year. Therefore, it is only right and proper that, when the Executive are planning their three-year Budget, they take that into account, because they will have to deal with it.
The Chairperson (Mr O'Toole): I do not think that I need to repeat verbatim what was said on a radio programme that I happen not to listen to, but the specific comment was that the Executive have agreed to fund that next year. Is that not your understanding?
Mr O'Dowd: I am not going to get into discussions about what did or did not take place around the Executive table.
The Chairperson (Mr O'Toole): That is not a no, but it is not a yes either. You are not confirming what the Justice Minister said, but you are not disputing it either.
Mr O'Dowd: I am not in a position to discuss what happened around the Executive table.
The Chairperson (Mr O'Toole): You are being monkish.
I have one final question before I move to other members. Joanne McBurney might know the answer to this, because she has a good head for history. We had a £250 million capital underspend in December monitoring. I have looked at the figures in previous years, and I cannot see a bigger underspend than that in capital in January monitoring. Am I wrong?
Ms Joanne McBurney (Department of Finance): I honestly cannot remember. This is not January monitoring; it is a combination of October and January monitoring. If you added the two together in previous years, you would probably find similar numbers. The other thing to remember is that a bulk of the money was not spent due to the ongoing legal challenges with the A5. Also, not all of that is money that is to be reallocated; some of it is money from the Irish Government that will be reprofiled.
The Chairperson (Mr O'Toole): That is true. There is about £45 million from the Irish Government.
A final question from me: are you confident that all the capital can be spent by the end of the financial year?
Mr O'Dowd: It has been allocated on the basis that Departments have reported to us that they can spend it. We have made it clear to all Departments that they should continually monitor their capital spend. If there are slippages, they should report those to us immediately, because there are other Departments that can spend more capital in this financial year.
The Chairperson (Mr O'Toole): Fingers crossed. There are lots of potholes to fill.
I will start with questions from the Deputy Chair. I ask that members keep their questions disciplined to budgetary matters, because we will have an opportunity to come back to broader topics after that.
Ms Forsythe: Thank you, Minister, Joanne and Neil. It is great to have you here.
Minister, we on the Finance Committee appreciate receiving the monthly out-turn reports. Obviously, they also go to you and your officials. From much of what has been said, it seems as though our current position on monitoring is really surprising to people, but we have been talking about it in Committee. It is not as though everybody dials in and listens to the Finance Committee to hear about it, but it is not a surprise to us. When you, as the Finance Minister at the centre of the process, see that pattern, what is your role throughout the year?
Mr O'Dowd: My role throughout the year is to engage with Executive colleagues to ensure that they are aware of their responsibilities to live within budget. My accounting officer and senior finance team also engage on that at their respective levels.
I am not surprised by the projected overspend. I am surprised that some Departments did not take action sooner. Perhaps there has been a tendency in previous years to rely on monitoring rounds. Last year, we had a significant autumn Budget and announcement that brought significant funding to the Executive, but I have been clear from day 1 that at no stage have I expected significant Barnett consequentials to come from Westminster in this financial year.
Ms Forsythe: You said that the current projected overspend was £387 million: is that as of today? We received the October out-turn in our papers, which stated that the projected overspend was £439 million, with further overcommitments of £231 million, leaving a total of around £670 million.
Mr O'Dowd: Those are the figures that were returned to my Department yesterday. There will also be an impact as a result of the December monitoring round.
Ms Forsythe: It will be helpful when we see those figures coming through in the new year.
You talked about a January fiscal event: can you give us any more detail on what you expect that to be?
Mr O'Dowd: It is the Westminster Supplementary Estimates. It is tidying up its accounts, for want of a better term, as it heads towards the end of its financial year. As a result, it is expected that small amounts of funding will be available to the Executive through Barnett consequentials. It is not going to be a major statement; it is a routine exercise in the Westminster fiscal programme, but I suspect that small amounts of money will be available to the Executive.
Mr Neil Gibson (Department of Finance): As the Minister indicated, there is also a responsibility for us, as accounting officers, to keep trying where we can to see whether there are any savings. Whilst we have a singular responsibility to the Department for which we are accounting officer, there is a collective responsibility too. A number of Departments were able to provide easements to help the pressures elsewhere. That remains a requirement for us. You can see from the figures that the work is far from done, so it is important for every Department, mine included, to make sure that they incur no expenditure that they could avoid. If there is any possibility of getting any more money back into the system, we should try to do that as well. That is a responsibility that all the accounting officers hold, me included.
Ms Forsythe: In the monitoring round, I saw that some money is going back from the different transformation projects across the Departments. Are those progressing at the pace at which you had hoped, or are they falling behind? We have a good opportunity for transformation.
Mr O'Dowd: I have no significant concerns at this stage. The board monitors progress on those projects, and, in some instances, it has appointed specialists to engage with Departments.
I have already met the head of the Civil Service about the second transformation tranche. We hope to progress that. The second tranche will most likely move forward in the new year. I have no significant concerns at this stage.
Mr Gibson: No. Given that they are all transformative and a little unusual in nature, perhaps trying something different, it is not surprising that the profiling has moved out a little. Some of them depend on recruitment, which has its own challenges in terms of getting the right people. We were expecting a little bit of profiling. That is how we should think about transformation. The funding is allocated over a number of years, so we expected a bit of profiling. The transformation board, in addition to providing information on the fresh tranche of bids, will provide an annual report on how those things are doing. One of the ideas of the transformation funding is to be agile. Therefore, if funding or whatever we are trying is not working, it can be redeployed. We will get an annual report in the springtime of next year. That will be useful feedback on how the projects are doing.
Miss Dolan: Thank you, Minister, to you and your team for coming in. I have two questions, the first of which is on the multi-year Budget. How important is a multi-year Budget in order to build on the positive progress that has been made to date?
Mr O'Dowd: The quanta of moneys available during the multi-year Budget period are not what we had hoped for. In this year's Budget, we are projecting a £387 million overspend. That figure will vary. We are not talking about huge amounts of additional money. The projected increased Budget take for the Exchequer as a result of the autumn Budget is £16 billion up until 2030. I and my Executive colleagues are talking in the hundreds of millions when it comes to what we need to balance services. I would gladly take more than that to improve public services, but, to balance where we are and give us a steady platform from which to move forward, we are talking about figures in the hundreds of millions.
The ability for Departments to plan over a three-year period is a game changer and allows Departments to think in the long term. That much-used term, "transformation", is much more easily achieved over a three-year Budget than in a single-year Budget, and it allows for efficiencies to be found and redirected to front-line public services.
Mr Gibson: It gives a further tool for accounting officers to move into a more strategic space. Often, you are just trying to survive the year that you are in, which does not allow you to do the strategic workforce planning or the longer-term estimates on what workforce you need and what income you might have. As the Minister and his predecessor had set out, we try to think about pay at the beginning of that cycle so that you know your pay implications. A proper strategic approach to planning all of your budgets is an opportunity that we have not had. We have always been trying just to survive each year. If you need to start a legislative programme of work or a workforce restructuring, you have a runway to do that. For me, as an accounting officer, it presents a different set of opportunities to those that I have had to date in the role.
Miss Dolan: Thank you. It definitely makes sense for planning.
Chair, my other question is about the local growth fund. Do you want me to come back in on that?
Mr Kingston: Thank you, Minister and officials, for your attendance. I welcome the fact that you started your address by highlighting some efficiencies and savings that you have made through the disposal of assets that are no longer required. From yesterday's monitoring round announcement, I welcome the £29·8 million in capital for the social housing development programme along with allocations for cladding, safety and disability adaptions.
Last week, I met the Housing Executive's chief executive. She highlighted the fact that the Housing Executive is having to dip into its reserves for the first time ever to achieve the necessary investment in its housing stock. Obviously, that is not sustainable. I understand that that is a consequence of rents having been frozen in five of the past 10 years, which, while good news for tenants, means that the Housing Executive has less money to invest. It is seeking borrowing powers, which will require change at Westminster. Can you explain what representation you have been able to make on that?
Mr Kingston: It follows on: the capital investment announced yesterday reflects the wider situation with the Housing Executive. Are there alternative solutions that you and your team are considering for the Housing Executive's financial situation?
Mr O'Dowd: The Housing Executive is lucky to have reserves. We do not have them. I suppose that that is a flippant remark.
Mr O'Dowd: Reserves are not inexhaustible; that is true.
I take the lead on Departments' engagement with the Treasury, so I am engaging with the Treasury on borrowing powers for the Housing Executive. I fully support that strategy, and I am fully engaged in it. The Treasury is keen to talk to us on that, but it wants to talk about it within the broader fiscal framework. It wants to look at all of our asks, rather than us coming with one ask and then coming back with another one. It is saying to us, "Come forward with your asks, and we will sit down and discuss and engage on them on that basis". Borrowing powers for the Housing Executive are, therefore, part of the broader discussion around a full fiscal framework. I assure you that I fully support it.
Mr Kingston: In the monitoring round yesterday, substantial capital funds were committed. I assume that they will carry over into the new year. I refer to projects such as the A5, the new children's hospital and maternity hospital at the Royal Victoria Hospital (RVH), city deal funding and Casement Park. Can you confirm that those capital commitments will carry over? Are you or your officials concerned at the level of capital commitments that will be carried over and how that will impact on other needs in the next financial year?
Mr O'Dowd: When you say "carry over", do you mean the delay carrying over —?
Mr Kingston: Into the new financial year. Effectively, that funding has been reallocated this year. That means less capital funding next year.
Mr O'Dowd: We are acutely conscious of the various projects and the potential delays to some of them carrying on into the next financial year. We will continue to engage at ministerial level and official level with those Departments. We have to try to project that into the next Budget as much as possible. Court cases can be lengthy — there are some ongoing — and you have to wait a significant time for a judgement. We will continue to reflect on that, because, as you are aware, the earlier we invest capital, the more chance there is of that capital being spent. Therefore, if there are going to be continuing delays to projects, we will have to reflect on that as part of our Budget preparations and when the Executive finalise their Budget.
Mr Tennyson: Thank you, Minister, for your answers so far.
I return to the issue of overspends. Obviously, there was an exchange of letters between you and the Minister of Education that was leaked to the media last week. It would be remiss of me not to ask you whether you know who leaked those letters.
Mr O'Dowd: I am confident that they did not come from my Department.
Mr Tennyson: OK. In that correspondence, the Minister of Education claimed that the pressures were related to teacher pay. You went back and said that those pressures were well known and understood at the start of the year and should have been accounted for then. Do you believe that it is a deliberate strategy by some Ministers to play Russian roulette with pay demands in order to avoid having to make other savings by front-loading other pressures, presenting pay as a pressure at a monitoring round towards the end of the year and then making it difficult for you, as Finance Minister, not to make awards on that basis?
Mr O'Dowd: I am not going to engage directly on the leaked letters because it does not help Ministers or discourse in politics if you are going to write a letter and then be suspicious that it will be leaked and become the topic of conversation etc. As I said to you yesterday ,it would be surprising if Ministers were not exchanging letters. I also said to you that it is not surprising that there are tensions between Ministers and the Finance Minister in any institution. It is the nature of the work that we are involved in. I suspect that there have been some terse letters between Ministers in Whitehall and the Treasury. That is sometimes the nature of what we are involved in.
On the broader topic, it is vital that Ministers set aside the money for public-sector pay at the start of the year rather than at the end of the year or midway through the year. That is one of the recommendations that I hope to make on the three-year Budget, and I hope that the Executive will accept it. You cannot deliver public services without public-sector workers, so Ministers should plan at the start of the year that X amount of money will be required to cover public-sector pay awards as the year progresses.
Matched to that, they need to do workforce planning. They need to manage their workforce and work with their arm's-length bodies (ALBs) and the agencies within their remit to ensure that they manage their workforce planning as well.
It is essential and crucial that they do that, because, first, it causes huge difficulties for staff if they are entering periods when they are being balloted for strike action and they are not sure what is happening with their pay awards.
I intend to do what my predecessor did last year with the pay award for the Civil Service. We are engaged with the Civil Service unions at this stage, discussing the potential for a three-year pay award and, hopefully, having that agreed at the start of the budgetary process, with review periods built in as we move through the three-year Budget. Other Departments may not be able to do that because of the way the various pay bodies award, but, at the very start of the financial year, there should be money set aside for public-sector pay awards.
Mr Tennyson: That is useful. Thank you, Minister.
Some capital underspends were surrendered in the monitoring round. When did you become aware that there would be significant underspends? I know that you touched on this earlier, but why did other Departments not make you aware earlier in the financial year? I am sure that you would have had a monitoring round earlier if you had thought that there was significant funding to be redistributed.
Mr O'Dowd: Obviously, we knew that there were going to be considerable amounts of capital coming back on the A5, and we had been engaging with DFI in that regard. DFI had to go through a process of internal engagement around how that profile was going to come back to us. There were some very late returns from DFI as a result of licensing and other matters that it was involved in around compensation to landowners, and that came to light late in the process. That was a factor. We have engaged with other Departments too. We are constantly saying to Departments, "If there is going to be an underspend, let us know as soon as possible in the process". As I said to colleagues yesterday, we also have to remember that the autumn Budget was four weeks later than it usually would be, which, again, delayed the December monitoring round.
Mr Gibson: I will add to that, Minister. As an accounting officer, I was able to give up some money because we were negotiating contracts and were able to secure a better price for the Integr8 contract. That freed us up. It was a little bit less than we had allowed for in the business case. It is important that you do that, rather than just relax with the business case, and try to drive down every saving that you can, but we could not release that until contracts were signed.
The exhaustive list of bids to spend money at this stage shows you that, as the Minister said, the A5 situation was known. The quantum might not have been precise, but all Departments have been gearing up: "If the announcement comes that there is money available, do not be shocked by that and be ready to go". I think that you saw in the bids that came through that many Departments were ready to push "Go" when that signal was sent, but, because of legal and contractual matters, you cannot really commit to that or provide that back. As members will know, in previous years, as an accounting officer, I have given up capital on foot of sales that then did not materialise. Even I have had my fingers burnt slightly in trying to get ahead of the contractual position. That is a personal reflection on how it affected this Department.
Mr Tennyson: That is helpful.
One more, if I may, Chair. As the Chair outlined, there is a £400 million overspend as we enter the first year of the multi-year Budget, and in-year pay awards will add to that. Is it not time that we looked at zero-based budgeting exercises in at least some of the Departments as we head into that multi-year cycle?
Mr O'Dowd: Departments can do that individually in terms of starting a zero budgeting programme. I am not suggesting that you are saying that it is easy, but it will not be as easy a process as others might think. It can rapidly cause significant transformational issues. If we are going to have transformation, it should probably be done in a planned and phased way rather than it being a sudden shock to some of the systems. Departments are perfectly at liberty to start on a zero base and work from there.
Mr Tennyson: To push back on that slightly, the incremental system that we have surely means that the bids that arrive with your Department are not necessarily a full picture of the value of the spending that is happening within the baseline of those Departments' budgets. Therefore, how are you confident that those allocations are the best use of public money at a constrained time?
Mr O'Dowd: It goes back to my conversations with the Chair. It is up to Ministers and their accounting officers to ensure that the public purse gets value for money and that the Budget requests that they make to me, which then follow on to the Executive, deliver in line with the Programme for Government objectives and when it comes to accountancy rules and value for money. I am not saying that anyone is negating their responsibilities, but ministerial and accounting officers' responsibilities cover a lot, and they cannot be taken away from.
Mr Gibson: The accounting officer's responsibility is significant here. There is work that we are doing — I am sure that we will talk about it later — such as workforce modelling and planning. There is benchmarking that you can do to make sure that, although the functions of each Department are distinct, they are carried out as efficiently and effectively as possible and you learn from other Departments. There is work going on at the permanent secretary table or the accounting officer table because, ultimately, Ministers have to be given the evidence to decide on. We need to dig into everything that we deliver and ask, "Is that the most efficient, effective and joined-up way to do it?". We have to put the material into the Ministers' hands to make those decisions, so there is a lot of work — I am sure that we will touch on it later — around workforce planning and other things that can help you with that.
The Chairperson (Mr O'Toole): With regard to accounting officers' responsibilities, given that we are looking at a £400 million overspend in RDEL and a £250 million underspend on capital, I think that people will ask questions about the broader piece, but we can come on to that.
Mr Carroll: I have two questions. On overspends, Minister, the example often used is households: you have to operate a budget and a financial system like a household. That is not truly accurate, because obviously most households are in debt — unfortunately, rising levels of debt — with mortgages and everything else. As a general rule, when it comes to funding services, funding jobs and overspending — as you said, there is no public sector without public-sector workers — is it better to overspend to protect services?
Mr O'Dowd: You are not protecting the services, because the rules under which we operate mean that the Treasury will take that money off us next year, which puts further pressure next year on the Budget and public services, on the workers who deliver them and on the general public who access them. It is not that easy an equation.
The better way forward is that Ministers and others reassure themselves that the money that they invest in public services is used in the most efficient and effective way to deliver those services. Start from that, rather than working on the equation that we will overspend and then we will just deal with it at a later stage. I am not, by the way, suggesting that any Minister or accounting officer is doing that, but it is better to look for efficiencies in the system and at how to improve services, rather than overspending and placing pressure on the next year's delivery of those services.
Mr Carroll: I might know the answer, but I will ask it anyway: are you saying that the Health Minister is not protecting services because he has an overspend?
Mr O'Dowd: No, I am not suggesting that he or any other Minister is not protecting services; I am saying that, if you overspend, the Treasury will take the money off us next year, and you are placing extra pressure on your workers and on the public who are accessing the services. Let us start from the point that the Executive are underfunded by the British Government and have been at least since the economic crash in 2008. I was reading in an article recently that public expenditure has increased only by around 3·4% in the past 14 years, so let us put it in that context. Ministers are striving to do their best to manage our processes. There are consequences to every decision that they make. If they end up with an overspend, there is a consequence to that.
Mr Carroll: I agree on the underfunding. I think, Minister, that tens of billions of pounds have been withdrawn from the North since 2010, and it could be more. I agree on that. I disagree on the overspend stuff, but that is fine.
Did I pick up rightly yesterday that the £6 million extra that you announced for Irish-medium education was for capital? Will you provide more detail on that?
Mr O'Dowd: It was capital. I think it is £3 million directly towards Irish-medium education and then £3 million into Iontaobhas na Gaelscolaíochta for a variety of capital issues. I do not have the full details in front of me, Gerry.
Mr Carroll: That is fair enough. Is that for new builds?
Mr O'Dowd: We can supply the Committee with the information at a later stage, but the capital is towards Irish-medium education for facilities.
Mr O'Dowd: The £3 million for Iontaobhas na Gaelscolaíochta, which is the trust fund for Irish-medium education, will support the development and sustainability of Irish-medium schools and preschools. There is £3 million for the accommodation fund, managed by Iontaobhas, which will help to address some of the significant capital requirements in the Irish-medium sector. I assume that that is in relation to builds.
Mr Carroll: I would welcome more detail on that. Thanks for that.
Mr Harvey: It is good to see you, Minister. In your opening remarks, you mentioned the digital technology for roads monitoring: have you estimated the cost of that?
Mr O'Dowd: No, that will be up to the Minister for Infrastructure. I used that as an example of where a Department faces significant financial challenges. I am familiar with DFI. There is significant public concern about the state of our roads. DFI has decided to do things differently. It has looked at the problem and, instead of putting its hands up and saying, "We do not have enough money to do anything about that", it is looking at how it can do things differently. It is bringing forward technology to monitor and assess roads and how it delivers the service to repair roads. I have used that as an example of where Departments can use technology to do things differently in a period of constrained finances.
Miss Hargey: Thanks very much, John, Neil and Joanne.
John, you mentioned that there has been a lot of discourse over the airwaves and in the Assembly around the Budget, fiscal policy and revenue raising. I believe, however, as you said, that there is not enough focus on the fact that, primarily, the Executive are underfunded and looking at the financial set-up from Westminster — that is, the block grant. We have an interim fiscal framework that is based on increased relative need, and that is positive. The one big area that is missing, however, is the cost of delivering public services. As you said, our public services have been underfunded and have been stripped out as a result of austerity. There has been no uplift, even though the British Secretary of State tries to articulate that there has been.
Has there been any discussion in the Executive? There was good unity on this issue last year, in fairness, even including the Opposition, around letters and putting pressure on Westminster. They are trying to create a narrative that they are providing all of this funding, when in reality they are not. Look at the cost of delivering public services here. Our Committee pack for today contains a report on public spending by region. It looks as if people here, per head of the population, are getting a cash windfall: in reality that is not the case, given that it costs more to deliver public services. What work is being done by the Department but primarily by all the Executive parties coming together to push back on that narrative?
Mr O'Dowd: As you said, good work was done in Professor Holtham's report. In the lead-up to the spending review in June, the Executive and others were united in their approach to the British Government around proper funding for this place. Huge strides were made there, and we are now getting a fairer share of the cake. I always say, however, that the cake is too small, and we need a bigger cake to slice up than the one that we have now. We continue to engage with the Treasury around the outworkings of the Holtham report, particularly in relation to fiscal devolution. I am of the view that the next step forward for the Executive is further fiscal devolution, where we have greater powers in our hands to be used when we agree the best ways to develop our economy, support workers and families and support our public services. That is the next step forward. There are differences of opinion around that, perhaps unsurprisingly, but there is a conversation and a debate that needs to be had. I will continue to engage with the Treasury around that, and I will report to the Executive on the development of those engagements with the Treasury. It will be a decision for the Executive what the next moves are.
There is a debate in sections of the media and among commentators around these matters now that is largely useful. I am sure that we all remember times when the media reported that the Executive had gone to Downing Street with begging bowl in hand. We have been proven right that we were being underfunded. That is beyond argument now. The next phase is proper engagement publicly, politically and elsewhere around fiscal devolution and how that can benefit this society and, at the same time, engaging with the Government around the proper funding of public services.
Miss Hargey: I agree with you: fiscal devolution is the obvious piece, and it was good that we got the relative need, even though, as you said, they resisted it. However, the cost of delivering public services is different from the relative need; it goes back to the block grant and how it is calculated. It was supposed to be an interim fixture back in the 70s, and it runs to this day. Is there any work in respect of the interim fiscal framework on how we can start to push back on the cost of delivering public services here being higher than it is in England? That is what the block grant is based on. In your discourse with the other devolved Assemblies, have you found that they are presenting with similar challenges with regard to that devolution arrangement and how the finances are worked out?
Mr O'Dowd: The Holtham report delved into that area. There is engagement, particularly in relation to the Finance: Interministerial Standing Committee (F:ISC), which is a bizarre title given to the Finance Ministers meeting together from the devolved institutions, and there is pushback to the Treasury on this. We meet the Chief Secretary to the Treasury quarterly, and there is a view from the Scottish and Welsh institutions that we have to look at how we are funded and the costs of delivering services in the different areas. Therefore, there is a commonality. There will be different points of view in the different areas, but there is a common view that we have to look at those matters.
The Chairperson (Mr O'Toole): I have a final couple of points on the multi-year Budget, and then we will bring members in to talk about ancillary things. I was indulgent there, as there were a few ancillary, non-budgetary things raised in that first round, but I will not be too hard on you about that.
On the multi-year Budget, how confident are you, either on a scale of one to 10 or as a percentage, that a multi-year Budget will be agreed? I think that we can assume that it will not be agreed and published this year.
Mr O'Dowd: No, I do not think that we can agree that yet. I am reasonably confident that we can make progress between now and 11.55 pm on Christmas Eve.
Mr O'Dowd: I am reasonably confident that we can deliver a multi-year Budget before the new year or the Christmas break. On a scale of one to 10 of whether I am confident that there will be a multi-year Budget, I will put it at 10.
The Chairperson (Mr O'Toole): Good. I am glad to hear that. I will not be a dark cloud about that, if that happens. I will say that that is a good thing.
On the multi-year Budget, will there be concrete proposals around fiscal devolution or additional revenue raising from existing sources, which largely means the rating system, over the three years for resource and four years for capital? Will there be specific proposals, as you might see in an Irish or UK Budget, in which you say, "We want to spend this amount of money. We get this in the block grant. We will raise a bit extra in order to fund it"? Will you put formal proposals in there in that regard?
Mr O'Dowd: The rates will have to form part of the Budget process. It is clear that we have to set a rate in the multi-year Budget that allows us to project the spend over those three years. That is part of that. As was the case with previous multi-year Budgets, there will be annual reviews, and there may be a decision by the Executive and the Assembly to change the projected regional rate as part of that review. They might say that they will continue as is. It allows the Executive to plan their spend, but it also sends a message to businesses and homeowners on what their projected rates will be over those years.
In relation to fiscal devolution, will there be firm proposals in it? The budgetary document is not the place for those firm proposals. We are at the stage where we are engaging with the Treasury, so we will not be in a position to put firm proposals in the Budget document. As we move through the three-year budgetary period, all parties should be conscious of the need to have fiscal devolution and what we could do with that as time progresses.
The Chairperson (Mr O'Toole): I look back to Caoimhe Archibald's first evidence session with the Committee when she was Finance Minister, which was 18 months ago. She talked about putting a fiscal devolution paper to the Executive. Conor Murphy commissioned the Fiscal Commission five years ago, but, five years on from that and 18 months since Caoimhe told us that a fiscal devolution paper was going to the Executive, as far as I am aware, no paper has gone to the Executive.
Mr O'Dowd: Let us look at the last 18 months or more. We have been back for 21 months. We had engagement about the interim fiscal framework and the work of Professor Holtham leading up to the June spending review, which was a successful engagement at that level and secured the Executive an additional £1·4 billion. That was important work. After the fiscal framework and the June monitoring round, I made it clear to the Treasury that I wanted to enter into discussions about full fiscal devolution, and that engagement has moved on. I have presented a paper to the Executive that outlines the steps that I plan to take and how I intend to report back, so that is in gear and we are now involved in those discussions.
When we deal with the Treasury, we must remember that it has its forward work programme. For the last eight to 10 weeks, the Treasury has been solely focused on the Budget, and that is understandable. It is zeroed in on the autumn Budget. Now that it is over, it allows us to say, "You have done that piece of work; here is the piece of work we want to do". It is ongoing work, and progress has been made. However, those of us who support fiscal devolution need to make the case for it.
The Chairperson (Mr O'Toole): I could not agree more, Minister. My honest challenge — I am challenging about this — is that, in September 2014, after the Scottish referendum, the Smith commission was appointed to look at further powers for the Scottish Parliament, including fiscal powers. The commission was appointed in September 2014, and it reported a few months later. The primary legislation was debated in 2015. That was the UK Government doing it, and it included the Treasury. Why do we have to move at a snail's pace? I appreciate that there is not likely to be perfect political agreement at the Executive, but a paper has not even gone to the Executive. It feels like we have been talking about this for ever.
Mr O'Dowd: Again, a paper has gone to the Executive. I have submitted a paper.
Mr O'Dowd: We have had a discussion around it. The paper's purpose is to outline to the Executive my responsibilities in the area and how I intend to move forward.
The Chairperson (Mr O'Toole): Just to be specific, it is about the fiscal framework, but did that paper say, "I would like to seek further fiscal devolution in these areas"?
Mr O'Dowd: I am cautious not to reveal Executive information. I am approaching it on the basis of the Fiscal Commission's report and recommendations.
Mr O'Dowd: Yes. Well, the Fiscal Commission's main recommendations are income tax, stamp duty, air passenger duty, landfill tax and the apprenticeship levy if income tax was devolved. I am working on that basis.
Mr O'Dowd: I put a paper to the Executive to tell them the basis on which I would engage with the Treasury.
Mr O'Dowd: There is no point in sticking my finger in the eyes of the people who do not want fiscal devolution. Those who support fiscal devolution have to persuade those who do not want it of the benefits, and that is the best way forward.
The Chairperson (Mr O'Toole): Nobody could accuse the Department or Minister of being in a rush. I am happy to talk about my experience. I do not think that the UK Treasury has the best interests of this place at heart. There has been underfunding. I disagree with none of that. My challenge to people from all parties, speaking politically, is this: why not press the accelerator and take more power here? We all agree that we do not have enough money.
Finally, are you planning for a scenario in which the Executive do not agree a multi-year Budget? A multi-year Budget was published in 2021 by your predecessor, Conor Murphy, but it was not agreed, and there had to be a rushed one-year Budget. Are you planning for that contingency?
The Chairperson (Mr O'Toole): I am delighted to hear that. I appreciate your optimism, but I hope that you are planning on the basis that there is no political agreement for a multi-year Budget. Surely, there must be that risk.
Mr O'Dowd: As I said yesterday, I am of the view that all the parties round the Executive table see the benefits of a multi-year Budget. There will be a wee bit of toing and froing, engagement and negotiation around the elements of that multi-year Budget. However, I think that all parties want to see a multi-year Budget. If we remain focused on that, we will deliver a multi-year Budget.
The Chairperson (Mr O'Toole): I have a couple of quick ancillary questions, and then I will bring in other members.
There is a story in the paper today about whether car parking at hospitals will be free from April 2026: what is your view?
Mr O'Dowd: I have no information on hospital car parking charges from next April.
The Chairperson (Mr O'Toole): No idea at all? Not proceeding with car parking charges at hospitals was part of the Budget sustainability plan presented to the Assembly, ergo the Committee was told that it formed part of the Executive's revenue-raising plan to support Budget sustainability that car parking charges would be retained for two financial years. If it is not, I assume that the Finance Department will have some say in that. Are you saying that you do not have a view?
Mr O'Dowd: I have no understanding of any article that was or was not in today's paper, OK? I am not going to speculate on newspaper articles. If the Health Minister has issues or wishes to bring a paper to the Executive, I will base my judgements on whatever paper comes before the Executive.
The Chairperson (Mr O'Toole): Should hospital car parking charges proceed? Do you think that free parking on the basis of the Bill that your party colleague — now your ministerial colleague, actually — introduced should be enacted from April 2026? What is your position?
Mr O'Dowd: As I said, I am not going to speculate on newspaper reports.
Mr O'Dowd: I will base my assessment on whatever paper — as in Executive paper, not a newspaper — the Health Minister brings to the Executive.
The Chairperson (Mr O'Toole): OK.
Will the developer levy be published in time for the multi-year Budget? That was something that you initiated in the Infrastructure Department. What are the details on the developer levy?
Mr O'Dowd: That is probably a question for the Infrastructure Minister.
Mr O'Dowd: I have been out of DFI for nine months. The Infrastructure Minister is probably best placed to answer that question.
The Chairperson (Mr O'Toole): The developer levy is critical to funding water in the multi-year Budget. Lots of my questions tend to be someone else's responsibility; you are good at doing that. It is London when it comes to the block grant — I get that — or the DUP when it comes to blocking papers — that is sometimes the suggestion — or other Ministers when it comes to managing their budgets. I am trying to find out what you think about those things. That is not unreasonable, given that you have come here to give us evidence.
Mr O'Dowd: I am sitting in front of you as Minister of Finance. I understand my role. I am reflecting to you what my role is. As I said in my briefing, if members around the table want to give me more powers, I will be happy to take those on. That is certainly not the case at the moment, however.
Mr O'Dowd: The levy is a good idea. How and when that levy will be delivered is a matter for the Infrastructure Minister.
Ms Forsythe: Getting back to the topic, as Finance Minister, you are obviously interested in maximising the potential of the 2025-26 Budget. I am sure that you would welcome any measure that had the potential to get money into our block. I want to ask about fraud and error. This week, the Audit Office report said that the cost of fraud and error in Northern Ireland had increased to £350 million a year. The Comptroller and Auditor General (C&AG) said that the Department for Work and Pensions (DWP) had made good inroads on recouping a lot of that, whereas, in Northern Ireland, we have fallen behind. Minister Lyons has been proactive in looking to invest more in tackling that and has put forward his case for some of that money to be returned to Northern Ireland to be spent. It has the potential to bring in tens of millions of pounds each year. I asked you about this on the Floor, and you said that the case was with the Treasury and had not yet been agreed. Do you support the proposal?
Mr O'Dowd: This dates back to the Fresh Start Agreement and is therefore part of that agreement. I am more than happy to work on the basis of agreements and delivering on them. My understanding is that the Treasury still has the business case. It has asked a number of questions in relation to that business case.
When Treasury responds with its views on the business case, I will bring that back to the Communities Minister and move forward on that basis. The business case has not yet been agreed by Treasury.
Mr O'Dowd: I support it as part of the Fresh Start Agreement.
Ms Forsythe: OK. If the business case were to be successful, would funding be available for the 2025-26 year to be applied to this block?
Mr O'Dowd: There is nothing to stop any Minister reallocating funds in their current or future budgets, to projects. I will not take a pre-emptive view on what will or will not be in next year's Budget, because that will have to form part of the multi-year Budget, but there is nothing to stop any Minister profiling or re-profiling in their budgets programmes with which they wish to proceed that, they believe, will deliver additional revenue to front-line public services.
Ms Forsythe: If it is up to the Treasury whether the money that is recouped is released back into the Northern Ireland block, do you foresee any of that going into the 2025-26 financial year?
Mr O'Dowd: The honest answer is that I do not know. The Treasury has not yet responded: let us wait and see how it responds.
The Chairperson (Mr O'Toole): You asked the Finance Minister's opinion on a matter that is to do with another Department too. That is fair enough; I do not mind. What's good for the goose is good for the gander.
Miss Dolan: There is anxiety in the community and voluntary sector about the local growth fund. Have you an update on that? What have your engagements with Treasury on that been like?
Mr O'Dowd: Officials continue to engage with the Ministry of Housing, Communities and Local Government in Britain on that matter. It is disappointing that the issue has not been resolved. I note that, as part of the autumn Budget, changes were made to similar programmes being run by authorities in England; the capital/resource split was more balanced there than it had been. I have corresponded with the NIO and the relevant Whitehall Departments to express my huge disappointment at the opportunity not having been taken, as part of the autumn Budget, to rebalance that spend here. As I said, those engagements continue, and I will report to the Executive and the Committee when I have further information.
Mr Kingston: In your statement yesterday, you said that not enough proposals came forward for financial transactions capital (FTC): have you a view on all the conditions on that? Getting such a proposal ready to go for a monitoring round is more challenging than it is in the case of other expenditure. Have you a view on the high bar set by the requirements for FTC funding? Is there any way of making that more amenable?
Mr O'Dowd: The rules for FTC funding are set by Treasury. I would much prefer to see traditional capital bids come forward, but there has been a greater reliance on FTC. FTC will form a growing part of budgets from the Treasury and elsewhere in the future. We have to deal with what is in front of us. My officials engage with Departments to encourage them to use FTC, and we will continue to do that.
Is there anything to add to that?
Mr Gibson: It remains constant. We work across all Departments, trying to get more and more bids. As the Minister said, it looks as though FTC will be part of the long-term landscape. It is about really getting into that, making those who can avail themselves of it more familiar with what it is like and how it works. Some conversations are taking place across Departments from which some things might come forward. You are right to raise, however, the fact that, because Departments need to have a relationship with whomever they lend it to, it is difficult to do in-year. We have not found it easy to be across that. We are massively oversubscribed with capital and resource bids but never with FTC bids.
As was mentioned in a previous question, the reality of the financial situation is that we need to look at all streams of financing that might be available. If FTC bids are going to remain a part of it, we have to encourage even those Departments that have not availed themselves of it in the past — I often ask myself about it; we do not tend to lend — whether they could do so. We are working on that. The treatment of FTC has changed in that it is not repayable to Treasury, which means there is more potential for us to think strategically about it, and we will think about that once we get the multi-year Budget out of the way.
Mr Kingston: On that point about it not being repayable to Treasury, my understanding is that the £50 million from FTC for Casement Park has been described as an equity share rather than a repayable loan. What will be the outworking of that? Will a share of the profits or a dividend from Casement Park, should we get to that stage, go to the UK Government or the NI Executive? How will that work in practice as an equity share?
Mr O'Dowd: It is worth remembering that the £50 million of FTC is a separate fund. It is directly managed by the British Government. They said that they would make a contribution to Casement Park. Therefore, in my opinion, the management arrangements for that are a matter for the British Government. As a delivery agency, the Executive continue to engage with the Government on that and on our bid to finalise how that will be delivered, but it is really a matter for the British Government.
Mr Kingston: Are we not sure whether a dividend would come to the Executive or the Westminster Government?
Mr O'Dowd: I would prefer any dividend to come to the Executive, but we have to finalise all those arrangements with the Treasury.
Mr Tennyson: Minister, at one of your previous appearances at Committee, we talked about the Holtham review and the fact that Treasury had not fully accepted its recommendations on Northern Ireland. Has that conversation largely been parked, or is there any attempt through the fiscal framework discussions to reopen discussions about whether Northern Ireland is funded to its objective need?
Mr O'Dowd: That forms part of our discussions. The Holtham report is a live document. Its contents are still the subject of engagement with the Treasury and others.
Mr Gibson: We did well to get 124% plus the farming payments, taking us closer to 127% or 128%. As I mentioned previously, however, Treasury will now look to us. I am sure that members agree that the long-term vision is not to be a society that is dependent on having more but to invest successfully in such a way as to perhaps ease some of the pressures in the future with greater economic and societal success. There is a little danger in constantly trying to talk down the economy.
As the Minister said, one of the strong arguments is this: the whole cake of public sector funding is the real question here. We could put a lot of resource into arguing for an extra percentage point up or down, but that may not be the best use of our limited resources, compared with making the argument on whether there is enough money to deliver effective public services. There certainly are areas in which Northern Ireland's costs are higher, but there are others in which labour costs and stuff are lower. You can imagine a significant paper and counter-paper that might not necessarily yield as much as asking a more systemic question about the funding available for public services.
We do not have time to go into this today, but an economy such as that of the UK or Northern Ireland that struggles to get to 2% growth is not really conducive to the absorption of cost pressures of 5%, 6% or 7% in public services. That is a systemic problem; it is not only us here who face it. It requires some radical transformation, but, as the Minister said, it also requires a conversation about what we need in order to deliver public services. We remain fully engaged and continue to debate the issue. We have made the point about farming and agriculture and about justice. However, we are asking, "What is the marginal benefit of our arguing for an extra percentage point of a cake that is too small?". That will probably not make as much material difference as making, alongside our Welsh and Scottish colleagues, more of a point about the overall size of public-sector funding.
Mr Tennyson: That is useful. For what it is worth, I agree, because it is all relative: if public spending is constrained across the UK, that would not make a huge difference, although it would make some.
This question may come slightly out of left field. It relates to your legislative priorities. You intend to introduce a marriage Bill. What engagement have you had with representatives of independent celebrants, who want the proposals in that Bill to go further?
Mr O'Dowd: We intend to introduce the legislation. There will, no doubt, be consultation and engagement on the Bill with a wide range of people. I have brought forward legislation that was agreed by the Executive. I have no doubt that, as the debate proceeds, there will be different views around it. I am open to hearing views on all those matters.
Mr Carroll: I have a couple of points. Minister, I asked you a question — yesterday, was it? It seems a long time ago now — about empty property levies and taxes, and you did not say no to it, which is welcome. I will ask you to expand on that. If you were to proceed with that and agree to some kind of proposal, would it have to come through the strategic review of rating, or could it come by a different avenue? If you were to take that on board, how would it work?
Mr O'Dowd: You asked me that question 24 hours ago, Gerry.
Mr O'Dowd: It seems a long lifetime ago. How or whether it should work has to be thought out and developed. Obviously, we want to bring empty properties back into use. Are you specifically referring to residential properties?
Mr O'Dowd: We want to see those being used for their intended purpose, particularly given the significant housing crisis that we face. If there are to be proposals on that, they will have to be thought out and developed. We have to ensure that they would have the positive consequences that we want to see — rather than pay the levy, the owner puts people into their home, allowing it to be used — and look at whether they would have a detrimental impact elsewhere. All those things will have to be thought out.
Mr Carroll: I appreciate that. I cannot see where there would be a detrimental impact, Minister, but I am willing to hear that argument. I appreciate that. We are looking to explore that.
I have a couple of separate issues to raise, Minister; they are also important. You mentioned that the interview process for the AO posts is moving more quickly, which is good. Alongside others, I have been pressing for the process to be sped up. It has been too slow, so it is positive news that things have moved much more quickly. You said that you are trying new things. I do not know where I stand on this, which is unusual; normally, I am black-and-white on issues. I heard recently about one arts organisation in Belfast that does not use job interviews; instead, you show up for a week, get paid for that week's labour, and, if you are suited to it, you get the job. I am probably missing issues, but that or something like it sounds interesting. I do not know whether that one is too left-field, Minister, but are you looking at different avenues to plug the gaps?
Mr O'Dowd: If we have achieved something new, we have puzzled you, Gerry
so it is definitely worth doing. Credit goes to the departmental team who brought the proposal forward for doing something different and taking on the challenge of the lengthy time that it takes to recruit people into the Civil Service; they are doing something new. I am open to ideas, although we have to work, as we should, obviously, within all the employment and equality legislation to ensure that everyone is protected.
The AO scheme has been good. As I said, it will be reviewed, and lessons will be learnt. We are listening to feedback on it from elected representatives, the trade union sector and our team. We need to go again on the basis of the lessons learned from this one, but I am open to ideas about how we can do things.
Mr Gibson: I had the pleasure of going to see the scheme on one of the days, and, Minister, I pay huge tribute to Catherine Shannon and her team, but its success also spoke to cross-departmental working. We are often criticised for working in silos, so it was about working with colleagues in DFC and other Departments to see whether we could try something while keeping our colleagues and our staff on board.
The buzz in the hotel was tremendous. By way of a little anecdote, it was interesting to me that it provided a much better experience for the candidates and for the people doing the interviewing. We previously tried video interviewing as another technique to speed things up, but sitting through 10 or 15 interviews back to back is an exhausting process. The buzz in the room as people went for a coffee after they had done their slot of interviews gave you real energy and made you feel proud to be part of the Civil Service. It is really important, if we are going to be an employer that attracts people, that people want to be part of that. I was hugely encouraged. I welcome all feedback on any tweaks, as, I know, will Catherine and her team.
That will have to be the way forward for the Department on estates strategy, recruitment and IT: try things, and try them quickly, do the best that we can, learn quickly and make the next iteration a little better. We will require your understanding of that level of innovative ambition, because the finances will require us to use that. We have never done it at such pace before, and maybe it is not a technique that would work for every role.
To come back to your point, when it comes to techniques, we are thinking about everything. People are now tech-enabled in the way in which they write their forms, and the value that those provide to us changes by the month. To be frank, we will have to think about all techniques over the coming years. We will probably end up with a menu or bookshelf of types of recruitment that are appropriate to types of competition, which will be different for certain roles and grades. The early indications are that the AO scheme represents great progress, and credit goes to the cross-departmental team that worked on it.
Mr Carroll: Sorry to get to the negative, but that is real life sometimes. I recently had correspondence from at least one person. It was not about the AO post. The person was in a temporary position, and they were trying to get a permanent post on promotion. They have a disability, so they were entitled to extra time, which was allocated to them. There was no issue with that, but there was an issue with communication. At the time of my most recent communication with them, they had been waiting weeks for a report, while other people had already had news of their promotions. Those were to different posts, possibly, but there is still a question, after what that person has relayed to me, about their feeling that they were treated differently because of their disability. As you will be aware, Minister, I submitted a more general question for written answer on that, because there are issues around that person's case and, possibly, others. What is the best avenue for the matter? Should it be directed to Neil or somebody else?
Mr Gibson: Keep writing to the Department. We look into every case, and we appreciate that feedback. Certainly, that is not an experience that we want people to have, and we would want to look into it.
Mr Carroll: I will send you that person's details, if they are content for me to do that.
Mr Gibson: Send them through to me and Catherine, and we will look into it.
Mr O'Dowd: If they do not want to share their details, send the circumstances of the case.
Mr Gibson: Catherine can take a look at that.
Mr Carroll: I have one final point on the Procurement Act 2023. My understanding is that Amnesty International sought legal opinion on excluding suppliers from tendering for public contracts on the basis that they have not upheld human rights responsibilities in other parts of the world, the occupied Palestinian territories being one area. The legal opinion was, I think that I am right in saying, that, with the Procurement Act coming into force, the British Government have to ensure that human rights issues are taken into account. Will your Department consider developing guidelines on that and publishing a list of excludable suppliers that have links with Israel in the occupied territories and other countries?
Mr O'Dowd: I am not sure whether it is able to share its legal advice with us, but, if it can share with us the information that it has, I will certainly take a look at that. Our procurement policy is progressive. Reflections on human rights and the rights of workers and minorities etc are embedded in it. What is the name of the organisation? Sorry, Gerry, I missed it.
Mr O'Dowd: If Amnesty wishes to share that information with us, I will certainly take a look at it.
Mr Harvey: Minister, Northern Ireland Civil Service sick leave cost the taxpayer £48·8 million last year, which was up from £44 million the previous year. How do you, as Minister, intend to tackle that issue? Is there an action plan, with key performance indicators, to drive that down?
Mr O'Dowd: I will bring in Neil on some of that. There are policies in place that are directed from my Department, but it is for line managers in the Departments to ensure that they monitor the situation and provide support, where needed, to workers who are off on sick leave and that they engage with workers on the policies and ensure that those are upheld. All employers want to ensure that sick leave is minimised. There is a variety of reasons why staff may be off sick, such as the age profile of our service and, it has to be said, some of the pressures of the job. We ask our civil servants to take on a lot of pressure in a lot of areas, and that can bear down on them, but there are policies in place.
Mr Gibson: It is a priority for us to have a compassionate, sympathetic and supportive employment culture that helps people back into work and tries to get ahead of the issues by understanding the data. We are doing a lot more analytics. As the Minister said, given the age profile, we will have higher sickness rates than many comparator organisations, because we have a much older workforce. We also have prison staff, and our workforce has other characteristics that make it harder to find a direct comparator.
The data shows that there is a significant problem with mental health that involves, in particular, staff reporting non-work-related issues. There are limits to how we, as an organisation, can support those staff, but there is lots of mental health support training for staff so that they can try to recognise and understand the issues. As the Minister said — you will all know this — the vacancies that Departments carry put a strain on staff. I am concerned that workforce burden could lead to more sickness, so it is very much a priority for us. As I said, one of our key tactics is having better occupational health; Catherine and her team can speak to that. We have hired new medical staff to help us support and understand. Finding the right supportive culture to help with mental health issues in particular is something that we are engaging on with a lot of organisations in the public sector and, indeed, elsewhere in order to understand how best to support that.
We have lots of programmes that are about phased returns, for example, and making sure that our line management is well trained to understand the pressures and strains. Our Northern Ireland Statistics and Research Agency (NISRA) colleagues are certainly looking at the matter to see whether we can better understand how much of it is a result of having a very different size and shape of workforce from that of those with whom we are often compared on sickness figures.
The Chairperson (Mr O'Toole): We are into Fergie time now, so I will squeeze in a couple of questions before we release the Minister for his — it will not be his Christmas break, because he will be working at Santa's workshop, apparently, until midnight on Christmas Eve.
Why have you not yet used the three-Minister rule to get on to the Executive agenda the rates changes that you want and your predecessor wanted?
Mr O'Dowd: I want to achieve a successful outcome on that, and, while I could use the three-Minister rule to bring it to the Executive, that would force others' hands. I want to see an engagement between me and those who have concerns about that paper and to reach a landing zone that is comfortable for all of us. There are areas where the three-Minister rule can and should be used. It is useful, but, on this occasion, there is still room for engagement to resolve the issue.
The Chairperson (Mr O'Toole): To explain for people who are watching, it is about the domestic cap moving from £400,000 to £485,000 and the early-payment discount. Those are good things, but they are pretty modest. What does that say about the Executive's ability to agree any significant form of revenue raising or change to the rates system, including the next thing that you want to do, which is about paying for small business rate relief through vacant property relief? If you cannot get the first proposal on the agenda, how likely is it that you will get the next thing ready for the next financial year? It does not look likely.
Mr O'Dowd: It says something about the Executive that we all know: the Executive are made up of parties that have significantly different ideologies on a wide range of areas. You have to seek common ground where you can find it; I am trying to find common ground on that issue.
The Chairperson (Mr O'Toole): I appreciate your concise answers on that. I assume that it is not just drift, although I think that people will see continued drift on it. I appreciate that you have at least announced your intention.
On Casement Park, you said, basically, that it is for the British Government to say how they want to treat FTC. Where is that project now? When can we expect to hear more about how you, the Communities Minister and the Executive more broadly want to attempt to pay for that project?
Mr O'Dowd: Again, that is probably more a question for the Minister for Communities, but I will play my part in it. Given that it is a projected spend over the next number of years, it will form part of the three-year budgetary round.
Mr O'Dowd: The final decision on that will be for the Executive on the basis of what capital resources we have to hand. A wide range of sporting organisations are seeking and, in my opinion, deserving of investment. We will use whatever tools we have at hand to support them.
The Chairperson (Mr O'Toole): There might be a few extra bob for people who might want into the NI Football Fund as well as for Casement: is that the idea?
Mr O'Dowd: No. The idea is that there are many sporting organisations that are deserving of investment. I am on record as saying that I do not care what size or shape the ball is: sport is a good thing.
The Chairperson (Mr O'Toole): That is one thing that, we think, will be in the multi-year Budget, hopefully, assuming that it is agreed. There is a big "if", but you are optimistic, and I take you at your word.
I have a final question before we have a couple of quick ones from other members. You mentioned the Opposition. There is a brilliant finance spokesperson from County Donegal. His name is Pearse Doherty, and he is really good and robust; I am sure that you agree. He is often a dark cloud for the Irish Government. He gets funded to produce official costings. Are you minded to respond positively to the official Opposition's request in that regard?
Mr O'Dowd: I think that I have responded to you. The official Opposition receive an additional £25,000 for the party plus £7,000 per MLA to assist them in their role as the official Opposition. You will find that that very good official Opposition finance spokesperson in the Dáil receives most of his information through questions to the Minister for both written and oral answer . I am always happy to answer questions from your good self.
Mr O'Dowd: — in correspondence the reasons why my Department is not equipped to offer the Opposition even —.
The Chairperson (Mr O'Toole): I have not read a definitive no from your correspondence, but I think that I am getting a definitive no on whether you will do the same as the South.
Mr O'Dowd: I have outlined to you in correspondence why my Department is not equipped to respond to the Opposition. I believe that the Opposition receive significant funding to carry out their task.
The Chairperson (Mr O'Toole): I can explain what other parties, including yours, got when that was agreed for the Opposition. I will not go through it and bore people, but I will take that as a no: you are not going to. I will bring in the Deputy Chair. Thank you for the clarity on that.
Ms Forsythe: Thanks, Minister. I am also on the Public Accounts Committee. Given your role at the centre of all the portfolios, do you foresee positive responses to our reports on public-sector procurement and major capital projects being able to flow through the multi-year Budget, releasing extra funding to Northern Ireland's public services?
Mr O'Dowd: There are, obviously, challenges in delivering large capital projects. Some of those challenges are not unique to this place, it has to be said, although some are. Westminster is bringing forward new legislation. I also see what, I think, is a policy paper on the challenges that the South faces and how it intends to address large capital projects. There are lessons to be learnt from those things. There are also lessons to be learnt here, and the head of the Civil Service has brought forward a programme of work on that. Significant capital will be spent in the next three years, albeit not as much as I would like to see. The more effectively and efficiently we can deliver that, the more positive an impact it will have on people's lives.
Mr Kingston: Yes, a quick one on the Northern Ireland Fiscal Council Bill. When we looked at equivalent bodies in the UK and Ireland, they explained their recruitment and appointments processes. It is covered very briefly in the Bill, which just says that members will "be appointed by the Department", which, presumably, means by a person in your position. Would other protocols and procedures apply, or would appointing people be purely in the gift of the Minister? That would raise questions about whether the process will be transparent and merit-based and whether the council will be independent, with members who are not there simply at the whim of a Minister.
Mr O'Dowd: I might be corrected on this, but the appointments will be made through a public appointments process, so a proper process that will be recorded has to take place. I suspect that anyone who puts themselves forward for the Fiscal Council will adhere to and protect their independence. The potential for interference is minimal. Under the legislation, if it is agreed, the Fiscal Council will be protected in doing the job that has been set out for it.
Mr Kingston: It would be helpful if we could have a written response.
Mr Kingston: It has been raised by others that there are more rigid processes. Thank you.
The Chairperson (Mr O'Toole): Minister and officials, thank you very much. Before I release you and wish you a merry Christmas, I must say that I am deeply concerned by the fiscal position, notwithstanding the season of goodwill. There is a nearly £400 million overspend in RDEL, with less than three months to manage that down, and nearly £200 million in capital to spend before the end of the financial year. That is pretty grave. While I welcome, in good faith, your optimism, Minister, about that and the multi-year Budget, the proof of the pudding will be in the eating or, rather, the spending of said money or the managing down of said overspend, because it looks pretty grave.
Having said that, I thank you for coming today and answering our questions. I am disappointed that the official Opposition will have to keep pressing to get the requisite costing, but we will not give up yet.
Mr O'Dowd: In fairness, you have significant resources to keep writing to me. [Laughter.]
The Chairperson (Mr O'Toole): I have plenty of jobs to do; I do as much as possible on behalf of the public.
OK, members. Thank you very much to the Finance Minister —
Mr O'Dowd: Thank you, and happy Christmas to you all.
Mr Gibson: Happy Christmas, everyone.