Official Report: Minutes of Evidence

The Chairperson (Mr McCrossan): Stuart, you are very welcome. Happy new year to you.

Mr Stuart Stevenson (Department of Finance): Thank you, Chair.

The Chairperson (Mr McCrossan): Thanks for agreeing to attend the Committee today to give evidence. We have asked you here in your capacity as the Treasury Officer of Accounts (TOA), given your system-wide role in setting and overseeing the framework for financial accountability, including providing guidance to accounting officers on memorandums of reply (MORs) and the handling of ministerial directions. Committee members have become increasingly concerned about the operation of the accountability cycle in practice, in particular about delays to MORs, inconsistencies in approach to Executive sign-off and the quality and clarity of some of the responses received. Those issues have, in turn, led to repeated correspondence and to the recall of accounting officers on a number of occasions, which has placed additional pressures on Departments and on the Public Accounts Committee's scrutiny processes.

Although the Committee recognises the complexity of cross-cutting issues and the wider pressures facing the Executive, timely, transparent and high-quality MORs are fundamental to effective scrutiny and public accountability. We are therefore keen to explore how the current guidance is operating in practice, what barriers exist and what more can be done at a system level to strengthen consistency, governance and, most importantly, follow-up.

We will also seek an update on recent experience of ministerial directions, on which Committee members will have a lot of burning questions. In that context, members considered the ministerial direction on the Health and Social Care (HSC) pay award last week. Although there is no issue with the principle of the pay award — we understand the huge pressure in the system on public-sector workers — the circumstances surrounding the direction raise broader questions for the Committee about governance, affordability and the operation of the ministerial direction process, which we will explore further with you today.

Stuart, we will give you an opportunity to make a few brief opening comments, after which members will ask a number of questions that will tease out a lot of the issues.

Mr Stevenson: Thank you, Chair, for inviting me to attend today. I welcome the opportunity to assist the Committee in its consideration of those very important matters. As Treasury Officer of Accounts, it is my responsibility to support the Committee through providing assurances on the frameworks that govern the proper, transparent and accountable use of public money. I recognise the Committee's essential scrutiny role and am committed to working constructively with members to fulfil that role. Chair, would you like me to expand a little bit on memorandums of reply or ministerial directions?

The Chairperson (Mr McCrossan): I think that questions will cover those matters. I do not want to be repetitive, because some of the questions are quite specific and get to the nub of the issue. Members do have a number of questions to ask.

We will focus on ministerial directions first. Stuart, are you in a position to update the Committee on the outstanding recommendation about the comparative analysis of ministerial directions?

Mr Stevenson: There were three recommendations in the report. We have completed recommendations 1 and 2. The third was about engagement with the permanent secretaries' stocktake. I carried out field research to look at the processes followed in the other devolved authorities. We reached out to Scotland and Wales and also contacted the now Department of Public Expenditure, Infrastructure, Public Service Reform and Digitalisation (DPEIPRSD) in the Republic Of Ireland. We have had discussions with Treasury on that front as well. We struggled to get meaningful feedback from some, but we did have some good engagement with Treasury, which offered some comments and its view on the disparity of numbers of NI and any concerns that it had. I have a good relationship with my counterpart in Treasury, who shared some thoughts with us. I do not think that it would be appropriate for me to cover those discussions in open session, but I am very happy to write to the Committee to expand on some of the aspects involved.

The Chairperson (Mr McCrossan): Why would it not be appropriate, Stuart?

Mr Stevenson: Treasury looked at our experiences and talked about those of some of the other devolved authorities in the UK. I would not feel comfortable sharing some of the quotations. Although it is important to get the message across to members, I do not want to —.

The Chairperson (Mr McCrossan): You are not citing anyone in particular, and you do not have to cite a particular jurisdiction. This is a matter of huge public interest. Decisions have been made on which public money has been spent, and, unfortunately, based on the current trend that we are seeing, it is largely money that we do not have. Budgets are being overspent in a wide variety of Departments. I have a feeling that we are going to see that happen a lot more over the next number of weeks and months. It is therefore in our interests to understand how decisions are being made.

Mr Stevenson: Five years ago, we had an increased number of ministerial directions. We talked through a number of those cases. There was a disparity in benchmarking with other areas. The feedback that I received from Treasury was that it was content with the processes in NI and that any misalignment would reflect its views of other authorities and of some of the decision-making processes in those areas. Treasury felt that we had a good, robust level of governance, including how each ministerial direction comes to this Committee for notification and is considered by the Comptroller and Auditor General along the way. It therefore felt that the controls in place were good.

The Chairperson (Mr McCrossan): Sorry for interrupting you, Stuart. I appreciate what you have just said, but they are not robust in the sense of providing good governance if the C&AG has requested in good faith minutes of a decision but has not received them months after requesting them. From what I can see, "robustness" is a loose term, particularly after our consideration of the ministerial direction last week.

Mr Stevenson: Absolutely, Chair. In this instance, I am referring to the increased number of ministerial directions issued here five years ago, compared with those issued by some other devolved authorities.

The Chairperson (Mr McCrossan): Equally, Stuart, in other jurisdictions, it would be unheard of for multiple Departments to be overspending in the way in which we are beginning to see them do here.

Mr Stevenson: I absolutely agree, Chair.

The Chairperson (Mr McCrossan): Ministerial directions are being issued to authorise the spending of money that we do not have. I do not think that that would be considered satisfactory in other jurisdictions, and I do not believe that it is happening elsewhere on the same scale as it is happening here. Is that an accurate assessment?

Mr Stevenson: I agree. The use of a ministerial direction potentially to provide cover for additional expenditure over and above the control totals is a very different question when compared with the research that we did off the back of the Northern Ireland Audit Office (NIAO) report 'Ministerial Directions in Northern Ireland' from 2023. I completely agree with the Committee's comments last week in that regard.

The Chairperson (Mr McCrossan): Stuart, is it not the case that, by design, ministerial directions are supposed to be used in exceptional circumstances and not as a routine mechanism by which to resolve a problem? Why is it that I get the sense that they are being used routinely as a solution as opposed to being an exceptional mechanism to be used?

Mr Stevenson: I agree with you, Chair, that a ministerial direction is an exceptional mechanism. When I first came to work in public spending, the phrase that was used to explain a ministerial direction was that it is the "nuclear option". That is a very clear message. Its use should be unusual. A ministerial direction should be a last resort when an accounting officer has concerns about a particular instruction or request from a Minister. A ministerial direction does not permit an accounting officer to proceed with any unlawful action or to override any existing statutory or legal constraints. It does not provide an accounting officer with a continuing mandate for anything. Rather, an accounting officer must continue to seek to address the concerns and should revisit the ministerial direction if the underlying circumstances change in any way.

The Chairperson (Mr McCrossan): We are seeing a situation emerge in which a number of ministerial directions are coming forward that will result in the direct overspend of budgets allocated to each Department. The exceptional circumstances for the use of a ministerial direction should not be to plug structural budget gaps, defer hard decisions or circumvent proper budgetary control. If it is accepted as normal practice, there is real danger that it could weaken accounting officers' accountability, which is not good for governance, and encourage unfunded commitments, which, again, from a scrutiny point of view, is not acceptable, because a Budget is brought to the House and agreed, only for, ultimately, things to be paid for beyond what is in the Budget, having not been agreed. The use of ministerial directions could set a very dangerous precedent across Departments, which, unfortunately, I am beginning to see. One Department starts it, another follows and so on. Regardless of the importance of the core issue behind such decisions, that will cause major problems.

That having been said, I understand that your powers are limited. You are there to provide guidance and advice. Given the seriousness of our concerns, where should the Public Accounts Committee be raising those particular issues, Stuart? I know that you do not have the power to deal with them. You can only issue guidance, which I have seen, and it is quite robust.

Mr Stevenson: I will come back to the Committee with the next steps that it should take. I agree with your concerns, Chair. For me, a ministerial direction is a response to an accounting officer's raising their concerns about any of the four areas that are highlighted in 'Managing Public Money NI' ('MPMNI'). Those four areas in MPMNI are important, Chair. They are regularity, propriety, value for money and feasibility. I look at everything through the lens of public expenditure. Twenty years of working in public spending will make one do that. It is a bit like what the C&AG said about being the auditor. I therefore look at everything through the lens of protecting the public expenditure system and the controls that flow from that.

When a Budget Bill is voted through the Assembly, accounting officers can effectively spend up to the strict amounts allocated. They do not have any authority to spend beyond those controls. A ministerial direction does not increase the totals in any way. It does not provide any additional funding. I think that you are right, Chair. I think that, last week, you said that ministerial directions are peculiar. We need to try to seek, and perhaps provide, clarity on the Committee's interpretation of how to make ministerial directions. To date, my Department has, in some ways, been very consistent. The Minister of Finance has been really consistent. I cannot share a lot of his correspondence, or what I have seen of it. When he made his oral statement on December monitoring, however, he followed it up. He talked about how we are not at the end of the game yet.

He said:

yet. It is his expectation that Departments will do everything that they can between now and the end of the year to manage the precarious position that we are in in 2025-26 down to as low as is possible and, hopefully, within the control totals. That is one aspect.

I am with you on the concerns that the Committee raised last week. A ministerial direction should not allow Departments or their accounting officers to circumvent the public expenditure system or the control bases. I was encouraged when I heard the accounting officer of the Department of Health, while at this very table last week, effectively say that as well. In some ways, we need to see how things play out. There is a consistent message coming from the Department of Finance at ministerial level. Our accounting officer, Mr Gibson, who will be before the Committee next week, has written several times in recent years to his accounting officer colleagues to remind them of their responsibilities when it comes to the stewardship of public money and of the importance of adhering to 'Managing Public Money NI' and other guidance, as well as to the Government Resources and Accounts Act (Northern Ireland) 2001.

The Chairperson (Mr McCrossan): Is that falling on deaf ears, Stuart, given what we are seeing and given the ministerial direction that we considered last week?

Mr Stevenson: I share your concerns, Chair, about the fact that there has been a bit of, shall we say, drift in recent years. It goes back to the Audit Office report from 2023, which stated that there were ministerial directions in place for potential emerging pressures, and affordability was quoted in some instances in 2022. As it was, that was overtaken by events. Once the Budget kicked in, those ministerial directions were no longer needed. There has been drift for a few years, Chair, so you are absolutely right when you say that the potential overspends for 2025-26 are significant. In my 20 years in public spending, it is the most precarious position that we have been in —.

The Chairperson (Mr McCrossan): I appreciate your saying that. I will say again for the record that I appreciate that your powers are limited. I also appreciate your commenting in a very honest way.

We will move on. What further steps can you, as the TOA, take to ensure that Departments comply with the guidance so that ministerial directions are brought forward for scrutiny in a timely manner?

Mr Stevenson: Chair, we issued updated guidance on the ministerial direction process. I think that we did that two years ago. The most recent development was the transparency aspect on the publication of directions, which is really important. That has brought us into line with other authorities on that front.

The work that we do with accounting officers is important. The C&AG and I are part of the team that delivers training on three occasions during the year for all newly appointed accounting officers. As the permanent secretary roles are filled in the coming weeks and months, some new accounting officers will join the next board. It is important that there be clarity of message. When I deliver that training, I talk to accounting officers about the importance of living within their budgetary control totals. I always use the term "non-negotiable". In some ways, what we are seeing with ministerial directions undermines that position a little bit, and, as the TOA, that frustrates me.

The Chairperson (Mr McCrossan): I appreciate that, Stuart. You provide the guidance, but, necessarily, you are very restricted in how you can enforce that guidance. Is that accurate? It is the departmental accounting officers who are ultimately responsible, along with their Minister.

Mr Stevenson: It is, Chair. That is why a clear message from the Committee helps me in my role and the Audit Office in its role, because if we see issues with which we are not happy and that are not considered acceptable, we are able to point to the fact that we will invite accounting officers to the Committee to answer for such issues.

The Chairperson (Mr McCrossan): I have stated for the record the reasons that I believe the process is being used not in exceptional circumstances but more routinely. There are consequences for that for this place, as the use of ministerial directions weakens the accountability of accounting officers, encourages unfunded commitments and sets dangerous and difficult precedent for Departments. That is not ideal.

You have given the Committee a number of clear answers. I have a couple of follow-up questions, after which I will bring in members.

Mr Stevenson: May I add one more thing, Chair, before you move on? I also lead on the Consolidated Fund. That involves the daily issuing of cash. Members will be familiar with the Estimates and the Budget Bill, where MLAs vote for a resource total and a cash total. Cash totals are critical for us. They form an essential control that we monitor daily. We are looking at the projections for cash flow. It is a control that tells us that, at a point in time, we will not be able to issue cash beyond some of the control totals. We see quite a disparity between the cash total and the resource total. Ultimately, we will not know how Departments have performed against their resource total until we see how the out-turn exercises play out later in the spring.

The Chairperson (Mr McCrossan): I understand that. We have a number of questions that we will address directly to Neil next week. I have no doubt that he will be listening in to this session.

Stuart, as the TOA, you attend Executive meetings.

Mr Stevenson: I do not, Chair.

The Chairperson (Mr McCrossan): Sorry, you do not. I should have said that you engage with the First Minister and the deputy First Minister and with the accounting officer of TEO. Is that right?

Mr Stevenson: As the Treasury Officer of Accounts, I am part of the Department of Finance. My line management flows through that Department, but my understanding is that I can write directly to the First Minister and the deputy First Minister if I have concerns about an issue that affects accounting officers or about something that needs to go directly to the —.

The Chairperson (Mr McCrossan): Some argue that ministerial directions are being used excessively. Have you, as the TOA, raised any such concerns about their excessive use?

Mr Stevenson: Not at this stage, Chair. I regularly take soundings from the public spending director and from Mr Gibson, as the accounting officer of DOF. We were at a meeting last week of the finance directors from all Departments, and the public spending director was very clear in saying that it falls to all Departments to flag any potential underspends. They do not need to wait for an exercise. The consolidated budgeting guidance is very clear. As soon as Departments are aware of any excess funding that is not going be spent this year, it should be offered to the centre, or at least flagged to the Department of Finance. Every Department is involved in trying to manage the 2025-26 position.

The Chairperson (Mr McCrossan): What I am asking you is whether, as the TOA, you have you raised as a concern the repeated use of ministerial directions across Departments in recent times.

Mr Stevenson: I have not formally raised it, no.

The Chairperson (Mr McCrossan): OK. Your role as the TOA is important. There is also a danger of their use becoming systemic. That would be a concern. Do you agree with that assessment?

Mr Stevenson: I agree with the concerns that have been raised in the past two weeks, Chair. It will be very interesting to see how this plays out in the coming weeks and months. We are keeping a very close watching brief on it.

The Chairperson (Mr McCrossan): In your role as the TOA, if you share the concerns that I just raised about Executive use of ministerial directions, why have those concerns not been brought to the attention of, for instance, the First Minister and the deputy First Minister, or have they?

Mr Stevenson: I am not privy to whether concerns have been raised separately, Chair.

The Chairperson (Mr McCrossan): You have not raised them, however.

Mr Stevenson: I have not formally raised them, no. I am working with senior officials in my Department and with the finance directors in all Departments to remind them of the importance of meeting their requirements under 'Managing Public Money NI' and various other guidance.

The Chairperson (Mr McCrossan): OK. You can understand why I had a number of those questions on governance. There are concerns here. I see a trend. I appreciate your being open with me on that, Stuart. We appreciate your role and how restricted it is, given that you do not have the power of enforcement. I will let Colm in, and we will go from there.

Mr Gildernew: Stuart, I was struck by what you said about Treasury being generally content in 2022 and describing robust levels of governance. There is a danger in comparing the general with the specific and taking the specific trend that we are in at the minute and extrapolating an overall trend from that. I am interested in the overall trend. Are those types of directions almost, if I may mix my metaphors, the canary in the mine for the elephant in the room? Is there a correlation between an upswing in those types of directions and periods of austerity? Does it indicate a lack of adequate public finances or fiscal powers? Can you track that? Do they fluctuate at times when budgets are just not adequate?

Mr Stevenson: We had that discussion with Treasury, Mr Gildernew. The one time that Treasury noticed a significant move in the frequency of ministerial directions it received was when the coalition Government moved in. I always remember that: I think that it was in 2010. It noticed that the number of its ministerial direction requests fell significantly at that time. We do not know why: it was just an observation at that point.

The correlation with funding and availability is an interesting one. There is certainly pressure on the Department of Health and the Department of Education to put plans together. Balancing their budgets is clearly a factor in that. It is worth going back to the wording on ministerial directions. Under "Regularity", 'Managing Public Money' refers to a proposal that is:

I prefer that phrase to the term "affordability", because it is a constant challenge for all accounting officers to balance their budgets and live within their control totals. That is the essence of good decision-making and planning; they look at the priorities and the options that are available to bring us on track. Certainly, in the two cases that have been flagged up this year, we have to accept that there was pressure. In both cases, the pay parity issue was clearly a factor.

Mr Gildernew: My question was in the context of the overall Budget — the overall settlement.

The Chairperson (Mr McCrossan): Thank you, Colm. Cathal, you were looking in briefly.

Mr Boylan: Yes, Chair. It is an interesting point.

The Chairperson (Mr McCrossan): It is, yes.

Mr Boylan: Stuart, I have to ask this. It is all right saying that those things should be dealt with and prioritised within the Budget framework. In the two most recent cases, however, you have to ask whether what has happened has been for the greater good. One of the cases relates to pay, and maybe the other case does too — I do not know. I am only throwing that out. I put that to you because we need to have that broader conversation. I keep bringing it back to the Committee's role and responsibility to scrutinise properly. We may need to look at the rules again — I do not know — but there have to be conversations on that. I am not defending that position, but we need to understand it. Is that why directions are now coming at us thick and fast? That is all that I am saying: it is a broader conversation.

Mr Stevenson: I absolutely agree with that. I appreciate that.

The Chairperson (Mr McCrossan): You are 100% right, Cathal. The core point here, however, is that if all Departments take that attitude — pay is an issue in all Departments — where does that leave us next year? It is going to be a continuing problem. There is a fundamental point there on the wider public finances of this place. It is of concern. I get —.

Mr Boylan: I agree. My follow-up question is this: how do we address that as a scrutiny Committee? That is the point.

The Chairperson (Mr McCrossan): We will raise those points with Neil Gibson at next week's Committee meeting, but you can see where the concern is coming from.

Ms Forsythe: Thank you very much, Stuart, for giving evidence to the Committee. I value your role, as a member of both this committee and the Finance Committee. As you know, I am an accountant and worked in the field for 15 years across the public sector, private sector industry and the voluntary and community sector. My experience has always been that finance roles do not work well if the people doing them have to chase and mopping up after people. It is really important that finance be given its status and importance. Your role needs to be backed and given a bit more authority. You are doing the best that you can, but it feels like there is a lack of power to back up what you are trying to do. You put out the guidance and do the right things, yet we continue to see a number of such issues.

Last week, we had the unusual circumstance of the ministerial direction on the review of the pay award for Health and Social Care. Everyone is so supportive of health workers getting their pay award, but, with the ministerial direction, there was the really unusual circumstance of the accounting officer recommending to the Minister that he seek a ministerial direction. That is an alarming precedent to set. My understanding is that the role of the accounting officer is, ultimately, to say, "No, Minister, we cannot afford this", and that, if the Minister is going to go ahead and do it anyway, the procedure is that he should give the ministerial direction. There is a clear difference in the governance of and rules for those two positions. Will you comment on that precedent from your position? Do you know of any other examples of a ministerial direction being sought in that manner, or of an accounting officer recommending that a Minister goes ahead and does something such as that?

Mr Stevenson: Thanks very much for that question, Ms Forsythe. That issue came up in our research work with Treasury. We discussed ministerial directions, and it agreed that the ministerial direction process does not necessarily mean that an accounting officer disagrees with a decision; it is more that the decision does not fit within the rules or guidance. That is a slightly different angle. He or she may seek a ministerial direction in order to cover a gap or an inability. We had a good example of that today in the news with the Women's World Cup: we simply were not able to reach the bar on value for money.

The issue is not necessarily that an accounting officer is in complete disagreement with a decision. However, on my first day in DOF, ministerial directions were explained to me like this: if a Minister wants to move the building 3 feet to the right, an accounting officer will seek a direction for that, and the Minister can direct them. In issuing that direction, he or she takes the burden of responsibility for the decision. That is a fairly ridiculous example, but it highlights the point. In that example, an accounting officer would disagree with the decision on the basis of the use of public money. On many issues, the accounting officer may agree with the overall policy decision, but they will try make sure that they meet the requirements that are set out in our guidance. That is my take on it. I hope that that helps a little.

Ms Forsythe: Thanks very much, Stuart. It is a wee bit unusual. We are coming at it from the point of view of the Public Accounts Committee. As Cathal said last week, we had not seen one like that coming to the Committee before, so we sought some guidance on it.

There are provisions in 'Managing Public Money' and the guidance that is issued to Departments. Mike Farrar, permanent secretary from the Department of Health, was at the Committee last week. He absolutely supports fair pay for health workers, so he supports the policy decision. Going back to the procedural point, however, he is the accounting officer. Under the guidance in 'Managing Public Money', should the accounting officer go so far as to say, "I can't apply that to my budget. It is unaffordable. Stop", and then hand that over to the Minister to come in and decide whether to issue a ministerial direction? What exactly does the guidance in 'Managing Public Money' say?

I am just trying to think of the different tiers of financial governance that we have for full transparency and accountability and identify where the gaps should be.

Mr Stevenson: Absolutely. 'Managing Public Money' states under "Regularity" that an accounting officer should raise a concern with the Minister if a proposal is

If the Minister is minded to issue a direction, that is OK, but it is not the end of the story. I believe that the accounting officer is under pressure to take steps to mitigate that level of overspend and that the Department should prepare options and place them before the Minister for a decision.

We are mindful of the fact that accounting officers and Departments feel that they are under pressure for breaching a statutory requirement. Doing so remains a decision for a Minister as opposed to an accounting officer. However, the Minister, subject to Executive agreement, has the ability to legislate to change a statutory requirement. That is a situation that accounting officers should prepare to present that as an option. Again, it will be for the Minister to decide on that front. There are practicalities to consider with that, but we cannot ignore it. Those are the kinds of decisions that need to be made and that is the extension beyond a ministerial direction for accounting officers and their respective Ministers to consider. That advice has been given to Departments on a regular basis in recent years, and Mr Gibson has written to accounting officers along those lines, so they are all fully aware of our expectations in DOF on what steps should be taken on that front.

Ms Forsythe: Absolutely. Thanks very much, again. Obviously, we are operating in a really constrained financial situation. All parties in the Executive have come together and agreed to prioritise public-sector pay. Delivering that has led to those unusual circumstances, but making sure that the procedures are being followed is so important for us on the Committee.

You said that Neil Gibson, the permanent secretary of the Department of Finance, has written to accounting officers. I am trying to understand your role in that. Do you write to them as well, or do the letters kind of come from you and Neil? What is the process there?

Mr Stevenson: I have some formal letters that I issue on a regular basis: anything around guidance or managing public money and "Dear Accounting Officer" letters go directly to the permanent secretaries. I also issue guidance to finance directors: the "Dear Finance Director" letters that go out are more of a technical accounting nature.

As for how we met the second recommendation from the Audit Office report, I write, periodically, to accounting officers with a range of governance and accountability issues, reminding them of the guidance and any emerging issues that we see. That will happen. However, given recent cases, we have been taking soundings and Neil has very much taken leadership of the situation, writing directly to the accounting officer group on several occasions to remind them of the importance of living within their controlled totals.

Ms Forsythe: Thanks very much. Thank you, Chair.

The Chairperson (Mr McCrossan): I have a brief comment on Diane's questions. I am struggling to understand how the accounting officer could sign off on or agree to the ministerial direction for the pay awards that really should have been planned for. We have been hearing about those pay awards issues since the Assembly was down. It has long returned. The pay awards should have been planned for, so how can the accounting officer justify the failure of a Minister to prioritise. He has to keep within the budget, so it should have been planned for in the budget. I do not understand, and I am specifically asking you, how the accounting officer can justify that action?

Mr Stevenson: Again, we discuss that at length when we are training accounting officers. My take on it is that the level of commitment that exists in departmental budgets is a real challenge for accounting officers. Accounting officers can technically only spend what has been voted for in the Assembly. Even a multi-year Budget is subject to change in later years. It is only when we take the Estimates document through and Members vote for the Budget Bill that they have the power to spend that money. Accounting officers are employing huge numbers of civil servants on recurring contracts, even though they have no guarantee that they will have that funding in future years.

The Chairperson (Mr McCrossan): There are 24,500, not including agency staff, to be exact.

Mr Stevenson: That is along with all the other bills that are paid and the multi-year capital project commitments that have been signed in advance. There is always an element of assuming that future budgets will flow to a certain extent, but the level of overcommitment and managing it down is key to the role of accounting officers. Future pay rises are clearly a major factor at the minute.

The Chairperson (Mr McCrossan): They are a factor for politicians and for Departments, but they should be planned for. That is my point.

My concern — and I am sure that, as the Treasury Officer of Accounts, it is yours as well, but you can correct me if I am wrong — is that the action taken by the accounting officer on that pay award sets a very difficult precedent because other Departments are likely to follow. Public workers in other Departments will say, "They're getting paid. Where's the fairness here? If they can go over budget, where's the fairness?". Do you not agree that that sets a dangerous and difficult precedent for the finances of this place?

Mr Stevenson: I absolutely do. I agree with that comment.

The Chairperson (Mr McCrossan): It is worrying. Are there any other questions on ministerial directions? Are you content?

Mr Boylan: On that last point, I agree with what you are saying, Chair. It is all right talking about planning, but surely part of the conversation should be about prioritisation. It is all right saying that you will plan for a pay rise, but you need to prioritise. There needs to be a broader, deeper discussion. That is not for this Committee, to be fair, because we have a certain scrutiny role, but if we are serious about it, we have to learn from it because we are going to have more ministerial directions. I do not think that will change, although we may not get them to the same extent. We have got to learn from what has happened. Some of the decisions are due to where we are: they are down to the composition of what we have over here, to be honest. The Chair keeps saying that we need a plan, but we need to prioritise if we do not have sufficient funds. Who comes first, and what will lose out? That is the truth of the matter. We all have certain roles and responsibilities, and we need to have a broader discussion if we are going to have proper scrutiny in the future. You know that as well as I do. I hope that that is part of the conversation that you are having with accounting officers.

The Chairperson (Mr McCrossan): I have been about for a fair long time — not as long as you, Cathal — and I will say this: things that are not planned for and are dealt with last minute are not a priority. That is the issue. This is all responsive stuff. These are not new problems. The Minister's solution to the problems is simply to overspend. Regardless of the issue, we are here to look at the process. I want to make that very clear.

We will move on to MORs. Members have a number of questions on that. I will begin and Jon Burrows will follow. Stuart, you have been very patient as TOA and the author of guidance to accounting officers. Could you or should you be doing more to ensure compliance with MOR guidance and timelines?

Mr Stevenson: That is something that we have looked at. Mr Gibson fired the starting pistol on that when he wrote to you. He asked me to have a look at the complexities that were flowing from finalising MORs and cross-cutting issues. We have crunched some numbers to get an evidence-base for that decision, and we are seeing a slight disparity in the dates. We have looked back over the past six years. We have had 14 MORs over that period. For a non-cross-cutting report, we are looking at an average response time of 8·3 weeks. For the cross-cutting reports, that response time rises to 8·8 weeks.

That slightly higher response time probably reflects the added complexity of having to engage with other Departments to get collaborative sign-off on a particular MOR. Of the 14 MORs, seven were responded to in under eight weeks, so there was about 50% compliance with the guidance. A further three were responded to within another week, and three were responded to within just under three months. The one outstanding MOR, which responded within eight months, was the one on the 'Major Capital Projects'. There is currently a situation with the MOR to our latest 'Major Capital Projects' report. The Committee will expand on that with a panel of witnesses at its meeting next week.

Our guidance flows from the wider Assembly guidance on responses to Assembly Committees. That is where the eight-week target comes from. That is consistent with devolved authorities elsewhere — the Scots ask for a two-month turnaround. At this stage, there is not a compelling evidence base for increasing those levels. Mr Gibson asked me to think about that. The next stage for me is to have a discussion with the permanent secretaries' group to see about that. If we were to give Departments an extra month or longer for MORs, my feeling is that they would probably take it, which would not be a good move for governance and accountability, of which timely MORs are an important element.

The Chairperson (Mr McCrossan): What did the permanent secretary in the Department of Finance ask you to do?

Mr Stevenson: He asked me to look at whether we need to consider having flexibility in the guidance for MORs on cross-cutting reports. I interpreted that as asking whether we should give additional time for the practicalities involved in producing the MORs. Looking at the past six years, I do not think that there is a strong enough case for that. The situation with the 'Major Capital Projects' report is an outlier, as there are difficulties with that. If the Committee is happy with this, my recommendation is that we hold on to the time frame of eight weeks in the guidance and look at having a sharper response time. We have been working on improving that. Since late 2024, the timescales have been fairly good, so we have been able to see an improvement as a result of just squeezing a bit more out of our internal processes.

The Chairperson (Mr McCrossan): We are in agreement on keeping the time frame as it is. There are 25,000 public-sector workers, not including agency workers. Given the size of Northern Ireland, there are sufficient resources to respond to this Committee. To any accounting officer who is listening, I, as Chair of this Committee, do not believe that it is appropriate to request or suggest any extension of the time frame. It is entirely appropriate as it is, at eight weeks. If an accounting officer cannot satisfy that time frame, they need to ask questions about their Department's processes.

I am glad that you agree with me on that, Stuart. I know that other members have concerns about MORs, which they will now raise. The timescales that we have now are best, provided Departments meet them.

Mr Burrows: I am reminded of Parkinson's law, which is that work expands to fill the time that is allotted to it. If you give people more time, they inevitably take it, so that is not the answer.

I want to get specifics. What are the specific barriers to meeting the eight-week time frame for cross-cutting MORs? Tell me what you think are the three main barriers to meeting the time frame?

Mr Stevenson: Thanks, Mr Burrows. It is about drafting and getting a MOR that is acceptable. To be effective, a MOR should be concise and to the point. We are clear in our guidance to Departments that we like to see clearly, under each recommendation, whether it has been accepted, not accepted or partially accepted, and that we want to see target dates included. Quite often we find that, if a Department is struggling to provide a clear response, it will provide a lengthy explanation for that.

For us, sometimes that is difficult. I accept that the content falls to individual Departments, but, when the departmental accounting officer and the Minister have cleared it, it comes to the Department of Finance, so I have to clear it through my Minister before the MOR is laid. If there are issues in it around public expenditure and so on, and the MOR is not the most appropriate place for it, I would go back to the Department, maybe to challenge the wording. That can become an iterative process and lead to delays.

It is difficult for us. We want to see a good, clear MOR that passes muster and can go to the Finance Minister early enough to allow him time to reflect on it and then give us clearance to lay it. Each MOR, depending on the subject matter, has its own difficulties, but, effectively, it is about the quality of response. We do our best to improve that where we can and to give constructive feedback that will enable that to take place.

Mr Burrows: So there is still some training and upskilling that could be done.

Mr Stevenson: I think so; that is fair enough. Again, a policy team for a particular area might work on a MOR only once every five or six years, so it is difficult. We need the governance people in the Departments to add value by looking across the board. As Treasury minutes come out, we share them with Departments. Quite often there will be an overlap with a topic area, so there is good material there for looking at the kind of responses that should flow in that regard and would certainly help with training. Quality assurance probably also comes down to capacity and competing priorities.

Mr Burrows: OK. Is one aspect of it culture? Is this just acceptable?

Mr Stevenson: I hope not, but we cannot rule that out. The audit recommendations fold into a Department's administrative processes. We expect the departmental audit and risk assurance committee (DARAC) and the internal audit team to look at outstanding recommendations and the progress that is being made on them so that, when the Department drafts the response to the MOR, that should be at the back of people's minds. They should be thinking about how the Department is going to meet the requirement or request in a timely way in future. I hope that that helps a bit.

Mr Burrows: It does. Thanks.

Mr Dunne: Thank you, Stuart, for all the detailed information. What more can be done to encourage Departments to provide partial or interim information where some recommendations are dependent on longer-term strategies?

Mr Stevenson: I will point to the follow-up regime, Mr Dunne. Traditionally, when a MOR comes to us, as a committee, we pass it to the departmental committee and the procedures in that Department for the DARAC and board members to follow up on it. Reinforcing that message is important, but so is the work that this Committee has done recently in inviting witnesses to discuss a MOR. I note that Mr Farrar was keen to come back; he offered to do so at the end of last week's session. In certain circumstances, it is appropriate to utilise that mechanism. We will include that in our training for accounting officers to remind them of the likelihood that they will be required to attend the Committee to discuss progress on a MOR.

Mr Dunne: That is an important aspect of it. Departments cannot just put it on the long finger by blaming everything on having to wait for a longer-term strategy. There is an important job of work for us and for you.

Mr Stevenson: The more regular request for updates is an interesting one. Traditionally it was annual updates, but the fact that we now ask for more things every six months or, in some instances, quarterly —

The Chairperson (Mr McCrossan): Cathal has suggested that a number of times.

Mr Stevenson: — provides an enhanced focus, which is good.

Mr T Buchanan: Thank you for being with us today, Stuart. The Committee has observed an increasing tendency for MORs to be submitted to the Executive for sign-off, contributing to further delays. Who decides whether a MOR requires Executive sign-off, and on what basis?

Mr Stevenson: We take it on a case-by-case basis. With the cross-cutting ones, the recommendations lend themselves to requiring that corporate sign-off, if you like. I remember having discussions with Sue Gray, who was the Department of Finance's permanent secretary at the time. In that instance, the MOR was to do with the social investment fund. We made a decision to seek corporate sign-off around the Executive table to get the buy-in that we felt we needed in order to deliver on that front. That slowed up that process by maybe 10 days to two weeks. Strategically, however, it was the right thing to do, given the subject matter. There is a role for us. The TOA team generally coordinates any cross-cutting reports. We will work with our accounting officer to take views, and the matter can be raised at the next board in the first instance, and then we can go to the Executive when we need to. It is considered on a case-by-case basis.'

Mr T Buchanan: Would having clearer guidance reduce unnecessary delay, while respecting the Executive's process?

Mr Stevenson: Major capital is the one that lets us down on that front, and the MOR itself is not necessarily the issue. We have had early drafts of the MOR, but the investment strategy is such a central foundational plank to it. When we were consulted on it in the early stages of the process, I was supportive of holding off in the hope that we would get the investment strategy signed and agreed, because that would add a lot of value to the MOR and the information from it. Unfortunately, up to this point, that has not been successful. In that instance, yes, I think that it would have at least helped to apply pressure. I do not think that it would have guaranteed the agreement on the investment strategy, but it certainly would have helped with pressure.

Mr T Buchanan: How do you explain the apparent inconsistencies in approach between different MORs?

Mr Stevenson: Again, that is down to the nature of our structure, Mr Buchanan, and the fact that different Departments have different approaches and the specialist teams within those Departments that lead on MORs. Some of the MORs that have come forward in recent months have similar aspects. Some Departments embrace the opportunities and seem to link in well with the recommendations as they are worded. Others have more of a challenge, perhaps, in trying to balance some ongoing work in a similar area. It is almost trying to make that fit with the recommendations that have come out of the inquiry's hearings. With different Departments and different teams, we are always going to see a slightly different approach. For us, however, the core messages remain the same about clarity on dates and deliverables, as well as key outputs. That is the message that we have tried to get across, but I accept that there are stylistic changes, Department by Department.

Mr T Buchanan: That is key to it, but we are not seeing that. Some are coming through with vague or revised timescales, while others have unclear explanations, recommendations not being accepted and issues like that. It is clear that the key to all of this is that we receive clear information when these things come forward.

Mr Stevenson: I accept your point; it is difficult. I have been doing some work over the past couple of weeks on access to GPs. That will be one of the MORs that will come forward next week, hopefully. I do not want to jump the gun on this when it is coming out so shortly, but a lot of the information that it wants to talk about on the departmental reset on health and the impact that that is having on access to GPs is included in there. I find myself struggling to think about whether we should encourage the Department to edit that out, but then I look at it and see that there is a lot of meaningful information in there. I have to accept that the Department is the expert on this and that, in the interests of transparency, it is important to leave it in. Some of the early recommendations in the access-to-GP reports are certainly not concise in their response. You will see that in the next week or so when that comes forward. It is difficult, Mr Buchanan, and I take on board those comments.

Mr Boylan: I will squeeze in a question if I can. Stuart, thanks very much. It has been an interesting conversation. I will make a comment to preface my question. I have noticed somethimg myself, and I pay tribute to the Chair and the Committee. We have gone about the process in a slightly different way, and, even during my time, we have learned different ways to go about it. We are presenting more information and better information, looking at the inquiries that we have done and some of the responses, working with the Audit Office. In some ways, that brings a bigger challenge for Departments to respond to. In general, what is your overall assessment of the standard of MORs today?

Mr Stevenson: I think that we have raised their profile through this session, and I think that that is a good thing. At times, the recommendations can be a challenge to Departments. While it is difficult to address a meaningful response within a fairly small timetable of eight weeks, it is probably a good thing to challenge Departments and be disruptive in that area. Ultimately, I think that we all want to see improved public services. I can appreciate that sometimes the recommendations are disruptive and challenging in terms of timing and funding, but overall, from a public audit perspective, I think that it is good governance, and I welcome that direction of travel. Departments are putting in the work. They are providing us with responses. There will be learned experiences as we move ahead. I am encouraged for the future. I think that we are in a better place at this stage than we were in at the start of the session. That is encouraging, and we can build on that.

Mr Boylan: Finally, as I said, it is our role to scrutinise. Likewise, we try to offer some solutions as part of our investigation and inquiry process. That is the right way to go about it. At the end of the day, it is about accountability. If you feel from the conversations that you have been having that we are making progress, we are doing something right, but there are other things that we can learn ourselves. Thank you very much for your answers.

Mr Gildernew: It has been an interesting and useful session. Stuart, does your team get any opportunity to provide advice or challenge before the MORs are submitted? Do they ever —?

Mr Stevenson: We do. Sorry to cut across you; I hope that is OK.

Mr Gildernew: That is fine.

Mr Stevenson: It is something that we have really tried to be more proactive on. We have tightened our timescales. We are asking Departments for a first draft in that three-to-five-week window so that we have the opportunity to give them feedback for improvement and so that they have time to respond to that. That is really important for us. We need to meet the standard for the Finance Minister so that he is comfortable with it for laying. Quite often, we will go back with drafting notes, challenges and maybe requests for further clarity and information to try to get it to the next stage. We are mindful of what I think are the clear parameters that have come out from this Committee about its expectations for MORs. That is helping us.

Mr Gildernew: Part of the answer to this question is probably in the way you framed the answer to that question, but are Departments generally welcoming and proactively and positively engaging in that iteration and reiteration?

Mr Stevenson: During the eight-week window, they are probably not as grateful, simply because of the pressures and capacity issues. That is the same for us on our side as well. But when we get back into the helicopter and take a look at it, we recognise that it is the right thing to do, and I suspect that Departments will be in the same place. MORs are about improvement in public services, and we all need to embrace that in the right spirit.

Mr Gildernew: Thank you.

Mr Honeyford: Stuart, thank you for your presentation. One of the things that came up this year at the

conference was revisiting progress. Has any systematic approach been considered for recommendations here in Northern Ireland? [Interruption.]

Mr Stevenson: Thanks, Mr Honeyford.

Mr Boylan: There was another question there.

Mr Honeyford: I am not sure where that came from.

Mr Stevenson: Was that your question?

Mr Boylan: You have asked a supplementary already, David.

Mr Honeyford: It was not me.

Mr Stevenson: There has been some work in our Department in streamlining the recommendations. For us, it is about the work of the departmental audit and risk committees. Those are really important vehicles for follow-up. The Audit Office attends those committees at a departmental level, which is really important and gives that independent viewpoint. The independent members of those committees have a key role to play, and those committees have to be chaired independently, which is also good. The follow-up on recommendations is so important. We maintain a database in the Department. As recommendations flow, we populate that and seek updates on a regular basis from Departments. For those cross-cutting aspects, it is important for us to go out to the respective Departments. For example, after the skills inquiry that we conducted recently, we are chasing both Departments for their inputs to populate those accountability grids, as we call them. They are an important exercise in looking at overall progress. Again, it is one that probably suffers a little bit more in terms of systemic follow-up. We should maybe be looking a little bit more at the completion dates for some of those recommendations and maybe at some of the numbers. Some trend analysis on that front would be really helpful. If we had the capacity, that would be the area that I would be interested in moving into next when it comes to that follow-up piece.

Mr Honeyford: Are you willing to support the Committee to develop such an approach for us here?

Mr Stevenson: Absolutely. That would be really helpful and would complete the loop for us when it comes to seeing successful implementation. There could be some kind of periodic reporting or exception reporting for those recommendations that are not being followed up on within a particular period of time. The Audit Office engagement on the DARACs is already probably —. I expect the Audit Office to be very mindful of those when doing that work. Again, we employ the independent non-execs to sit on boards and chair those meetings, so they have a role to play as well. We do not want to completely tread on their toes, but we are all in it together, and I hope that we can share information and maybe take something forward in the future if we have the capacity and the opportunity to do so.

Mr Gildernew: I have one other question, Stuart. What more do you think you could do yourself to encourage clearer explanations and better and more robust timelines?

Mr Stevenson: In some ways, the exchange with Mr Honeyford on MORs —. We could look more at the training piece in terms of responses. We probably do not have the capacity to do that at the minute because, like all Departments, Finance is struggling for resources, and we have to prioritise. In recent years, we updated 'Managing Public Money' for the first time in 15 years. That is the most important document that we produce, so refreshing that once every 15 years is an example of how we are struggling with capacity and priorities. We would make improvements to training and following up on recommendations, but there is a limiting factor for us. There are lots that we would be keen to do and work with the Committee on, but, at the moment, we are struggling for the bandwidth to take on some of that work.

The Chairperson (Mr McCrossan): Thanks, Colm. That was an important question.

Mr Delargy: Are you confident that the accountability grids and the Audit Committee oversight of PAC regulations are being applied consistently?

Mr Stevenson: Mr Delargy, thanks for that comment and question. I am probably not well enough sighted to offer a comprehensive response on the consistency aspect of that. That goes to the structure of the monitoring of progress in those areas. The fact that it is individual DARACs — we are putting a lot of emphasis on the chair and the non-exec directors to carry out that role for us. The consistency point is probably challenging on that front. I absolutely agree with Mr Gildernew: if we had the capacity, we would check right across to make sure that standards are being met consistently.

Mr Delargy: Are you in a position to update the Committee on the outstanding recommendation relating to the comparative analysis of ministerial directions?

Mr Stevenson: Yes, Mr Delargy. My assessment at this stage is that we have carried out fieldwork, with different degrees of success. We had some extensive feedback from Treasury, which was helpful. The Cabinet Office was particularly helpful. It talked through its directions and challenging subjects. The Rwanda scheme was a ministerial direction. It shared with us the process around that. There were some other ones. The sale of RBS shares was another ministerial direction that it had issues with. It was helpful to get some of that feedback about the process. That has thrown up some misalignments that we have with Treasury. For example, when a ministerial direction is issued, it simply copies papers to the PAC, the departmental Select Committee, the C&AG and the TOA. The added element that we have is the C&AG's considering the ministerial direction and then presenting to this Committee. In some ways, what has happened in recent months has helped to raise awareness of some of the issues and concerns on that front. If we were looking to strictly align with Treasury on that front, you could argue that that is an element of our process that we could do away with, but, after what has happened in recent weeks, it is clear that there is significant value in that. If anything, we need to extend beyond that and see what menu of options is available to the Committee when we have concerns. It has been really helpful to garner some of that information and look comparatively at it.

I was able to sit in on the accounting officer training at Whitehall, which was a real eye-opener regarding the challenges and issues for an accounting officer. It validated a lot of the stuff that the C&AG and I deliver in our own accounting officer training, but it also gave us a fresh look and perspective on it, which was good. The next stage for me is getting time to work with the perm sec group in some kind of presentation or workshop-type situation, and then writing up our findings from that piece of work. That has suffered, Mr Delargy, which is on me and my team. However, we took great assurances from the significant reduction in the number of ministerial directions. The Audit Office report dealt with the directions up to the autumn of 2022. Since then, obviously, we have had one ministerial direction in 2023-24 and none in 2024-25. We are seeing a slight uptick this year. We are aware of three, with another three in the system, so now is a very good time to press ahead with the completion of that work. I will be looking to bring that out. Given some of the issues that have emerged with those recent directions, we have a very timely opportunity to have a discussion with our accounting officer team on that front. We will be looking to finalise that in the weeks and months ahead.

Mr Delargy: That is really useful. Thanks, Stuart.

The Chairperson (Mr McCrossan): OK, Stuart. You have taken a lot of questions, and we appreciate your answering them. You will appreciate that this Committee recognises the complexity of the issues that have been discussed. It remains clear, however, that timely, transparent and high-quality MORs, along with robust governance around ministerial directions, are essential to effectively scrutinise public expenditure and ensure accountability. The members and I will consider the evidence that has been provided and the answers that you gave, including the implications for guidance, consistency of approach and follow-up arrangements, and we will determine what further action and engagement may be required. We appreciate your being here, Stuart. Thanks very much for taking questions and answering them as honestly as you have.

Mr Stevenson: Thank you, Chair and members.