Official Report: Minutes of Evidence

The Chairperson (Mr O'Toole): We have with us for one of the final times, if not the final time, Joanne McBurney, deputy secretary at the Department of Finance; Patrick Neeson, assistant secretary; and Maryann Smith, director. Joanne, I invite you to make an opening statement.

Ms Joanne McBurney (Department of Finance): Thank you, Chair, and thank you for the opportunity to brief the Committee today. We touched on some of these issues briefly when I was here before Easter, so I will keep my opening remarks brief.

As the Committee is aware, the £400 million reserve claim that was provided in 2025-26 was included in the Department's final Budget allocations for that year. The Treasury report, following the open-book exercise, has now been shared with the Executive. It represents high-level Treasury analysis and will be used to inform discussions with the Treasury and the Executive's own consideration of the Budget. Intensive work is ongoing in relation to the Budget. The Finance Minister is continuing to engage with the UK Government to make the case for fairer funding for public services and is working in partnership with ministerial colleagues to progress the multi-year Budget. An updated Executive paper has been provided for consideration. It reflects repayment of the reserve claim following Treasury confirmation in February and the additional funding from the spring forecast announcement on 3 March. Even with the additional funding from the spring forecast, there remain significant pressures across all Departments.

I am afraid that I cannot provide more detail on the Budget, given the ongoing Executive consideration, but we are happy to take any questions that the Committee may have

on any of these topics. [Interruption.] [Laughter.]

The Chairperson (Mr O'Toole): Will members who are participating remotely

please put themselves on mute? [Laughter.]

The Chairperson (Mr O'Toole): Steve, please put yourself

on mute. [Laughter.]

The Chairperson (Mr O'Toole): Steve, put yourself on mute, please. [Interruption.]

The Committee Clerk: We cannot do it. He has to do it himself.

The Chairperson (Mr O'Toole): Go ahead.

Ms McBurney: That is it. I am happy to take any questions. I said that I would keep it brief, and I did.

The Chairperson (Mr O'Toole): I do not know how [Cackle] can be included in the Hansard report, but anyway.

Thank you. There will be a Executive meeting tomorrow on the multi-year Budget. Is the hope that the multi-year Budget will be agreed tomorrow?

Ms McBurney: I have not seen the agenda for the Executive meeting. I imagine that there will be a discussion around the Budget, but I do not know whether there will be agreement. I cannot comment on that, but I imagine that there will be a discussion on it.

The Chairperson (Mr O'Toole): Yesterday, I asked the Justice Minister about her departmental budget, and she said that she had not agreed it. Is the expectation that Ministers agree in writing or that there is a soft agreement in person before an Executive meeting? Is the expectation —

Ms McBurney: There are — sorry to cut across you.

The Chairperson (Mr O'Toole): How will it work? Would we normally expect Ministers to formally agree it in writing before it is signed off at an overall Executive meeting?

Ms McBurney: There are just ongoing discussions on the Budget. The normal process is that a paper is brought to the Executive, and then the Executive agree or do not agree that paper. A paper has been shared, and it will be considered by the Executive, but I do not know what is on the agenda for tomorrow. I imagine that it is likely that there will be a discussion around the Budget.

The Chairperson (Mr O'Toole): There are ongoing discussions and lots of discussions. Has the Minister been meeting his Executive colleagues this week bilaterally to finalise the Budget?

Ms McBurney: There have not been any bilateral meetings this week. There have been bilateral meetings previously, and there is ongoing engagement. Now, I can only —.

The Chairperson (Mr O'Toole): Does "previously" mean in the past fortnight?

Ms McBurney: There are ongoing discussions and engagements, and they have been ongoing since the draft Budget was published.

The Chairperson (Mr O'Toole): OK. What people want to know is, will it happen soon? The draft Budget was published in January, and if there have been discussions since January, that could mean three months ago. Have there been discussions in the past week about finally signing this thing off?

Ms McBurney: There are ongoing discussions on the Budget. That is as much as I can say. These are matters that are under consideration. There are significant issues around the Budget. There are significant pressures across all Departments. As well as engaging with ministerial colleagues, the Finance Minister is engaging with the Treasury and the NIO. Therefore, there are ongoing discussions at the moment, with a view to finalising a Budget.

The Chairperson (Mr O'Toole): You said that he is engaging with the Treasury and the NIO. According to media reports, one of those things might be the participation of Hilary Benn at the Executive meeting tomorrow. Was it the Finance Department that invited Mr Benn?

Ms McBurney: I honestly cannot comment on that. The Finance Minister met the Secretary of State earlier this week and is hoping to meet him again tomorrow, but —

The Chairperson (Mr O'Toole): He will certainly be meeting him if he is at the Executive tomorrow.

Ms McBurney: — as for the Executive meeting, that is the Executive Office's business, not mine.

The Chairperson (Mr O'Toole): Are you aware of a Secretary of State ever participating in an Executive Budget discussion like that before?

Ms McBurney: As I said, I cannot comment on the Executive's business. I can only comment on our engagement. We obviously engage with the Treasury and the NIO on all matters relating to finances here.

The Chairperson (Mr O'Toole): OK. Those are admirably general answers, Joanne, for one of your final appearances in front of us. On the draft Budget, so that we are clear, the Department is now in breach of the law.

Ms McBurney: Yes. The legislation says that a Budget should be brought, but with Executive agreement. You have to recognise the very challenging circumstances that we are in, given the need for a £400 million reserve claim, the need to repay it and the pressures that are being forecast by all Departments, particularly Health and Education. It is a very challenging position.

The Chairperson (Mr O'Toole): I suppose that it is never not a challenging position. It has never not been a challenging position for as long as I have sat on this Committee. Can you give us an indication of the pressures that are faced? We are now in the new financial year. From your perspective, what unmet pressure existed at the start of the financial year, factoring in the reserve claim and repayments?

Ms McBurney: I cannot put a figure on the unmet pressure, because every Department will give you a figure for its own particular pressure, and obviously that is subject to the discussions on agreeing a Budget and the level of funding each Department needs. There is what a Department wants and desires, and there is what it absolutely needs. I cannot put a figure on it, but there are immense pressures, particularly in Health and Education, as was borne out by the need for the reserve claim this year for those two Departments.

The Chairperson (Mr O'Toole): Post reserve claim but before some of the final moneys from the previous financial year were allocated from London, we heard a guesstimate from Ann Watt of Pivotal that a rough calculation of the overspend in 2026-27 suggests in might be £1 billion. Do you recognise that number, or does it seem too high?

Ms McBurney: Again, I cannot comment. As I think I said the last time I was here, I have not seen Pivotal's analysis, so I cannot really comment on that. Certainly, if you were to take the total pressures — if you were to take every Department's bids and take off the allocations that we give them, you would get a figure that is far north of £1 billion. Then again, the absolute necessary amount that Departments need is a different matter.

The Chairperson (Mr O'Toole): That is the purpose of Budget discussions, but if we are in a situation where those Budget discussions are ongoing, as you said, with no clear end point or political desire or pressure to get to an end point, they will just go on and on, and Departments will continue with those positions.

From your perspective, what is the latest possible —? Theoretically, I suppose, a Budget could be allocated on 31 March next year at five minutes to midnight for the sake of form, but obviously that would be preposterous. However, we are now in the situation where we are a fortnight into the financial year. At what point do we start really getting into chaos? We have heard, for example, about the Communities Minister's giving, essentially, three-month letters to charities. I presume that we will see more of that in other parts of the public sector. At what point does it become a bit of a crisis in relation to setting a Budget?

Ms McBurney: I do not think that you can put an absolute date on it. Obviously, the sooner that a Budget is agreed, the better. When Departments are working without a budget, they do not have the ability to plan effectively. As you say, that has an impact, and considerations have to be given to every decision, but you cannot put a date on it. It is just that the sooner that a Budget is agreed, the better that it will be for everybody so that Departments can plan effectively.

The Chairperson (Mr O'Toole): The Vote on Account will run out at a certain point, and we will probably then have another vote to re-authorise spending. Just explain to us what happens if an Executive Budget is not agreed, but we have another Budget Bill. It is possible to continue spending without an overall Executive Budget even after that point, if there is a new Budget Bill.

Ms McBurney: Yes, technically. I do not think that we are in the territory of going down that track yet. The Vote on Account will keep Departments going until the summer, and I hope that a Budget will be agreed long before then. Yes, if that does not happen, there are contingency measures, but it is not something that we are countenancing at this point. You are right: you could bring another Budget Bill or there is provision in the Northern Ireland Act 1998 and the Government Resources and Accounts Act 2000 for other measures, but we are not at that point.

The Chairperson (Mr O'Toole): OK. In relation to the open-book exercise, the book is now closed, seemingly. Can you give us an update on what the outworking of the open-book exercise will be?

Ms McBurney: As I said in my opening remarks, the report has been shared with Executive colleagues, so it is formally —.

The Chairperson (Mr O'Toole): Was it shared recently?

Ms McBurney: It was shared shortly after it was received by us.

The Chairperson (Mr O'Toole): Was it in late March?

Ms McBurney: It had come in just before I was last here. It had been shared then. It forms part of the ongoing discussions with the UK Government on the back of that, and the Executive will factor it into their considerations of the Budget. It is all part of that ongoing process at the moment.

The Chairperson (Mr O'Toole): Have any Ministers fed back on the open-book exercise?

Ms McBurney: Without going into the detail of it, we need to recognise that it was done, as I have said before, in a short time frame, which means that the analysis that the Treasury has done is very high-level. I think that the Treasury would accept that. There are areas where we do not necessarily fully agree with the Treasury's numbers, but the broad areas that are there will form part of the Executive's considerations. There has been no particular feedback on it other than that there are areas where we do not concur with the Treasury's analysis but reflect that it is high-level analysis and was done over a short period.

The Chairperson (Mr O'Toole): What kind of analysis do you not concur with? What is the Treasury saying that you do not agree with?

Ms McBurney: It has compared some of our spend with that in England, but, as I said before, it is not that simple. The Treasury has come up with broad areas to look at. One could go into some of those and start to do more in-depth analysis, but, at this point, it is the broad themes that are more important, as well as the ongoing discussions between the UK Government and the Executive and the Executive's own discussions.

The Chairperson (Mr O'Toole): What was the point of the entire exercise, then? If the analysis was high-level and the Treasury knew the information anyway and you are in constant contact with it, surely the Treasury knew all the information in the first place. Why not just —?

Ms McBurney: I do not think that the Treasury had looked at it in that way. The analysis helps to inform its understanding of the pressures and gives another lens through which to look at everything.

The Chairperson (Mr O'Toole): One of the arguments that the Finance Minister made was that the open-book exercise would allow us to argue to the Treasury that we need more funding. One might say that he would have said that anyway, because that is his job. Has he made that argument to the Treasury on the basis of the open-book exercise, and has the Treasury accepted it?

Ms McBurney: That has been an ongoing discussion with the Treasury. The open-book exercise is part of that, but, yes, the Finance Minister is in ongoing discussions to make the case for fairer funding for services here.

The Chairperson (Mr O'Toole): OK. Again, a bit like the strategic cycle with rates, it feels like a fairly circular process without a clear, distinct end point. The book has been closed on the open-book exercise, but there is no clear sense that it will lead to a particular outcome one way or the other. It is just another part of reviewing as an ongoing process.

Ms McBurney: The intention was never that it would lead to a clear outcome. It is just part of the wider process. The setting of a Budget in any circumstances is not a simple process. When you add in the pressures and other issues that Departments have, it becomes part of the information that is shared to help inform views and discussions.

The Chairperson (Mr O'Toole): It may have been initiated by the Treasury or the NIO — who knows? — but, for a lot of people, it feels like 'Yes, Minister' or Kafkaesque that this thing was announced, this open-book exercise, that would have some end point or meaning, but then it is a case of, "No, it is just an ongoing thing anyway". Before I bring in other members, will we see the open-book exercise?

Ms McBurney: That is a matter for the Executive and the Treasury. At this point, I cannot comment on whether they will share it.

The Chairperson (Mr O'Toole): We are the Finance Committee: surely the Finance Department can share it with us.

Ms McBurney: No. It says clearly in the terms of reference that whether it is published is a matter for the Treasury and the Executive.

The Chairperson (Mr O'Toole): OK. We will have to take that up with the Treasury. We have talked a lot today about letters to the Treasury; that is a letter that I would certainly be keen to write. I will bring in other members now.

Ms Forsythe: Thank you all for coming, and congratulations on the new role, Joanne. We will really miss you in Finance.

The Chairperson (Mr O'Toole): Indeed, yes. Of course.

Ms Forsythe: We are now in April. Do you have an idea of the 2025-26 final out-turn position?

Ms McBurney: We have the latest forecast out-turn from the Departments, and we are working through that at the moment. The Committee will get its usual analysis. The position has improved from the previous forecast out-turn. We are still showing a slight overspend in the latest analysis, but I remain hopeful. It has come down considerably, so I am hopeful that we will reach a balanced position by the end of the year.

Ms Forsythe: Good. What about the capital budget? How has that ended up?

Ms McBurney: Again, the capital is, I think, slightly under. I do not have the figures, because we are still working through the analysis on that, but we certainly will not be over. Hopefully, we will be slightly under and by enough to carry forward.

Ms Forsythe: That is good. As the Chair said, we saw a note of the Secretary of State going to the Executive meeting and the ongoing discussions around financing. Is the conversation still open around our level of need in Northern Ireland? My understanding of the open-book exercise was that, when Treasury came in to get a full understanding, that should have exposed the level of need, and specifically where we are still struggling in certain Departments.

Ms McBurney: It is still on the table and being discussed with the Treasury. One of the other things that has come out through the ongoing discussion and our analysis of it is not so much the level of need — obviously, we would argue that it should not be 124% but should be much higher — but that, while the Executive are funded at the 124% level of need, Scotland and Wales are funded significantly above that. That is having an impact on our ability. Scotland and Wales being funded significantly above their estimated level of need means that they have more capacity to address emerging pressures. The Executive are currently hovering around their 124% level of need, and that gives less capacity. That is all part of the ongoing discussions that we are having with the Treasury.

Ms Forsythe: That is good to know, because as we are sitting at that funding floor level, it totally takes away your ability to invest to save. Do you think that having it set out in that way, compared with Scotland, is a useful exercise? Does it show potential for progress?

Ms McBurney: From our side, it is useful for us to show that. Obviously, it is part of the ongoing discussions with the Treasury, and we do not know where those are going to end. However, it is useful for us to highlight that, while we are funded at need, that does not provide the level of support that others have.

Ms Forsythe: We have closed 2025-26. We have had the reserve claim to get us through business but, as we have opened 2026-27, the same challenges exist right across our Departments. This week, in the Chamber, the Education Minister talked about how we are opening the year looking at the budget pressure to exist as we are. You said that the Vote on Account would carry us through these few months. Is there any guidance to Departments on how they should spend during these opening couple of months of the year until the multi-year Budget, or any Budget, is agreed?

Ms McBurney: Nothing has been issued yet, but that is being considered.

Ms Forsythe: That is brilliant.

You said that we would get the out-turn figures back quite soon. Have any particular issues come up in the Department of Finance itself at year-end?

Ms McBurney: Not in my particular area. It would fall to the finance director, Gavin Patrick. I am not aware of any issues around the year-end, but Gavin could speak better to that than I can.

Ms Forsythe: We touched on transformation earlier. Maybe it is not quite your area. We had the Executive restoration package, our transformation projects and all those things sitting there. Earlier, we were talking about how much has actually been drawn down in the 2025-26 year. Have you sight of that? Have you any indication of how much would be —.

Ms McBurney: I do not have it with me. We will have that, and we can provide it. I do not have it with me at the moment because, as I say, we are still working through the end-of-year figures.

Dr Aiken: Hi, Joanne. Congratulations on your promotion. It is great to see it.

Ms McBurney: It is not a promotion, unfortunately. It is just a move.

Dr Aiken: Well, whatever it is, you have done sterling work. I have really enjoyed working with you all these years, through thick and thin.

Ms McBurney: Thank you.

Dr Aiken: Just a couple of questions. We are now outside the Budget Act, so, legally, we are into the usual territory that we seem to get into. Can you give us an idea of how much of the Vote on Account has already been "spent up", if you know what I mean, before we head towards the next quarter, and what the implications are likely to be?

I have now fired in quite a few questions to the Minister and the Executive on the open-book exercise. I actually got better responses from the Treasury, which was interesting. Its view is that, if the Executive want to publish it, they can go ahead and publish it. The other really interesting point that Treasury came with was —. It has obviously spent a lot of time reading the Fiscal Council report, the reports from the Northern Ireland Audit Office (NIAO) and how much it is costing per —. One of the things that was indicated to me was how much it was costing per civil servant for delivery as compared with an English local council. I know that it is not a direct equivalence, but the difference between 1 and 1·88, I think, is significant. Have any of the Treasury's thought processes found their way back into the thinking of the Department of Finance? Put it this way: it is much more loquacious than the Northern Ireland Executive in letting us know what is going on. I am pretty sure that, if I ask the question, it will give me the report.

Ms McBurney: OK. I will take your first question first. I do not know how much of the Vote on Account has been drawn down. We do have those figures; I just do not have them in front of me. We are in the early stages of the year, so I do not imagine that —.

Dr Aiken: Can you ping them to us, please? That would be quite useful.

Ms McBurney: Well, they change every day, so we can get you them at a point in time.

Dr Aiken: I know. They would give me an indication of how close we are getting now. You and I have gone through this three times previously. If we can just get an idea, we can see what sort of cliff edge is coming, if you know what I mean.

Ms McBurney: We are nowhere near that yet. It will be June/July before we get anywhere near the limit of the Vote on Account, but we can certainly provide you with the drawdown of cash figures.

It is hard for me to comment on what Treasury has said about the open-book exercise without actually seeing in front of me what Treasury has said. The terms of reference very clearly state that it is for Treasury and the Executive — not the Department of Finance — to agree whether they publish it. I would be cautious about publishing it, simply because we would not agree with all of the Treasury analysis in it. We would not have time to check all of that. It is a Treasury report, and we would need to go through it. It goes back to some of the numbers that you quoted about the Civil Service cost of delivery. You rightly said that you were not necessarily comparing like with like. Before those figures were used, you would have to be careful about what was being compared and whether they were relevant comparisons.

Some of the thinking in the report — some of the comparisons of spend between ourselves and others — relate to things that we would be looking at, but you have to be very aware of the differences between the jurisdictions. There are things that are done centrally here but which are done in local authorities in England; there are things that sit in the public sector here but are privatised in England. There are all those differences. We also have less capacity, for example, for economies of scale. So we are very different. We are a lot smaller. Some of the differences are reflected in that 124% level of need and some things are not. There is also the fact that we have things to fund that are not funded in England and for which, therefore, Barnett is not provided — for example, legacy costs, victims' payments and, in 2026-27, the PSNI data breach. There are a lot of differences. While comparisons between jurisdictions may be helpful in some cases, they are not helpful in all.

Dr Aiken: Just a final question. From the discussions that I have had and the trails back and forth, Treasury did seem fairly well informed. It was using the Fiscal Council information, had read the Fiscal Commission's stuff, had read the Northern Ireland Audit Office's stuff and had even read the Pivotal document. Do you agree that it was not a case of its not coming in informed? It seemed to be fairly well informed about what it was doing.

Ms McBurney: I have no doubt that Treasury keeps up to date. I am not being critical of Treasury colleagues. Treasury keeps up to date with anything that is published in relation to any of the devolved Governments. When it was doing the open-book report, it will have been looking at the Fiscal Council information etc. I am saying that it was asked to do a significant body of work in a very short time and, therefore, by its nature, that has limited the analysis that it could do, particularly when you take into account how differently things are done and the different ways in which services are funded etc. It is because of that time limit, as opposed to any criticism of Treasury. We have good relationships with Treasury. It is very well informed, but the time period that was available —. It is one of those bodies of work where you could have had a whole team looking at it for about a year to come up with something very, very robust, but we did not have a year because we need to get a Budget agreed. It is reflective of that. Similarly, we would need to go through all the Treasury analysis to make sure that we were content with it. That is why I said that I would be cautious about publishing the report until DOF had had time to do that. We are a small team, and our focus is on getting a Budget agreed.

Dr Aiken: That will go to your relief, then — he or she can struggle through it. It has been a pleasure working with you; best wishes.

Ms McBurney: Thank you.

The Chairperson (Mr O'Toole): The feeling is mutual.

Miss Dolan: Joanne, like everyone else, I am sorry to see you go, but congratulations.

Ms McBurney: Thank you.

Miss Dolan: I have a couple of questions. If a multi-year Budget is not agreed, that will obviously limit the ability for the transformation of public services, will it not?

Ms McBurney: Absolutely. The absence of a multi-year Budget will have a significant effect on Departments' ability to plan for the longer term. That in itself will limit the ability for the transformation of services. Departments might be reluctant to start initiatives if there is no guarantee of funding in future years. Obviously, the other thing is that delaying agreement of a Budget is delaying starting some of the things that need funding. It will absolutely have an impact.

Miss Dolan: That is what I thought. Just one other question from me. What challenges does the repayment of the reserve claim bring to, or for, the Executive?

Ms McBurney: Obviously, it exacerbates the financial pressures facing the Executive over the Budget period. The repayment needs to be reflected in the Budget position. For 2026-27, the additional funding received in the spring forecast is greater than the reserve claim repayment, which is £80 million in 2026-27. Therefore, we will not really need to reduce the draft Budget allocations to Departments. However, in the subsequent two years, the spring forecast funding is lower than the repayments. That is going to be particularly significant in 2027-28, when we have a repayment of £160 million but the spring forecast just gives us £5·6 million. Obviously, that means that we need to reopen those draft Budget allocations if we are going to factor in the repayment of that reserve claim. It will have an impact; there is no doubt about that. It is positive that it is spread over three years, because there is absolutely no way that we could have managed it had it all fallen as an overspend to come off in the first year, but it is nevertheless challenging.

Miss Dolan: It sounds like it. Thank you, Joanne, and good luck in your new role.

Ms McBurney: Thank you.

Mr Carroll: Some of the questions that you asked were valid, Chair. It is quite frustrating that we generally do not receive any information. It seems that all the conversations are "ongoing" — everything is "ongoing". I am frustrated about the lack of information coming through. In some cases, we would probably get more information from North Korea than from the Northern Ireland Executive. That is a general comment, rather than a comment about anything that Joanne has said specifically. I imagine that some journalists are probably being briefed, unofficially or officially, on some of this stuff. As a general comment, I find it incredibly frustrating that we, and, by extension, the general public, are not kept abreast of this.

I have a question about the reserve claim, Joanne. If I have understood it, the payback is £80 million, £160 million and £160 million over the three years. You will be aware of different debates in Stormont, such as the debate on holiday hunger payments that we had on Monday. In that debate, the Minister said that the £20 million or so that the hunger holiday payment would cost could not be absorbed because his Department is under pressure. That is a good policy and it should be absorbed and implemented. How will that payback to Treasury of £80 million, £160 million and £160 million be absorbed? Which Departments are exposed to that substantial payback over the three years?

Ms McBurney: You are right about the figures of £80 million, £160 million and £160 million. That will have to be reflected in the Budget position, so it does reduce the funding that is available for Departments and other services. I do not see an effect on any one Department, but it reduces the overall pot of funding, which means that, effectively, it impacts on all Departments, because the less money that we have to allocate, the less money that all Departments get. It has an effect across the board, but there is no specific instance of it being taken off one Department. There is money to be handed out against a baseline position, and it limits the money that is available to hand out, so it affects everybody.

Mr Carroll: Joanne, this may have been discussed at the Committee previously — I cannot recall — but have there been any discussions about extending that so that it is paid back over a longer period? There might have been some suggestion that that could be the case, but I cannot recall.

Ms McBurney: We want to make the case to Treasury that the reserve claim that we needed this year is a symptom of the pressures that we face and the difficulties that we have that are part of our wanting fairer funding for services here. There is an argument that we should not have to repay that reserve claim, but that is part of the ongoing discussions. Treasury provided the reserve claim on the basis that it would be repaid over the three years and in the profile that we have discussed. Only Treasury can change the profile of repayment. I imagine that the Executive will want to push either for an extension or for that repayment to be written off. It is all part of the ongoing negotiations, which come down to the pressures that we face and what can be done to manage them.

Mr Carroll: I appreciate that. Just a final question: in theory, the Treasury has the power to waive the repayment or to say that it could be paid back over 30 years, so it is just a question of political will. Is that correct?

Ms McBurney: Treasury absolutely has that power. It manages public expenditure across the UK, so it has the power to make that decision. Treasury would say that there are other factors that it has to take into account. For example, its own finances are under extreme pressure at the moment. To be fair to Treasury, it will say that it has to take other things into account and will refer to the repercussive effects, but it is absolutely within Treasury's control.

Mr Carroll: It also has a record surplus.

Thanks. Good luck with the new job.

Ms McBurney: Thank you.

Mr Tennyson: I echo the congratulations to you on your new post, Joanne.

Most of the ground has already been covered, but I will follow up on a few things that were raised by other members. Jemma and Gerry focused on the reserve claim, and Jemma mentioned the Barnett consequentials from the spring statement. In the aftermath of that, there were lots of demands for the money to be invested in certain areas. To get some clarity on that, are you effectively saying that that money will be absorbed by the reserve claim and not available for any other priorities?

Ms McBurney: I would not so much say that the money is reserved for the reserve claim. It all goes into the overall funding that is available, and that all has to be taken into account when agreeing a Budget. Repayment of the reserve claim does effectively reduce the amount of money available, so it will mean changes to budgets. As I said, there will be a bit more to hand out in 2026-27 than there was in the draft Budget. There is also the potential for the draft Budget allocations to change, but, in the round, repayment of the reserve claim will reduce the available funding.

Mr Tennyson: When talking about relative need, the Deputy Chair made a comparison with Scotland and Wales. Can you elaborate in cash terms or provide any analysis from the Department on what the gap is between here and Scotland and Wales? To inform our thinking more, can anything be provided to the Committee about what the differentials are?

Ms McBurney: I was going to say that we did some analysis, but it was not my area of the Department that did it. I do not want to take the credit for something that we did not do, but DOF did do some analysis. The comparison is based on our analysis, not on any Treasury analysis. Our figures for 2026-27 show that we are 0·6% above our 124% level of need. Wales is 8·6% higher, while Scotland is 20·5% higher. Wales has the Holtham work, so it has the figures, and Scotland has only an estimated level of need, but those are our calculations. We would say that Wales and Scotland are in a better place than we are.

Mr Tennyson: The gap between Northern Ireland and the other devolved regions is quite considerable.

Ms McBurney: Yes.

Mr Tennyson: That is helpful to know. The Minister of Finance said that his discussions with the NIO and the Treasury are focused in very broad terms on fair funding for public services. Can the Department be more specific about which areas are in scope or about what the Finance Minister's objectives are in those discussions?

Ms McBurney: I cannot go into too much detail, but he will be raising matters such as fair funding. We are not being treated in the same way as Scotland and Wales. That is not because of any specific decision to treat us differently. Rather, it is just the way in which the numbers have panned out. He will also be raising with them the pressures that we are facing. He also regularly tells them that one of the problems that we face is that underfunding of services in England leads to underfunding of devolved services. If public services were funded better across the board, that would generate more money for us. There are also the issues of how we are treated compared with Scotland and Wales, the unique pressures that we face and the specific pressures that required the reserve claim last year and are leading to the difficulties with the Budget over the next three years.

Mr Tennyson: Thank you.

Mr Kingston: Thank you all for your attendance. Congratulations, Joanne, on your new post.

Ms McBurney: Thank you.

Mr Kingston: We were originally told that the open-book exercise would be a joint exercise, with a joint report from Treasury and the Department of Finance. How has that ended up?

Ms McBurney: Yes, it was to be a joint report, and we did work with the Treasury. We provided it with information that it requested. We facilitated returns from Departments and worked through those returns with Treasury. Again, however, it came down to the time frame. Treasury had done its own analysis based on the information that we and other Departments had provided. We did not have the time to check all that analysis, so we could not put our name to a report that we could not stand over. That is not to say that there are areas on which we may disagree. Unless we had checked the report, however, we could not put our name to it. For that reason, it is not a joint report.

Mr Kingston: It is an HM Treasury report.

Ms McBurney: Yes. It is HM Treasury analysis, but we did assist with that analysis, and Departments provided information, so it was a joint effort, in that we provided information and everything else. Ultimately, however, it is the Treasury's analysis that is in the report.

Mr Kingston: People may wonder about the significance of that. Was there a dispute about the findings, or are you saying that the Department just did not have the time to verify the analysis?

Ms McBurney: There is not a dispute about the findings. Rather, there were some areas on which we went back to Treasury with comments such as, "We're not sure about this" or, "We're not sure about that". I make the broader point, however, that we simply would not have had the time to go through absolutely everything. We would have had to replicate what the Treasury had done, and there was not enough time for us to do that. We did flag areas by saying, "We don't think that's right" or, "That's not our understanding of it". If we had had more time, a joint report would have hammered out those areas to get to an agreed position, but the time was not available for us to do that.

Mr Kingston: Do you expect the report to end up in the public domain?

Ms McBurney: I honestly do not know. It is in the hands of the Executive and the Treasury. As I said, unless we had an agreed position on everything, I am not sure how helpful doing that would be.

The Chairperson (Mr O'Toole): Helpful to whom? That is the question, I suppose.

Mr Kingston: Do you think there will be a legacy from the open-book exercise? I do not know why it was necessary. How much access does Treasury normally have to all those figures, or is there a withholding of certain figures? Will the report result in greater communication, openness or whatever word you want to use?

Ms McBurney: There is no withholding of numbers or figures in any way. Moreover, Treasury has the legislative power to ask for whatever it wants from us. We would not withhold information from Treasury, but it does not have the capacity either, so it would not have the time to come in and look at everything. From that perspective, the open-book exercise was a one-off. It was a unique exercise, because it was the first time that Treasury had specifically asked for information from us and then done that type of analysis.

The analysis will lead to a better understanding. I do not think that the relationship will change, because we already have a good working relationship with the Treasury. It is not an "us and them" situation, nor is it about our withholding information. If the Treasury wants something, it gets it. Sometimes we will provide it with things, such as the forecast out-turn that comes to the Committee. That routinely goes to the Treasury, and it gets other routine information from us. Its getting the information was not unique. Rather, it was the time that the Treasury took to do the analysis that was unique.

I will just comment on the Chair's "Helpful to whom?" remark. It is not helpful to anybody if there were numbers out there that would be disputed or argued about later. That would just add to the confusion. If you want to put out something publicly, there should be an agreed position.

Mr Kingston: On the question of ongoing access, you would say that Treasury has full access to the Department of Finance.

Ms McBurney: If the Treasury were to ask us for something, it would be provided. Treasury gets routine information. It does not generally ask us for anything additional. As I said, it has the power to compel us to provide anything that it asks for, but we have a good relationship, and we tend not to withhold things if the Treasury asks for them. The Treasury team is a bit like ours, in that it is very small, and it also manages Scotland and Wales, so its capacity to do anything in depth is limited.

Mr Kingston: I have a couple of other questions, if that is OK, Chair.

The Chairperson (Mr O'Toole): Go ahead. That is fine.

Mr Kingston: I was interested in what you said about the fact that Wales gets funding above the level of need that was decided for it. Will you explain what the level of need is in Wales and how it gets more? Does it come through different channels, or is it just the case that the block grant for Wales is higher?

Ms McBurney: We are straying into areas that are not ours. Patrick may have to help me out with this one. Another part of DOF does that analysis. Wales had the Holtham commission much earlier than we had the Fiscal Council work on the level of need. At that point, it was identified that the level in Wales was coming down. A fiscal floor was put in, and Wales got Barnett consequentials at 1·05%, which allowed its funding to come down more slowly towards that fiscal floor. We were already below need and therefore had to be bumped up. Wales's level of need was coming down slowly, which resulted in its funding staying above the level of need, but we had to be brought up to the level of need, and we are now bumping along it. That is the difference between us and Wales. Historically, all the regions, including Scotland, were funded above any assessed level of need, which then came down slowly. Ours just happens to have come down quite quickly.

Mr Kingston: Northern Ireland's level of need came down.

Ms McBurney: Yes.

Mr Kingston: OK. My final question is on Northern Ireland's contribution to the UK economy. A certain amount of money goes around within Northern Ireland, but we are a net contributor to the UK economy, owing to stuff being ordered that is supplied from GB. Money is provided to us, but there is a slow drain of money back to GB, because things are being bought by individual residents or by companies, meaning that there is a net flow of money back to GB. Has there been any analysis done of that?

Ms McBurney: I am not sure whether such an analysis has been done. It has not been done in my area. I am not sure whether the Department for the Economy has done it, but we have not.

Mr Kingston: It is just that there is an argument to be made about Northern Ireland's contribution to the overall UK economy.

Ms McBurney: Given that all money that is raised through taxes goes back into the Exchequer, there is no doubt that if the Northern Ireland economy does better, that benefits the UK Exchequer.

Mr Kingston: I would argue that not only does money from here go back to the Exchequer — we get an amount back — but, even just through private-sector transactions, money flows constantly from Northern Ireland to GB.

The Chairperson (Mr O'Toole): I will make a couple of final points, Joanne. A lot of people will note that the amount of the reserve claim, which is £400 million, is strikingly similar to the £380 million allocation in the spring statement. Is that a complete coincidence.

Ms McBurney: Yes, it is a complete coincidence.

The Chairperson (Mr O'Toole): It is a coincidence that people will note, however, and you have acknowledged that the cash amount is extremely similar to the cash amount that came from the reserve claim. You have talked about the way in which it is profiled: a big amount in year 1, a small amount in year 2 and relatively big amount in year 3, which is unusual. Overall, however, the basic difference between the amounts is £20 million spread over three years. If, in regular terms, we were to put that kind of number to you, you would say, "I am confident that that can be managed in the course of a single financial year, let alone three". It is fair to say that, is it not? The difference is not huge.

Ms McBurney: Do you mean the gap between the two?

The Chairperson (Mr O'Toole): Yes.

Ms McBurney: In overall terms, it is not, but the problems are, one, the yearly profile and, two, the purposes for which the Barnett money was provided. We do not hypothecate Barnett, so it does not go to meeting those purposes. It came primarily for SEN, particularly in 2026-27, for which SEN deficits in councils were written off. That points to the fact that the pressures that our education system is facing are being felt across the board, so our pressures are not unique, but it also means that if the money that comes in for the pressures that we are facing is used to repay the reserve claim, it is not available to help fund those pressures.

Although the difference is not big in overall monetary terms, we need the extra Barnett money to fund the pressures that we face. That is why we are getting the money.

The Chairperson (Mr O'Toole): It is interesting that you draw a comparison to show that there are huge SEN pressures here just as there are in England. When, regularly, I ask — not you specifically or necessarily, but the Department and, indeed, the Minister — why a Barnett consequential that is generated by the health service or as a result of spending on roads in England not being hypothecated in Northern Ireland, I am told that Barnett is not hypothecated. Now, however, you are saying, "Ah, but".

Ms McBurney: No, I am not.

The Chairperson (Mr O'Toole): Surely this is for repaying the reserve claim. You have —

Ms McBurney: It will, in effect —.

The Chairperson (Mr O'Toole): — the amount.

Ms McBurney: Sorry for talking over you.

The Chairperson (Mr O'Toole): That is OK.

Ms McBurney: It will, in effect, repay the reserve claim. Barnett is not hypothecated. That is one of the key principles of devolution. If we were to hypothecate all the Barnett money, we might as well not have devolved powers, because the Executive would not be making their own decisions. The Barnett money that came is indicative of the pressures that are being faced in England. We face similar pressures here. Although we would not directly move the money across to those pressures, the fact that we have the reserve claim to repay means that the money is not available for those and other pressures.

Another reason for not hypothecating the Barnett money is that the Executive make their own policy decisions. There are things that we fund here for which we do not get Barnett money — I touched on some of them earlier — such as victims' payments and legacy costs. We do not get Barnett for those things, so it could not all be hypothecated.

The Chairperson (Mr O'Toole): It comes back to why we have devolution in the first place. We have it to set a Budget, which we have not done yet, because there has not been political agreement. It is so that, and you alluded to this, we have autonomy over budgetary matters, but an observer would ask, "In that case, why is the Department of Finance allowing the Treasury to come in and do an open-book exercise?", given that it is like the fourth secret of Fatima, in that we will never get to see the report. The Treasury has been invited in to do the report, but we will never see it, and the Secretary of State has now been invited to sit in on an Executive discussion on the Budget.

It seems as though, on the one hand, we talk about protecting the integrity of the devolved financial process but that, on the other hand, we regularly undermine it. I will say — this is a political comment — that, even if we all agree that there is not enough money, Ministers are determined to undermine the integrity of the devolved financial process by constantly blaming the UK Government for decisions. Do you accept that the devolved financial settlement has been undermined by the open-book exercise, by inviting the Secretary of State to sit in and by constantly —?

Ms McBurney: No. The terms of reference of the open-book exercise make it clear that the Treasury was stepping in not to make decisions or recommendations but simply to do analysis. Making the case that Northern Ireland needs fairer funding and that it faces pressures does not undermine the ability of the Executive to make their own policy decisions. It is simply about making the case that we need fairer funding and that Scotland and Wales are in a better position than we are. That needs to be taken into account. It does not undermine devolution. The Treasury is not coming in to make decisions for us. Rather, it is coming in to do a bit of analysis.

The Chairperson (Mr O'Toole): OK, but we may not ever see the report. There is concern about that, which the Committee will want to talk about.

I have a couple of final points. You mentioned the underspend, which may not be an underspend, on the capital side. We will, as you said, get the full year-end details eventually. There was obviously a huge underspend for the A5, for reasons that are well known — that is not the Department of Finance's responsibility — and that meant that there was a £100-plus million capital underspend very late in the financial year. Will you give us an overview of how you have managed to get all that money out the door so that we are not going to be carrying a big underspend?

Ms McBurney: I do not have the details in front of me, but, as you know, the money was allocated near the end of the financial year. There were two components to the A5 money: the funding from the Irish Government and our funding. Our funding was reallocated to Departments, which will now spend it. The Irish Government funding will be re-profiled to match that profile. The money has therefore been reallocated to Departments, and Departments are spending it. The underspend that I am referring to is the normal slippage that happens approaching the end of the financial year.

The Chairperson (Mr O'Toole): It is a good thing that the money is being spent. That is better than the alternative. People will be interested in learning how it has been redeployed so quickly, however.

Ms McBurney: I do not have the details in front of me, but a statement was made in the House on how that money was reallocated. It was reallocated through the normal in-year processes. It became available as a result of legal challenges, so there was not much that the Department for Infrastructure could do. The Executive reallocated the money. There are always capital projects. Departments are very good at their capital planning, and they usually have some projects that can be brought forward or pushed back. Although slippage is inevitable, and some things come out of the woodwork at a later stage than one would like, there are mechanisms to allow funding to be reallocated to allow us to remain within our Budget exchange carry-forward.

The Chairperson (Mr O'Toole): My final question is on the public-sector transformation board. I know that this is not completely in your area, but it relates to the original restoration package, in which you were very involved. Do we know when the second tranche of funding will be announced? Will it be soon?

Ms McBurney: I have no idea. Discussions are ongoing, but I do not have any confirmation of dates.

The Chairperson (Mr O'Toole): OK, so there has been no further indication. My final, final question — it may be the final question that I ever get to ask you, Joanne — relates to revenue raising, which is something about which the Committee talks a lot. You were involved with the Fiscal Commission, not just the Fiscal Council, five or six years ago. One of the desires with the Fiscal Commission was for it to explore options for increasing the amount of fiscal power that we have here. Where is that?

Ms McBurney: Do you mean the fiscal powers element?

The Chairperson (Mr O'Toole): Yes, it was also supposed to be part of the fiscal framework.

Ms McBurney: It is part of the next stage of the fiscal framework. Those discussions are being taken up with Treasury. Again, it is not my side that is doing that, but that work will be taken forward.

The Chairperson (Mr O'Toole): Have there been any active discussions? Have any proposals been put to the Executive on new fiscal powers?

Ms McBurney: That is not my area, and my memory is not good enough to remember whether I have seen anything.

The Chairperson (Mr O'Toole): We will be sure to ask your colleagues about the fiscal powers. It is like the extension to a house that is going to be built at some stage, in that we will get there eventually.

I have no further questions, and no members have indicated that they have any. I reiterate my warm congratulations to you, Joanne, on your new appointment.

Ms McBurney: Thank you.

The Chairperson (Mr O'Toole): It is very well deserved. The Department of Health's gain is very much our loss. We may see you again, you —

Ms McBurney: Yes, I have a month to go. [Laughter.]

The Chairperson (Mr O'Toole): — will be delighted to hear. You may have to do your penance before you are finally released, not that the Department of Health is an easy task. Thank you, Patrick, Maryann and Joanne.

Ms McBurney: Thank you.