Official Report: Minutes of Evidence

The Chairperson (Mr O'Toole): I welcome the Minister and Neil Gibson, the permanent secretary. We discussed before the session, Minister and Neil, that, if you are amenable, we will discuss first where we are with the multi-year Budget and then cover ancillary matters, including the public-sector transformation board and the Civil Service. I am sure that members will have other questions. I always forget this: if members are content, Hansard will record the meeting. Please give us an opening statement.

Mr O'Dowd (The Minister of Finance): Thank you, Chair, Deputy Chair and members of the Committee for your invitation. As you said, there are several areas that you want to cover, including the financial situation and the multi-year Budget. Before moving on to those, I would like to touch briefly on some of the progress made in my Department. Significant progress has been made on legislation. Members will be aware that the Assembly has now passed the baby loss certificate regulations. The Fiscal Council Bill and the Administrative and Financial Provisions Bill will have their Final Stage in the Assembly later this month. The Marriage and Civil Partnership Bill, which will raise the minimum age of marriage and civil partnership to 18, helping to better safeguard our children and young people, is now with you at Committee Stage. I have confirmed my intention to drive forward reform in the management of shared property, with a dedicated team being put in place to begin developing policy proposals that will lead to legislative reform. I have committed to changing family law to automatically remove the parental responsibility of anyone convicted of the murder or voluntary manslaughter of a person with whom they share parental responsibility.

In Land and Property Services, £1·72 billion has been collected in rates, providing vital public funding resources. I am determined to back small businesses. They are the backbone of our local economy, creating jobs, driving growth and supporting families and communities. That is why I have extended the small business rate relief scheme, providing 30,000 businesses with reductions of between 20% and 50% off their rates. Members will be aware that I want to go further. Once the Budget process is complete, I will make the case for expanding that vital support for small businesses by using the £10 million set aside in my draft Budget. To support our town centres, I have extended the Back in Business scheme, and, to maintain access to cash in our local communities, I have extended the rural ATM exemption. I want to deliver a fairer, more progressive rating system; one that drives growth, supports new businesses and strengthens our communities. That is why I have accelerated the strategic review of rates. So far, four key measures have been assessed. Those include early payment discount and the maximum cap, both of which are with the Executive for consideration. Reviews have also been completed on small business rate relief and non-domestic vacant rating. My Department is due to launch a consultation at the end of this month on a business growth accelerator and further changes to non-domestic vacant rating.

To support our public bodies, my Department has cut the red tape on low-value procurement. Public bodies, including schools, can now buy what they need quickly and locally for anything under £50,000, or £65,000 for utilities, by simply getting quotes. As part of my Department's office estate strategy, which will reduce the in-scope office estate by around 40% by 2028, three major buildings have been divested, two buildings sold and a lease exited during the 2025-26 year. Already this year, we have sold a further building and exited another significant lease.

We have significant work going on through the General Register Office, with 120,000 birth, death, marriage, civil partnership and adoption certificates issued and over 940 digital inclusion training sessions undertaken. Much of the work that the Department does is providing shared services, supporting and enabling other Departments. As colleagues will know, the Department enabled £29·85 billion of cash to be issued to fund public services, which is just one example. I have no doubt that we will touch on the Civil Service people strategy. Supporting the Civil Service workforce through HR policies will also be touched on, and over 838,000 payments, totalling £4·61 billion, have been processed on behalf of Departments.

I will now turn to the financial situation. When I published my proposals on the draft Budget in January, I made it clear that it did not provide the level of funding that any of us would wish to see directed to public services. There has been extensive engagement with Executive colleagues over the multi-year Budget. I have also met and will continue to meet the Secretary of State on that matter, and I look forward to an engagement with the Chief Secretary to the Treasury, Lucy Rigby. The crux of the issue is that we remain underfunded, particularly when we compare ourselves with Wales and Scotland. There needs to be a fairer funding settlement for this place to allow us to move forward, support public services and invest in our economy.

Members will be aware of my recent statement on transformation. No doubt, we will touch on that matter as well. Chair, as always, I am happy to take questions. Well, whether I am "happy" or not, I am going to get questions.

The Chairperson (Mr O'Toole): Thank you, Minister. Absolutely. To your credit, you are never shy about taking and answering questions, so I am sure that you will not mind our asking them.

Minister, this session is, obviously, on the Budget situation. The last time that you were in front of us, you said that you were ten out of ten confident about getting a Budget agreed. I will be upfront in asking this: for horse racing followers, this is Derby weekend, and, no offence, Minister, but, if you have any tips, I do not want them. How did we get into this mess?

Mr O'Dowd: I do not apologise for being optimistic about progressing a Budget when I was sitting with the Committee in December of last year. It is important that we have some optimism and drive even in the most difficult scenarios in politics. We are in such a scenario because of the lack of funding available to me as Finance Minister to distribute across the Executive. I published my draft Budget on 6 January, and, following that, I had a series of bilateral meetings with my Executive colleagues. There were discussions around the Executive table, and it became quite clear that all of my Executive colleagues were reporting back to me that they simply could not deliver sustainable, stable public services with the quantum of funding that was available at that time. I engaged with the British Government around that. I made a strong case for a proper funding package for this place. I have repeatedly referred them to the package that Scotland receives. If we were to receive a package comparable with Scotland's, we would receive an extra £3 billion a year, and, if we were to receive a package comparable with that received by Wales, we would receive an extra £1 billion a year. You can imagine that, if I had those sorts of resources available to me to distribute among my Executive colleagues, agreeing a multi-year Budget would be much easier.

The Chairperson (Mr O'Toole): That begs a question, Minister. If you knew that the draft Budget was suboptimal back in January, why did you publish it? Furthermore, why did you publish it for consultation and ask business, civic society, trade unions and everyone else to spend their time responding to a consultation on a draft Budget that you have now disowned?

Mr O'Dowd: I have not disowned the draft Budget. It was only right and proper that, in January, I published a draft Budget, because, at that stage, we were working our way through the financial year. To be able to start a detailed conversation about the Budget, we needed a paper, that being the draft Budget. I also believed that it was only right and proper that the sectors that you referred to — the general public, businesses, trade unions and others — had an opportunity to respond and to see for themselves the challenges and opportunities that were presented by the draft Budget that I had published. Executive colleagues, in my engagement with them, made their position clear. It was only right and proper that I took those considerations on board and engaged with the Government on a funding package for this place.

The Chairperson (Mr O'Toole): You said that you were right to be optimistic, and you said that you put it out because you wanted the public to see all these things, but it was a draft Budget. Would it not have been better to agree the Budget in private or around the Executive table and then publish it for consultation? We are now in a situation where we have this strange document that no one knows the status of. We will get on to the legal position in a minute. Would it not have been better to properly agree it rather than trying to negotiate in public?

Mr O'Dowd: When I was sitting with you last December, there was ongoing engagement with Executive colleagues on a draft Budget. I was having discussions at political level with them on the need for a draft Budget. I was putting proposals to them, and they were putting proposals to me. Those political discussions had run their course at that stage, and, in January —.

The Chairperson (Mr O'Toole): There was no agreement at that point. You could not get agreement.

Mr O'Dowd: No, there was no agreement at that point. Given the timescales that we were working to, we were required to, in my opinion, put a document out to consultation.

The Chairperson (Mr O'Toole): Right. We had no political agreement then. We still do not have political agreement, so, clearly, that strategy did not work. Before I bring in other members, I want to move on to where we are legally as of right now and, practically, what that will mean for public services. Where are the discussions with the Treasury, which you have mentioned? Legally, Neil, as permanent secretary, you have written to Departments giving them guidance. I want to be clear about the legal position. We currently have 45% of last year's Budget — or 45% of a Budget — authorised under a Vote on Account. We understand that, if that runs out, unless there is an agreed Budget and an associated Budget Bill is passed, we then fall back on your legal authority under the Northern Ireland Act to authorise 95% of the cash spent last year. Is that correct?

Mr Neil Gibson (Department of Finance): Correct.

The Chairperson (Mr O'Toole): OK. What happens if spending exceeds 95% in a Department? Is it 95% for the whole Executive or is it 95% per Department?

Mr Gibson: It is for the whole Executive.

The Chairperson (Mr O'Toole): OK. What happens if you exceed it?

Mr Gibson: First, every effort, as the Minister said, is being made to avoid that circumstance occurring. The balance that we have to strike as accounting officers relates to whether to advise on the level of harm that could be caused, knowing that that other 5% would become available if a Budget Act were to be passed at some point during the year. We cannot say that with any certainty, and it resides with accounting officers to say that, if a Budget is not agreed, the contingency planning envelopes give a flavour of what might be available to allocate. However, all efforts must be on trying to agree a Budget so that that eventuality does not occur. Otherwise, we will be in the same position of simply not having the cash.

The Chairperson (Mr O'Toole): Presumably, that is already happening to some extent. There is a really important factual point that we need to understand. Does that 95% include annually managed expenditure (AME) or is it just the departmental expenditure limit (DEL)?

Mr Gibson: It includes AME, so that makes the projection quite challenging. AME has almost the first call on money: pensions, welfare and so on. Although Departments project that, they cannot tell what the economic circumstances will be, so it is not a simple calculation of taking 5% less than we had last year. It is not as easy as that. There are also statutory Treasury-earmarked commitments that have to be met, so our team's calculation work to determine what number can be made available is quite complex.

The Chairperson (Mr O'Toole): Minister and Neil, is it the case that, should a Budget not be agreed, the legal position is that the Executive would be agreeing or by default implementing a 5% cut to their own Budget? That is before you factor in high inflation from last year. That is more brutal than any British Government have ever imposed on this place.

Mr O'Dowd: We do not want to get to that position.

The Chairperson (Mr O'Toole): We are in that position now, Minister.

Mr O'Dowd: There is still a period in which we can, I think, resolve this issue.

The Chairperson (Mr O'Toole): How long, just to be clear?

Mr O'Dowd: I simply do not know. The determining factor in that is how seriously the British Government take this.

The Chairperson (Mr O'Toole): Sorry. Do you have no responsibility? Do the Executive have no responsibility here?

Mr O'Dowd: Of course they do. I am trying to engage with you on time frames and put it into context.

The Chairperson (Mr O'Toole): Please do.

Mr O'Dowd: Since the ructions in the Labour Party, I do not think that the British Government have been giving this the focus that it deserves.

The Chairperson (Mr O'Toole): Have they ever?

Mr O'Dowd: That is a longer debate, but I do not think that they have been giving this issue the focus that it deserves. I have had recent meetings with the Secretary of State and made that very point to him. The British Government recently responded to a document that the Executive shared with them on how the matter should, we believe, move forward. That document outlined our responsibilities and the British Government's responsibilities, so we are not simply shirking our responsibilities.

There needs to be a focus on that by the British Government.

On the legalities, this will not be sorted out by solicitors or barristers. It is a political question. We need to sort it out politically, and we know that the only way to do that is through proper engagement at political level with the British Government. Uniquely on this matter, perhaps, the Executive are united. There are different tensions. There will always be different tensions around the Executive table. Ministers will have their priorities and will challenge me as Finance Minister and other Ministers on what level of budget they should have. Ministers are agreed, however, that the current funding package for this place is unfair and that taxpayers here are not getting a fair return on their taxes from the Treasury.

The Chairperson (Mr O'Toole): That is fair enough. There is lots of that going on. I agree at a personal level, as would the Opposition, although I am not acting in that capacity today. Notwithstanding all that, we have limited ability, as you just said, to create an extra allocation from the Treasury. I hope that it happens, but, if it does not happen, it is the case that, legally, there will be an automatic 5% cash cut now. Permanent secretaries could allow more spending and Ministers could order more spending, but that additional spending, Neil, it is true to say, would be unlawful and irregular.

Mr Gibson: Yes. It could be made regular when a Budget Act comes along, if that happens, but that could be the position if we were to spend beyond what has been made available to us. The reason for providing planning envelopes is that I have a responsibility to work only on the legal powers that exist. It is important, therefore, to give as much warning as possible. Each accounting officer can then calculate whether that contingency envelope would mean decisions being required now. If I do not provide that advice, it becomes too late in the year to know that.

The Chairperson (Mr O'Toole): If there is a 5% cut and the Budget is only 95% of last year's, that is a situation in which pensions and welfare payments could become irregular and limited. That is a huge risk.

Mr Gibson: By default, those would be treated as first call. What would get squeezed is the money left for our DEL. AME commitments, such as pensions and welfare commitments, would always be met first.

The Chairperson (Mr O'Toole): That means that things such as pay, which are in our DEL, become much more compromised.

Mr Gibson: Yes, correct.

The Chairperson (Mr O'Toole): That, perhaps, is why we are hearing from the public-sector unions. We heard from the Minister for Communities about the multi-year Budget holding up housing for victims of domestic violence. We heard from the deputy First Minister about integration funding being held up. We are in an extraordinarily serious situation here.

Ms Forsythe: Thank you, Minister and permanent secretary, for being here. We appreciate your taking the time. I would like clarity on the roll-forward approvals. The Budget Act (Northern Ireland) 2026 was for the 2025-26 financial year. Up front was the opening approved Budget. During the year, we then had monitoring rounds, Barnett, fiscal events and the reserve claim to get to the closing position. Is the 95% calculated on the closing position for 2025-26 or the opening position?

Mr Gibson: The opening position.

Ms Forsythe: OK, that is grand. Thank you.

The Chairperson (Mr O'Toole): That is even worse than we thought.

Ms Forsythe: Yes, but it is good to have that absolute clarity. Minister, I welcome the engagement by you and Ministers across the Executive to increase the funding package for Northern Ireland. We very much need it, but we are now months into this financial year. When I asked you about this before, you said that it is up to Ministers to manage their own budgets and up to the UK Treasury what it allocates to here. What specifically do you see as your role as Finance Minister in the middle of that?

Mr O'Dowd: My role as Finance Minister is to bring a Budget to the Executive, seek Executive agreement on that Budget, keep the Executive informed of spending patterns, challenges and opportunities that arise throughout the year and ensure that Executive colleagues are making collective decisions in the full knowledge of the current financial position and individual decisions in the context of the full financial information in front of them and whatever I am required to share with them.

At this stage of the Budget negotiations, I am engaging with the Government, and I regularly update my Executive colleagues, who are aware of the 95% Budget, which is based on our opening point last year. As an Executive, we will have to make decisions in stages as we go through the process about what we do next in the Budget process. I am acutely conscious that, if the Budget is not settled in the near future, it will have significant consequences now, but it could be hugely significant for the public sector and the economy in the future. I will keep Executive colleagues informed of the position.

Ms Forsythe: Thank you. Moving into the 2026-27 financial year, have all Departments rolled forward from last year's position, or has there been an assessment of baselines? Did you have any role in that?

Mr O'Dowd: That, I assume, will have been through your letters, Neil.

Mr Gibson: Yes. The starting position was that the severity of the financial position was communicated to every Department, and all Departments were asked whether they could give up any more resources: for example, the Minister's Department has tried to keep its cash requirements flat to try to ease the pressure elsewhere. The accounting officers are required to examine their money in that way. On baseline positions, we have corresponded with the Departments to ask them to determine whether, after carrying out a line-by-line analysis, every spending line is required. As the Minister indicated, after working with the relevant accounting officers, all Ministers said that they would need additional resources on top of what was proposed in the Minister's draft proposals.

Ms Forsythe: Again, it comes back to my initial point. I fully appreciate that we need more funding to deliver high-quality public services, and I acknowledge the pressures on the services that are being delivered. As Finance Minister, have you taken any action to identify inefficiencies or potential savings, or have you advised, given direction or made suggestions cross the Executive?

Mr O'Dowd: I am not avoiding my role, but our Executive may be unique in that Ministers are responsible for running their own Departments. I have no authority to step in and say to a Department, "That spend is unnecessary and should be stopped". I can advise Ministers around the Executive table of my view on certain matters, and they can take that advice on board if they wish. I have had conversations with Neil about the Finance Department's spending envelope and how we will deal with that. I am assured that we will manage in the time ahead, but Neil and I have regular conversations about the trajectory of our budget. We have encouraged Departments to deliver their five-year spending plans so that we can see how they are run, where there are efficiencies and where there are opportunities to raise revenue in a fair and equitable way. All those things should be examined, but, ultimately — this is in statute — the responsibility for running individual Departments lies with Ministers.

Ms Forsythe: The Finance Committee is here to scrutinise the Department of Finance, but we also see that we have a central role to support the other Statutory Committees and shine a light on their finances. As the Finance Minister, there is a similar role and opportunity for you not just to run the Department of Finance but to put out the Budget, and, ultimately, running that falls to you.

Mr O'Dowd: I have regular bilateral engagements with my Executive colleagues. They bring me proposals, usually for extra spend, and I engage with them, challenge them and make my point of view known about those issues. I encourage my Executive colleagues to be effective and efficient in the delivery of public services and to look for any possible savings so that they can be redirected into public services. However, I cannot instruct. I might like to have the power to instruct, but I cannot instruct.

Mr Gibson: It is worth adding that the Executive have agreed that the head of the Civil Service (HOCS) carry out a piece of work to look at some financial sustainability options. One strand of that looks at efficiency and effectiveness measures. That work is being carried out, and the Minister was good enough to make members of the budget sustainability team and the fiscal team, under Jeff McGuinness and Aidan McMahon respectively, available to support HOCS with that work.

The Chairperson (Mr O'Toole): Will you send that to us when it is completed?

Mr Gibson: Yes, indeed. By happenstance, yesterday, we worked on that in my end-of-year review with my boss in the HOCS office. That work included efficiency and effectiveness measures that are operational within the service, such as what I am doing about headcount measurement, vacancy numbers and temporary promotions. All of that was, with the permission and agreement of the Executive, considered collectively. The Minister made some of the key people with the right expertise available to support that work.

Ms Forsythe: That is great to hear. As the Chair said, hopefully, you will be able to share that with the Committee. It sounds like a really helpful and useful piece of work. Thank you.

Dr Aiken: Minister and Neil, it is good to see you again. We have been here before with Budgets not being passed and all the rest of it. You will probably feel reasonably comfortable, Neil, sending out letters of direction to other Departments to spend up to, if necessary, 98% or 99%, despite the Northern Ireland Act, of one year's worth of a Budget. However, this is the first time that we have had a three-year Budget ahead of us, and some of the things that we need to do in order to deliver efficiencies need to be front-loaded. What degree of comfort would you feel in allowing other Departments to spend out beyond that percentage, bearing in mind that, as far as the Treasury is concerned, there is a three-year Budget there and it is up to you to shape how that is spent?

Mr Gibson: As the Minister said, we hope not to be in that position, and every effort will be made to get a Budget. My honest answer is that I would not be comfortable.

Dr Aiken: Yes, the Northern Ireland Act states that it should be 95%, but we are where we are.

Mr Gibson: At this point, I am not contemplating a decision to consider a spending trajectory beyond what is legally permitted. I absolutely accept your point about the need to get started on a number of things, not least some of the issues that we may talk about later to do with workforce controls. It is very difficult to make decisions about who and how many you can afford when you do not have certainty on the Budget position. The longer the year goes on, the more difficult that becomes.

Although we have a plan in place — I reassure the Committee that the public spending group (PSG) and I will have a plan to follow all the required legislative processes — all our efforts at the moment are around continuing to provide effort and support to the Minister and Executive colleagues on negotiating a fair funding arrangement. That remains our effort, but we will continue to abide by the legally permitted routes.

Dr Aiken: John, you and I have been talking in the Chamber for ages about the open-book exercise and letting the Treasury have a look at the books. What it came up with came as no surprise. Fairly close up, it found £1·8 billion of savings and probably £3·3 billion further on. There will be pressure now every time we go back to the Treasury to ask for more money, because that report is out there. What work are we doing behind the scenes to counter those arguments, particularly the quite stark figure of our having 1·83 civil servants per full-time equivalent in England, or whatever way they want to put it? What are we doing to get the evidence base to counter that? If that is the case, what are we doing to make efficiencies?

Mr O'Dowd: We have a very strong argument and case against the Treasury's open-book process. You can tell that the document was collated at speed. I would challenge the research in it, and I am more than happy to challenge its findings. We can and will do that, and I am happy to share some of the information in relation to the challenges around that with the Committee. The issue of the number of civil servants here compared with the number in England has not been equated properly and shows no understanding of how our system works here. A lot of our Departments carry out functions that, in England, are delegated to councils, so there is not a proper read-across in that regard. It does not take our rurality into account when it comes to the services that we deliver or the number of civil servants and public-sector workers that we have, which is commensurate with that rurality. There is definitely a pushback on that. I am confident in our arguments and in our case, which we have presented, against the open-book process. I will be happy to put more detail in writing to the Committee.

Dr Aiken: That would be good. I would appreciate it.

Mr O'Dowd: It is a report that catches headlines, but, when you examine it in detail and in relation to other reports, such as a number of Fiscal Council reports etc, it contains stark contradictions. Therefore, it should not be used to equate what we do here.

It is important that we constantly examine our spend, efficiencies and effectiveness. We quite rightly put a lot of energy into that. I suspect that the Treasury will put a lot of energy into that as part of the discussions, but these are the facts of the matter: it does not do the same process with Scotland and Wales, but it still hands them £3 billion and £1 billion more than us. I am happy to engage with anyone about how effective we are, and I am prepared to learn lessons. However, I cannot get past the stark reality that our taxpayers do not get a fair return on their taxes. The Treasury has not been able to counteract that.

Dr Aiken: We all sat round the table at Hillsborough Castle and talked ad infinitum about the level of need and whether it should be 122%, 124% or whatever. If we are asking, "What is the level of need?", what level does the analysis say that we should be at?

Mr O'Dowd: You have to use the Holtham report as the latest report, but it was a staging post in the sense that Gerry Holtham recommended that it be 128%. We ended up with 124%. It was 128% with the inclusion of agriculture. There was, however, more work to be done on the full fiscal framework. The full fiscal framework is not simply about the devolution of fiscal powers etc; it is a much broader conversation and detailed engagement. That has never been done properly with the Treasury. I will not put a figure on it in the here and now, but, somewhere between the £1 billion and £3 billion, the Treasury is not treating us fairly.

Dr Aiken: We are probably looking at pushing for 126% or 127%. Are we somewhere about there?

Mr Gibson: It would be more than that. Wales is about eight percentage points above its measured need. The crux of the argument is that, even if we were to accept 124% rather than 128% — we can argue about that figure and farming — the question is whether that is enough money to make the kind of transformational investments that are needed. It is almost "get-by" money, rather than what I like to think of as fiscal transformation headroom. It will be very hard to invest in services, digitise and change things if you have just enough to meet the need, given the current trajectory of the services. That is the basis of the argument.

I think that I have said at the Committee before that I do not think that anyone with an ambitious vision for this place would say that our long-term vision is to require support in perpetuity. We want to make changes, invest and do things to be more prosperous and successful. Parts of our need, such as rurality, will never change. The idea is to find a funding framework that gives you the freedom to make those types of investments. The package that we had previously was not enough to give that investment room. That is why things such as the transformation fund etc are critical when it comes to changing the trajectory of the spend. If we do not do that, we will not make those types of transformational changes, meaning not only that the services will get worse for our citizens but we will continue to have financial problems, because they will get more expensive the longer they go on.

Dr Aiken: It would be useful if you could let the Committee know your thinking about what the figure that you are discussing with Treasury will be. It will help us to be aware of what you are thinking.

The Chairperson (Mr O'Toole): I agree — I do not think that there is any doubt — that the analysis is glib and jaundiced and that it has political

but lots of the numbers are from the Fiscal Council and are not disagreed with. We may come back to those.

Miss Dolan: Thank you both for coming in. A lot of my questions have been touched on, but we have said that we are not funded equitably. What does Treasury say when you say that? What feedback does it give on that?

Mr O'Dowd: Treasury will suggest that we have received a number of funding packages relating to restoration and other issues over a number of years. As Neil said, we need a sustainable funding package over a period of years so that we know exactly what our projected spend will be so that that spend is based on need and allows us to carry out the transformation and changes required to deliver high-quality front-line public services to support the public and the people who work in those services. The argument that the Treasury has come back with thus far is weak and can be challenged robustly. We will continue to do so.

Miss Dolan: Thank you. Obviously, you will continue to do that until we get something positive. Thank you. Those are all my questions.

Mr Kingston: Thank you for your answers so far, Minister and permanent secretary. You have covered a lot of what I wanted to ask about.

Minister, you explained how your powers are limited by the mandatory coalition arrangements compared with how it would be if there were a single party in Government. Will you give us an insight into how your Department operates and how Ministers and Departments work together? You said that you have limited access to individual Departments' finances, but the Finance Department is equivalent to the Chancellor of the Exchequer in a single-party Government. You would like to be in the position of driving efficiencies and savings and setting budgets. How much access do you have to individual Departments? Are Departments open to your carrying out almost an open-book exercise on their finances?

Mr O'Dowd: It varies between Departments. There can be a variety of reasons why the way in which Departments engage with my Department varies. There has been a useful exercise with the Department of Health over the past year or 18 months that is an example of how to do things. The senior finance officer — I am not sure what Joanne's official title was.

Mr Gibson: In Health?

Mr O'Dowd: In the Department, before she left.

Mr Gibson: Joanne was the PSG director.

Mr O'Dowd: She sat in on the Department of Health's finance meetings and engaged directly. That provided a useful insight, both from Joanne's experience and from learning exactly what the issues in the Department of Health are. There was a similar exercise with the Department of Education, although it was, in my opinion, at a lesser level: a senior official from my Department engaged with the Department of Education on challenges in the Department. That allowed us to get a better understanding of what was happening in the Department of Education.

Those are two examples of how work can be progressed by Departments cooperating with one another, respecting one another's boundaries and understanding the limitations within which we work. That is the way forward. The Department of Finance should not be seen as going into Departments to interfere. It is important that we understand and learn from the pressures that Departments face. Neil mentioned the fact that my Department allowed a number of senior officers to work directly with HOCS in the preparation of her report for the Executive. That is how one of my team ended up in the Department of Education for a time.

There is support there, as well as the ability to monitor. That needs to be developed, regardless of who is in the Department of Finance or any other Department.

Mr Gibson: I will add to that, if I may. I am conscious that I am always either complaining about resource pressures or talking about future states. There is a very small team within what was Joanne's directorate and is now Deborah's directorate, with fewer than 20 people on central expenditure matters and only 60 in the entire division, including all those on the Treasury Officer of Accounts team, so we have limited bandwidth to do that type of deep dive.

The head of profession sits with Deborah, having previously sat with Joanne. That includes training and developing the accounting profession. All the finance directors meet so that we can talk about what type of data we need and in what way we require it to be presented. We are investing in the Integr8 transformation project, which will give us even better and easier-to-access management information and intelligence.

As the Minister has said, however, there is a still a fundamental level of in-depth understanding in finance departments that we would be unable to duplicate or do not have the resource to duplicate. We therefore have to take a lot of figures through requests and information coming in from other Departments that have to speak to their measures. What we can do and are doing, however, is to work around things by creating better HR databases and new financial reports so that Departments have better information to benchmark themselves against other Departments and see how big their functions are and how efficient they are being. We are getting better tools all the time, but the Minister is right to say that the primary responsibility sits with Departments' accounting officers.

We are doing a lot more as a central group of permanent secretaries. When we meet on Friday mornings, we bring in new dashboards and new intelligence to look at ways that we could be more efficient and effective operationally. Finance is leading on the data and the systems that help to do that. However, if somebody says that they need seven people to deliver a function or to make something, it is difficult for Finance to have the level of departmental expertise to know whether that should be seven, six or two. Therefore, there needs to be benchmarking data and the sort of thing that we are working to produce now.

Mr Kingston: That is interesting. You say that it can vary from Department to Department. Where can the resistance come from? Can it come from a Minister or officials?

Mr O'Dowd: It could be both. A Minister may suspect the Finance Minister of having a political agenda on an issue. It may be just the nature of working in different Departments and engaging on what you see as your focus, which might make you resistant to somebody coming in to tell you how to do your job — or you perceive that they are coming in to tell you how to do your job. I can only offer reassurances in either case that that is not what it is about. It is about ensuring that we are sharing best practice, learning from each other, and that my Department understands fully the challenges and opportunities in Departments, which we can share with others.

Mr Gibson: It is important to add that we behave, certainly from an accounting officer point of view, in a collegiate and corporate way and that it is in our interest to share material. That requires a high level of trust with the Department of Finance that you are not trying to catch somebody out or trying to find money that you can then "take off" them. We are trying to be transparent, share best practice and make sure that we can see where the efficiencies are.

To add to the Minister's points, another complexity can be access to data. The vast majority of public expenditure goes out through arm's-length bodies (ALBs), and although each Department has primary responsibility for its ALBs, there can be more complex methodologies in being able to collate the types of data that we need. We can look on the database at what Departments are spending but we do not necessarily have the granular data on what an ALB is spending, and we rely on Departments for that.

Mr Kingston: The open-book exercise implies that too much is being spent on pay for public services and that the Civil Service is too large. You pointed out that a lot of statutory functions that are carried out by councils in England are done centrally under Departments here.

With regard to right-sizing the Civil Service, we sometimes hear about high numbers of vacancies and there are questions whether all those positions are needed. When it comes to Departments' willingness to assess their staffing needs, is there a collective approach to that or does the silo mentality kick in and there is a reluctance to do that? Is there a centralised effort to look at the right-sizing of the Civil Service?

Mr O'Dowd: I know that the Committee is undertaking an in-depth inquiry into the Civil Service, and I look forward to reading the report. As for the right size for the Civil Service, HOCS and Neil will most likely want to touch on that in the role of HOCS and the work that she is doing on those matters.

It is important that Ministers sit down with their senior teams and have an honest conversation about what is and what is not a vacancy, ensuring that the figures are as accurate as possible. My understanding is that a significant number of vacancies refer to the contract with DWP, and there are vacancies in our own Civil Service as well. That has to be an ongoing conversation at ministerial level.

I am sure that Neil would like to comment on some of the work that is going on.

Mr Gibson: Yes, to give you reassurance —

The Chairperson (Mr O'Toole): Just to say that we probably going to back to the Civil Service. Feel free to answer the question. We will be coming back to the Civil Service in round 2.

Mr Gibson: A significant piece of work is under way at corporate level. We now have dashboards showing live vacancies and our own workforce complements. We now look at those together as a leadership group. HOCS has carried out her own work and has, indeed, instigated a new grip process, whereby each of us goes through every one of our vacancies to provide reassurance on affordability. We are doing that on the same basis, departmentally rather than individually. I have a big responsibility to make sure that that data is provided, that we work corporately and that we try our best, as you said, to think about things through the same lens. We do that by benchmarking functions and looking at how many people are required to deliver something. To add a bit of flavour to the Minister's figures: of the 5,000 vacancies in the system, 3,500 are for DWP through DFC.

We have some what I call "persistent vacancies". I certainly see that in my Department, because we are not that competitive in the labour market. We are constantly looking for auditors, accountants, valuers, technicians and engineers. Those roles are almost constantly on the list. We keep advertising, but we struggle to recruit. We are looking at new methods and training from within. In some sense, nobody should read that number and say that it is, if you like, a vision or a plan to grow the Civil Service by that size. Far from it. In fact, the Civil Service has hardly grown in size over the past five years.

The Chairperson (Mr O'Toole): We will come back to Civil Service matters.

Miss Hargey: Do you believe that we are an afterthought in Westminster politics and fiscal policy?

Mr O'Dowd: Yes, and there is more and more evidence to suggest that. The British Government are funding Wales and Scotland at levels that are based on a report issued in 2010. I am not suggesting that they cut funding to Scotland and Wales, but they are relying on figures that are 16 years old. Deprivation figures and demographics change over a time. I am not suggesting that those reports are out of date, but they are a lot less current than our analysis of our funding situation. The fact that internal turmoil in the Labour Party has stopped proper discussion on it suggests that we are an afterthought.

Miss Hargey: On Steve's point about the narrative, I think that there is a battle of narratives. We often hear about the begging bowl and the fact that our Budget settlement is the biggest that we have ever had. However, when you look at the figures that you have just presented on the level of need, you see that, compared with here, Scotland and Wales get an additional £3 billion and £1 billion respectively. Even though people in the North pay exactly the same income tax as those in Britain, our baseline is underfunded. That is one of the critical issues. I am not sure that people even realised that until that figure was released recently. I hear a lot of political commentators and some think tanks here regurgitating the narrative from Whitehall.

What more work can the Executive collectively and the Department do to shift that narrative? The core issue is the baseline against which we get compared with other places. As you say, our level of need is greater, given how services are delivered here, and that costs more. What can we do to start to shift that narrative both here and at Westminster?

Mr O'Dowd: There needs to be an interrogation of Whitehall's narrative and, quite rightly, my narrative on those things. The myth of the begging bowl has been blown out of the water. Professor Holtham’s report was very useful in that regard. People here deserve a fair return on their taxes. Political analysis and economic analysis certainly point to the fact that they are not getting a fair return.

Let us ensure that people get a fair return on their taxes. The challenge for local politicians and the Executive is to ensure that that money is used effectively and efficiently and that we create the change that everybody desires. Even when we receive a fairer funding settlement, I am not suggesting that everything will be rosy in the garden. Ministers around the Executive table will have to make very difficult decisions. This is about easing the pressures on the Executive; it will not resolve the pressures on the Executive.

Mr Gibson: Too add to that, it is important and worth putting on the record that the relationships at official level with Treasury are excellent. Whilst there may be a different dimension politically, at official level, we continue to share information. The Treasury loves its numbers, so it is about making sure that our case is well evidenced, that the data is robust and that we have a very open sharing of information. Officials in Treasury always take the calls, and we have weekly engagement with them.

One of the most important things for us is that we have to be empathetic and understand the fiscal realities of the UK at the moment, which is not terrific. It has huge financial problems, too. We also want to craft and support an argument that says that, with the right investment, the financial support required for this place would fall over time as we made the right investments and prospered and succeeded. We have to speak their language and engage fully. Any breakdown in relationships would be damaging to securing a better agreement.

I must say that, in my entire time in this role, Treasury has been nothing but open at official level and has shared data. We could not agree on the open book. We did not agree with its analysis, but we saw the material that it produced. An important part of getting to a better place is having a high level of engagement at official level, and I reassure the Committee that that is absolutely happening.

Miss Hargey: Engagement is key. If only the British Prime Minister would engage with the Executive. That is where we want to be. Neil, on that point, you cannot escape the fact that the baseline of the Budget here is very different from what Scotland and Wales get — between £1 billion and £3 billion. You are right, John, that that will not deal with all the problems, because you are dealing with a historical deficit and are trying to undo the effects of underinvestment. However, it would be a good start in putting us on the right trajectory.

Another issue is the open-book exercise and the talk of revenue raising. The Nevin Economic Research Institute was in a while ago to give evidence. One of the arguments that its representatives made was that, yes, of course, the Executive can look at revenue raising — you have laid out in your report what revenue we raise through the rates system and so on — but that that cannot fundamentally deal with the core deficit. It is about how the Barnett consequentials are made, and we have to get that right or we are always going to come back to that point. What is your view? If we are to look at revenue raising, should it focus on protecting low-income households?

Mr O'Dowd: The Executive should always be examining areas where they can raise revenue in a fair and equitable way. It is easy for a headline maker to say that the Executive could raise £3·3 billion if they were to do a, b and c, but you have to look at the impact that a, b and c would have on the wider economy and on workers and families.

The Executive have made conscious decisions not to introduce water charges and not to increase student fees above the level of inflation. Those are multifaceted decisions that also look at the crucial element of the cost of living and the challenges that people face. The cost of living continues to cause huge challenges for many families, and, understandably, there have been calls across the board for measures to be introduced to tackle it. We have prevented people from paying water charges, which gives them a significant saving every year. We have reduced the level of rates that people pay compared with elsewhere. There are also examples on student fees. Those decisions bring consequences, but I think that they are the right decisions.

The Welsh and Scottish Governments raise revenue in various ways and have different attitudes to water charges, student fees and so on, as is their right. However, the British Government have never said to them that they are not getting their extra £1 billion or £3 billion because they have not done a, b or c. Those are devolved decisions that the Executive have a right to make. It is a separate discussion from that about the proper funding and return on taxes for people here. Yes, let us continue the conversation on a fair and equitable taxation system run by the Executive and how we do that — when I refer to taxation, I am talking about rates and other matters — but that does not preclude the responsibility on the Government to fund this place properly.

Mr Carroll: I have some questions on the Budget. Obviously, we are owed several billion pounds, if not tens of billions of pounds, just based on the period from 2010 to 2020 under the Tories. Maybe that is for another day.

I was trying to find the exact quote, but when Joanne McBurney briefed the Committee — I know that she has moved on to pastures new — I asked her what would happen if a Budget were not passed. There were predictions of disastrous consequences and that all sorts of things would happen. There was a sense of urgency in the Department then to pass that Budget. I do not detect that sense of urgency now. Why is there a different approach? I voted against that Budget, just for the record.

Mr O'Dowd: Fair enough. The Executive cannot continue without a Budget. They have to pass a Budget at some stage this year, for a variety of reasons, including, as the Chair and others have set out, the fact that, in the absence of a Budget, we are spending only 95% of last year's total financial allowance to the Executive, which includes AME and our resource. It is a stark period of the year, so that has huge consequences for public services, public-sector workers and the economy.

The other stark reality is that, with the current allocations, Ministers tell me that there will be a huge impact on public services and the economy. The reality is that the British Government have to fund this place fairly. I understand and support the reason why a Budget has not been passed at this stage. There needs to be continued engagement. The lack of urgency, if you detect one, is not from the Executive; it is from across the water.

Mr Gibson: I echo the urgency at official level. It is a constant concern and worry for us, and our engagement at official level with Treasury is to articulate just how clearly the challenge that not having and not agreeing a Budget presents to us. Most of my weekly engagements with the Minister pertain to trying to find a way forward on the Budget. If a lack of urgency is detected externally, it is definitely not how it feels in the Department.

The Chairperson (Mr O'Toole): I have some final questions on the Budget before we close that section. Minister, you talked about engaging back and forward, and you have a meeting coming up with Lucy Rigby, the Chief Secretary to the Treasury. You said that you are giving the matter urgency. We are now two-plus months into the financial year, so it does not feel very urgent, but there is a factual point here and a slight contradiction that we need to get to the bottom of. You and others have said that this place is item 5,000 on the agenda in Whitehall. I wholly agree, both from being a politician here now and from experience in my previous career as a civil servant. There is a degree of ingrained cynicism in the Treasury about funding this place. There is no doubt about that. The devolved funding model is broken. The Labour Government are totally distracted by their own chaos.

If all those things are true, is it not deeply irresponsible to put public-sector pay, possibly even pensions and welfare, at risk of having to be cut, with loads of legal jeopardy and chaos, which is already happening, on the basis of waiting for a response from a group of people who, we have already established, do not care about this place? That they do not care may be wrong — it is wrong, and you and I agree that, in the long term, we want a totally different future for this place — but, in the here and now, is it not unbelievably irresponsible to say, "Those people do not give, frankly, a toss about us, and they are not paying attention, but we will just wait and hope, fingers crossed, that they come back, and, if they do not, we will just have to go through with a 5% cut"?

Mr O'Dowd: For the record, I do not have a confirmed meeting with Lucy Rigby, the new Chief Secretary to the Treasury. I am seeking a meeting with her.

I am engaging with Neil on how we process public-sector pay during the current hiatus. I want to see that matter resolved and public-sector workers given their pay awards.

The Chairperson (Mr O'Toole): You cannot do that with 95%, when you have benefits and pensions to pay too.

Mr O'Dowd: I have not yet come to the conclusion that we cannot. My role is to engage with Neil, and Neil's role —.

The Chairperson (Mr O'Toole): That is sheer optimism, Minister. We have had that before. People need answers about their pay.

Mr O'Dowd: Let me finish the point. Neil's role is to advise me. We challenge each other back and forth on those matters. That conversation is not complete yet. We will come to a conclusion on that conversation, because it is important that public-sector workers are given a pay award.

The Chairperson (Mr O'Toole): Are you talking about issuing a direction on pay?

Mr O'Dowd: All those things are on the table.

The Chairperson (Mr O'Toole): I strongly support doing what needs to be done to get pay rises for public-sector workers, but surely the most important thing is to pass a Budget.

Mr O'Dowd: I will come on to that.

The Chairperson (Mr O'Toole): The Treasury is not listening. I agree that it is not listening. Sometimes you accuse me of this, Minister, and I appreciate that it is the cut and thrust of politics, but I am not taking London's side.

I know how little London cares about this place. My worry is that we are just deferring to them and making people here hostage to their indifference.

Mr O'Dowd: As part of any political issue, you have to look at the staging points — where you are and what you have to do at certain points in a political scenario. At a certain staging point, the Executive are going to have to decide what they are going to do about a Budget for this year. That will have to take into account what, if any, engagement there is from the British Government, how seriously they are taking the situation and what impact a 95% Budget will have on public services and public-sector workers.

The Chairperson (Mr O'Toole): Is it fair to say that they are not even in an active negotiation with you at the moment?

Mr O'Dowd: I am hesitant to talk about negotiations. I do not think that we need to negotiate; they owe us money. Anyhow, I appreciate the point that you are making. Certainly, I would like to see the British Government taking this matter more seriously than they are currently.

The Chairperson (Mr O'Toole): If there is no live negotiation, people will say, "What?" If we are at a certain point where there is no active negotiation with London and the Executive do not agree on a Budget, when does the crunch point come? Is it before the recess or in the summer? When will you have to say to your colleagues from other parties, "Look, I cannot make London listen. We all want more money and we know that our quantum of need should be higher, but we need to agree this now". When does that moment come? On the record, by the way, the Executive are right to press the UK Government.

Mr O'Dowd: In fairness, there are political differences around the table, but we are all generally on the same page on this one. On when decisions have to be made, I keep that under weekly review. I update the Executive on a fortnightly basis and engage bilaterally more regularly than that. I keep under review as to when the crunch points will arrive, but it will be a collective decision of the Executive when that crunch point has arrived. The British Government need to get over their internal difficulties in the Labour Party and properly engage with the Executive on the matter.

The Chairperson (Mr O'Toole): I am afraid, Minister, that it is not good enough to wait for Andy Burnham to win a by-election or God knows what to happen with all the machinations.

Mr O'Dowd: As I said in the Chamber the other day —

The Chairperson (Mr O'Toole): We cannot control that.

Mr O'Dowd: — I do not care who the leader of the Labour Party is.

The Chairperson (Mr O'Toole): Neither do I.

Mr O'Dowd: When I hear their presentations, I do not anticipate any major economic change from any of them. I am not waiting for Andy Burnham or Joe Soap or anybody else.

The Chairperson (Mr O'Toole): You are, in the sense that you are not going to pass a Budget until you have some kind of engagement with them. It does not seem as if they are listening. People are waiting for a pay deal and public services are in limbo.

Mr O'Dowd: Here is the other thing: are you suggesting that we pass a Budget now?

The Chairperson (Mr O'Toole): I am suggesting that you should have passed a Budget before the end of the financial year, yes.

Mr O'Dowd: In the absence of an uplift from the British Government?

The Chairperson (Mr O'Toole): I am suggesting that you should have done your job and met the law. I am the one who is asking the questions today, Minister, because I am chairing the Committee.

Mr O'Dowd: In fairness, I am having a discussion with you around this matter.

The Chairperson (Mr O'Toole): Well, I am the Chair of the Committee and I have answered your question. We are going to move on to some other matters. You have already answered a couple of questions and you have taken them on, in all fairness.

We will start with the public-sector transformation fund, which has announced tranche 2. There is important stuff there. One point about transformation relates, in a sense, to the most untransformed bit of our public sector. The Treasury's open-book exercise provided a jaundiced analysis, but there are numbers there that we need to look at and reflect on. One of them is around the health service. We are at 150%, roughly. Those are numbers that I think that the Fiscal Council would stand over. They are not debated, unless Neil or someone else wants to contradict them. We spend about 150% of need on Health, but our outcomes are worse than those across the water. Clearly, something has gone wrong there. We are spending a lot more, but we are getting worse outcomes. People have said it before, including members of your party and previous Finance Ministers: if there comes a point where putting more money into Health is not necessarily getting better outcomes for people, do we need to think about how that is structured? Health is the biggest, most unreformed and thorny bit of our public service, so, when it comes to the public-sector transformation board, why not just say, "We are putting this into health. We are going to ask for it on a longer horizon, and we are going to try to transform the health service"?

Mr O'Dowd: The figure of 152% of spend compared with England is simply not true. [Inaudible.]

Mr O'Dowd: The British Government's statistics show that the spend per head on health here was around 6% higher than in England. Again, that needs to be debated, discussed and analysed. A lot of it relates to our higher levels of deprivation and health issues and to our rurality, so that figures. Should we put it all into Health? I do not think we should. We have set up a transformation board that analyses the bids coming from Departments. Health has done very well out of it, it has to be said, on the basis that there is a lot of transformation to do, and it has put forward interesting and innovative programmes of change. However, as you know, to create good health, you have to have good housing, a good environment and good education, so let us look at all areas of our society. If the transformation bids pass through the board, they are worthy of funding.

The Chairperson (Mr O'Toole): OK. I have another question about tranche 2 of the public-sector transformation fund. One area that has been funded, with about £16 million, is, basically, employability support. A lot of people looked at that number and said, "God, that number is very similar to what people who lost funding from the Shared Prosperity Fund — what used to be the European social fund — didn't get". I spoke to people in the community and voluntary sector who said, "Well, we were invited to a co-design group, and this just feels like it's plugging the gap from lost local growth fund money". We all agree that the way in which the British Government split that was improper, so we do not need to reopen that debate, but is it the case that that award is just funding something that you did not want to fund from the mainstream Budget?

Mr O'Dowd: No. That came about as a result of a combined bid, if I am right. The Department for the Economy and the Department for Communities were involved in it, and it is about them leading change and transformation through employability measures. As you said, they have engaged with the community and voluntary sector. The bid was being formatted long before, because we knew that there was a crisis coming to that sector. I thought that it was a solid bid, as did the transformation board, and it is delivering real, positive change to those who are furthest away from employability.

The Chairperson (Mr O'Toole): I have spoken directly to people in the sector who feel like, having had to lay people off, they are now being asked to co-design and build a thing that is what they had been doing before.

Civil Service reform is important. There was a commitment to it in the New Decade, New Approach agreement. What are your key priorities in Civil Service reform? I am not just talking about HR matters — how to do HR and recruit — because, although that is part of our inquiry, there is a bigger question about how the Civil Service functions and delivers. What are one or two of your key priorities?

Mr O'Dowd: My key priority across the whole public sector is to see an effective, efficient Civil Service.

The Chairperson (Mr O'Toole): Do you think that it is effective now?

Mr O'Dowd: There are different elements to that. We have an organisation of about 25,000 people who operate in an era of austerity, with all the pressures that that places on them in delivering the services and changes that are required across this society. We have a highly dedicated group of civil servants who require political guidance and political support. They also require challenge when challenge is required. Saying this might not make me popular with some newspapers — I might get myself into trouble in certain editorials — but it is easy to give the Civil Service a kicking. If something goes wrong, it is a case of, "Let's give the Civil Service a kicking". That is not fair, right or proper, but it does not negate the fact that your inquiry is important, that we have to learn the lessons of the Audit Office report, and that I, as Finance Minister, and the Executive have a challenge function in relation to the Civil Service. It does not negate any of that.

The Chairperson (Mr O'Toole): You mentioned austerity. If the Civil Service is made to operate on a 5%-plus-inflation cash cut on last year, it will be the worst austerity it has ever experienced in a single year. On your exact point about the Civil Service — I was a civil servant — nobody is talking about hard-working people in benefits offices or the people who administer farm payments. We are talking about scrutinising how well the Senior Civil Service — the people who give you advice — is optimised and whether its structures are right. That was not meant to be a direct allusion to you, Neil. The NIAO report was fairly scathing. Having read that report a few months ago, what specific actions did you ask to be taken?

Mr O'Dowd: I have engaged with my officials about the NIAO report. I am also mindful that the Committee is doing an inquiry. Normally, the report would have gone to the PAC, and we would have waited for its inquiry. I am also mindful that the Committee is carrying out an inquiry. I have to be respectful of the Committee and allow it to do its work and back recommendations to me. However, there is a wide range of ongoing work to transform and change the Civil Service. That is not to say that the pace of change is what is required or desired, and I am mindful of the Audit Office's report. It is simply too easy to give the Civil Service a kicking either in the media or in the Chamber, but I am not suggesting that the Committee is doing that. When I work with the civil servants in my Department, I see my role as that of a leader and a challenger, and I carry out both those roles.

The Chairperson (Mr O'Toole): With respect, Minister, we are very flattered that you are waiting for our report, but people want to see a direction of travel. We are a decade on from the renewable heat incentive situation, the Coghlin report was published in 2020, and we have now had two scathing reports from the NIAO. It is not the Committee, the media or politicians kicking the Civil Service; it is the NIAO. It is not kicking the Civil Service but it is being robust about the scale of the challenge. We want to hear more from your Department about that going forward, but I need to bring in other members at this stage.

Mr Gibson: Sorry, can I come in briefly?

The Chairperson (Mr O'Toole): Yes, very briefly.

Mr Gibson: Very briefly, I want to make sure that the Committee is aware of the responsibility that I feel as a leader. Much of what the Minister expects of me is required of me, with my leadership colleagues, to deliver on. Many of the recommendations — things such as silo working — are being taken forward. Not once in my short time as a permanent secretary have I been asked not to work collegiately with other Departments. I bring officials from other Departments to the Minister when required. There is an onus on me as a leader within the service to drive those changes. As the Minister said, political direction and support are required, but there is much that we can do and are doing. I am delighted that the Committee has visited Integr8 and some of our change programmes. Sadly, change is much slower than I would often like to see. You will have seen us innovate on new recruitment techniques, and the amount of challenge that you get for every incremental change is significant. So we have to be bold and brave, but it is a leadership role that I take personally.

The Chairperson (Mr O'Toole): I am glad you said that. Now that you have expressed that interest, we may have you back for a separate session. I think you have probably —.

Mr Gibson: Oh, no. Strike that from the record, Chair.

Dr Aiken: If he thinks you are doing it all, you might as well come back.

Ms Forsythe: I want to ask some follow-up questions about a couple of questions for a written answer that I put in, Minister. The first one is about thefts from the Civil Service. Your response said that thefts of £360,000 in assets and cash have occurred since 2022 across the Departments. That is quite a significant figure, and a loss of significant funds that could have been directed to front-line services. Have there been any prosecutions? What measures have been put in place to prevent future losses? Have any lessons been learned around that? Some of the losses are quite sizable for individual Departments.

Mr O'Dowd: If I recall it properly, it relates to thefts within and from the Civil Service. To clarify, it does not necessarily all equate to the actions of civil servants. I have also followed up on a more recent question for written answer from you about the level of prosecutions and dismissals. Have you received that answer?

Ms Forsythe: I have not have received that yet.

Mr O'Dowd: It should be with you very shortly. There have been a number of dismissals from the service and prosecutions both within the service and outside the service for those who were stealing from the service. There have been a series of disciplinary and criminal investigations.

Ms Forsythe: Thank you. The question was about the reported thefts of assets or cash that were owned by the Civil Service. I am pleased to hear about the action because there were significant losses, and lessons need to be learned. We do not want to see public funds being stolen. I look forward to getting the follow-up response. I have not got it yet.

My other question was about the number of legal cases and judicial reviews taken against the Department of Finance. You noted that there were three judicial reviews in the 2025-26 financial year. The Committee was not aware of the details of those cases. Can you give a bit more detail on the three judicial reviews — the progress, the potential losses to the Department or any consequences?

Mr O'Dowd: I am not sure whether Neil can recall the three. There is one that is going on at the minute: Omniplex was given permission yesterday to take the Department to court on the Reval issue. That is an ongoing legal matter. I am not sure whether we have the detail of the three from last year.

Mr Gibson: No. We will come back in writing with anything that we can provide, but, obviously, with ongoing judicial reviews, we need to be very careful about anything that we reveal that could be prejudicial.

Ms Forsythe: Thank you. I appreciate that. I asked about legal cases and judicial reviews more broadly and was surprised that we did not know, as a Committee, that there were three in 2025-26.

Mr O'Dowd: We will follow that up. If there has been a failing, I apologise, and we will get to the bottom of why you did not know that. We will follow that up with you.

Ms Forsythe: Thank you.

Just finally from me, the UK Government recently announced the Great British Summer Savings scheme for this summer for discounts for family days out and travel for children. Have you had any engagement with, or made any representations to, the UK Government around that, especially in light of the fact that catering businesses that do not have on-site seating are not currently part of the scheme? Some businesses have been in touch with me about that. Have you had any representations about that, given that the scheme will roll out in the next few weeks for this summer? I want our families here in Northern Ireland to get the benefit of the discounts.

Mr O'Dowd: As you asked the question, we could hear the rain beating off the roof. [Laughter.]

Hopefully, the sun will come back again.

My Executive colleague the Economy Minister has been engaging with the relevant Ministers on that matter. If I can provide any further support or information, or if I am required to engage with other sectors of Whitehall, I am more than happy to do so.

Ms Forsythe: I will maybe follow up on that in writing to you, Minister. It is supposed to go live on 25 June. Obviously, families here want to be able to get out — weather permitting. There are indoor children's activities and restaurants and things, so they could still use the discount. I would not want to see families here missing out.

Mr Carroll: Minister, I appreciate that you cannot be over every detail and every question, but I have submitted a few questions for written answer to you about AI and Microsoft, particularly over the past few weeks. You probably have a general sense of where I am going. I am concerned that the approach to AI in general is not even blasé but enthusiastic. There are potential benefits, but there are also huge pitfalls, to put it mildly, that people have screamed about, including people who have worked in the sector. I was informed a few days ago that Microsoft has an AI manifesto for NI, which is a bit concerning. It seems that it wants to dictate, and I hope that it is not getting its way. That is just a few general points. Do you have any concerns about that? What level of input do you have into raising concerns about the dangers of AI, organisations such as Microsoft, and the Clarifying Lawful Overseas Use of Data (CLOUD) Act? You submitted an answer to me about the CLOUD Act, but there is some ambiguity about whether the US Government can request information and get data from the cloud through the CLOUD Act. There is a dispute about whether that is accurate, but there is major concern about that. Is any of that detail keeping you awake at night? It is certainly keeping me awake most nights.

Mr O'Dowd: Obviously, I am aware of the range of questions for written answer that you have submitted to me on the matter. I have made enquiries to my Department in order to clarify things for myself as I have received responses around that. Obviously, if there are any further questions about that, or any points of further clarification that you require, you will submit them to me.

AI is going to feature across all aspects of our lives. An interesting analysis involving the printing press was given to me at a meeting. The printing press was invented in the 1700s at some stage. Since then, it has been used to produce great classical novels and literature. It has produced 'Mein Kampf'. Great innovations can be used for good and for bad. In relation to AI, I fully understand concerns among the workforce that their jobs are going to be lost because of robots or innovation as we move forward. Any move forward has to be ethical and has to be governed by strong ethical guidelines. TEO has a team that is working its way through AI and related matters in relation to how we, as an organisation, move forward. AI will also bring great change, opportunity and hope when it comes to how we deliver our public services and how we redirect personnel into more front-line operations where they will be able to carry out different functions and move away from some other tasks. Thousands of questions for written answer are answered every year in the Assembly. Can AI be used more in that, allowing staff to go off and do other matters? As a Minister, I see every answer to a question for written answer that comes before me, and, if I am not happy, I will not sign off. I am not suggesting, before I read a headline somewhere, that a computer is going to do the Minister's work for him. AI could be used for a lot of the research behind the answers, and a lot of the questions are repetitive. Let us look at each case and each example on how we use AI — I am not saying that you are dismissing it — rather than dismissing it out of hand.

Mr Carroll: There are huge dangers. Artificial superintelligence needs to be looked at, and there is no real prevention of its being rolled out here, which is really terrifying. The press barons were, in many cases, historically railed against; the tech bros are quite often bowed down to. That is a historical point.

Finally, there was some commentary in the media today about on-site EV charging points. I do not know whether you saw that. My understanding is that the vehicle charging points at the back of the Building can be used by MLAs with no charge incurred, but that the public have to pay —.

The Chairperson (Mr O'Toole): Pun intended?

Mr Carroll: Sorry?

The Chairperson (Mr O'Toole): Pun intended? Sorry. Go ahead. Apologies.

Mr Carroll: I missed the joke. The public have to pay approximately £20 for an average-sized engine to be charged. For me, the issue is about discrepancy. I do not think that MLAs should be on a pedestal, getting something for free while the public should pay for it. My understanding is that the Finance Department is in charge of the other on-site EV charging points. Are you open to waiving that fee for the public and civil servants, who have to pay £20 to charge their car whilst MLAs do not?

Mr O'Dowd: My understanding is that everything outside the boundary fence of this Building falls under my Department's responsibility. Although the charging points are, therefore, in my Department's physical space, they are managed and run by the Assembly Commission, and any revenue that comes from those goes to the Assembly Commission rather than to my Department. I think that today's story raises questions and that the Assembly Commission is the best place for questions to be put on how all those things are managed. People quite rightly expect a fair and equitable relationship between elected representatives and the public, and I am sure that the Assembly Commission will want to view that through that prism.

Mr Carroll: Can we get some clarity on that?

The Chairperson (Mr O'Toole): Yes, we will ask the Department of Finance to clarify that on the record.

Mr Carroll: In the media, it was said that it was the Department of Finance. I am not saying that you are mistaken.

Mr O'Dowd: They are on Department of Finance property, but there is an arrangement between the Department of Finance and the Assembly Commission. As far as I am aware — we will clarify this for you, Gerry — the revenue goes to the Assembly Commission.

The Chairperson (Mr O'Toole): I will bring in other members and let the Minister away.

Dr Aiken: As a declaration of interest, I have an electric car, and I can never get a parking space to charge it here.

Minister, a couple of weeks ago, we had evidence from the head of the Northern Ireland Civil Service on what the Civil Service is trying to do on transformation. Every answer that we could work out, between all the managerial gobbledygook that she was speaking, was that it was your responsibility and, particularly, Neil's responsibility to sort it out. Time and time again, she referred to the importance of Integr8 and how it was going to deliver this and deliver that, and she said that dashboards were going to do this and were going to do that. I asked her, and we asked her, what plan B was, and there was not very clearly a plan B that she was considering, just that Neil was going to deal with it. Bearing in mind that you are both here and that, by the words of the head of the Civil Service, you are both responsible for that vital programme, how is Integr8 going? I asked, if it were on a risk register, what colour it would be, and I did not get an answer on that either. Neil, I know that you will probably give me an answer, which will be useful. The third question is: what is plan B?

Mr O'Dowd: I will bring Neil in; Neil is always my plan B. One of the challenges that the Civil Service faces is in selling its case and its cause. You referred to gobbledygook. There is a lot of Civil Service language and a lot of headlines or issues that have come across, and the general public are sitting back, quite understandably, scratching their heads and saying, "What does that actually mean?"

Dr Aiken: John, I do not even understand that language, and I have been here for a decade.

Mr O'Dowd: Dashboards and this, that and the other. I refer to it as Civil Service lingo. When I am sitting down with my team, I am engaging with them on what that means for change. What change is the public going to see in delivery, effectiveness and efficiency. All those things have to mean that. I will let Paul — Neil explain that.

Mr Gibson: I wish we did have Paul here.

The Chairperson (Mr O'Toole): I remind you both that we are tight for time and that we want to get as many members in as possible.

Mr Gibson: It is amber at the moment, but, honestly, in my mind, Integr8 constantly flits between amber and red, given the importance that we place on it. I am very confident in our leadership group, but, as we move through and start to unravel what the data looks like, each new week brings a fresh challenge. The biggest challenge is the change to culture and behaviours. That is a leadership challenge, not a technology one. That is for me, the head of the Civil Service and others. I do not like the thought of being anybody's plan B, but there is a huge responsibility on me to make sure that Integr8 is delivered effectively. That can only be done with the full support of staff across all Departments. I am pleased to say that that engagement has been very thorough. Integr8 will change our HR and finance systems. However, I will say that, while having better information is great, and Integr8 might get us to that, a lot of it will still require leadership decisions and cultural change to how we run and operate. Whilst I love a good dashboard, the real change will come from what is done with the data and the decisions and actions that are taken.

If we do not embrace Integr8 as a cultural change to our way of working — I know that the Committee enjoyed its visit to the Integr8 offices — we will miss the opportunity of it. It is not a technology programme. It is on my risk register, and we meet about it frequently. Paul Duffy, Kirstie Murray and the team are doing a great job of curating it across the service. The nature of any change programme, however, is that, every week, you lift the lid on a new piece of data or a new stage. We will be in the first wave of parts of the Finance Department that go live next year. The next eight to nine months will be critical. There is a close, watching eye on that. We will keep the Committee fully briefed, and I know that it will be close to the regular updates on Integr8. Integr8 will provide a culture change and a technological platform, but that does not take away from the fact that our biggest challenges relate to leadership and decisions, and those rest with me.

Dr Aiken: A figure of £100 million was quoted to sort out Dundonald House. Has anyone looked at that independently?

Mr Gibson: Yes, we have done some work on that. Unfortunately — you will be struck by the irony of this — we would have to spend many hundreds of thousands of pounds to work out the state of the concrete in order to determine whether it could even be salvaged. I am very reluctant to spend a huge amount of money on determining that for a building that we do not need in that size and shape and that is not physically right internally. We have checked with the market, but we would have to spend a significant sum to do what is called a detailed spec document. I am not sure that a building of that size or scale is within the scope of what we need in any regard. The irony is that that is the best estimate that we can make. We have looked at it independently, but the answer is that, unless you do proper structural surveys, you are not able to get a precise number.

Dr Aiken: Could you sell it for £1 and get someone to take it off your hands?

Mr Gibson: Not really, because there are limits — I think of the Stormont Regulation and Government Property Act (Northern Ireland) 1933 etc — on what you can do on the estate. Also, in the next phase of the estate strategy, which the Committee will look at in due course —

The Chairperson (Mr O'Toole): We had a session on it last week.

Mr Gibson: — we will move from divestment, which, really, has been our strategy over the four years up to now, to starting to think about what the future estate might look like. I would not rule out the possibility that we will need new accommodation for civil servants on the Stormont estate. It just would not be a building of that size, shape or structure.

Miss Dolan: How successful has the small business rate relief scheme been? Are you aware of that yet?

Mr O'Dowd: The scheme has been running for the past number of years, and it has been hugely successful. Businesses are very appreciative of the discount in their rates bills. We are running other schemes, such as the Back in Business scheme, which allows businesses that occupy, for retail and other uses, premises that have been empty for 12 months to receive a 50% rate discount. Again, that has been very successful. I visited a number of businesses that have gone into buildings on the high street that were previously closed. Not only have they revitalised that building, but the businesses around them appreciate the fact that they have moved in because of the increase in footfall in the town centre. I am keen to expand support to small and medium-sized businesses in any way that I can and take some pressure off them, given the rising costs that they face.

Miss Dolan: Is the business growth accelerator managed by your Department, the Department for the Economy or local —?

Mr O'Dowd: The rates aspect will be managed by my Department. It is about allowing businesses to physically expand and extend buildings etc through construction. I would like to be able to give businesses rate relief on those expansions for the first year so that we take some of the pressures and costs off them and alleviate their construction costs.

Miss Dolan: Is it going out to consultation?

Mr O'Dowd: It will go out for consultation later this month. It will be before the summer recess, but I will give you the exact date.

Miss Dolan: Will that be in train by the end of the mandate?

Mr O'Dowd: I hope so. Again, it depends on whether my Executive colleagues are prepared to support it.

Miss Dolan: That is OK. Thank you.

Mr Kingston: Minister, what have you learned from the cancellation of Reval2026, which might have been able to proceed had there been mitigations for the sharpest increases? Are you working on a Reval2027 for non-domestic properties?

Mr O'Dowd: Remember that I had £10 million built into the draft Budget to support businesses, so there was some support going out to businesses. My officials are sitting down and engaging with the hospitality sector and other sectors on how we move forward from where we are and in working towards a new Reval. I cannot yet confirm when that Reval will take place. I am also conscious that there is an ongoing court case. I will have to take account of whatever findings come out of it before making a final decision on the way forward.

Mr Kingston: OK. There is no certainty at the moment, then?

Mr O'Dowd: There are too many moving parts at the moment, Brian: what the engagement will be; what proposals the hospitality sector will look to bring forward; and, as I said, the ongoing court case that will have to be taken into account.

Mr Kingston: OK. Thank you.

Miss Hargey: John, in your opening statement, you mentioned, as part of the strategic review on rates, a paper that is with the Executive on the cap and the early payment discount. When did you submit that to the Executive?

Mr O'Dowd: That has been with the Executive for several months, perhaps longer. We submitted it last year. It is about having a fair and equitable rating system. We currently have a 4% discount for people who pay their bill upfront — they are people who can afford to pay their bill upfront. That causes technical and processing issues in the Department, which adds further costs. I would have liked to see that removed completely, but others suggested that we should go for a 2% discount to ease the process in. I then agreed to 2%, but that paper has not moved since.

There is also the cap on rates for more expensive houses. That is another issue in respect of having a more fair and equitable taxation, and it needs to be changed. Genuine concerns have been raised about older people and people on low incomes who are in high-value properties. Those people would fall under the support measures through the rates system.

Miss Hargey: With the money that would be released from that, you could be progressive and put it back in to protect some of the most vulnerable.

Mr O'Dowd: Yes. Ultimately, we would probably raise about £9 million per annum. That would be split, with about £6·3 million going to the Executive and the rest going to local councils. I am sure that local councils would welcome those additional funds. I know that, for my Department, Executive support of £6·3 million would be welcome. We often talk in billions and hundreds of millions, but £6·3 million can make a big difference when it is directed towards the right project.

Miss Hargey: Without your breaching confidentiality, are there any reasons that are preventing progress? Is there outstanding information? Can you understand what the issue is?

Mr O'Dowd: I have had discussions with Executive colleagues on that. They have expressed concerns about older people in high-value properties. I have explained to them that anyone in a high-value property who is on a low income will be protected through the rates-support mechanisms that are already there. I have not been asked for any further information since.

Miss Hargey: Do you believe that it should progress?

Mr O'Dowd: It should progress. It would be equitable and fair progress. It would allow the Executive to raise a small amount of money, but small amounts of money invested in the right place make huge differences.

Miss Hargey: You mentioned looking at a new policy for the management of shared property. I would welcome that, particularly for South Belfast, as the Chair would.

The Chairperson (Mr O'Toole): Absolutely.

Miss Hargey: Is any consultation or engagement taking place on the policy work and to look at best practice? In the South of Ireland, there are greater rights for tenants who occupy a lot of the buildings, so it is not just about the property owners. Is there an intention to engage, consult and benchmark against other places on these islands?

Mr O'Dowd: We are establishing a team in the Department to look at that work. It will look at best practice across these islands as regards how we properly support tenants in those properties. I have had a significant amount of correspondence from MLAs about the model, and that is why I am keen to move on it. However, it is such a complex piece of legislation with regulations etc. I would like to have done something in this mandate, but it simply would not have been possible. I am preparing the work so that we will be able to move forward on it in the next mandate.

Miss Hargey: OK. Thank you.

The Chairperson (Mr O'Toole): Thank you, Minister. We have just a minute or two left before we release you. We have covered a lot. I have a couple of points about responsibility taking. Taking responsibility has been a big theme in setting a Budget, even if, as we acknowledge, the UK Government are distracted, do not prioritise this place and all those things. Did you support Minister Nesbitt's introducing the Hospital Parking Charges Bill?

Mr O'Dowd: As in did I vote for it in the Assembly?

The Chairperson (Mr O'Toole): I do not think that you did vote for it. I am not sure how many Ministers voted for it. Did you support its being introduced? Do you support it now? Do you support its implementation?

Mr O'Dowd: We did not vote for it. We did not support it in the Executive, as far as I am aware, and I did not vote for it in the Assembly.

The Chairperson (Mr O'Toole): You allowed it to proceed through the Executive.

Mr O'Dowd: Yes, and that is a point that needs to be debated and discussed. If we are to move draft legislation from the Executive on to the Floor of the Assembly, Ministers should allow the papers to move through. They can voice their position on them in the Executive, but, if we are to respect the Committees and the Assembly, Bills need to go to the Floor of the Chamber, where a vote take can place.

The Chairperson (Mr O'Toole): That is a legitimate argument. However, there is a specific issue: you are the Finance Minister, and the purpose of that Bill was to save money by not implementing free parking. Are you saying that you would have given Mike Nesbitt the money to implement free hospital parking had your side been in the majority and the Bill had not gone through?

Mr O'Dowd: No, I have never said that to Mr Nesbitt. I have never said that.

The Chairperson (Mr O'Toole): I do not understand, then. You were opposed to the Bill: you did not support the Bill, and your party voted against the Bill. If the Bill had fallen, what would you, as Finance Minister, have said to Mike Nesbitt if he had come to ask for an extra £6 million or £7 million?

Mr O'Dowd: If Minister Nesbitt had approached me on that issue, I would have had discussions with him on it. I would have said to him, as I say to all Ministers who approach me, "Examine your own budget first".

The Chairperson (Mr O'Toole): Does that not get to the heart of a slightly farcical situation in which you are saying that you did not support a Bill — I do not know whether you are saying that as a Minister or as a Sinn Féin MLA — but also saying, "I, as Finance Minister, would not have found any way to help the Minister responsible to pay for it".

Mr O'Dowd: I did not say that. What I said to you was that I would have had discussions with the relevant Minister, as I would with any Minister. My first point to Ministers is, "Examine your own budget first, and then come back to me".

The Chairperson (Mr O'Toole): Minister, that is an absurd situation given not just the position in the Executive but the fact that the Budget sustainability plan, which is agreed and presumably still exists to some extent, having been produced by your Department, scores the savings from not implementing free hospital parking. How can, on the one hand, your Department count the savings from not implementing something, while, on the other, you tell me now that you oppose not implementing free hospital parking but say, "If the Minister had come to me, I would not have given him the money"?

Mr O'Dowd: With respect, Chair, I think that you are now in the role of Opposition spokesperson and speaking to me as a Sinn Féin MLA. I have graced you with my time. I am not getting into that point. We have had a very good discussion at this Committee, with all members being able to question the Minister.

The Chairperson (Mr O'Toole): It is an absurd situation, Minister, but you are not going to answer.

Mr O'Dowd: If you, as Opposition leader, wish to question me on those matters at the next Finance Question Time, I will be more than happy to take those questions.

The Chairperson (Mr O'Toole): We will release you now, Minister, but, with respect, I think that you understand the absurdity of the position, which gets to the heart of lack of responsibility taking.

Mr O'Dowd: I understand the absurdity of that point being made in this session.

The Chairperson (Mr O'Toole): You are saying that you do not support the Health Minister not proceeding with free hospital parking, while your Department stands over the savings. That gets to the heart of lack of responsibility taking.

Mr O'Dowd: You have made my point. You are not questioning me as the Committee Chair; you are questioning me as the Opposition party spokesperson.

The Chairperson (Mr O'Toole): Do you, as Minister, support its implementation?

Mr O'Dowd: I have set out my position. It is in Hansard.

The Chairperson (Mr O'Toole): I think that the Minister is refusing —.

Minister, thank you very much.

Mr O'Dowd: Thank you.

The Chairperson (Mr O'Toole): We need the Executive to take responsibility for setting a Budget. That is why I wanted to close out the session with that point. There is a problem here with taking responsibility.

Mr O'Dowd: Here is the thing, right?

The Chairperson (Mr O'Toole): Let me finish my point.

Mr O'Dowd: Were the Opposition to produce an alternative Budget, that would assist me in my deliberations.

The Chairperson (Mr O'Toole): Minister, your counterparts in Dáil Éireann, who are the official Opposition there, have something called official Opposition resources, which enable them to do that.

Mr O'Dowd: You may find that you are given those resources as well.

The Chairperson (Mr O'Toole): We are not talking about that today because I am the Chair of the Finance Committee, but I am happy to tell you that my official Opposition resources amount to less than the cost of a single spad in the First Minister and deputy First Minister's office.

We want to see responsibility being taken —

Mr O'Dowd: We do.

The Chairperson (Mr O'Toole): — and we all want to see a Budget being passed. We hope to be kept informed about that, because public-sector pay and welfare are at risk. It is a very serious situation, and we all need to understand the gravity of it. We wish you well, whether that is in talks or negotiations or engagement of some other kind. It is a really serious situation. Public-sector workers and people who use public services want to know that we are not going to voluntarily impose a 5% cut on them, which would represent the worst austerity that we have ever seen here.

Thank you for your time, Minister, and thank you, permanent secretary.

Mr O'Dowd: Thank you.

Mr Gibson: Thank you very much, Committee.