Official Report: Minutes of Evidence

The Chairperson (Mr O'Toole): We have with us Gavin Patrick — hi, Gavin — the Department of Finance's director of finance. Like Caesar's wife, you have to be a model of good behaviour for all the other Departments, which is probably particularly tricky at the moment. [Laughter.]

Thank you for coming, Gavin. I invite you to make an opening statement. As always, members should indicate if they wish to ask a question.

Mr Gavin Patrick (Department of Finance): Thank you, Chair, for the opportunity to brief the Committee on the Department's current in-year position and the future-year position. We have provided a written briefing, and I will now give you a high-level summary of the budgetary position, after which I will be happy to answer any questions.

I will start on the in-year position and the absence of an agreed Budget. The Department of Finance had issued a contingency planning envelope to all Departments as a necessary interim measure to maintain the delivery of essential public services while ensuring that spending remains within legal and financial control limits. The contingency planning envelope issued to the Department of Finance is £288·7 million resource and £29·6 million capital. We plan on landing the non-earmarked resource and the capital budgets. However, we have pressures on earmarked funding for Integr8, the census and the people strategy.

On non-earmarked resource, we are managing within the contingency planning envelope through careful budget management and prioritisation. A number of actions have been taken. Ongoing rationalisation of the office estate has resulted in estimated savings of £5·1 million. The divestment of surplus buildings and the exit of leases have led to savings in rates, utilities, service charges and other related property running costs. Savings of about £4·4 million have been achieved from not filling vacancies across business areas. We have about £3·5 million of increased income, which reflects DOF's continuing move towards charging fully for services — in effect, that will increase costs to other Departments for the services that we provide to them. The remaining £2·2 million of efficiencies have been identified across the Department and have been achieved mainly through efforts to work more efficiently using emerging technology and restructuring.

On earmarked resource, as part of the recent exercise, bids have been put forward to include pressures related to Integr8 of £11 million, to the census of £0·7 million and to the people strategy of £1·6 million. The Integr8 requirement is driven mainly by higher Integr8 development support fund requirements, which will support implementation in all Departments following the programme design phase; increased implementation delivery partner licence and solution change costs; and re-profiling of the business transformation partner expenditure, bringing it forward from 2027-28. Additional accommodation and staff substitution costs have arisen to maintain programme delivery. It is important to point out that, alongside that, the programme has eased £7·2 million in 2025-26 and £3·6 million in 2024-25, resulting in the re-profiling of expenditure across the programme's lifetime. Therefore, the overall cost remains within the planned spending envelope.

I move to capital. There has been significant reprofiling of capital expenditure across the planning period. In 2026-27, there is a forecast capital requirement of £43·6 million against the contingency planning allocation of £39·2 million, which is made up of the baseline budget of £29·5 million plus anticipated sales receipts of £9·7 million. If the gap of £4 million is not met by bids, the Department can reduce its forecast spend by reducing spend on desktops and laptops. As I said, anticipated total sales receipts for 2026-27 sit at £9·7 million. That will provide additional spending power if the sales proceed in full in 2026-27. Therefore, only £33·9 million has been put forward as part of the current exercise.

I turn to the future-year period. Non-earmarked resource bids are aligned to those submitted as part of the exercise this time last year. They have been categorised into five thematic groups and revised downwards to £19·5 million and £19·2 million from £35·3 million and £39·4 million respectively. The decrease is mainly due to the census, digital workplace and data linkage, which were previously stated as non-earmarked bids, now being treated as earmarked, and the fact that the progress of the fiscal devolution work that had been forecast as part of those original bids has not taken place as initially envisaged. Through careful management and implementation saving measures, the Department has attempted to absorb the assumed pay increases in future years and has, therefore, not bid for a pay award in 2027-28 and 2028-29. Aligned to the Budget exercise, the departmental people and resource committee is taking forward a programme of work to improve workforce planning and explore new approaches to efficiency.

I move to capital bids. The capital bids reflect a shift in delivery timelines rather than a fundamental change in the overall scope of the capital programme. The main areas of capital forecast bids include: capital maintenance works; small lease consolidations; estate review; laptop and desktop refresh; Land and Property Services (LPS) transformation projects; and Northern Ireland Statistics and Research Agency (NISRA) data collection and analysis.

In 2027-28, the planned capital expenditure is lower than what it was last year, primarily due to reduced requirements for accommodation projects, maintenance works and several LPS transformation projects. In 2028-29 and 2029-2030, expenditure is higher than originally forecast, as a number of those projects have moved to this later period.

I move now to our five-year sustainability plan. It was drafted at the start of this calendar year, just as the draft Budget was issued. The draft Budget impacted the forward look that was in that draft plan. To enable us to rework the five-year sustainability plan, we need the budget agreement to give a realistic view of our position in future years. We do not have a finalised five-year sustainability plan, but our ongoing work on the budget will underpin that plan once it is finalised.

I hope that you have found the written briefing and my statement helpful. I am happy to take questions.

The Chairperson (Mr O'Toole): Thank you, Gavin. That is really helpful. I have a couple of specific points. What does it mean to you to be Department of Finance finance director in the absence of an agreed Budget? You are getting monthly — pocket money might be the wrong way to put it — update requests from the guy who is in charge of keeping all of the Departments right, and who happens to be the person in charge of your Department, asking what your profile is. Are you spending to the profile that you would have spent to if a Budget had been agreed, or are there things that you are not doing?

Mr Patrick: We have a contingency planning envelope. That is the basis on which we are working for the year.

The Chairperson (Mr O'Toole): A contingency planning envelope is not the 95%. Will you tell us what it is?

Mr Patrick: We are going to land within the contingency planning envelope that has been provided on the non-earmarked allocations. That is similar to the baseline from last year on the non-earmarked allocations.

The Chairperson (Mr O'Toole): Where is the non-earmarked stuff? How close is it to what was in the draft Budget in January?

Mr Patrick: It is very similar. There is no material difference between them.

The Chairperson (Mr O'Toole): You are basically operating to the draft Budget that you would have had if the January one had been agreed.

Mr Patrick: Yes, it is very similar. As I said, there is no material difference. The difference is in the earmarked allocations, especially on Integr8. The draft Budget and, therefore, the contingency planning envelope is based on the return that we made in the Budget exercise last September. As I mentioned, as last year went on, there were easements on the Integr8 programme, and some of the programme got pushed forward into this year, hence the pressure that we have this year, which was not reflected in the draft Budget position and, therefore, cannot be reflected in the contingency planning envelope. At the moment, that is where the focus —.

The Chairperson (Mr O'Toole): There is a pressure on Integr8 spending because there was an easement last year. In ordinary times, with a regularised Budget, last year's easement would have been written into a new —.

Mr Patrick: It would have been considered as part of a bid and —.

The Chairperson (Mr O'Toole): But, had that been accepted and agreed, it would have been in your headroom and allocations for this year. Could that cause a delay to Integr8?

Mr Patrick: At this point, no. We are working on the basis that we have a bid in for Integr8 and that a Budget will be agreed, but we have one eye on the fact that we may not get the bid for Integr8 funded. We are looking to try to ensure that we will be able to deliver the funding for Integr8 if it means further efficiencies within our non-earmarked, but nothing has been identified in that regard yet, other than some slippage.

The Chairperson (Mr O'Toole): Does the Department feel a particular pressure — you can tell us if you feel a personal pressure, if you want — to live within its means and to model good behaviour to other Departments by coming within your contingency envelope? Some Departments are already straining at their contingency envelope. Do you see it as part of your job to be absolutely sure that you are within the contingency envelope, because, if DOF is not, you are effectively telling others that it does not matter?

Mr Patrick: It is my job to land the budget in any year, and I will continue to do that for this year. When I say that it is for me to land the budget, I mean that it is for me to advise the accounting officer, who has a particular role, and the Minister.

The Chairperson (Mr O'Toole): He is effectively the accounting officer for the Executive at the moment, because there is no Budget.

I will make one further point before bringing in colleagues. If you were to strip out things such as the rates rebate, which is a big part of the Department's everyday resource spending, the £4·4 million in relation to vacancies represents a significant amount of unfilled payroll.

Mr Patrick: We have had the discussion at Committee before —

The Chairperson (Mr O'Toole): Yes, we have.

Mr Patrick: — about the number of vacancies at the start, whether or not they are filled during the year and whether they will ever be filled.

The Chairperson (Mr O'Toole): You are not filling them this year.

Mr Patrick: This year, we have brought any vacancy money into the centre for my team to manage, so there is no vacancy funding and budgets out in the business areas. The departmental people and resources committee has a role to approve any vacancies that are being filled, with one of our questions being: is the post affordable? We assess that. There is much tighter control on those and therefore better vacancy forecasting.

The Chairperson (Mr O'Toole): Say that a manager in a team in DOF who is a grade 6 or 7 or whatever happens to lose two or three people for whatever reason — it could be because of people moving on in their career or whatever else can happen in teams — they cannot automatically say, "I've got my a vacancy at", whatever grade the member of staff was, "I'm going to go straight out to market", or, "I'm going to get that up on the board quickly, so that I can replace that person". They effectively have to go to you, in the centre.

Mr Patrick: As a member of the people and resources committee, I can say that, yes, we are, in effect, saying that a seat that happens to become empty is not necessarily a priority over one that may already be empty elsewhere. It is about prioritising where vacancies can be filled.

The Chairperson (Mr O'Toole): It may be a good process, but, if it is widespread and the Department already has a relatively low headcount, it could be a challenge.

Ms Forsythe: Thanks very much for being here, Gavin, and for outlining where you are at on this in really good detail. We know, from previous sessions, that you and your team are well over the brief. With respect to the Chair, I think that he is a bit upset that your information does not reflect more of a crisis. It is really good to get this detail.

I think that I have asked about the "inescapable" category before. I know that it is not your job to police it, centrally, but will you outline how you define "inescapable" in DOF and in Departments more widely? It may be that not everybody is using the same definition or guidance.

Mr Patrick: Is that "inescapable" in relation to capital?

Ms Forsythe: Yes.

Mr Patrick: My colleagues in DOF Supply set out quite a tight definition. Even though we are in the same Department as DOF Supply, there is separation, and we are challenged in the same way as other Departments are. "Inescapable" refers to cases where a contract is in place. If there is a contract for a computer system or a building, for example, that would be deemed to be inescapable. "Pre-committed" refers to where the Executive have agreement on something. Anything else will fall into "High priority" and below. Unless there is a contract, it should fall down into the other categories.

Ms Forsythe: It is such an important definition. We see "inescapable" time and again, and, for me, that should refer to something that literally cannot be escaped from. Sometimes we see "inescapable" applied to bids, however, and, then, when money is made available, it goes to something else, rather than to that "inescapable" bid. As the Chair said, it is good that the Department of Finance is leading by example on that definition.

Mr Patrick: Our inescapable bid figures are high because we have the contracts. A lot of that is for LPS transformation work, for which the contracts are in place.

Ms Forsythe: Absolutely.

We talk a lot about the committed spend for Integr8. Has anything been costed or built into the financial position regarding the savings from Integr8? How has that been profiled in your financial planning? We were at the Integr8 offices, and there was a lot of talk about reprofiling jobs and things like that. Has that been built into the financial plan?

Mr Patrick: Not yet, but we are aware of it. The benefits of Integr8 are still being worked through as the design of the programme and how our teams will look is finalised. We are aware of it, and, once we see the final position, we will be able to revise further. We work closely with the Integr8 team. We had a meeting the other week about those types of issues.

Ms Forsythe: Presumably, it will be much more far-reaching than just Department of Finance staff, because Integr8 will feed through the different business areas in other Departments. Will it capture savings reprofiling and what that means for wider transformation?

Mr Patrick: The Integr8 programme team will lead on that, but I expect that a full benefits analysis will be carried out on where that will land.

Ms Forsythe: That is grand.

You have a central role, and everyone was to feed in by, I think, 18 September. Is there any update on the collation of information from other Departments?

Mr Patrick: That is not my role, Diane. I am just the departmental element of it. That is for Patrick Neeson, who was at the previous session, and Deborah Brown's team.

Ms Forsythe: We should have kept Patrick when we had him. He did not get any questions. I was just wondering where we are at on that.

Thank you very much. As I said, there is a lot of detail. Department of Finance officials are always very forthcoming with information. It is very clear, and it is very useful to us.

Mr Kingston: Thank you, Gavin. On the face of it, the Department should be commended for taking the approach of asking business areas to live within a flat budget as far as possible. I appreciate that there are inescapable pressures. In a multi-party Executive, it is difficult to ensure efficiency and effectiveness in all government spending. It is the right approach to emphasise that government spending must be challenged internally within the Department. It takes planning to live within a flat budget and even to build in an anticipated pay increase to staff.

Paragraph 8 of your report states:

Is that £3·5 million all from within the Northern Ireland Civil Service (NICS)? Is any of it from an outside source? Can you give us any detail about what that refers to?

Mr Patrick: I can get further detail for you. The majority of it is from within the Civil Service. We charge some fees to LPS and elsewhere. A lot of those are restricted by legislation, but they may be increased in quantity if not in value.

Mr Kingston: Is that for personnel or —?

Mr Patrick: It is a mixture. The services that we provide include HR, internal audit and the Departmental Solicitor's Office (DSO). The Department provides a wide range of services across NICS.

Mr Kingston: It is not a huge amount out of the overall budget, but I accept that DOF carries costs.

Mr Patrick: One thing to say on that is that those have to be efficient as well. I get challenged by my fellow finance directors in other Departments on that. Those services are managed through memorandums of understanding (MOUs) and agreements between us and other Departments. It is important that efficiency continues even in those areas.

Mr Kingston: I would always encourage the Department of Finance to champion the cause of efficiency and effectiveness in government. When you can point to your own financial modelling, that helps to set an example.

I note the disposure of Fermanagh House and Clare House from the capital estate. We had a previous briefing on that. Is there a way forward yet for Dundonald House? I recently drove past it. It was like being on a film set.

The Chairperson (Mr O'Toole): Which film?

Mr Kingston: A film about a future in which buildings have been abandoned.

Mr Patrick: I will have to defer to my Construction and Procurement Delivery (CPD) colleagues on that. I do not know what point that has got to.

The Chairperson (Mr O'Toole): We can ask for an update, Brian, if that would be helpful. It may be worth our getting an update from the relevant officials.

Mr Kingston: It is within the Civil Service estate. You can see the building from miles away, and, sadly, it stands out as a cost to the public purse, with no viable future having been found for it. Apart from the building, the land that it is on is of value. I would like to hear about any progress on finding a way forward for it. OK.

The Chairperson (Mr O'Toole): If members are content, we will write to the relevant officials — we will go via the departmental Assembly liaison officer (DALO), obviously — for an update. It has been a few months since we heard from CPD about the status of Dundonald House.

Mr Carroll: Thanks, Gavin. You mentioned £4·4 million in savings on staff costs. If I heard you correctly, you said that those savings come from not replacing people who retire or move on. Has the Department made any assessment of the impact of that on the staff who remain? Presumably, if there are five people in an office, and someone retires and is not replaced, by extension, everyone does more work. Has there been any assessment of how that may impact on people's physical and mental health and, potentially, the Department's finances?

Mr Patrick: It is not about retirement in every case. It may be that the forecast includes vacancies that we have had for a number of years. Any decision not to fill vacancies is for the line managers in the business areas. They will assess and take into account the areas that you mentioned to ensure that the volume of work is appropriate for the number of staff in their team. For example, in my team, I carry out that assessment and ensure that the workload is appropriate for my staff. Especially given the Budget position that we are in, I am fully cognisant of the pressures on staff.

Mr Carroll: Sorry. I am not sure whether that assessment has been made. I appreciate what Gavin said about his team, but has there been a wider assessment of the impact on remaining staff of how that £4·4 million of savings was made?

Mr Patrick: There has been no Department-wide assessment, but assessments would be made at business area level as to whether a vacancy needs to be filled. We now have the people and resources committee process. The pressures on teams etc would be part of the documentation that would go to that committee so that vacancies can be prioritised appropriately and a decision on filling them can be made.

Mr Carroll: Maybe, Chair, we could get some of that in writing so that we can see at what level that information is recorded.

The Chairperson (Mr O'Toole): That is fine, Gerry. No problem.

One final question from me. You mentioned the pressures on staff from the absence of a Budget. What specific pressures are you talking about?

Mr Patrick: It is about the exercises. We have not had a multi-year Budget for years, so the finance teams —.

The Chairperson (Mr O'Toole): The last time that one was signed off was 2015.

Mr Patrick: Finance teams in not just my Department but all Departments are having to do annual exercises and monitor their financial situation even more closely.

The Chairperson (Mr O'Toole): Does that create more work? The absence of both a multi-year Budget and an annual Budget means that teams in DOF have to spend more time emailing their counterparts to say, "Send me this; send me that".

Mr Patrick: There is certainly more interaction, yes. It is hard to determine how much difference it makes because it has been a while since we had a multi-year Budget. For the current exercise, we have had to revisit the data that we looked at this time last year. We then have to pick the right moment to update the forecast, because we do not want to be updating it repeatedly.

The Chairperson (Mr O'Toole): Do you mean a Department's spending forecast?

Mr Patrick: Yes, for future years. As part of the exercise, we have just submitted information on the next two years. We would not want to be updating that every month.

The Chairperson (Mr O'Toole): Is that the exercise that finished on 18 September?

Mr Patrick: Yes. Alongside that is Integr8, which I have mentioned. My team is involved in that. It is about how, as a wave-1 Department, we will implement Integr8 from 1 April.

The Chairperson (Mr O'Toole): I wonder whether the Department has made any calculation — this might be one to ask for — of the excess hours that Department of Finance officials are required to work when there is no agreed Budget. Are you aware of there being anything like that? We can bring it up with the Department.

Mr Patrick: I would not have thought so, because doing that might create more work for those teams.

The Chairperson (Mr O'Toole): It would create more work for them to find out how much extra work is being created.

Ms Forsythe: Just to build on that question: do you do hourly job codes? Do you allocate time and say, "This is how much time we are spending on budget"?

Mr Patrick: No.

Ms Forsythe: You do not have a time recording system?

Mr Patrick: No.

Ms Forsythe: Something such as that would be an extraction. Thank you.

The Chairperson (Mr O'Toole): We will release you, Gavin. Thank you very much. It has been useful. I hope that the next time you are here, you have a budget to operate to, but thank you for coming in front of us.