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Committee for Finance and Personnel Submission to the Executive's Session 2008/2009 Second Report Committee for Finance and Personnel Submission to the Executive’s Strategic Stocktake of the Budget Position for 2009/10 & 2010/11 Together with the Minutes of Proceedings of the committee relating to the report, written submissions, memoranda and the minutes of evidence Ordered by The Committee for Finance and Personnel to be printed 3 December 2008 Report: 20/08/09R Committee for Finance and Personnel This document is available in a range of alternative formats. For more information please contact the Northern Ireland Assembly, Printed Paper Office, Parliament Buildings, Stormont, Belfast, BT4 3XX Tel: 028 9052 1078 Membership of Powers Powers The Committee for Finance and Personnel is a Statutory Departmental Committee established in accordance with paragraphs 8 and 9 of the Belfast Agreement, Section 29 of the Northern Ireland Act 1998 and under Assembly Standing Order 48. The Committee has a scrutiny, policy development and consultation role with respect to the Department of Finance and Personnel and has a role in the initiation of legislation. The Committee has the power to; . consider and advise on Departmental budgets and annual plans in the context of the overall budget allocation; . approve relevant secondary legislation and take the Committee Stage of primary legislation; . call for persons and papers; . initiate inquiries and make reports; and . consider and advise on matters brought to the Committee by the Minister of Finance and Personnel. Membership The Committee has eleven members, including a Chairperson and Deputy Chairperson, with a quorum of five members. The membership of the Committee since its establishment on 9 May 2007 has been as follows: Mr Mitchel McLaughlin (Chairperson) Mr Simon Hamilton (Deputy Chairperson) Dr Stephen Farry Mr Fra McCann Ms Jennifer McCann Mr David McNarry** Mr Adrian McQuillan Mr Declan O’Loan Mr Ian Paisley Jnr* Ms Dawn Purvis Mr Peter Weir * Mr Ian Paisley Jnr replaced Mr Mervyn Storey on the Committee on 30 June 2008. ** Mr David McNarry replaced Mr Roy Beggs on 29 September 2008. Table of Contents List of Abbreviations used in the Report Report Executive Summary Introduction Strategic and Cross-cutting Issues Departmental Stocktake Positions Conclusion Appendix 1 Department of Finance and Personnel (DFP): Background to the Budget 2009-11 Strategic Stocktake Appendix 2 DFP: Letter following the Minister’s meeting with the Chairperson and Deputy Chairperson of the Committee Appendix 3 – Written Submissions from Statutory Committees Committee for Agriculture and Rural Development Committee for Culture, Arts and Leisure Committee for the Environment Committee for Enterprise, Trade and Investment Committee for Health, Social Services and Public Safety Committee for Regional Development Committee for Social Development Appendix 4 DFP: Departmental Financial Planning 2009/10 and 2010/11 – Strategic Stocktake Review Appendix 5 DFP: Public Expenditure: 2008 Strategic Stocktake Appendix 6 – Minutes of Evidence 15 October 2008 Role of DFP’s Central Expenditure and Supply Divisions in Overseeing Public Expenditure 26 November 2008 Overview of Issues Emerging from Strategic Stocktake 2009-11 Appendix 7 DFP Press Release: Dodds Welcomes Measures in Pre-Budget Report to Stimulate the UK Economy Appendix 8 Executive Press Release: 20 November 2008 – Executive back in business and making a difference Appendix 9 DFP: Chancellor’s Pre-Budget Report 2008 Appendix 10 – Minutes of Proceedings (extracts) 15 October 2008 22 October 2008 5 November 2008 12 November 2008 19 November 2008 26 November 2008 3 December 2008 (unapproved) List of Abbreviations used in the Report APD Air Passenger Duty Br Brucellosis CSR Comprehensive Spending Review DA Devolved Administrations DARD Department of Agriculture and Rural Development DBFO Design Build Finance Operate DCAL Department of Culture, Arts and Leisure DE Department of Education DEL Department for Employment and Learning DETI Department of Enterprise, Trade and Investment DFP Department of Finance and Personnel DH Department of Health (UK) DHSSPS Department of Health, Social Services and Public Safety DoE Department of the Environment DoH Department of Housing DRD Department for Regional Development DSD Department for Social Development ESA Education and Skills Authority EU European Union EYF End Year Flexibility GB Great Britain GDP Gross Domestic Product HMRC Her Majesty’s Revenue and Customs HMT Her Majesty’s Treasury HSENI Health and Safety Executive Northern Ireland ISNI Investment Strategy for Northern Ireland MLA Member of the Legislative Assembly NI Northern Ireland NICS Northern Ireland Civil Service NIE Northern Ireland Electricity NILGOSC Northern Ireland Local Government Officers Superannuation Committee NIR Northern Ireland Railway NITHC Northern Ireland Transport Holding Company NIW Northern Ireland Water OFMDFM Office of the First Minister and deputy First Minister PBR Pre-Budget Report PfG Programme for Government PPP Public Private Partnership PPS Planning Policy Statement PSA Public Service Agreement PSO Public Service Obligation PTU Permit to Use RVH Royal Victoria Hospital SME Small Medium-sized Enterprise TB Tuberculosis UK United Kingdom VAT Value Added Tax VED Vehicle Excise Duty Executive Summary This report presents a co-ordinated submission by the Assembly statutory committees to the NI Executive’s Strategic Stocktake of the Budget position for 2009/10 and 2010/11. The Executive decided in March 2008 that a Strategic Stocktake would be undertaken in place of a comprehensive local Budget process for 2008/09. The main emphasis of the Stocktake would be to assess the overall financial position in advance of the 2009/10 in-year monitoring process. The terms of reference for the exercise indicated that it would include a review of departmental progress against plans, the identification of reduced requirements and emerging pressures for the next two years and proposals for addressing the pressures through adjustments to existing plans and priorities. In addition to co-ordinating the views of the statutory committees on the Strategic Stocktake, the Committee for Finance and Personnel (CFP) has given some initial consideration to the implications for NI of both the Chancellor’s Pre-Budget Report and the recent financial settlement between the Executive and the Treasury. A range of budgetary concerns, both at a cross-cutting and a departmental level, arise from the submissions of the statutory committees and from the evidence presented by Department of Finance and Personnel (DFP) officials. These issues have a particular resonance in the current economic and financial climate. In terms of strategic considerations, the following are highlighted in particular: . doubt as to the reliability of information in departmental submissions to the Stocktake and, thus, the evidence base upon which Executive decisions may be based; . the failure by departments to fully address the Stocktake terms of reference, in identifying significant increased requirements without setting out how they will address these through adjustments to their existing plans and priorities; . the potential for additional efficiency savings being required, in the context of possible slippage by departments in achieving existing efficiency targets; . the budget implications of not achieving previously planned asset realisations; . doubt as to the capacity of departments to deliver accelerated capital expenditure, in circumstances in which they are required to raise their standard of financial management and performance generally; . the need for clarity on the implications for departmental budgets of the Chancellor’s Pre- Budget Report and of the outworking of the recent financial settlement between the Executive and Treasury; and . general concern at the range and quantum of new and emerging pressures on existing budget allocations which remain to be addressed. The Committee considers that the economic downturn and the mounting pressures on the NI Block over the Stocktake period make it vital that the maximum impact and value for money is achieved from available resources. In the immediate term, this will require DFP to take the lead in identifying pre-emptive measures to safeguard against significant year-end underspend. The pattern of departments declaring reduced requirements late in the financial year has resulted in unacceptable levels of year-end underspend and accumulating stocks of End Year Flexibility (EYF). The Committee has previously called for an end to the ‘culture of underspend’ in departments and considers that it would be intolerable for this to continue in the current economic climate, especially given that the Executive’s access to its EYF stock is likely to be further restricted by Treasury. Going forward, the Committee will also wish to see a general improvement in the performance of the public sector in managing programmes, finances and other resources and in achieving business targets. The Committee calls on DFP and the wider Executive to consider carefully the concerns which have been raised in this submission. The Committee looks forward to the Assembly receiving the necessary clarification and assurances on these issues when the Minister of Finance and Personnel makes a statement to the Assembly on 13 January 2009. This will set out the budget position for 2009/10, as reflected in the 2008-11 Budget approved by the Assembly on 29 January 2008, in the context of the Strategic Stocktake. The Committee will subsequently
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