Committee for Finance and Personnel

Legacy Report

(a) Committee Remit, Current Membership and Powers

Powers

1. 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 (DFP) and has a role in the initiation of legislation.
2. The Committee has the power to;
   1. consider and advise on Departmental budgets and annual plans in the context of the overall budget allocation;
   2. approve relevant secondary legislation and take the Committee Stage of primary legislation;
   3. call for persons and papers;
   4. initiate inquiries and make reports; and
   5. consider and advise on matters brought to the Committee by the Minister of Finance and Personnel.

Membership

3. The Committee has eleven members, including a Chairperson and Deputy Chairperson, with a quorum of five members. The current membership of the Committee is as follows:

Mr Daithí McKay (Chairperson)
Mr David McNarry (Deputy Chairperson)
Dr Stephen Farry
Mr Paul Frew
Mr Paul Girvan
Mr Simon Hamilton
Ms Jennifer McCann
Mr Mitchel McLaughlin
Mr Adrian McQuillan
Mr Declan O’Loan
Ms Dawn Purvis

(b) Committee Achievements

Acceptance of Committee Recommendations

4. Throughout the course of the mandate the Committee has made a range of recommendations to the Department of Finance and Personnel (DFP) through its reports on legislation, draft budgets and the budget process; and as a result of the outcome of inquiries into policy and public expenditure issues. By the end of January 2011, out of a total 197 recommendations arising from formal Committee reports, almost 80% were accepted by the Department. A further 12% were rejected, while just over 8% were categorised as “still under consideration” or for consideration by the Executive. Of those recommendations that have been accepted by DFP, almost one third have been implemented by the Department.
5. Further recommendations were made to DFP and the Executive in reports agreed between January 2011 and the end of mandate, including the Committee’s co-ordinated report on the Executive’s Draft Budget 2011-15, which are not included in the aforementioned figures. Moreover, numerous other proposals have been made in routine communication with the Department throughout the course of the mandate, which are also not included in this analysis.

Budget Scrutiny

6. The Committee for Finance and Personnel has a unique role in leading the Assembly’s scrutiny of the Executive’s Budget and expenditure. This includes co-ordinating consultation responses on draft budgets and spending plans with the other statutory committees and leading Assembly debates. The Committee must also confirm that there has been appropriate consultation with it on the public expenditure contained within each of the Budget Bills brought forward by the Executive. During this mandate the Committee has agreed the following co-ordinated reports:
   • Report on the Executive’s Draft Budget 2008-11;
   • Submission to the Executive’s Strategic Stocktake of the Budget Position for 2009-10 and 2010-11;
   • Report on the Review of 2010-11 Spending Plans for NI Departments; and
   • Report on the Executive’s Draft Budget 2011-15.
7. As well as putting forward key recommendations relating to spending plans at both strategic and departmental level, each report included proposals for improving the Budget process.

Preliminary Inquiry into Efficiency Savings

8. The Committee completed this exercise in June 2010 in anticipation of the coming period of exceptional budgetary constraint for the local public sector. The inquiry findings were informed by expert evidence, including from witnesses with experience of efficiency programmes in other jurisdictions. In its guidance on the preparation of departmental savings plans as part of the Budget 2010 process, DFP advised departments to take note of the Committee’s report recommendations.

Inquiry in to the Role of the Assembly in Scrutinising the Executive’s Budget and Expenditure

9. During the course of the mandate the Committee undertook a three-stage inquiry aimed at maximising the Assembly’s contribution to the Executive’s budget process and enhancing the role of Assembly statutory committees and members in budget and financial scrutiny. The final report of the Inquiry was completed before the end of mandate and has identified a range of practical measures to improve future budget scrutiny. These include: potential changes to the budget process and to Assembly standing orders to ensure that committees are provided with sufficient information and time to examine budgetary proposals; and potential resource improvements to support Assembly statutory committees and Members in undertaking budget and financial scrutiny.

Public Procurement Policy and Practice

10. In February 2010 the Committee reported on its major Inquiry into Public Procurement Policy and Practice in NI. The Committee made over 40 recommendations to DFP on improving policy and processes; maximising social benefit; building capacity for purchasers and suppliers; collaborative procurement; minimising litigation; and strengthening governance arrangements. In March 2011 the Committee received an update from Central Procurement Directorate (CPD) on its progress in implementing the recommendations. Actions that have been taken or are underway include:
    • a revised definition of “best value for money” which includes consideration of social and environmental outcomes alongside cost;
    • standardisation of the pre-qualification process;
    • revised guidance to help reduce barriers for small and medium-sized enterprises (SMEs) and social economy enterprises (SEEs); and
    • greater use of social clauses in construction contracts, including the recruitment of apprentices.
11. In addition, arising from Committee recommendations on the reaccreditation of Centres of Procurement Expertise (CoPE), CPD indicated in March 2011 that the accreditation process is being reviewed, including consideration of what action can be taken in the event of the failure of a CoPE.

Rating Reform

12. In November 2007 the Committee made a comprehensive response to the Executive’s 2007 Review of the Domestic Rating System. Throughout the course of the mandate the Committee has witnessed the implementation of a number of the recommendations from its report, through the Rates Amendment Bill and a range of associated statutory rules. As a result of the early engagement between the Committee and DFP in this area, the subsequent Bill was able to proceed by accelerated passage. Key areas of influence included:
    • rating of vacant domestic properties;
    • education and training relief;
    • clear differentiation between regional and district rates in billing (revised format of information for rates bills);
    • single pensioner discount;
    • uptake of rate reliefs with focus on the work of Access to Benefits; and
    • improved data sharing amongst agencies.
13. The Committee also made successful representations to the Minister to provide additional relief for carers through the rating system.

Location of Public Sector Jobs

14. Early in the mandate the Committee considered the departmental response to its recommendations on Workplace 2010 and the Location of Public Sector Jobs. The Committee supported the development of an affirmative policy for the dispersal of public sector jobs but recommended that this be approached in a strategic way to maximise benefits throughout NI. The Department agreed that the issue should receive careful consideration and the then Finance Minister, Peter Robinson, commissioned an independent review to examine the case and develop policy options on the location of public sector jobs, which would enable the Executive to come to an agreed approach on the matter. This work was led by Sir George Bain and the subsequent Independent Review of Policy on the Location of Public Sector Jobs is currently with Executive Ministers for consideration. The Committee has continued to highlight this work in its reports into public sector efficiencies and on the Executive’s draft Budget 2011-15, particularly in relation to the NICS home-working policy.

Senior Civil Service Pay & Bonuses

15. In December 2008, following concerns identified through scrutiny of the Senior Civil Service (SCS) pay award for 2007, the Committee called for an external review of the SCS pay system. In June 2009 the Finance Minister subsequently announced this review, which was undertaken by the Review Body on Senior Salaries (SSRB). A number of the recommendations from the Review Report, published in August 2010, reflect the concerns raised by the Committee including that:
    • pay should be aligned to the local labour market and economic circumstances;
    • the bonus scheme should be discontinued;
    • pay awards are subject to independent review; and
    • performance-related rewards for senior civil servants in under-performing organisations should be restricted or suspended.
16. The Committee also raised a number of concerns with some of the other Review recommendations, as alluded to later.

Programme for Government/Public Service Agreements

17. During its regular scrutiny of the Department’s performance against Public Service Agreements (PSAs), as contained in the Programme for Government, and DFP Business Plan targets, the Committee identified discrepancies between DFP’s account of its own performance and that reported in the End-Year Delivery Report by OFMDFM. Members informed the Public Accounts Committee (PAC) of their concerns, and this was subsequently reflected in a PAC report on PSAs, published in September 2009. As a consequence, the Department amended its performance reporting system and the Committee continued to scrutinise DFP performance throughout the year.

Building Regulations

18. In June 2008, the Committee reported on the Building Regulations (Amendment) Bill. The Committee had a considerable impact on the outcome of this bill and made 15 recommendations in its report, all of which were accepted and 9 of which have already been implemented. These include:
    • an amendment to clause 2 of the Bill;
    • that the Code for Sustainable Homes be used to inform the guideline documents;
    • the introduction of formal protocols covering both the publication of the basis for appeal decisions and the turnaround time for such decisions;
    • a review and an assessment of the effectiveness of the present appeals mechanism;
    • that DFP brings forward legislation to close a loophole which allows building to an outdated standard;
    • that more formal north-south and east-west arrangements for coordinating policy are established;
    • that additional measures aimed at reducing the carbon footprints of buildings be implemented; and
    • that building regulations are used to promote and encourage zero carbon buildings.
19. Aside from scrutiny of legislation the Committee has had influence in other areas of building regulations policy including:

(i) MENCAP Changing Places Campaign

20. In June 2009 the Committee took evidence from representatives of Mencap on its Changing Places Campaign, which called for toilets that cater for people with severe disabilities to be installed in all large public places in the UK. The Committee fully supported the Changing Places Campaign and wrote to the Minister asking that the necessary amendments be made to building regulations. The Chairperson also wrote to the Speaker recommending that the Assembly Commission make a Changing Places facility available within Parliament Buildings.
21. DFP has since been actively engaging with Mencap, which has been reviewing the Changing Places standard; and, in the latest revision of Technical Booklet R “Access to and use of buildings”, the Department provided an illustration of a Changing Places facility outlining the size, layout and fittings to be installed where such a facility is to be provided in a building. This revision went out for public consultation as part of a wider exercise in November 2010.
22. The provision of a Changing Places facility within Parliament Buildings was agreed by the Assembly Commission in October 2010 and it is expected that this work will take place during the dissolution period.

(ii) Provision of Carbon Monoxide Alarms

23. In September 2010 members wrote to DFP to enquire whether consideration has been given to including regulations relating to gas installation and carbon monoxide alarms within current building regulations. The Minister notified the Committee on 10 March 2011 that he has accepted that there would be merit in setting a requirement to provide a carbon monoxide alarm where a combustion appliance is to be provided in a new dwelling and also where a new or replacement appliance is to be installed in an existing dwelling. The policy proposal will be submitted to the incoming Committee for scrutiny in the new mandate, along with a number of other proposed amendments to the building regulations.

(c) Committee Approach

Evidence-based approach

24. The Committee has adopted an evidence-based approach to its work, in terms of supporting its scrutiny and ensuring that it reached an informed position on issues. This has included commissioning preliminary and follow up research on a wider range of issues from Assembly Research & Library Service, which has drawn upon comparative data from other jurisdictions as appropriate. Also, in addition to following the conventional approach of publicly calling for written submissions and holding oral hearings from stakeholders and interested parties, the Committee has actively sought evidence from expert witnesses, both locally and from other countries, to inform its investigations. The Committee has often found it useful to collect and bank information and evidence for subsequent application in the formulation of outputs and formal reports at a later date.

Stakeholder Involvement

25. The views of stakeholders have been vital to informing the Committee position on issues before it. The Committee’s Public Procurement Stakeholder Conference in 2009 was an example of an innovative approach to gathering evidence. This event attracted around 100 participants, representing government purchasing bodies, small and medium sized enterprises and umbrella bodies. The format of the event, which was professionally facilitated, included breakout sessions, short inputs from recognised procurement commentators and digi-voting on priorities and recommendations. Output from the Conference added value to the evidence base of the Inquiry into Public Procurement. Following completion of the Inquiry all those who had participated and given evidence were invited to comment on the Committee’s findings and recommendations. There was overwhelming support for the Committee’s recommendations across the spectrum of stakeholders.
26. More recently the Committee has issued its Report on the Executive’s Draft Budget 2011-15 to all stakeholders who provided evidence and the incoming Committee may wish to review any feedback received, which could inform its future work programme.

Collaboration with other Committees

27. Where appropriate, the Committee has worked collaboratively with other statutory committees. This has included sharing relevant information on cross-cutting matters and also working with individual committees on matters of joint concern. Recent examples include the formal concurrent meetings with the Committee for Enterprise, Trade and Investment (CETI) on banking issues, particularly with regard to the difficulties faced by local small and medium sized enterprises in accessing finance facilities. The Committee has also worked collaboratively with CETI on the case for reducing the rate of corporation tax in NI and the implementation of the INTERREG IVA programme, through tabling joint motions for debate on these issues and also through a series of informal meetings.
28. The Committee also met concurrently with the Committee for Regional Development in February 2009 to take evidence from the Economic Research Institute for NI on the impact of the economic downturn on NI.
29. The Committee has also sought to learn from the experience of other legislatures through both formal evidence sessions, particularly in relation to the Inquiry into the Role of the Assembly in Scrutinising the Executive’s Budget and Expenditure; and also informally with representatives of the House of Lords Committee on the Barnett Formula and the Westminster Treasury Committee on the Banking Crisis.

Approach to working with the Department

30. Throughout the mandate the Committee has sought to work constructively with the Minister and departmental officials, with a view to maximising its influence and ensuring the most effective outcomes.
31. The contribution of the Committee was acknowledged by the DFP Permanent Secretary in a letter received by the Committee on 23 February 2011. The Permanent Secretary thanked the Committee for its valuable contribution in advising and assisting the Department in the formulation of policies and acknowledged the good working relationship that has developed between departmental officials and members and between departmental officials and the Committee secretariat. All are keen to ensure that this constructive way of working continues into the next mandate.

(d) Issues and matters for consideration by incoming committee

Monitoring the Implementation of the Committee Recommendations

32. The incoming Committee may wish to prioritise the recommendations that it makes to the Department so that it can highlight those which it considers require most urgent attention.

Report on the Executive’s Draft Budget 2011-15

33. The Committee made 45 recommendations to the Department and the Executive in its report on the Executive’s Draft Budget 2011-15, which was agreed on 16 February 2011. Many of the recommendations relate to medium and longer-term issues. Under normal circumstances departments must respond to recommendations contained within a Committee reports within eight weeks. As this falls within the dissolution period the next Committee may wish to consider the Department’s response to the Report as a matter of urgency in the new mandate. The new Committee may want to pay particular attention to the alignment of the agreed budgetary proposals with the Programme for Government that will be forthcoming in the new mandate.
34. As alluded to above, the Committee has issued its report to the stakeholders who provided written and oral evidence for comment and the new Committee may also wish to consider any stakeholder feedback received in addition to the Department’s/Executive’s response to the public consultation on the Draft Budget 2011-15.

Budget Bill No. 2

35. One of the first tasks of the incoming Committee will be to consider a request from DFP for accelerated passage of the Budget Bill which will give effect to the Executive’s spending plans for 2011-12, as agreed by the Assembly on 9 March 2011. Under Standing Order 42(2) the Committee must signal that it is satisfied that there has been appropriate consultation with it on the public expenditure proposals contained within the Bill. The new Committee may wish to take the Department’s response to the Committee’s Report on the Executive’s Draft Budget 2011-15 into account when considering the request for accelerated passage.

Efficiency Savings

36. The Committee reported on the findings of its Preliminary Inquiry into Public Sector Efficiencies in June 2010. While the focus of the Committee’s work in the 2010-11 session was on the proposals arising from the Executive’s draft Budget 2011-15, given the scale of savings required over the four year budgetary period there remains scope for the incoming Committee to undertake a more detailed examination of this subject.

Inquiry into the Role of the Assembly in Scrutinising the Executive’s Budget and Expenditure

37. The new Committee may wish to familiarise itself with the action plan associated with DFP’s Review of the Executive’s 2008-11 budget process, together with the progress made in implementing the recommendations arising from the Committee’s Second Inquiry Report. It may also wish to engage closely with DFP on the planned Review of Financial Process.
38. As it was agreed at the end of the mandate, the Committee did not have the opportunity to pursue any of the recommendations arising from the Third Inquiry Report, which aim to improve the process, procedures, resources and approaches for budget scrutiny by Assembly committees. Members recommend that the new Committee takes this forward as a priority early in the next mandate.

Rating issues

(i) Industrial derating

39. The incoming Committee may wish to ensure that DFP explores fully the possibilities for reinvesting the savings gained by manufacturing businesses through industrial derating in skills, training and research for the sector and, looking further ahead, the alternative options to industrial derating, given that it has been recognised as a “blunt instrument”.

(ii) Land and Property Services

40. Land and Property Services (LPS) performs a vital role, collecting almost £1bn in rates each year, and the Committee has raised concerns around whether a firm budgetary baseline has been established for the Agency going forward. The new Committee may wish to monitor the situation in this regard and may also wish to continue scrutiny of progress against the recommendations arising from both the PEDU review of LPS and the PAC report, and improvements in the collection of rate arrears.

(iii) Calculation of the Penny Product

41. Concerns were raised by members regarding the difficulties that significant differences between the Estimated Penny Product (EPP) and the Actual Penny Product (APP) have for local councils. The new Committee may wish to examine similar processes in other jurisdictions to determine how stability can be built into this process.

Public Procurement

42. While the Department has made good progress in implementing the Committee’s recommendations arising from the Inquiry into Public Procurement, there are a number of key areas which the incoming Committee may wish to monitor during the next mandate. These include, for example, the application of the revised definition of “best value for money”, application and evaluation of social clauses, the approach of the Procurement Board to framework agreements, and the process for reaccrediting Centres of Procurement Expertise.

Senior Civil Service Pay & Bonuses

43. While welcoming the progress made up to August 2010 in reviewing the SCS pay system, there are a number of areas which the incoming Committee may wish to ensure that this matter is addressed. This includes:
    • progress towards implementation of the SSRB recommendations; and
    • key concerns arising from the Committee’s consideration of the SSRB report, including matters not specifically addressed by the Review, such as the complement of SCS posts across departments and public bodies.

Equal Pay

44. The Committee has monitored the implementation of the NICS Equal Pay settlement throughout the last two sessions of the mandate. Members are concerned at a number of apparent anomalies that have arisen from the settlement and the position in respect of a number of groups which appear to be omitted from the settlement, including: PSNI civilian staff; secondees to other public bodies/agencies; staff in Arm’s Length Bodies which mirror NICS terms and conditions; and retired civil servants. The Committee recommends that its successor Committee pursues these issues in respect of DFP’s role.

Dormant Accounts

45. The Dormant Accounts scheme is a Treasury-led initiative which will allow for dormant funds locked in bank or building society accounts to be used for social or environmental purposes, for the benefit of society. The funds will be apportioned for spend in England, Scotland, Wales and NI based on population share.
46. A consultation to establish the NI spending priorities was undertaken by DFP in 2009, and a summary of responses subsequently provided to the Committee; however, no final decisions regarding the spending priorities has yet been made. The Cabinet Office has recently undertaken a consultation on the apportionment process, which should provide more certainty about the likely amount of funding available for distribution, and will in turn inform the spending priorities.

Local Financial Sector

47. Whilst banking regulation is a reserved matter the Committee remains concerned about the relationship between local SMEs and the banking sector. The Committee has supported the Minister of Finance and Personnel in his engagement with the British Bankers’ Association (BBA) and has welcomed the commitment from the BBA to provide NI specific lending data on SMEs on a quarterly basis. The Committee recommends that the incoming Committee continues to closely monitor this situation and also takes time to explore options for developing a formal trilateral arrangement between the banking sector, the Executive and local businesses.

Civil Law Reform

48. At the close of this mandate matters relating to Civil Law still fell within the remit of DFP. In the event that this area in not transferred to the Department of Justice early in the next mandate, the incoming Committee will, at an early stage, need to consider the NI Law Commission’s work programme to establish potential policy reviews and bills coming to the Committee during the mandate.

Advice from the NI Human Rights Commission on legislation

49. Following an evidence session with the NI Human Rights Commission on the Damages (Asbestos-Related Conditions) Bill, the Committee subsequently wrote to the Minister asking that he highlight to the Executive the value of early engagement by departments with the Commission on legislative proposals. It was also suggested that the declaration on Human Rights compliance in the explanatory and financial memorandum of any forthcoming legislation to the Assembly be accompanied by an appropriate explanation.
50. The Committee copied the correspondence to the Chairpersons’ Liaison Group (CLG) for consideration but, due to time constraints, CLG was not able to consider this before dissolution. This is a cross-cutting matter that the incoming Committee may wish to pursue at the start of the new mandate.

Other potential issues to be scheduled:

51. Other matters of interest which the incoming Committee may wish to consider for further scrutiny include:
    1. further implementation of European funding programmes, including successor programmes – INTERREG V and PEACE 4;
    2. output of Census 2011;
    3. Enterprise Shared Services – continued focus on achieving efficiencies; measuring outcomes against agreed baselines; and exploring scope for further rolling out of shared services;
    4. progress on the case for devolving corporation tax varying power to the Assembly;
    5. Review of Data Security; and
    6. implementation of rating measures announced in Budget 2011-15.

Appendix 1

Committee for 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 during the current mandate has been as follows:

Mr Daithí McKay (Chairperson) ¹
Mr David McNarry (Deputy Chairperson) ²
Dr Stephen Farry
Mr Paul Frew ³
Mr Paul Girvan ⁴
Mr Simon Hamilton ⁴
Ms Jennifer McCann ¹
Mr Mitchel McLaughlin
Mr Adrian McQuillan
Mr Declan O’Loan
Ms Dawn Purvis

¹ Mr Daithí McKay replaced Ms Jennifer McCann as Chairperson on 19 January 2011, having replaced Mr Fra McCann on the Committee on 13 September 2010. Ms McCann replaced Mr Mitchel McLaughlin as Chairperson on 9 September 2009.

² Mr David McNarry was appointed Deputy Chairperson on 12 April 2010 having replaced Mr Roy Beggs on the Committee on 29 September 2008.

³ Mr Paul Frew joined the Committee on 13 September 2010; Mr Ian Paisley Jr left the Committee on 21 June 2010 having replaced Mr Mervyn Storey on 30 June 2008.

⁴ Mr Paul Girvan replaced Mr Jonathan Craig on 13 September 2010; Mr Jonathan Craig had been appointed as a member of the Committee on 13 April 2010. Mr Peter Weir left the Committee on 12 April 2010. Mr Peter Weir had replaced Mr Simon Hamilton as Deputy Chairperson on 4 July 2009. Mr Simon Hamilton replaced Mr Mervyn Storey as Deputy Chairperson on 10 June 2008.

Appendix 2

Committee for Finance and Personnel

Meetings & Visits

¹ Session ran May 2007 to August 2007

² Session ran from September 2010 to date of dissolution 24 March 2011

Bills

Statutory Rules

Committee Inquiries

Committee Reports (excluding Bill and Inquiry reports)

Budget Scrutiny

Primary Legislation Scrutiny