Finance Committee Northern Ireland Assembly Report 01/02

SESSION 2002/2003

FIRST REPORT

COMMITTEE FOR FINANCE AND PERSONNEL

The Executive's Position Report to
The Assembly: Developing The
Programme for Government and
The Budget for 2003-04

REPORT ON THE OUTCOME OF CONSIDERATION BY
THE STATUTORY DEPARTMENTAL COMMITTEES

Ordered by the Committee for Finance and Personnel to be printed on 27 August 2002.
Report 01/02 to the Northern Ireland Assembly from the Committee for Finance and Personnel on
Statutory Departmental Committees' deliberations on 'The Executive's Position Report to the Assembly:
Developing the Programme for Government and the Budget for 2003-04'.

COMMITTEE FOR FINANCE AND PERSONNEL:
MEMBERSHIP AND POWERS

POWERS

The Committee for Finance and Personnel is a Statutory Departmental Committee established in accordance with paragraphs 8 and 9 of Strand One of the Belfast Agreement and under Standing Order No. 45 of the Northern Ireland Assembly. 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 relevant primary legislation;

call for persons and papers;

initiate enquires and make reports;

consider and advise on matters brought to the Committee by the Minister of Finance and Personnel.

MEMBERSHIP

The Committee was established on 29 November 1999 with eleven members, including a Chairperson and Deputy Chairperson and a quorum of five members.

The membership of the Committee is as follows:

Mr Francie Molloy (Chairman)
Mr Roy Beggs Jnr (Deputy Chairman) (appointed in replacement of Mr James Leslie on 20 February 2002)
Mr Alex Attwood
Mr Billy Bell
Mr Seamus Close
Mr Derek Hussey
Mr Roger Hutchinson (appointed in replacement of Mr Nigel Dodds MP on 12 November 2001)
Ms Patricia Lewsley (appointed in replacement of Mr Donovan McClelland on 15 January 2001)
Mr Alex Maskey
Mr Maurice Morrow (appointed in replacement of Mr Peter Robinson MP on 12 November 2001)
Mr Peter Weir

Executive Summary

Introduction

1. General.

2. Budget process

The Public Spending Framework

3. Indicative figures for 2003/04.

4. Implications of the Barnett Formula

Consultation

5. Process and timetable.

Scrutiny and Monitoring by Departmental Committees

6. In Year Scrutiny 11

7. In Year Monitoring

8. End Year Scrutiny

9. End Year Monitoring

Executive's Position Report - Resource Issues

10. Context.

11. Questions posed in the Executive's Position Report.
Using resources more effectively.
Financing our future.
Executive Programme Funds.
Public Procurement.
Administrative Costs.
Use and disposal of assets.
E Government.

Executive's Position Report - Departmental Issues for 2003/04 and beyond

12. Common themes and major strategic issues.

13. Questions posed in the Executive's Position Report.
Pressures and easements.
Rises in pay and prices.
Administration costs.

Conclusions

14. General

Appendices

APPENDIX 1. Minutes of Proceedings of the Committee relating to the Report

APPENDIX 2. Commissioning Letters and Related Documents.

APPENDIX 3. Responses from Committees.

EXECUTIVE SUMMARY

COMMITTEE FOR FINANCE AND PERSONNEL RECOMMENDATIONS

The Committee for Finance and Personnel agreed to collate Assembly Committee responses to the Executive's Position Report on the resource and Budget issues. The Committee has carefully considered the strategic and departmental issues arising from committee responses and makes the following recommendations for consideration: -

Recommendations to the Executive Committee

1. The Committee recommends that adequate time should be provided for a full Assembly debate, initiated by the Executive, on the Needs and Effectiveness Evaluations.

2. The Committee recommends that some rationalisation is urgently required to reduce the number of strategic documents and to potentially amalgamate SDAs and strategic planning documents. The Committee would like to see a greater focus on a few key documents set within an agreed framework around the PfG and the Budget.

3. The Committee recommends that while there is no lack of material available to committees to facilitate the scrutiny process, early action should be taken to rationalise information flows to committees from departments. The Committee would wish to see a solid and coherent financial process established and for all committees to receive timely, relevant and appropriate financial information throughout the financial cycle.

4. The Committee for Finance and Personnel is concerned about the percentage of resource underspends in the 2001/02 financial year and the rate of increase in the last two financial years. The Committee recommends that departments and DFP should actively engage in identifying areas of consistent underspend. This information, provided at the earliest opportunity in the financial year, would enable committees to focus their scrutiny on departmental resource allocations against planned activities and outcomes and contribute to effective targeting of resources against high priority areas.

5. The Committee recommends that further consideration should be given to the format and content of Departmental Position and Executive Position Reports to enable Committees to give a more informed response. Consultation with committees and adequate but focussed information is essential if the recent and welcome improvements in the financial planning process are to bear fruit.

6. The Committee considers that there is currently a lack of clarity about the respective roles of the Strategic Investment Body and the Procurement Board and recommends that clear guidance from the Executive on this issue should issue as a matter of urgency. The Committee would also like to have clarification on which committee will be responsible for scrutinising the Strategic Investment Body.

7. The Committee recommends that all departments should be addressing efficiency and effectiveness issues through designated Business Improvement Units. The Committee also recommends that the work of the Improvement Units should be co-ordinated by DFP with the potential for involvement of the Economic Policy Unit. The lessons learnt should be shared through a co-ordinated inter-departmental body chaired by DFP. The conclusions of the inter-departmental group should be made available to committees to inform their views on the competing demands of departments for resources.

8. The Committee recommends that efficiency savings identified by Central Finance Group, Central Personnel Group and Corporate Services of the Department of Finance and Personnel are validated by Departments, particularly before they are submitted as part of bids for additional resources. Evidence of consultation should be required as standard.

9. The Committee recommends that the Executive should develop and introduce an asset management strategy as soon as possible. The Committee also recommends that guidance should be issued by the Executive to departments on departmental investment strategies including advice on monitoring and control systems. Relevant Assembly committees should be consulted on both sets of guidance.

10. The Committee has concerns about the potential for wastage through the replication of high project costs on individual departmental computerisation projects and recommends the need for a co-ordinated interdepartmental approach to procurement and systems development.

Recommendations to Assembly Committees

1. The Committee recommends that all committees should set aside planned time for financial scrutiny of departmental expenditure against expected outcomes. The Committee believes that this approach is essential if committees are to make a telling and informed input to the budget debate.

2. The Committee recommends that all Assembly departmental committees include scheduled scrutiny of their departments' financial positions in advance of Monitoring Round statements by the Minister of Finance and Personnel.

INTRODUCTION

1. General

1.1 The Minister of Finance and Personnel, Dr Sean Farren, made a statement to the Assembly on 4 March 2002 regarding the Budget 2002 timetable and arrangements on behalf of the Executive Committee. The Minister advised the Assembly and the wider public of the proposed timings for the key planning and financial events leading to the Executive's Budget in December 2002. A copy of the Minister's statement is presented in this Report as Appendix 2A.

1.2 In his statement the Minister said that he welcomed the suggestions which had been made to refine the Budget process. Among those suggestions were recommendations made by the Committee for Finance and Personnel in its Report on the considerations by Assembly committees of the Executive's Position Report last year.

1.3 The Committee for Finance and Personnel welcomes the Minister's positive response to its recommendation that Assembly Committees should be involved earlier in the Budget process.

2. Budget Process

2.1 The first stage of the process was the copying of draft Departmental Position Reports to Assembly committees for consultation and scrutiny. No consultation on Departmental Position Reports was available in the previous Budget cycle. The Minister advised the Assembly that Departments had been issued guidance to consult with Assembly committees on Departmental Position Reports before they were submitted to the Central Finance Group in the Department of Finance and Personnel and the Economic Policy Unit in the Office of the First Minster and Deputy First Minister.

2.2 The Minister of Finance and Personnel set the completion date for consultation and final presentation of Departmental Position Reports as 19 April 2002.

2.3 The Minister of Finance and Personnel accepted that the Chancellor of the Exchequer's announcement on the outcome of his Spending Review 2002 in the third week of July 2002 could lead to consequential allocations under the Barnett Formula. Departments and Committees would not have an opportunity to comment on this announcement in this report but could do so later in the process.

2.4 On 5 June 2002 the First Minister and Deputy First Minister presented the Executive's Position Report to the Assembly. Their statement is included as Appendix 2B.

2.5 The First Minister and Deputy First Minister wrote to Assembly committees requesting views on the resource aspects of the Executive's Position Report by mid - August (see Appendix 2C). The Committee for Finance and Personnel agreed, as in previous years, to co-ordinate committees' responses to the Minister of Finance and Personnel into a single report. This Report presents that response.

THE PUBLIC SPENDING FRAMEWORK

3. Indicative figures for 2003/04.

3.1 The Position Report highlighted the amount of money available to the Executive for 2003/04. This baseline was first set in the 2000 Spending Review. The figures have been revised to take account of technical adjustments and the Chancellor of the Exchequer's April 2002 Budget and converted to Resource Accounting and Budgeting (RAB) classifications. The Departmental Spending Limit (DEL) is as follows [i]

	Total DEL (£ Million)
	2002/03	2003/04
December 2001 Budget Position	6,119.4	6,419.2
Technical Transfers	1.2	1.5
SR2000 Baseline Adjustment		-22.0
RAB 2 Stage Conversion	866.9	899.5
Transfer to AME	-91.6	-92.3
Chancellor's Budget Additions	10.3	73.6
Revised DEL	6,906.3	7,269.5

3.2 When the Assembly agreed the Budget presented by the Executive in December 2001, it set indicative minima for Departments for the 2003/04 financial year. This approach was taken to offset the possibility of limited increases in public expenditure in 2003/04 from Treasury. The Executive would thereby retain a significant degree of flexibility to allow it to effectively target its resources to reflect local needs and priorities. The amount of resources held back through the Executive's SR 2002 allocation was £125m.

3.3 The Executive has earmarked the £73.6m unallocated resources from the Chancellor's April 2002 Budget for the Department of Health, Social Services and Public Safety.

3.4 The Executive has recognised that it will be necessary to restore some of the £125m held back from Departmental baselines for 2003/04 but this approach allows it to be more flexible in moving resources from lower to higher priority areas.

3.5 The Executive also retains unallocated ring-fenced resources in its Executive Programme Funds.

3.6 The resources available to each Department as set by the indicative minima and the unallocated resources held back by the Executive are detailed below.

2003/04	£Million
Agriculture and Rural Development	220.7
Culture, Arts and Leisure	87.6
Education	1,407.3
Employment and Learning	630.9
Enterprise, Trade and Investment	266.0
Finance and Personnel	144.2
Health, Social Services and Public Safety	2,792.4
Environment	114.8
Regional Development	896.7
Social Development	535.5
Office of the First Minister and Deputy First Minister	32.8
Northern Ireland Assembly	52.2
Other Departments	6.7
Total of Departments	7,187.7
Executive SR 2002 Allocation	125.7
Unallocated Executive Programme Funds	115.6
Regional Rates and Other Items	-233.1
Unallocated April 2002 Budget Allocations	73.6
Total Other DEL	81.8

Total Overall DEL	7,269.5

4. Implications of the Barnett Formula

4.1 The Committee notes that spending per head of population in Northern Ireland is substantially higher than in England. The Committee agrees with the Executive view that this is misleading as no account is taken of relative need, lack of absolute comparability between central government and local government spending areas and the particular characteristics present in Northern Ireland that are not present in England. Differences such as the higher levels of social deprivation and the relative size of the school population indicate a higher level of need for resources to meet the needs of Northern Ireland to the level present in England.

4.2 The Committee has been sensitive to the difficult issues that Barnett raises for the Executive and has been content to await the outcome of Executive discussions with HM Treasury. The Committee welcomes the completion of the Needs and Effectiveness Evaluations and hope that these will provide the detail to make a successful case for more resources. The Committee will be looking to the Executive to provide an update on the discussions with Treasury during a debate on the Needs and Effectiveness Evaluations.

CONSULTATION

5. Process and timetable.

5.1 The Northern Ireland Executive began the process to deliver its Programme for Government and Budget for the 2003/04 financial year on 4 March 2002. The Minister of Finance and Personnel announced a timetable leading to the presentation, debate and vote on these key documents by December 2002.

5.2 The Committee for Finance and Personnel had pressed for earlier consultation between departments and committees before priorities were set and bids submitted. The Committee therefore welcomed the Minister of Finance and Personnel's decision to require departments to consult committees on Departmental Position Reports (DPRs) before submission to the Central Finance Group (CFG) and the Economic Policy Unit (EPU). The Committee recognises that this places a key responsibility on committees to provide substantive and informed input to the financial planning process.

5.3 Departmental Position Reports effectively start the annual Budget process but as the Minister of Finance and Personnel advised the Assembly, committees are free to scrutinise financial performance and budgetary issues at any stage.

5.4 The guidance issued by DFP regarding the Departmental Position Reports sought a broad analysis of how departments are delivering the Executive's priorities. At this point in the process Assembly committees have the opportunity to examine and validate their Departments' analysis. Ongoing in-year scrutiny of budgets and performance by Assembly committees would significantly enhance the scrutiny process and inform committee responses at the key planning stages. To carry out this scrutiny committees have access to Departmental and Agency Strategic and Business Plans, Public Service Agreements and Service Delivery Agreements and can request Ministers and/or departmental officials to update them on performance and financial issues (See Section 6). In addition, variation to spending plans is provided in quarterly monitoring reports by departments to the Minister of Finance and Personnel and by the Minister to the Assembly (See Section 7).

5.5 The Committee accepts that it is a key function of the scrutiny process for all committees to regularly consider and question departments about easements and pressures emerging in quarterly monitoring rounds. To this end the Committee has required DFP to provide regular briefings and updates on the position within the Department. The Committee has also successfully pressed the Minister to urgently review the in-year monitoring process to improve the level of performance in financial profiling against actual expenditure.

5.6 The Committee recommends that all committees should adopt a similar approach by setting aside planned committee time for financial scrutiny of departmental expenditure against expected outcomes. The Committee believe that this approach is essential if committees are to make a telling and informed input to the budget debate.

5.7 The second stage of the Budget process is the presentation of the Executive's Position Report to the Assembly. Responses from Assembly committees and the wider public are sought, which assists the Executive Committee to consider and agree its priorities for the Budget and the Programme for Government (PfG). Resources to address the PfG are targeted towards those priorities through the Executive's Budget. The Executive's Position Report is therefore not a decision making document but provides a vital basis for consultation whereby Departmental Ministers present the strategic issues facing their departments and make bids for resources to support those programmes.

5.8 The Minister of Finance and Personnel announced in his Budget 2001 statement that the Executive had initiated Needs and Effectiveness Evaluations in five programmes involving health, education, housing, training and vocational education and financial assistance to industry. This was later increased to six to include culture, arts and leisure. In his statement announcing the Budget 2002 timetable on 4 March 2002 the Minister of Finance and Personnel referred to the assessment by the Executive of the Needs and Effectiveness Evaluations along with the Burns Report, the Hayes and Acute Hospitals Review, the Regional Transportation Strategy, the Task Force on Long Term Unemployment, the interdepartmental work on Research and Development, proposals in relation to the Water Service and the Rural Visioning Report before the summer. These documents also provide valuable information to Assembly committees to assist them with their responses to the Executive's Position Report.

5.9 The Minister had indicated that five of the Needs and Effectiveness Evaluations would be presented to the Executive Committee in May and June 2002 and were to be released to Assembly committees before the summer recess to coincide with committees' consideration of the Executive's Position Report. However, the Needs and Effectiveness Evaluations were not available to committees before the recess and therefore committees have been able to provide only tentative analysis of performance by departments of their achievement to deliver the Executive's priorities. The Committee for Finance and Personnel considered that the delay in providing the 6 Needs and Effectiveness Evaluations inevitably restricted committees' ability to respond to the Executive's Position Report in a more informed manner. The Committee does, however, recognise that the Assembly will have an extended opportunity to scrutinise and debate the Evaluations in the period leading up to the Executives' Revised Budget in December 2002.

5.10 The Committee recommends that adequate time should be provided for a full Assembly debate, to be initiated by the Executive, on the Needs and Effectiveness Evaluations.

5.11 The Executive's Position Report is presented in four parts. Part one sets the context of the document while Part two addresses the Executive's endeavour to update its policy direction, plans and priorities for the years ahead through a revision of its Programme for Government. Part three addresses the strategic issues facing the Executive and sets out the financial resources and constraints involved with resource budgeting and the spending reviews. Part four addresses Departmental issues for 2003/04 and beyond.

5.12 Committees were asked to respond directly to the Office of the First Minister and Deputy First Minister on Part two - the Programme for Government. This Report concentrates on Part three - Resources, and Part four - Departmental issues for 2003/04 and beyond.

SCRUTINY AND MONITORING BY DEPARTMENTAL COMMITTEES

6. In Year Scrutiny

6.1 In its Programme for Government the Executive sets out in detail its plans and priorities for the coming year and beyond. The Programme for Government and Public Service Agreements contain the key objectives, outcomes and outputs that each Department is working to deliver in support of the Executive's objectives. These objectives are presented along with resource allocation figures.

6.2 In addition, Departments and Executive Agencies produce Strategic and Business Plans and Service Delivery Agreements which link to the Programme for Government and provide lower level and more detailed information on the work within departments to underpin the PfG.

6.3 The Committee has been concerned about the proliferation of strategic planning documents. For example, the apparent duplication between Departmental Service Delivery Agreements and Departmental and Agency Strategic and Business plans. The Committee recommends that some rationalisation is urgently required to reduce the number of strategic documents and to potentially amalgamate SDAs and strategic planning documents. The Committee would like to see a greater focus on a few key documents set within an agreed framework around the PfG and the Budget.

6.4 These documents collectively provide a basis for scrutiny by Assembly committees and an opportunity to focus on departmental performance and budget management and/or service provision.

6.5 The Committee for Finance and Personnel is aware that some committees are carrying out structured in-year periodical reviews of performance on business areas within their departments to assess in-year performance in achieving objectives.

6.6 By carrying out this scrutiny on an ongoing basis Assembly committees can have an input to prioritisation and targeting of resources within their departments to achieve agreed objectives and to contribute to the strategic allocation of resources in the annual Budget process. The Committee for Finance and Personnel believes that all Assembly departmental committees should include scheduled and structured in-year scrutiny of business areas within their departments.

7. In Year Monitoring

7.1 There are four Monitoring Rounds within the annual financial cycle at June, September, December and February. These Monitoring Rounds are opportunities for departments to reappraise their spending plans and to surrender surplus resources and/or bid for additional resources to meet emerging pressures or priorities.

7.2 The Executive has the discretion to retain some of those resources surrendered in Monitoring Rounds for reallocation in future years to higher priority areas than those arising in-year.

7.3 Departmental committees have the opportunity to be briefed by their departments on developing in-year financial position before Monitoring Round statements by the Minister of Finance and Personnel. By doing so Assembly committees can have an input to prioritisation of resources within their departments. This approach would avoid an excessive concentration on departmental bids by providing a balanced emphasis on outputs, VfM and the wider financial position within departments.

7.4 The Committee for Finance and Personnel is briefed by the Department of Finance and Personnel in advance of Monitoring Rounds on the financial position within the Department. Also, the Minister of Finance and Personnel briefs the Committee Chairman and Deputy Chairman in advance of Monitoring Round statements on behalf of the Executive. The Committee for Finance and Personnel recommends that all Assembly Departmental Committees include scheduled scrutiny of their departments' financial position in advance of Monitoring Round statements by the Minister of Finance and Personnel.

8. End Year Scrutiny

8.1 At the end of each financial year the Executive produces an Annual Report setting out its progress in implementing the Programme for Government. In addition, departments and agencies produce their own annual reports and accounts. These documents provide analysis of the Executive's performance against targets.

The Committee for Finance and Personnel considers that the information in these documents is a key and integral part of the wider scrutiny and monitoring process.

8.2 The Committee recommends that while there is no lack of material available to committees to facilitate the scrutiny process, early action should be taken to rationalise information flows to committees from departments. The Committee would wish to see a solid and coherent financial process established and for all committees to receive timely, relevant and appropriate financial information throughout the financial cycle.

9. End Year Monitoring

9.1 Each year the Minister of Finance and Personnel presents a provisional statement on underspends by departments. Formal approval is sought (and usually given) from Treasury to carry forward underspends into the new financial year.

9.2 In his statement to the Assembly in July 2002, the Minister of Finance and Personnel told the Assembly that the total provisional underspend figure for the 2001/02 financial year was £365m. A large proportion of that amount related to ring-fenced funds for EU Funds, Executive Programme Funds, room to manoeuvre, planned carry forward and capital. A summary of departmental underspends and comparison to the previous year, 2000/01 is presented below.

Provisional underspend figures

Department	2000/01		2001/02
	£m	% of final plan	£m	% of final plan
Agriculture	2.8	1.5	11.3	6.3
Culture, Arts & Leisure	0.9	1.5	8.6	10.9
Education	0.0	0.0	0.0	0.0
Employment and Learning	12.4	2.6	10.5	2.0
Enterprise, Trade & Investment	5.0	2.3	8.8	7.6
Finance & Personnel	3.9	4.2	5.3	5.1
Health Social Services & Public Safety	8.8	0.5	18.6	0.8
Environment	1.2	1.4	1.8	2.0
Regional Development	3.6	1.4	0.9	0.3
Social Development	6.0	3.6	7.9	2.7
Office of the First Minister & Deputy First Minister	1.1	4.4	1.8	5.8
Assembly	0.7	3.3	0.8	2.9
Small Departments	0.2	4.3	0.1	1.6
Sub Total	46.6	1.0	76.2	1.8
Capital	45.2		64.8	8.6
Education & Library Boards			28.3	2.6
Planned Carry Over	81.4		40.0
Returned to Treasury	34.7		27.6
EU Programmes	35.3		53.9
Executive Programme Funds	21.1		22.9
Room to manoeuvre	5.3		51.3
Total DEL	269.6	4.8	365	6.1

9.3 It should be noted that the provisional underspend figures for each department relate to its final plan. Other amounts below the sub-total line have been secured from Departments' baselines during the financial year.

9.4 Scrutiny of end-year underspend positions will inform Assembly committees of the level of resources which have become available to the Executive over the previous financial year and assist committees' responses to the Executive's Position Report and analysis of departments' budget management.

9.5 The Committee for Finance and Personnel is concerned about the percentage of resource underspends in the 2001/02 financial year and the rate of increase in the last two financial years. The Committee recommends that departments and DFP should actively engage in identifying areas of consistent underspend. This information, provided at the earliest opportunity in the financial year, will enable committees to focus their scrutiny on departmental resource allocations against planned activities and outcomes and contribute to effective targeting of resources against high priority areas.

EXECUTIVE'S POSITION REPORT - RESOURCE ISSUES

10. Context.

10.1 The Minister of Finance and Personnel asked Assembly Committees to "look at Departments from the widest possible context" and "not to lose sight of the full range of issues facing public services or become exclusively preoccupied with bids for additional resources".

10.2 In Part three of the Executive's Position Report several questions were specifically posed to help committees address the wider context of resources. The Committee for Finance and Personnel found this approach helpful in its deliberations but has noted that not all Assembly committees adopted this approach and have concentrated their deliberations mainly on their own departmental issues.

10.3 The Committee is concerned about the limited capacity available to committees to address the strategic and detailed questions posed. The Committee believes that the level of expectation placed on committees to provide substantive and informed views to a tight timetable on broadly drawn planning documents such as DPRs and the Executive's Position Report is unrealistic. The intervention of the summer recess adds to committees' problems.

10.4 The Committee also believe that it was a little unrealistic of the Executive to expect a substantive policy input from committees on major policy areas, which were still in the process of review and before recommendations were available in reports.

10.5 The Committee recommends that further consideration should be given to the format and content of Departmental Position and Executive Position Reports to enable committees to give a more informed response. Consultation with committees and adequate but focussed information is essential if the recent and welcome improvements in the financial planning process are to bear fruit.

10.6 The Committee is considering whether it would be helpful to recruit a specialist adviser to assist it and other committees to provide effective and strategic input to the Budget process.

10.7 Committees' responses are attached as Appendix 3 of this report.

11. Questions posed in the Executive's Position Report

11.1 Executive's Position Report Paragraph 67 - Using Resources More Effectively.

How should spending priorities be changed from 2003-04 onwards? What scope is there to save on existing public spending programmes to enable resources to be directed to greater PfG priorities?

Several committees called for the restoration of the resources removed by the Executive for its SR2002 allocation and expressed support in general terms for bids made by their departments. The Committee for Agriculture and Rural Development recommended that rural needs should be escalated as one of the Executive's highest priorities because they were key in terms of economic, social and environmental issues in Northern Ireland and bear comparison with the Executive's other highest priorities. The Committee for Agriculture and Rural Development also reiterated its recommendation that tackling animal disease should be made a sub-priority in the Programme for Government and called for greater co-ordination and financial and technical support for farmers dealing with the environmental aspects of farm pollution.

11.2 The Committees for Enterprise Trade and Investment and the Centre welcomed the Review of Public Administration to allow resources to be focused where they are most needed. The Committees for Education, Finance and Personnel and Health Social Services and Public Safety indicated that the Needs and Effectiveness Evaluations would provide a better measure of the effectiveness of current programmes so that resources could be targeted more effectively. The Committee for Finance and Personnel would like early sight of investment proposals from the Strategic Investment Body.

11.3 The Committee for Employment and Learning specifically identified three areas where it believed there was scope from within existing provision to be directed at the priorities in the Programme for Government.

11.4 Executive Position Report Paragraph 80 - Financing our future.

How should the Executive maximise the opportunities presented by the Reinvestment and Reform Initiative?

The Committee for Regional Development presented a substantial assessment of the bids submitted by its Department to address the infrastructure deficit. The Committee for Regional Development considers that all the bids submitted by the Department for Regional Development for infrastructure should be met. The Committees for Education, Finance and Personnel and Regional Development welcome the establishment of the Strategic Investment Body. This should ultimately achieve a deal flow of capital projects underpinning strategically financed economic development in Northern Ireland. The Committee for the Centre hopes to explore the potential of the Reinvestment and Reform Initiative in the next few months.

11.5 Executive's Position Report Paragraph 86 - Financing our future.

What opportunities exist to make full use of private sector funding as a means of improving the quality of services?

The Committee for Finance and Personnel has no objections in principle to the use of private sector funding but has reiterated its view that the preferred form of funding is conventional public finance. Committees did not identify any specific project for private sector funding and several considered that it is largely beyond the competence of committees to provide an informed view on this question. The Committee for Regional Development and the Committee for Finance and Personnel have, however, stated that each capital project should be taken on its own merits and that the Strategic Investment Body should produce a strategic approach in providing funding options for a range of projects. The Committee of the Centre had some concerns regarding the availability of robust evidence to support the assertion that Public Private Partnerships can deliver value for money.

11.6 The Committee considers that there is currently a lack of clarity about the respective roles of the Strategic Investment Body and the Procurement Board and recommends that clear guidance from the Executive on this issue should issue as a matter of urgency. The Committee would also like to have clarification on which committee will be responsible for scrutinising the Strategic Investment Body.

11.7 Executive's Position Report Paragraph 98 - Executive Programme Funds.

What should be the strategic direction of the Funds and can they be used more effectively?

The Committee for Regional Development wishes to see the Infrastructure Fund and the Reinvestment and Reform Initiative helping to reduce the deficit in the roads and water infrastructure. The Committee for Finance and Personnel has previously recommended to the Minister that each Fund should have its own strategic direction and intent set out clearly by the Executive provided it does not create inflexibility or inhibit an imaginative approach. The Committees for Finance and Personnel and Employment and Learning want to see a more cross cutting approach to the bids by Departments. The Committee for Health Social Services and Public Safety has welcomed the recent changes made to the structure and management of the Funds.

11.8 Executive's Position Report Paragraph 102 - Public Procurement.

What further opportunities exist to improve public procurement?

The Committee for Finance and Personnel wishes to see a co-ordinated approach in the PfG to address the infrastructure deficit. The Committee considers that the Procurement Board should utilise the scale of the investment programme to maximise value for money. The Committee for Regional Development welcomes the Central Procurement Directorate.

11.9 Executive's Position Report Paragraph 105 - Administration costs.

What opportunities exist to streamline and improve the efficiency of public services?

Committees have identified the Review of Public Administration as an important opportunity to make real gains in efficiency. The Committee for Regional Development believes that all public institutions must proactively seek to improve their efficiency. The Committee for Finance and Personnel recommends that all departments should be addressing efficiency and effectiveness issues through designated Business Improvement Units. The Committee also recommends that the work of the Improvement Units should be co-ordinated by DFP with the potential for input by the Economic Policy Unit. Lessons learnt should be shared through a co-ordinated inter-departmental body chaired by DFP. The conclusions of the inter-departmental group should be made available to committees to inform their views on the competing demands of departments for resources.

11.10 The Committee recommends that efficiency savings identified centrally within Central Finance, Central Personnel and Corporate Services of the Department of Finance and Personnel are validated by Departments, particularly before they are submitted as part of bids for additional resources. Evidence of consultation should be required.

11.11 Executive's Position Report Paragraph 107 - Use and disposal of assets.

What opportunities exist to make better use of public service assets?

The Committee for Finance and Personnel agrees that the Executive Committee should seek advice from, amongst others, the Strategic Investment Body for ways of making better use of its assets. The Committee recognises the potentially negative impact that the costs of capital and depreciation could have on departments' DEL following Stage 2 implementation of Resource Accounting and Budgeting. The Committee notes that this will need to be fully considered when decisions are being made on the Review of Government Office Accommodation, Public Private Partnerships and other capital investment programmes. The Committee for Regional Development believes that a lack of investment in roads and water has led to major public assets being in poor condition. The Committee for Health Social Services and Public Safety is conscious of the need to hold its Department accountable for the good management of its assets.

11.12 The Committee recommends that the Department and the Executive should develop and introduce an asset management strategy as soon as possible.

11.13 The Committee also recommends that guidance should be issued by the Executive to departments on departmental investment strategies including advice on monitoring and control systems. Relevant Assembly committees should be consulted on both sets of guidance.

11.14 Executive Position Report Paragraph 108 - E Government.

What opportunities exist to improve the delivery of public services through E Government?

The Committee for Finance and Personnel and the Committee for Regional Development recognise the advantages of E Government. The Committee for Finance and Personnel has concerns about the potential for wastage through the replication of high project costs on individual departmental projects and recommends the need for a co-ordinated inter-departmental approach to procurement and systems development. The Committee recognises that many committees supported the use of better and smarter ways of electronic working in response to the consultation on Government Office Accommodation. The Committee for Regional Development believes that every effort should be made to maximise the benefits of electronic delivery of service and the Committee of the Centre saw the Review of Public Administration offering a unique opportunity to exploit the use of E Government.

EXECUTIVE'S POSITION REPORT -
DEPARTMENTAL ISSUES FOR 2003/04 AND BEYOND.

12. Common themes and major strategic issues

12.1 Part four of the Executive's Position Report addressed new issues which had emerged in departments since the Programme for Government and the Budget 2002/03 allocations were agreed by the Assembly in December 2001.

12.2 Departments presented these new issues in their Departmental Position Reports and they are summarised in this part of the Executive's Position Report. The Executive is therefore aware of the major issues and asks Assembly committees to identify common themes and for their assessment of the major issues.

12.3 The Executive asked committees to draw on their detailed work over the last year to give an assessment of departments' policy and spending plans. The Executive hoped that committees would conduct a rigorous assessment of each department's spending plans and priorities. To assist this assessment the Executive asked that committees should address several specific questions.

12.4 Once again the Committee for Finance and Personnel found this approach helpful in its deliberations but has noted that not all Assembly committees addressed the specific questions or adopted this approach.

13. Questions posed in the Executive's Position Report

13.1 Executive's Position Report Paragraph 118 -Pressures and easements.

How reliable are the assessments and easements, which have emerged since the 2002/03 Budget allocations?

Many of the committees did not specifically respond to this question but supported the bids placed by their departments and called for the restoration of the amounts removed through the indicative minima imposition. Where comment was provided it made the point that committees relied on the financial management systems in departments and considered that the pressures and associated resource amounts were reasonable. The Committee for Finance and Personnel had reservations about the timing and resource demands and expenditure in relation to major reviews by its Department. Experience in the past had questioned the credibility and validity of certain bids. The Committee of the Centre expressed concerns about the levels of resources bid for certain programmes.

Only the Committee for Employment and Learning identified easements and called for these resources to be diverted to priorities within higher and further education.

13.2 Executive's Position Report Paragraph 118 -Pressures and easements.

How well has the Department planned to deal with any unforeseen new issues?

The Committee recognises that the Department of Finance and Personnel has made best efforts to plan for new issues and has placed bids for resources at what the Department sees as the most appropriate times. The Committee has monitored the movement of resources at Monitoring Rounds and has carried out some analysis of end-year positions and associated End Year Flexibility (EYF). The Committee is concerned about the high levels of EYF and called for a review of the Monitoring process, which was agreed to by the Minister. The Committee for Agriculture and Rural Development has no specific concern regarding resource planning and has seen marker bids for resources lodged. The Committee for Culture, Arts and Leisure is content that the Department can pick up unforeseen issues and inescapable bids at Monitoring Rounds.

13.3 Executive's Position Report Paragraph 118 -Pressures and easements.

What impact will new issues have on PfG/PSA targets and can these be accommodated by re-prioritisation within existing baselines?

The Committee for Agriculture and Rural Development expressed the view that an additional bid for compensation for animal disease was in direct support of the objectives in the PSA. The Committee felt that the indicative minima already restricted the Department's ability to re-prioritise. The Committee for Finance and Personnel would like to have assurance from DFP that the targets for delivery of new priority issues are realistic and achievable within the timeframes stated and the resource impact of new issues are in fact additional. The Committee for Health and Social Services and Public Safety wishes to have more effective scrutiny mechanisms before commenting on this issue. The Committee for Regional Development referred to previous underfunding in roads and water, which presented limited scope for re-prioritisation within its Department

13.4 Executive's Position Report Paragraph 118 -Pressures and easements.

If any important new issues cannot be addressed by the Department, what other public services or programmes might be re-prioritised to enable the new policy to be delivered?

The Committee for Agriculture and Rural Development sees the case for additional funding for DARD as overwhelming and if that meant other departments receiving less then that should be faced. It also expressed the view that where departments had failed to meet expenditure expectations in the past that should be a basis for reprioritisation. The Committee for the Environment stated that there should be ring-fencing of its department's resources to address transposition and subsequent implementation of the major backlogs of EU Directives facing the Department so that there is no impact on other important catch up work. The Committee for Employment and Learning identified three areas where it sees resources being available for re-prioritisation.

13.5 Executive's Position Report Paragraph 118 -Pressures and easements.

What priorities exist for improved efficiency and reprioritisation of resources?

The Committee for Finance and Personnel would welcome further developments in tangible performance measures and resource allocation methodologies. The Committee welcomed the introduction of a dedicated Business Improvement Team to examine processes with a view to enhancing the efficiency and effectiveness in its department. The Committee for Regional Development and the Committee for Agriculture and Rural Development also welcomed efficiency reviews and Business Excellence Programmes underway in their respective departments pursuing efficiency savings. However, the Committee for Agriculture and Rural Development also stated that it had not received details of specific improvements made and the Committee for Employment and Learning had not received details of planned efficiency savings or indeed achieved efficiencies despite its requests.

13.6 Executive's Position Report Paragraph 124 -Rises in pay and prices.

How should the Executive deal with the issue of pay and prices?

The Committee for Culture, Arts and Leisure stated that its view was that departments should not have to deal with the additional costs, beyond planned price assumptions of centrally settled pay deals such as those experienced by its Department in the 2001/2002 financial year. The Committee for Regional Development questioned the adequacy of the block vote in matching pay deals agreed in GB and introduced in Northern Ireland. The Committee for Finance and Personnel stated that it saw an opportunity to address pay and prices by a strategic approach to three year pay bargaining which would support and facilitate the Executive's policy of setting three year budgets.

13.7 Executive's Position Report Paragraph 127 -Administration costs.

What more should departments do to contain administration costs?

The Committee for Social Development accepted that savings in two Agencies in the Department had a part to play in reducing costs but also stated that it was important that services are not diminished. The Committee for Regional Development and the Committee for Finance and Personnel expressed the view that they would examine unit costs in their departments. The Committee for Finance and Personnel also stated its aim to examine the management and associated costs of sickness absence in the Civil Service as a means of addressing shortfalls in efficiency and resources. The Committee for Agriculture and Rural Development indicated that containing administration costs in some areas of the Department was beyond its control because they related to the administration of EU policies and the processes were dictated by EU requirements. The Committee for Agriculture and Rural Development welcomed a departmental management plan aimed at producing £3m savings but which would leave alone activities in the Department supporting the PfG/PSA.

CONCLUSIONS

14. General

14.1 The Committee welcomes the responses received from Assembly committees and is keenly aware of the difficulties that consideration of the broadly based strategic issues raised by the Executive Position Report creates for all committees. The Committee would welcome views on the benefits that the appointment of a specialist financial adviser might bring to assist committee deliberations on financial matters.

14.2 Committees have made a large number of initial comments on the process, the Programme for Government and departmental spending plans. Committees have indicated that they intend to continue their discussions with departments into the autumn. This will facilitate informed debate on the Budget.

14.3 The Committee welcomes the growing co-operation between the Executive and committees in the development of the Executive's spending programme. However, it stresses that access to the right information at the earliest possible time will benefit both the Assembly and the Executive. The Committee has therefore recommended a need to rationalise the amount of material that is produced and would wish to ensure that consistent good practice is adopted by all departments in providing timely and appropriate financial information to committees.

14.4 The Committee accepts that financial planning and scrutiny of departmental budgets is an essential and inescapable part of committees' remit. A number of recommendations have been made to develop consistent practice across committees. The Committee accepts that committees will tend towards supporting bids from departments but hopes that an equal emphasis might be placed on scrutinising and monitoring by committees of the effectiveness and efficiency of departmental spending plans against allocations.

14.5 The Committee wishes to develop its strategic role in the Budget process and would welcome discussions with the Minister and other committees on the direction this might take. The Committee is conscious of the need to avoid second-guessing other committee's views on departmental expenditure plans and allocations and believes that an agreed strategic approach would substantially add to the quality of the process.

APPENDIX 1 MINUTES OF PROCEEDINGS
RELATING TO THE REPORT

NINETY FOURTH MEETING
TUESDAY, 11 JUNE 2002
COMMITTEE ROOM 144, PARLIAMENT BUILDINGS

Present: Mr Francie Molloy (Chairman)
Mr Roy Beggs (Deputy Chairman)
Mr Seamus Close
Mr Roger Hutchinson
Ms Patricia Lewsley
Mr Alex Maskey
Mr Maurice Morrow
Mr Peter Weir

In attendance: Mr Alan Patterson (Principal Clerk)
Ms Sheila McClelland (Clerk)
Ms Shauna McDaid (Executive Support)
Mr Jonathan Briggs (Administrative Support)

The Chairman declared the meeting open at 2.09p.m. The meeting began in closed session.

The Chairman declared the meeting open to the public at 2.12pm.

5. Executive Position Report

5.1 The Minister for Finance and Personnel and Departmental officials Mr David Sterling and Mr Richard Pengelly briefed the Committee and answered questions regarding the Executive Position Report.

Ms Lewsley left the meeting at 3.04pm.

Mr Weir left the meeting at 3.16pm.

5.2 The Minister stated that the Committee has an important role to play in this process and asked that they draw together the key preliminary conclusions of all Committees in relation to the Executive Position Report. The Minister concluded that he would look forward to receiving the Committees co-ordinated report by the end of August. Officials agreed to provide information on the receipts component of monitoring round easements for the previous financial year.

Resolved: The Committee agreed to place this item on the agenda for next week's meeting.

FRANCIE MOLLOY
Chairman

[Extract]

NINETY FIFTH MEETING
TUESDAY, 18 JUNE 2002
COMMITTEE ROOM 144, PARLIAMENT BUILDINGS

Present: Mr Francie Molloy (Chairman)
Mr Roy Beggs (Deputy Chairman)
Mr Alex Attwood
Mr Billy Bell
Mr Seamus Close
Mr Derek Hussey
Mr Roger Hutchinson
Ms Patricia Lewsley
Mr Alex Maskey
Mr Maurice Morrow
Mr Peter Weir

In attendance: Mr Alan Patterson (Principal Clerk)
Ms Sheila McClelland (Clerk)
Mr Joe Sloan (Assistant Clerk)
Ms Shauna McDaid (Executive Support)
Mr Jonathan Briggs (Administrative Support)

The Chairman declared the meeting open at 2.22 p.m.

4. Executive's Position Report.

4.1 The Committee was briefed by the Clerk on a proposed schedule for consideration of its response to the Executive's Position Report and a co-ordinated response from the Assembly Committees to the Executive Committee.

Mr Weir left the meeting at 2.50 p.m.

Resolved: The Committee agreed to the proposed schedule.

4.2 The Committee considered the questions presented in the Executive's Position Report in relation to the Department of Finance of Finance and Personnel.

Ms Lewsley attended the meeting at 2.56 p.m.

Resolved: The Committee agreed that the Clerk should collate the responses by the Committee for further consideration at its next meeting.

FRANCIE MOLLOY
Chairman

[Extract]

NINETY EIGHTH MEETING
TUESDAY, 2 JULY 2002
COMMITTEE ROOM 144, PARLIAMENT BUILDINGS

Present: Mr Roy Beggs (Deputy Chairman)
Mr Alex Attwood
Mr Billy Bell
Mr Seamus Close
Mr Derek Hussey
Mr Roger Hutchinson
Ms Patricia Lewsley
Mr Maurice Morrow

In attendance: Mr Alan Patterson (Principal Clerk)
Ms Sheila McClelland (Clerk)
Mr Joe Sloan (Assistant Clerk)
Ms Shauna McDaid (Executive Support)
Mr Jonathan Briggs (Administrative Support)

The Chairman declared the meeting open at 2.22 p.m.

8. Executive's Position Report

8.1 The Committee considered a draft response to section 4 of the Executive's Position Report.

Resolved: The Committee agreed the draft response subject to an amendment provided.

8.2 The Committee considered a draft response to section 3 of the Executive's Position Report.

Resolved: The Committee agreed the draft response subject to the amendments provided.

8.3 The Committee considered the questions in section 2 of the Executive's Position Report.

Resolved: The Committee agreed that the Clerk should draft a response taking account of a report by the Northern Ireland Council for Voluntary Action on New Targeting Social Need.

FRANCIE MOLLOY
Chairman

[Extract]

ONE HUNDREDTH MEETING
TUESDAY, 27 AUGUST 2002
COMMITTEE ROOM 135, PARLIAMENT BUILDINGS

Present: Mr Francie Molloy (Chairman)
Mr Roy Beggs (Deputy Chairman)
Mr Derek Hussey
Ms Patricia Lewsley
Mr Maurice Morrow
Mr Peter Weir

In Attendance: Ms Sheila McClelland (Clerk)
Ms Shauna McDaid (Executive Support)
Mr Stephen Ball (Administrative Support)

The Chairman declared the meeting open at 3.20 pm.

4. Executive's Position Report

Mr Hussey attended the meeting at 3.28 pm. Mr Weir left the meeting at 3.44 pm.

4.1 The Committee considered the draft Executive Position Report.

Resolved: The Committee ordered the Draft Executive Position Report to be printed subject to the amendments provided to the Clerk.

FRANCIE MOLLOY
Chairman

[Extract]

APPENDIX 2 COMMISSIONING LETTERS
AND RELATED DOCUMENTS

INDEX OF COMMISSIONING LETTERS
AND RELATED DOCUMENTS

Contents

A. Statement to the Assembly, 4 March 2002 by the Minister of Finance & Personnel

B. Statement to the Assembly, 5 June 2002 by the First Minister and Deputy First Minister.

C. Letter dated 6 June 2002 from the Office of the First Minister and Deputy First Minister.

D. Letter dated 7 June 2002 from Chairperson, Committee for Finance and Personnel to
Assembly Committees.

E. Letter dated 10 June 2002 from the Minister of Finance and Personnel.

BUDGET CYCLE 2002
STATEMENT TO THE ASSEMBLY BY DR SEÁN FARREN MLA
MINISTER OF FINANCE AND PERSONNEL

INTRODUCTION

1. With permission, Mr Speaker, I would like to make a Statement on behalf of the Executive, setting out our proposed timetable for the key planning and financial events between now and December when the Budget for 2003-04 needs to be agreed. This year, the cycle will cover the period 2003-04 to 2005-06, as the Executive plans for the three year period covered by the Treasury's Spending Review.

2. The Budget and the process which surrounds it is very much an evolving one. In presenting last year's Budget to the Assembly, we endeavoured to build on and refine the processes which were put in place during the first Budget. In drawing up this year's Budget, I intend to continue that process. I have considered carefully many of the comments and suggestions which have been made about the process to date and I have endeavoured where possible to take these into account in this year's timetable.

3. Last year, we committed ourselves to ensuring that we presented the Draft Budget as soon as possible after the summer recess. This was intended to facilitate greater consultation on the Draft Budget. We found this additional consultation important in finalising the Budget and we would intend, therefore, to work again towards presenting this year's Draft Budget again as soon as possible after the summer recess.

BACKGROUND TO BUDGET 2002

4. This year is an important year in budgetary terms as it is the year in which a UK Spending Review takes place. In July, the Chancellor will announce the financial envelope for the next three years for all Whitehall departments, and the three devolved administrations including Northern Ireland. Thus we will know the total level of resources which Northern Ireland can expect to receive for the years 2003-04, 2004-5 and 2005-6. To avoid confusion, I intend to use the term Spending Review or SR 2002 to refer to the UK wide exercise and the term Budget 2002 to refer to our own exercise.

5. At this stage we do not know what outcome we can expect from SR2002. The current signals from Treasury are not encouraging, but we are determined to make the strongest possible case. We also need to ensure that we plan in a realistic but flexible manner. I will say more about the financial considerations later.

6. In setting our first two Budgets, we have concentrated primarily on the following financial year and included only broadly indicative figures for subsequent years. This does not secure a satisfactory planning position for public services, because departments' financial position is not confirmed until the finalisation of the relevant Budget in December. Many aspects of our key services such as capital projects and the education system do not run on a financial year basis and we need to make the transition from year to year as smooth as possible.

7. This year, the Executive will seek to establish as firm a three year planning position as possible in our circumstances. In drawing up this year's Budget, we would aim to set out our expenditure proposals for the next three years. This will be helpful for departments in relation to longer term planning as they should have firm figures for 2003-04 and indicative allocations for 2004-05 and 2005-06. Our intention then would be to revisit these allocations in the Budget exercises in 2003 and 2004, but if we achieve a better strategic plan for the Programme for Government and the Budget this year, there should not be a need to have as fundamental a review of spending plans in 2003 or 2004 as we envisage this year.

8. The process of preparing the new Budget runs from now to December when we will seek to settle an agreed Budget in line with our revised Programme for Government, which will form the basis of spending plans for all Departments and other public sector bodies. I would also remind Members of the need to complete our work on the spending allocations for the financial year 2002-03. Last week we passed the Budget Bill which covered the Vote on Account for 2002-03 and which is intended to enable expenditure to proceed until the Main Estimates are agreed and the related Budget (No 2) Bill is passed. We would intend to present the Main Estimates and introduce the relevant Supply Resolution in late May or early June.

THE BUDGET TIMETABLE

9. Mr Speaker, the management of the budget timetable this year will be very demanding and will need to be managed carefully if the expectations of Members and Committees for consultation are to be met and if we are also to meet our Section 75 obligations.

10. The position is complicated by the fact that the Chancellor will not announce the outcome of the UK Spending Review until the third week of July. This means that we will not know what resources are available to us in the next three years until then. Nevertheless, the Executive wishes to begin now to examine the strategic issues and priorities confronting us both across and within departments. The next few months will be very important for the Executive in assessing its priorities and in drawing up a strategic framework for use once we know the outcome of the SR 2002.

11. We will still need to complete the budgetary process before Christmas. With that in mind, the approach I am setting out today will ensure that the Assembly has as much time as possible to consider the Budget proposals contained in our Draft Budget 2002, in the context set by the Programme for Government, so that the spending proposals can be approved by December after an acceptable period of scrutiny. This step should be seen as the main authorisation of spending plans, and it follows that we should provide the best possible procedures for that purpose.

ASSEMBLY SCRUTINY OF THE BUDGET

12. Mr Speaker, the proposals set out in the indicative timetable before you today will provide for a much earlier involvement of the Assembly Committees in the budgetary process than was possible last year. To-day's Statement marks the start of that process although I have made the point on other occasions that Committees are free to scrutinise financial performance and budgetary issues at any stage.

13. To set the process in motion guidance is being issued which requires all Departments to submit a position report providing a broad analysis of current performance in delivering the Executive's priorities and future requirements. The position reports will provide each Department with an opportunity to set out its overall purpose and strategy, identify its role in delivering the Executive's priorities and set out the financial context which it faces. It will also identify areas where departments anticipate any reduced requirements or expect to make savings and re-deploy resources. Clear linkages between the Programme for Government and PSAs will be drawn out and the focus will be on the assessment of output and outcomes.

14. Equality and social need input will also be considered as central issues in the Budget cycle. As before, we will consult on the equality and New TSN implications of the Draft Budget in the autumn. But these issues will need to receive attention at every stage of the process within Departments and in the consideration of the issues by the Committees, so that the Draft Budget can fulfil our determination to promote equality of opportunity and New TSN.

15. Mr Speaker, the guidance states clearly that committees should have a proper opportunity to scrutinise their department's position reports before they are submitted to my Department and the Economic Policy Unit. This meets a concern expressed last year by committees that they wished to be involved in the process at an earlier stage in the cycle than was possible last year.

16. In providing this opportunity for earlier engagement and scrutiny I would hope that Committees look at their department's position from the widest possible context including the likely level of resources that may be available. Mr Speaker, I would also urge committees not to lose sight of the full range of issues facing all our public services or become preoccupied with the bids for additional resources that may emerge. We need at this stage to focus on determining what our strategic priorities should be, indeed that is the very reason why we decided to produce a Position Report early in the financial planning cycle.

17. We need to form a more strategic view of departments' overall spending. If we are to make a much more substantial difference to spending patterns, we need to examine what is being secured for the large amounts of spending that are going on mainstream public services. We are working on several means to help with this process. For example the Public Service Agreement targets set out in the Programme for Government, provide a good basis for some inquiries. The Needs and Effectiveness Evaluations will provide a more systematic analysis of the issues in six major sectors. These tools do not provide multiple choice answers that we as politicians can simply mark with a tick or a cross: they can inform our judgements, but the judgements must, Mr Speaker be made first by the Executive - when we prepare the Draft Budget - and then by the Assembly.

18. To do so I suggest Committees may wish to consider departmental plans and the Public Service Agreement targets set out in the Programme for Government. Committees will also need to think about how priorities set out in the Programme for Government may be refined and developed in the light of experience in the last year. I consider it important that Committees also take a view of the implications for equality and New TSN and that they should be informed by scrutiny of other material available to Committees. In this way we can ensure effective examination and identification of changing financial priorities at departmental level and, at a wider strategic level

19. Mr Speaker, to put all this in context it is worth remembering that we will not know the implications of the 2002 Spending Review until the Chancellor's announcement in late July, though current signals from the Treasury are that that this will be a tough Spending Review. We will, of course, be making our case to the Treasury over the coming months but we need to be realistic about the possible outcome.

20. In preparing for this year's Budget, that is why the Executive established "indicative minima" for departments. By doing this, we were able to set aside an allocation of £125m to be known as the "Executive SR allocation". Regardless of the outcome of the SR2002, we will need to make decisions about this allocation. Our decision to hold back the allocation represents a prudent approach to financial management, as well as clear signal of our determination to look for change in the way spending is allocated.

21. Mr Speaker, we need to recognise that this allocation of £125 million, plus the consequences of any allocations made by the Chancellor in his April 2002 Budget and any reduced requirements declared by departments, could be the main resources available for allocation. I would therefore emphasise the need for realism in our approach to the task ahead.

BARNETT AND OTHER STRATEGIC ISSUES

22. Before then we will of course need to conclude our consideration of the Barnett mechanism. Over recent months we have been undertaking a detailed and rigorous scrutiny of the Barnett formula, looking carefully to see whether it is meeting our needs sufficiently both now and, more importantly, in the future. We clearly cannot accept a situation where the provision for priority services here such as health, education and transport is markedly less favourable than in England - which appears to be the consequence of Barnett. I am sure members will accept that now would not be the time to state publicly all that we have in mind in relation to the negotiations with the Treasury that are about to begin - but I can reassure the Assembly that we are determined to seek a fair and appropriate outcome to SR 2002, and that the case will be pressed at the highest levels.

23. But challenging Barnett is not something we will undertake lightly and it is not, as I have said before, a "no risk" option. We can be sure that any challenge will lead to strong pressure from the Treasury that we should pay our own way more fully - and I do not have to remind members that that will mean looking hard at the issues of rating and the financing of water and sewerage. This will apply especially if the Chancellor increases taxation to finance health spending.

24. We will also in the months ahead be assessing the outcome of the six Needs and Effectiveness evaluations before the summer covering Health and Social Care, Education, Training, Housing, Selective Financial Assistance and Culture, Arts and Leisure - in total the Evaluations cover some [75%] of our total expenditure. We will also be considering a number of other strategic issues including the Burns Report, the Hayes and Acute Hospitals Review, the Regional Transportation Strategy, the Task Force on Long Term Unemployment, the interdepartmental work on Research and Development, proposals in relation to the Water Service and the Rural Visioning Report.

25. These are complex pieces of work which will provide us with a good deal of information about what we are achieving with what we are spending and will serve to inform our future expenditure decisions. However, we do not expect that the Evaluations will provide us with easy answers. In reality, they are more likely to identify areas where we will need to review our policies and what we are doing. Nevertheless, they will provide a very valuable analysis of what we are achieving with our current expenditure and will provide us with very valuable information which will inform our future spending decisions.

26. Clearly, we all face an intensive period of work which will culminate in the presentation of the Executive's Position report to the Assembly in late May. It is important that we conclude this work as soon as possible before the summer, so that the Executive's conclusions about the key issues facing the Administration are understood and can be the subject of debate and dialogue within the Assembly and between Departments and the Assembly Committees.

MAIN ESTIMATES 2002-03

27. Mr Speaker, it is likely that the publication of the Position Report in late May will coincide with Assembly business on the Main Estimates for 2002-03. I want to make it clear that these are two distinct processes, and I hope that the timing of the business can be managed in a way that helps that distinction. In brief we will need to debate and vote on the main resolution seeking approval of the Main Estimates for 2002-3 and then consider the stages of the Budget (No 2) Bill. The key point is that these concern 2002-03 while the Budget process which is set out in the timetable I am announcing today is the beginning of the cycle for 2003-04.

28. Mr Speaker, the Committee for Finance and Personnel will have an important role to play throughout this next phase and may be able to assist by drawing together some of the key themes and conclusions of each Committee. I would welcome the advice and assistance of the Committee throughout the process and especially at several key stages and will be talking to them in detail about this.

BEYOND THE POSITION REPORT AND THROUGH THE SUMMER

29. Mr Speaker, once the position report has been published the timetable before the Assembly today will allow the Committees until August to consult on and consider the Departmental proposals. Obviously we want to achieve as much as possible before the recess so that the Executive may be properly informed during the summer months as it considers the revision of the Programme for Government and begins to construct a Draft Budget. We will again be looking to the Committee for Finance and Personnel Committee to play a key role in co-ordinating any views expressed during this period and I look forward to receiving any comments or conclusions before the end of August when we will be preparing the updated Programme for Government and Draft Budget.

30. Last year we used the period between the end of August and mid-September to develop further, and refine, proposals for the Programme for Government and the Draft Budget before introducing these documents in draft to the Assembly in late-September. For the Autumn period, we would propose to follow a similar process to last year. In particular, the Executive found the full debate on the Draft Budget on foot of a motion from the Committee for Finance and Personnel very helpful in hearing some of Members' concerns about the Draft Budget.

31. This debate would again supplement the work of the Committee for Finance and Personnel which will in parallel be taking evidence from other Statutory Committees on the Draft Budget during the Autumn. Consultation on equality implications would take place in October/early November when Committees would also consider the revised Programme for Government and Public Service Agreements.

32. I would hope that the Committee for Finance and Personnel would again be able to report its views on the Draft Budget to me as early in November as possible. This would allow me to ensure that their views were fully taken into account when drawing up a paper on the Revised Budget for consideration by the Executive in mid-November. We are working towards making a Budget Statement to the Assembly in early December with an Assembly debate and vote by 10 December.

RESOURCE ACCOUNTING AND BUDGETING

33. In preparing our Budget 2002, we will also have to take account of the final stage of the implementation of resource budgeting in the Budget 2002. This will involve a number of changes to the budgeting regime for departments including the movement of a significant element of non-cash costs (depreciation, cost of capital, management of assets and provisions) from the Annually Managed Expenditure to the Departmental Expenditure Limit. In addition, capital grants by central government to the private sector will score as resource rather than capital expenditure.

34. This is going to have a profound effect on the management of our resources. From the Assembly's perspective it should provide better information on how resources are used to meet objectives and whether taxpayers are receiving value for money. It will provide better-focused information resulting in enhanced accountability to the Assembly. Mr Speaker, I am aware however that the move to resource budgeting has been seen to add complexity to some of our financial processes and clearly it will take time for us all to become familiar with the new concepts and presentations of information and figurework. I want to work with the Assembly to help get to grips with this. My officials have already held two seminars on some aspects of this work and will be holding more in the coming weeks and months. I would urge Members to become as familiar as possible with these issues.

CONCLUSION

35. The preparation of the annual budget is normally a complex and challenging exercise. This year will be especially difficult. We will be seeking to put in place a three year budgetary framework and we will need to take account of the Needs and Effectiveness Evaluations and consider how best to address the issues which they will raise. We will also be considering how to deal with the increasing difficulties associated with the Barnett formula. We must also be realistic about the signals which are emerging from the Treasury and prepare ourselves for a situation where we do not have sufficient resources to fund all the activities which we would wish.

36. Mr Speaker, I need to ask for the forbearance of the Assembly and the Committees in this process. There will be limited time available at each of the stages in the first part of the year. But I must stress that all of those stages are in practice preparations for the main statutory stage of Assembly involvement in the autumn. Hence we do not need the final views of Committees in the constrained periods for, first, input to the Position Reports from Departments in April, and secondly in response to the overall Position Report in the late spring and early summer. At both of those stages, Departments and the Executive will have to move the work on at or very close to the stated times.

37. It may appear that those stages are very rushed, but they are not the decision making stages. If there is one point I would emphasise most strongly, it would be the value and necessity of the Committees providing clear views on priorities so that the Committee for Finance and Personnel can advise me on those issues by mid August. That will mean that when the Executive addresses the issues of allocations within the DEL in early September, we can reflect on the views of the Assembly. Even if that means in practice completing that work before the summer recess, clearly there is substantial time before then for that to happen, and all the other stages should serve rather than obscure that key point.

38. To summarise, the main events associated with the preparation of the Programme for Government and Budget 2002 include: -

the preparation by departments of position reports setting out the main issues they will face in the three years from 2003 - 04
the presentation of the Executive's Position Report to the Assembly in late May which will then be available to the Committee for Finance and Personnel, other Departmental Committees and the wider community
I will seek the views of the Committee for Finance and Personnel by the end of August on its consultations with other Committees.
The outcome of the six Needs and Effectiveness Evaluations will be carefully considered in drawing up the Programme for Government and the Draft Budget.
The Programme for Government and Draft Budget (which will seek to put in place a financial framework for the next 3 years) will be developed, and considered by the Executive in early September.
An updated version of the Programme for Government and Draft Budget will be introduced to the Assembly in late September.
This will be followed by the Committee for Finance and Personnel taking evidence from DFP and other Statutory Committees on the Draft Budget. The Executive would again very much welcome a further debate on the Budget should the Committee for Finance and Personnel decide to introduce this.
There will be consultation on the equality implications of the Programme for Government and the Draft Budget.
Concurrently, Committee consideration will be taking place on a revised Programme for Government and Public Service Agreements, reporting back on these to the OFMDFM.
Our aim will be that the revised budget will be announced to the Assembly in early December and debated and voted upon a week thereafter.

39. I hope that Members will find this explanation of intended procedures and timetable helpful.

INDICATIVE PFG AND BUDGET 2002 TIMETABLE

Task	Timing
Preparing for SR 2002: Budget 2002 Timetable to Executive	28 February
Timetable Statement by Minister of Finance and Personnel to the Assembly and Budget 2002 Guidance to Assembly Committees	Early March
Preliminary Budget 2002 Bilaterals between Minister of Finance and Personnel and Ministerial colleagues	March
Detailed "Position Reports" returned by Departments after consultation with Assembly Committees	19 April
Analysis of emerging findings from six Needs and Effectiveness Evaluations	April - June
First Consideration of Draft PfG and Draft Budget by Executive Committee (papers required by 29 August)	5 September
Draft Executive Position Report on PfG and Budget to Executive (may require two meetings)	Mid May
Executive Position Report on PfG and Budget presented to Assembly and more widely for consultation.	Late May
Minister of Finance and Personnel briefs Committee for Finance and Personnel	Late May/June
First PfG annual progress report (covering PfG1) published	[May/June]
Assembly Committees consider issues affecting PfG and Budget for 2003 - 04 to 2005 - 06, including those in the Executive Position Report	May to September
During July - August period:
Committee for Finance and Personnel discusses Executive Position Reports with other Committees	Mainly between June and July, but could continue between June and September if Committees so wish.
Committee for Finance and Personnel receives preliminary responses from other Committees on Executive Position Reports	July
Chancellor announces outcome of Treasury SR 2002	3rd week July
Committees provide comments on PfG issues direct to OFMDFM	End August
Comments on Executive's Position Report budgetary aspects from Committee for Finance and Personnel to Minister of Finance and Personnel	Mid August
September - December
First consideration of Draft PfG (including draft PSAs) and Draft Budget by Executive Committee (papers required by 29 August)	5 September
Second consideration of Draft PfG and Draft Budget by Executive Committee (papers required by 11 September)	16 September
Draft PfG and Draft Budget introduced to the Assembly	23 September
Consultation on Equality implications of Draft PfG and Draft Budget with the Assembly and the public	23 September to mid November (Note this shortens the consultation period but enables the comments to be fed into the Executive's decision making process.)
Debate on draft PfG	[24 September]
Committee for Finance and Personnel takes evidence from DFP and other Committees on Draft Budget	October/Early November
[Assembly Committees consider Draft PfG and PSAs and equality aspects]	[October/Early November]
Debate on Draft Budget on take note motion from Committee for Finance and Personnel	Early - mid November
Report from Committee for Finance and Personnel to Minister of Finance and Personnel	(precise timing and sequence to be determined)
First Executive consideration of Revised PfG and Budget (papers required by 8 November)	14 November
Executive agrees revised PfG and decides Revised Budget allocations (papers required by 21 November)	22 November
Final PfG document made available to MLAs	2 December
Revised Budget and Programme for Government announced to the Assembly	2 December
Programme for Government debated and voted on by the Assembly	9 December
Revised Budget debated and voted on by the Assembly	10 December

STATEMENT BY FM AND DFM ON
EXECUTIVE POSITION REPORT ON PROGRAMME
FOR GOVERNMENT & BUDGET

FIRST MINISTER

Opening Remarks

1. Mr Speaker, with permission, the Deputy First Minister and I would like to make a statement about the issues that will affect the Executive's work to develop the Programme for Government and Budget for the 2003/04 financial year and beyond.

2. In his statement to the Assembly on 4 March, the Minister of Finance and Personnel identified the main stages for this year's Programme for Government and Budget cycle. A key first phase is the development of the Executive's Position Report on the Programme for Government and Budget which has been made available this morning to all Members.

3. The Position Report reflects the commitment we signed up to as part of the Belfast Agreement to agree each year a Programme incorporating an agreed Budget. The Report provides the Executive with the opportunity to set out for consideration by the Assembly the key issues affecting our public services that should influence the preparation of our next Programme for Government, and the Budget that will support it. The issue of this Position Report therefore formally launches the consultation with the Assembly and others on the next Programme for Government and Budget. We will also be producing towards the end of this month an annual report on how we have performed over the past year on our first Programme for Government.

4. The Position Report also sets out how we might roll forward the Programme for Government and refine our priorities so that we can target resources more effectively in the Budget to delivering progress across these priorities.

Background

5. The development of the Programme for Government, has been continuous. It is less than six months ago that the Assembly endorsed the current Programme for Government, which focuses on the 2002/03 financial year, and we are just over two months into its implementation. However, the current cycle represents a particular and very important opportunity. For the first time, we are intending to set plans for a three-year period, informed by a much more thorough analysis of the needs and effectiveness of our major public service programmes than before.

6. The approach we can take will depend on the conclusions we reach in the current negotiations on the Treasury Spending Review, which will be known next month. But we signalled very clearly in December, by the approach we took to spending plans for 2003/04, that we were determined to make room to make changes in the pattern of public services to reflect more fully the priorities of the Programme for Government than has been possible up to now. On top of that, the Reinvestment and Reform Initiative, launched on 2 May, adds several new dimensions to the debate that needs to take place on how our public services develop under the Executive and the Assembly, and in co-operating through the North/South and wider structures of the Agreement.

7. The development and the annual revision of the Programme for Government, incorporating the Budget, is the core process of our administration. Through it we set out the overall policy direction, plans and priorities of the Executive for the years ahead, plans and priorities which in turn inform budgetary decisions. In it we seek to develop, across the four parties in the Administration, across the 11 departments, a sense of collective direction, of agreed priorities. Through it, we continue to build the basis of our new democracy.

8. And through discussion, debate and consultation - both within this chamber and further afield - we seek to draw together the views of the Assembly and wider civic society, agreeing on the priorities for Northern Ireland.

Key Messages

9. The Position Report reflects very clearly the Executive's desire to focus debate on the quality of our public services, fairly and effectively administered. Within this debate, we feel that we need to emphasise:

The need for investment in our infrasture.
The desire to improve service delivery.
Tackling social exclusion, in particular poverty.
Working in partnership with others.

10. We want to deliver re-investment and reform that will result in high quality public services. The Reinvestment and Reform Initiative provides a real opportunity for us to invest substantially in improving and modernising our infrastructure.

11. In allocating resources - from whatever source - we need to identify more closely what reforms might be required and what outcomes might be achieved from such reforms. We are already committed to reviewing the structures of public administration, looking at the types of structures that might best serve the needs of Northern Ireland and at how we might make real gains in efficiency that would allow resources to be focused where they are most needed. As we indicated when we made the statement on the Reinvestment and Reform Initiative, resources and reform must go together.

12. The Position Report makes this clear and sets out our determination to articulate the vision that we have for public services and to explain how we might reform them and improve their quality.

13. The Position Report also underlines our commitment to ensuring that everyone in Northern Ireland has an opportunity to share the benefits that should flow from the investment and reforms that we want to see. We recognise that, for too long, poverty has blighted the lives of too many people. We remain committed, in developing our policies and programmes and in allocating the resources to support them, to focusing on those people and areas in greatest objective social need in line with our policy on Targeting Social Need.

14. The Position Report recognises too, Mr Speaker, the need to address how different departments can best work together in this process, and how best we might work with other partners. We rely on others - including in local government; in business; in the voluntary and community sector - to work with us to deliver our Programme for Government and it is right that we should be working to develop our relationships with these partners.

Contexts

15. Of course our work to develop and agree a Programme for Government and Budget does not take place in a vacuum. There are important contextual issues that need to be understood and reflected in the Executive's work and take account of by the Assembly and others in responding to the Position Report.

16. Turning first to the financial context, the Position Report explains that the spending power available to the Executive for the period 2003-04 to 2005-06 will largely be determined by the outcome of the 2002 Spending Review. We understand this will be announced by the Chancellor of the Exchequer in July.

17. Our key reference point - the baseline - for the entire process will be the spending plans for 2003/04. These were first set in SR 2000, and have been updated and converted to Resource Accounting and Budgeting State 2 classifications to provide the foundation for the Spending Review, which will set revised plans for 2003-04 and new plans for the succeeding two financial years.

18. The Chancellor's Budget announcement on 17 April has already provided significant additions for Northern Ireland for the period 2003/04 to 2007/08, arising from the application of the Barnett formula to the allocations to the NHS in England. Gordon Brown has also provided some signals as to the likely outcome of the national Spending Review.

19. He has confirmed that the Treasury envisages some real growth in spending over the Spending Review period, over and above the provision already set aside for the health service. This suggests that there will be limited further additions for UK public expenditure in total, and hence for Northern Ireland, through the Barnett Formula, or otherwise, depending on the outcome of the present discussions with the Treasury.

20. Even limited real growth in spending could lead to substantial additional spending power for us in 2004/05 and 2005/06 if the Chancellor applies the increase to spending areas which are comparable with our own programmes. However, if he is obliged to use the spending power available for Annually Managed Expenditure, such as social security benefits, debt interest or for spending on defence or other non-comparable programmes, the additional amounts available to the Executive could be much more limited.

21. There are of course other contexts for our work. Turning to the economic context, it is encouraging to note that, over the past year, the Northern Ireland economy has performed generally well. Employment is at a record high and unemployment approaching the lowest level for a generation. That said, however, the impact of the Foot and Mouth outbreak and the global economic downturn has constrained progress in some areas with Northern Ireland firms facing difficult trading conditions, particularly as a result of the decline in the growth in world trade. This has contributed to the decline in manufacturing output.

22. The agriculture and tourism sectors have also seen declines in earnings as a result of the Foot and Mouth outbreak as well as of the wider economic and fiscal environment - while there has been a modest improvement in farm incomes over the last year, for example, they are still well short of the levels seen in the mid-1990s.

23. The outlook for the economy over the next few years is, however, reasonably benign with growth expected to accelerate in 2002 and 2003. But we need to understand the conditions in which we currently operate and we need to be able to identify the economic challenges we are likely to face and develop our proposals for tackling these challenges as we take forward work on the Programme for Government and Budget.

24. We also need to be aware of the social and environmental contexts for the work of the Executive. We know only too well the challenges that need to be faced. I have already highlighted our determination to focus on tackling poverty and social exclusion. But our work to develop the Programme for Government also needs to reflect our responsibilities to promote good relations within and between communities. We need to be aware of wider environmental issues and to ensure that the principles of sustainable development underpin everything that we do.

25. The Position Report that you will be considering in Committees over the weeks ahead recognises the importance of ensuring that the Programme for Government reflects the economic, social and environmental challenges we face and provides an appropriate, relevant and evidence-based policy framework for decisions on financial allocations and for the work programmes of departments. For this to happen, we believe that the Programme for Government needs to set out a thorough analysis of the context in which we work.

Agreeing Priorities and Measuring Progress

26. The Position Report also explores and seeks views on the Executive's priorities and sub-priorities. It is important that the priorities we set reflect and keep pace with the changing environment in which we find ourselves. We believe that our current priorities, priorities that have received broad support from the Assembly and among the social partners, continue to provide a useful framework for our work. However, we want to explore ways in which we might refine our overall economic and social strategies.

27. The Executive, of course, is not solely content with setting out a work programme for the years ahead. We are also committed to maintaining a focus on measuring results and assessing the impact we make. Our first two Programmes for Government have not just sought to explain the policy priorities we have identified; they have also set out very clearly the actions we want to deliver in support of these priorities and the sub-priorities that support them.

28. They have also gone further, incorporating Public Service Agreements that aim to set out targets reflecting the key outcomes that departments want to achieve with the resources voted to them through this Assembly.

29. These Public Service Agreements, in turn, are now being supported by Service Delivery Agreements for each department that explain the action each department will take to deliver its Programme for Government commitments and Public Service Agreement targets and to raise service standards.

30. Open and accountable government, Mr Speaker, is and should be a defining characteristic of this Executive. We want to be responsive, to listen to the views of others and to ensure that this Assembly and the public can see the benefits that a locally accountable Executive can deliver for the people of Northern Ireland.

31. The Position Report, therefore, seeks views on the current arrangements for measuring results and the effectiveness of these arrangements.

32. To underline further this commitment to open and accountable government, we will shortly be bringing to this Assembly a full report on the progress we have made during the first year of our Programme for Government. It will provide information on the actions contained in that Programme and the targets in the 11 departmental Public Service Agreements. We will also be making this report more widely available so that the public too can assess our progress.

Equality of Opportunity

33. We are determined that our Programme for Government should continue to reflect our responsibility to promote equality of opportunity and good relations. The Position Report therefore seeks views on the equality aspects of the issues we have raised and on how these might best be taken into account as we develop the Programme for Government and the Budget.

Conclusion

34. Mr Speaker, today's statement not only provides a starting point for the Assembly's consideration of the Position Report - it also represents the start of a process of wider consultation on these issues. It is crucial that we have the views of the Assembly on the issues raised in the report. But, in keeping with the theme of partnership I mentioned earlier, it is worth noting that we recognise also the value of a wider debate. For that reason, we plan, following this statement, to make the Position Report more widely available, sharing it with our social partners, with our colleagues in local government and with other interested organisations and individuals.

35. The Position Report sets out the timescales for providing views to us on the issues it raises. We will need comments from Committees on the issues that relate to the Programme for Government before the end of August. As was the case last year, the Finance and Personnel Committee will co-ordinate comments on the associated resource issues and will be seeking these comments before the end of July.

36. We look forward to receiving the views of Assembly Committees and of individual MLAs.

37. Mr Speaker, I have outlined some of the key issues that we must address as we develop the Executive's Programme for Government. The Deputy First Minister will build on some of the issues I have mentioned, particularly as the relate to the financial context in which we operate.

DEPUTY FIRST MINISTER

Introductory Remarks

1. Mr Speaker, I would like to support the words of the First Minister and to develop some of the themes he covered in his opening remarks.

2. In particular, I would like to focus on the financial context in which we find ourselves and on the resource issues that the Executive has highlighted in its Position Report on the Programme for Government and Budget for 2003/04 and beyond.

Indicative Figures for 2003/04

3. The Budget agreed by the Assembly in December 2001 set "indicative minima" figures for departments for 2003/04. By holding back some £125 million of available spending power we have retained the option of making changes in the shape of our public expenditure programmes to reflect local needs and priorities and retain a significant degree of flexibility.

4. Aside from the money which remains unallocated from the Chancellor's Budget, we are committed to maximising other immediate sources of funding available for allocation to services. For this Budget cycle, and for the longer term, we are taking a number of important actions to improve the quality of our public services and get better value from the resources available to us.

Needs and Effectiveness Evaluations

5. These include the needs and effectiveness evaluations now being carried out in Health and Social Care; Education; Housing; Training and Vocational Education; Financial Assistance to Industry; and Culture, Arts and Leisure. These six areas account for some 75% of planned public expenditure in Northern Ireland. There are also important issues to be addressed in relation to agriculture; regional transportation; the water and sewerage service; long-term unemployment and the work of the Employability Task Force; hospitals services; and the review of post-primary education - "the Burns Report".

6. These are major pieces of work which we have been undertaking over the past year. These evaluations are scheduled to report to the Executive in the next couple of months.

7. These evaluations will also be important in informing the Executive as we make funding decisions in relation to the Budget 2002. While changing strategic direction or skewing resources to new areas of expenditure takes time and careful planning, we are determined to make a real difference and to reshape public expenditure to support our key priorities. Reports from each study will be made available to the Assembly and more widely.

The Reinvestment and Reform Initiative

8. The First Minister has already referred to the Reinvestment and Reform Initiative (RRI). It will provide a unique opportunity for a very substantial infrastructure investment programme.

9. Currently many parts of our services, especially health, education and transport, require levels of capital investment far in excess of the resources available to us, if they are to be funded in the traditional manner.

10. From 2004/05, a new borrowing power will give the Executive the option of using additional revenue sources. This will make it possible for a multi-billion pound programme over the coming decade and beyond which will address our most acute infrastructure needs.

11. These resources will help meet a pressing need, but money alone will not produce the scale of change we are seeking. We are quite clear that it will be just as important to take a highly innovative approach to managing and financing the infrastructure programme so that the resources are wisely used and complement our existing programmes.

12. The Executive has decided to create a new organisation in the form of a strategic investment body, ensure that strategic infrastructure is planned and delivered in a way that makes the most of all the means and resources available. It is intended that the strategic investment body should have the necessary expertise and resources to serve the Executive's programme of strategic capital investment. By using the new body the Executive hopes to provide the best possible opportunities to promote the effective use of all the various means available.

13. More work needs to be done to settle the details of the arrangements for this body, but as a first step we have invited our Executive colleagues to nominate representatives to a project board to secure the best possible way ahead. This Project Broad will be asked to turn round its work programme in a tight timetable working closely with an Executive sub-committee to scope the way ahead.

Paying for Our Public Services

14. If we want to make Northern Ireland a better and more prosperous place in which to live and work then the means of delivering the priority commitments in the Programme for Government must be established on a sound and equitable basis.

15. The Rating Policy Review is already looking at how the burden of revenue should be distributed, between households and businesses and within each sector. The current rating system has inequities and anomalies in it and the review will address these and produce a fairer and more equitable system. This will be of fundamental importance if the Executive and the Assembly were in the future going to choose from 2004-05 onwards to raise more finance locally to finance reinvestment in our infrastructure through the borrowing power.

16. The First Minister, Executive colleagues and I have been asked many times in this Assembly to address the shortfall in Public Services, be that by securing bonds or by increasing our Block baselines. By negotiating this package we can address the short-term position. What needs to be decided now is how much we want to avail of the borrowing power and that needs to be based on priorities.

17. Aside from our own revenue sources we will explore all possible ways of financing and providing public services that are affordable, deliver value for money, and provide effective solutions to meet our needs.

18. The use of Public Private Partnerships provides one possible means of addressing the needs of our public services. The creating of the strategic investment body, and possible use of borrowing financed by local revenues, give us new options. In this new context we have been examining all options carefully and objectively to develop a clear policy in this area and learn from experiences nationally and internationally. We will be considering carefully the responses to the "Financing our Future" consultation exercise before settling an Executive policy on PPPs.

Issues Affecting the Budget

19. Against this background, the Position Report highlights a range of issues which will need to be addressed as we begin to develop the Programme for Government and the Budget for 2003/04 and beyond.

20. The Executive is determined to make a difference through the services and policies for which we are responsible. We want to take the opportunities to break away from approaches that are no longer effective and relevant to the best interests of this community.

21. Spending pressures are, not surprisingly, intensifying, despite a recent rising trend of spending in real terms. We have to face up to significant backlogs of investment, and great demand on some programmes. For this reason, we have emphasised in the Position Report the need to consider very seriously and extensively the scope for re-prioritisation of spending.

22. We need to focus more carefully and more effectively on the top priorities of this administration, the most strategic requirements of this region and the most pressing needs of our community. The Position Report concludes with a short summary of the strategic issues facing each individual Department. This summary makes clear the many substantial demands that are being made on future spending power, and a whole host of useful and desirable purposes to which additional resources could be put. However, the plain fact is that many of the departmental pressures set out in this Report and in individual position reports which departments have provided to their Committees, may either have to be absorbed through re-prioritisation within the individual department's budget or simply not met.

23. Nevertheless I think it is important that we consider briefly some of the strategic issues facing the Executive as we move to develop our Programme for Government and Budget.

24. In agriculture, key challenges include taking forward the work of the Vision Group and ensuring that Northern Ireland's views are represented effectively in negotiations on the reform of the Common Agricultural Policy.

25. In education, consideration will have to be given to the future reorganisation of post-primary education following the Burns Review, though we do not expect there will be any significant expenditure implications within the Budget 2002 period. Other strategic studies to be either concluded or undertaken in this timescale include a Curriculum Review and an assessment of the Local Management of Schools' common funding formula.

26. There is the need to take forward strategies to address long-term unemployment; improve adult literacy; and take steps to meet the changing skills needs of the local economy. We need to enable it to respond and increase employment through business expansion and inward investment. Increasing participation in education and training, especially by those at the bottom of the economic and social ladder, can have significant economic and social impact. Progress has been made locally on this through the Student Support Review but more needs to be done, particularly in Further Education.

27. The creation of Invest Northern Ireland, as a new organisation, provides new opportunities for us to facilitate the development of businesses large and small that are able to compete and win business in global markets and in the face of changing consumer demands. However, Invest NI will face a number of strategic and operational pressures as it seeks to implement new strategies and establish new relationships and new methods of operation, particularly in the areas of innovation and entrepreneurship.

28. Our agenda for modernising the devolved administration and improving the efficiency and effectiveness of public service delivery is also a wide and challenging one. Key initiatives will be developed and implemented in the area of public procurement; government office accommodation; and E-government. We will also take forward the Review of Public Administration and determine our policy framework for PPPs following the current consultation exercise.

29. Our health and personal social services will also continue to demand our attention. The Acute Hospitals Review and the measures needed to address capacity problems in the acute sector, including winter pressures and waiting lists remain the most significant issue. The Minister for Health, Social Services and Public Safety will shortly be issuing her consultation paper on a proposed way forward.

30. Turning to the environment, we need to introduce a large volume of EU environmental Directives into Northern Ireland legislation and then to implement these through monitoring and enforcement. It is essential, if the risk of infraction proceedings are to be reduced, for work on EU Directives to be further advanced. We also want to modernise our planning framework to ensure that development takes place in line with the principles of sustainable development and can contribute to a quality environment and meet economic and social aspirations.

31. Mr Speaker, the Regional Development Strategy has set out the strategic planning framework for the spatial development of Northern Ireland and is designed to shape our social, economic and environmental well being up to the year 2025. The 10-year Regional Transportation Strategy is an important component of the Regional Development Strategy. Consultation on the proposed Transportation Strategy has recently been completed and we will need now to consider the implications flowing from this.

32. Key challenges also exist for the Water Service including the development of a Leakage Strategy and a Water Efficiency Plan. Considerable investment in water and sewerage infrastructure is needed to secure a proper service to the public. This will also ensure that we comply with EU Directives on water quality and waste water standards.

33. Turning to our social agenda, we will continue to drive forward the Welfare Reform and Modernisation Programme, keeping pace with similar developments in Great Britain. In line with targets in the Programme for Government, Neighbourhood Renewal Strategies and strategies for Belfast Regeneration are emerging, along with strategies for Regional Town Centre Reinvigoration.

34. We also want to focus on issues relating to culture, arts and leisure including consideration of the future role of the public library service. A number of Reviews have also been planned during the Budget 2002 period including an examination of Museums and Galleries and a Community Arts Review, and Review.

35. Finally, Mr Speaker, our own Office is to take forward a number of strategic issues including the arrangements for appointing a Commissioner for Children and Young People; a Children's Strategy; a new Community Relations Strategy and work to implement the commitments and actions identified in the Victims Strategy.

Concluding Remarks

36. Mr Speaker, I hope that these remarks have helped place in context the important work that this Assembly will be undertaking over the summer in scrutinising and providing views on the Executive's Position Report.

37. We accept that the timetable is tight - but it is necessarily so. But, as the First Minister has made clear, it is important that debate takes place within Committees and between Members on the issues highlighted in the Position Report. And it is important that this debate translates itself into comments and suggestions that can inform the Executive's work over the coming months to develop its Programme for Government and Budget.

38. Mr Speaker, the First Minister mentioned the role of the Programme for Government in building the basis of a new democratic society. The philosopher John Dewey once wrote that "Democracy begins in conversations". We need conversation and debate to take place, both within this Assembly and elsewhere. We give you an assurance that these comments and suggestions will be considered carefully by individual Ministers and their departments and by the Executive as a whole and will be used to inform the Programme for Government and Budget for 2003/04 and beyond.

THE OFFICE OF THE FIRST MINISTER AND
DEPUTY FIRST MINISTER

RT HON DAVID TRIMBLE MP MLA, FIRST MINISTER AND
MARK DURKAN MLA, DEPUTY FIRST MINISTER
PARLIAMENT BUILDINGS
STORMONT, BELFAST BT4 3XX

Mr Francis Molloy MLA
Finance & Personnel Committee
Northern Ireland Assembly
Parliament Buildings
Stormont
BELFAST
BT4 3XX

6 June 2002

Dear Mr Molloy

EXECUTIVE'S POSITION REPORT - DEVELOPING THE PROGRAMME FOR GOVERNMENT AND BUDGET FOR 2003/04

We are today presenting to the Assembly a detailed Position Report which the Executive agreed last Thursday setting out the background to work we are now undertaking to roll forward the Programme for Government for 2003/04 and beyond and prepare the Budget that will support it. The Report highlights issues that the Executive will need to address in taking forward this work and provides information on the resources available to support the Executive's activities for 2003/04 and beyond.

We are asking the Assembly, through its Committee structure, to consider the Report and to provide views to us on the issues it raises and a copy of the Report is attached for this purpose. While it has been written with the needs of the Assembly primarily in mind, we feel that the issues and questions we have raised will have much wider relevance. We are also therefore making arrangements for our social partners in business, local government, the voluntary and community sector and the trade union movement and other interested organisations and individuals to have an opportunity to consider and comment upon the Position Report.

Background

The Belfast Agreement requires the Executive to bring forward a Programme for Government, incorporating an agreed Budget, each year. As part of this process, it is important that we re-examine our plans and priorities, identify any new problems and issues emerging and the actions that might be required, looking at areas where we may need to do more and any where we perhaps should do less. The Position Report sets out the issues and challenges we have identified and how we might roll forward the Programme and refine our priorities so that we can target resources more effectively in the Budget for 2003/04 and set plans more effectively for the years ahead.

Structure of the report

The Report identifies some key aspects of the Programme for Government and the Budget which the Executive will need to consider. It highlights in particular our desire to maintain a focus on four key issues: investing in our infrastructure; improving public services; tackling social exclusion; and working in partnership. The opening sections of the Report focus mainly on issues related to the Programme for Government. They set out, and seek views on, our ideas for refining and reshaping the Programme. As the Report explains, the list of issues identified is not intended to be exhaustive: we are asking Assembly Committees not just to let us have their views on what is included but also to identify other issues and questions which they feel should be pursued.

The Position Report also sets out, in section three, the resource position, highlighting the fact that departments would require funding well in excess of the resources which will be available after the conclusion of the UK Spending Review in the summer. We would be interested in your views on the issues raised in this section and on the relative priority that might be attached to different policies, programmes and actions, and the scope for meeting new challenges by reducing some services or improving our effectiveness and/or through efficiency improvements.

We wish to ensure that consultation also occurs on the implications of the issues for equality of opportunity and good relations. In providing your comments we would therefore also welcome views on any such implications arising from the Report.

Timescales for responding

We were pleased with the response we received from Committees to last year's Position Report and hope that, once again, each Committee will examine the information contained in the Report carefully and provide views on both cross-cutting issues and issues specific to its department. As the Minister of Finance and Personnel indicated in his statement to the Assembly on 4 March, the timescale for providing views allows Committees until the end of August to provide their views to our office on issues relating to the Programme for Government. That said, it would be helpful if initial comments from as many Committees as possible could be relayed to us sooner to allow us to consider the initial comments as we draft the Programme for Government.

As was the case last year, the Finance and Personnel Committee will play an important role in collating the views of all Committees on the resource aspects of the Report. We have asked Committees to provide preliminary views to the Finance and Personnel Committee during July, so that you might provide a co-ordinated view by mid-August.

Next steps

We plan that the draft Programme for Government will be introduced to the Assembly in late September and that Committees would then have until mid November to examine the details of the proposals and provide comments. At the same time, the document will be issued more widely, along with the draft Budget, for consultation. It is also anticipated that there will be an opportunity for an Assembly debate on the draft Programme at the beginning of this consultation period. You will be aware that the Minister of Finance and Personnel will present the Draft Budget and consult on it, liaising with the Finance and Personnel Committee, in parallel with these stages of work on the Programme for Government.

We hope that you and your Committee will find the Position Report helpful in setting the context for the work of the Executive over the coming months in reviewing and rolling forward its Programme for Government and Budget. We look forward to receiving your comments.

Yours sincerely

david trimble (signed)
rt hon david trimble mp mla

wesley shannon
pp mark durkan mla
Approved by the Deputy First
Minister and signed in his absence

NORTHERN IRELAND
ASSEMBLY

COMMITTEE FOR FINANCE AND PERSONNEL

Committee Office, Room 401
Parliament Buildings
BELFAST
BT4 3XX

Tel No: 028 9052 1734
Fax No: 028 9052 1083
E-mail: committee.finance@niassembly.gov.uk

7 June 2002

Chairpersons
Statutory Departmental Committees
Committee of the Centre

COMMITTEES' RESPONSE TO THE EXECUTIVE'S POSITION REPORT

The First Minister and Deputy First Minister presented the Executive's Position Report to the Assembly on Wednesday 5 June 2002. The Executive's Position Report is the conclusion of the key first phase to the Budget process and will inform the development of the new Programme for Government and the draft Budget to be introduced in September 2002.

The Executive's Position Report is not a decision making document but serves to inform the Assembly and the wider public of the key issues and demands for resources affecting public services. Through the production and distribution of the document, the Executive is seeking to involve both the Assembly and the wider public in the development of the Programme for Government and Budget 2002.

The Report consists of four sections.

Section 1 of the Executive's Position Report presents the context of the document.

Section 2 of the Report seeks to consult on the policy direction, plans and priorities for the Executive for the years ahead. The Executive is seeking views on the Programme for Government issues in this section from Assembly Committees by the end of August 2002. These responses should be sent directly to the Office of the First Minister and Deputy First Minister.

Section 3 of the Executive's Position Report sets out the resources available to the Executive (currently £7369.5m) before the Chancellor of the Exchequer's SR 2002 statement, which is due in July 2002. Departments were set indicative minima resource allocations in Budget 2000 for the years 2003/04 onwards and the Executive's SR2002 allocation of £125m was therefore created. Departments should by now have consulted with Assembly Committees on their Departmental Position Reports (DPRs) and presented details of the impact on services made by the indicative minima. Through the DPR departments will also have presented Committee's with details of reduced requirements and their proposals for improved administration, programme efficiency and departmental investment. Departmental consultation on these issues and scrutiny by Assembly Committees of DPRs will have provided Committees with an advance opportunity to consider their responses to this section of the Executive's Position Report.

Section 4 of the Report presents in narrative and tabular form the strategic issues and resource implications of the Departmental issues identified during the DPR consultation process.

Other key documents which will also inform Committees will be the Needs and Effectiveness Evaluations and the Annual Report on Implementing the Executive's Programme for Government which are due to be published in June 2002 (with the exception of the Culture, Arts and Leisure Needs and Effectiveness Evaluation). The Committee for Finance and Personnel recently copied to Committees an overall assessment of Needs provided by DFP in advance of the Needs and Effectiveness Evaluations. This document should provide Committees with some insight into the 'Needs' aspect underpinning departmental priorities. Other information available to Committees can be found in the major reviews, which have been completed in the last year, for example, the Burns Report, the Acute Hospitals Review, the Regional Development Strategy and the Regional Transportation Strategy. Committees' input to these reviews will provide a tangible basis for deliberations on the Executive's Position Report.

The Executive is seeking a co-ordinated response on the financial issues (Sections Three and Four) of the Executive's Position Report by mid-August 2002. My Committee therefore would welcome responses from Assembly Committees to these parts of the Executive's Position Report by 28 June 2002 at the latest, to allow it to consider and produce a co-ordinated report to the Executive Committee during the recess.

I have attached in list format for your convenience the various questions presented in Parts Three and Four of the Executive's Position Report which your Committee may find useful for your response. This does not, however, preclude any other consideration your Committee might like to make as part of its response.

Committee Clerks and MLAs will also have received a briefing pack following the Budget Seminar organised by the Committee for Finance and Personnel in March 2002. The briefing provides some useful pointers to how a Committee might scrutinise Departmental Position Reports.

Yours sincerely,

FRANCIE MOLLOY
Chairman

SECTION 3 - RESOURCES

Page 27 Par 63 - Using Resources More Effectively

Have you any views on how best the following measures (Needs and Effectiveness Evaluations, The Reinvestment and Reform Initiative, Rating Policy Review, Executive Programme Funds, Procurement Review, Administration Costs, Use and Disposal of Assets, e Government) can be applied to maximise the resources available to the Executive, increase effectiveness and improve the quality of public services?

Page 28 Para 67 - Using Resources More Effectively.

How should spending priorities be changed from 2003-04 onwards?

What scope is there to save on existing public spending programmes to enable resources to be directed to greater PfG priorities?

Page 30 Para 80 - Financing our future.

How should the Executive maximise the opportunities presented by the Reinvestment and Reform Initiative?

Page 31 Para 86 - Financing our future.

What opportunities exist to make full use of private sector funding as a means of improving the quality of public services?

Page 35 Para 98 - Executive Programme Funds.

What should be the strategic direction of the Funds and can they be used more effectively?

Page 37 Para 102 - Public Procurement Review.

What further opportunities exist to improve public procurement?

Page 37 Para 105 - Administration Costs.

What opportunities exist to streamline and improve the efficiency of public services?

Page 38 Para 105 - Use and disposal of assets.

What opportunities exist to make better use of public service assets?

Page 37 Para 105 - E Government.

What opportunities exist to streamline and improve the delivery of public services through E Government?

SECTION 4 - DEPARTMENTAL ISSUES FOR 2003-04 AND BEYOND

Page 43 Para 118

How reliable are the assessments of pressures and easements, which have emerged since the 2002-03 Budget allocations?

How well has the Department planned to deal with any unforeseen new issues?

What impact will new issues have on PfG/PSA targets and can these be accommodated by re-prioritisation within existing baselines?

If any important new issues cannot be addressed by the Department, what other public services or programmes might be re-prioritised to enable the new policy to be delivered?

What opportunities exist for improved efficiency and re-prioritisation of resources?

Page 45 Para 124 - Rises in pay and prices.

How should the Executive deal with the issue of pay and price pressures?

Page 46 Para 127 - Administration Costs

What more should departments do to contain administration costs?

DEPARTMENT OF FINANCE AND PERSONNEL
FROM THE MINISTER

Craigantlet Buildings
Stoney Road
BELFAST
BT4 3SX

Mr Francie Molloy MLA
Chairperson of the Committee for
Finance and Personnel
C/o Committee Office
Room 401
Parliament Buildings
Stormont
BELFAST
BT4 3XX 10 June 2002

Dear Francie

THE EXECUTIVE'S POSITION REPORT

Following on from their Statement on 5 June when presenting the Executive's Position Report to the Assembly, the First Minister and the Deputy First Minister are writing to the Chairs of the Assembly Committees and to the Speaker, seeking views on the issues and considerations affecting the preparation of the Programme for Government for 2003-04 and the Budget 2002 process.

As I mentioned in my Statement to the Assembly on 4 March on the Budget 2002 timetable, I see the Committee for Finance and Personnel as having a particularly important role in this process and, as was the case last year, I would be very grateful if the Committee could draw together the key themes and conclusions of each Committee on the Report. This approach worked well last year and the Committees' report in September was very useful in preparing the Draft Budget.

The issues in the Position Report will, of course, remain relevant and important as we proceed through the autumn, and thus there is a longer period, between now and late November, when the issues can be considered further. However, in order to facilitate the development of Budget proposals, I would hope that you would be able to operate to a broadly similar timetable as was used last year, ie the Committee to draw in preliminary comments from other Committees in July with a view to providing a preliminary reflection of the issues by mid August.

I appreciate that this is a challenging target, however I hope your task will be somewhat easier than last year as a result of our efforts to get the underlying departmental position reports to Assembly Committees in April.

In terms of your own input, I would draw your particular attention to Section 3 of the Report, which deals with a range of measures which could potentially maximise the level of resources available to the Executive, increase effectiveness and improve the quality of public services. Though it will be important for such issues to be considered and addressed, in each Department's context, by the individual Committees, they will be of particular interest to the Committee for Finance and Personnel.

I would be happy to discuss this in more detail when I appear before the Committee tomorrow.

I am copying this letter to all Ministers for information and to Roy Beggs Jnr MLA. You may also wish to circulate this letter to other Committee Chairs.

Sincerely

DR SÉAN FARREN MLA
Minister of Finance and Personnel

APPENDIX 3 COMMITTEE RESPONSES
RELATING TO THE REPORT

RESPONSE BY ASSEMBLY COMMITTEE:
COMMITTEE FOR AGRICULTURE AND RURAL DEVELOPMENT

28 June 2002

Your Committee Chairperson wrote to Committees on 7 June seeking their responses to Sections 3 and 4 of the Executive's Position Report (EPR), in order that the Finance Committee might provide a co-ordinated response to the Executive on these Sections.

The Committee has met with Department officials on three occasions to discuss both the Department's and the Executive's Position Reports, and the Department's priorities for bids under Executive Programme Funds (EPF) and the Re-investment and Reform Initiative (RRI). The Committee has also been involved in the preparation of the DARD Service Delivery Agreement (SDA) for 2003-04.

Following deliberations on the outcome of these meetings and related correspondence, members have today agreed the contents of this letter as the formal Committee response on the resource issues contained in the EPR.

In terms of spending priorities, the Committee is satisfied that there is overwhelming evidence to support the assertion that rural needs are, in fact, key in terms of economic, social and environmental issues, and that they bear comparison with other, more obvious, priorities such as transport, health and education. Examples of this evidence include the findings of the Committee's Inquiries, as well as the Vision Group Report. Together, they describe an industry, and a rural community, faced with crisis, low morale and an uncertain future. They identify the forces, including reform of the Common Agricultural Policy, that are affecting the agri-food industry, and the absolute necessity for restructuring, modernisation and reinvestment.

There is a province-wide economic and social impact, stemming from the economic non-viability (in terms of ability to support a family) of a large percentage of the near 30,000 active farms in Northern Ireland. The recent report, highlighting the sense of hopelessness amongst farming communities, should serve to remind the Executive that there are implications for other policy areas such as Health and Social Services. Add to this the obvious environmental impacts (both positive and negative) of farming, and the implications of farmers going off the land, and it is clear that these issues must be addressed, in a strategic way, for the greater good of Northern Ireland.

Furthermore, the European Commission's recent proposals, arising from the review of the Common Fisheries Policy, also represent a key challenge to the local administration, in terms of ensuring that the local fishing industry can survive and prosper in this heavily regulated industry. The Committee believes that the importance of the fishing fleet along the County Down coast, together with the jobs associated with fish processing, make this worthy of Executive attention.

Accordingly, the Committee recommends that rural issues receive a higher priority in terms of the allocation of resources within the Programme for Government than is currently the case. In particular, much higher levels of funding are necessary to allow restructuring and modernisation of the agri-food and fisheries industries. The effects of such restructuring will also require parallel efforts to offer economic and social alternatives to those who can no longer make a living from the family farm or a restructured fishing and processing sector.

It is for these reasons that the Committee has offered its full support to the Department's recent bids under the Executive Programme Funds (EPF) and the Reinvestment and Reform Initiative (RRI). The Committee has also supported DARD's Position Report bids.

One of the areas in which the Committee sees particular merit is the Department's proposed environmental measures, for which important bids have been lodged. The Committee recognises as have DARD officials, that farming has environmental consequences. Officials have also accepted that responsibility for addressing these issues should not fall solely to farmers, and that where farm incomes are so low, investment on farm infrastructure is bound to suffer. However, the Committee would like to see a greater co-ordination of effort between the two departments involved (DARD and DOE) and members would repeat their earlier call for a sensitive and proportionate response to farm pollution problems, and the provision of adequate financial and technical support to farmers.

In addition, the Committee considers that the prevalence of animal disease is highly significant, in terms of resource implications, animal health and future access to export markets for Northern Ireland produce. The Committee has therefore recommended, to the First and Deputy First Ministers, that animal disease should be addressed within a dedicated sub-priority in the Programme for Government. This, the Committee believes, would sit reasonably well in the "Securing a Competitive Economy" Priority, with the Executive committing itself to take all appropriate steps towards the eradication and reduction of various animal diseases, and setting out a number of actions it will carry out during the next 3 years.

The Committee believes that it is important for the Department to have appropriate resources in place, both to deal with the current animal disease situation (in terms of compensation payments to farmers) and to put in place the measures necessary to eradicate the diseases, or reduce their incidence. In making this a priority therefore, the Committee recommends that the Executive should agree to a realignment of the Department's budget, to provide the baseline necessary for provision of compensation. This realignment should not 'count' against DARD's bids, but would reflect the Executive's intention that Departments should improve their ability to accurately estimate expenditure, thus avoiding significant under or over-spending and subsequent reallocation of resources in-year. It would also be important for the realignment to be set against clear objectives to reduce incidence year on year, thus reducing the resource requirements year on year too.

The Committee now seeks to answer some of the questions raised in the Executive Position Report in respect of "Departmental Issues".

1. How reliable are the assessments of pressures and easements, which have emerged since the 2002-03 Budget allocations?

The Committee is satisfied that the Department has 'captured' the current and future issues in Section 3 of its Position Report. Indeed, the pressures relating to implementation of the Vision Action Plan were foreseen before the 2002-03 allocations, and the Committee has repeatedly expressed its concern that no resources were allocated in that year. The Committee is also acutely aware of the levels of the recurrent costs of animal disease compensation, and the current situation whereby DARD seeks additional funds in-year every year. The Committee would therefore agree that DARD's assessments of pressures are reliable.

2. How well has the Department planned to deal with any unforeseen new issues?

In terms of resources, and as outlined in the answer to the first question, the issues contained in the DARD Position Report were already either foreseen, or could be described as 'markers' put down in preparation for the results of reviews or consultation processes that are currently underway within several policy areas. The Committee would, therefore, have no specific concerns that there has been any lack of planning by the Department in terms of resource management.

3. What impact will new issues have on PfG/PSA targets and can these be accommodated by re-prioritisation within existing baselines?

The top priority issues contained in the Department's Position Report are in direct support of Programme for Government priorities (implementation of Vision Action Plan) and the objectives contained in DARD's Public Service Agreement (PSA). The bids for funds for animal disease compensation are not, as the EPR states, going to have a major impact on current objectives as they stand. However, the Committee has recommended that tackling animal disease should become a priority within PfG and there are linkages between the issue and the PSA objectives.

The Committee has quizzed DARD officials on possibilities for reduced requirements and re-prioritisation. This is dealt with in more detail in a later question.

4. If any important new issues cannot be addressed by the Department, what other public services or programmes might be re-prioritised to enable the new policy to be delivered?

The Committee's powers, as enshrined in legislation clearly enable it to consider and advise on Departmental budgets in the context of the overall budget allocation. Members do not, therefore, consider it appropriate that the Committee should advise on other Department's budgets. However, members believe that the case for additional funding to meet DARD's pressures is overwhelming and that if this requires other Departments receiving less then this must be faced. Members consider that, where Departments have failed to meet expenditure expectations in the past, this may offer the Executive a basis on which to re-prioritise other public services or programmes.

5. What opportunities exist for improved efficiency and re-prioritisation of resources?

The Committee has considered these questions in detail with DARD officials. In fact, members have pushed quite hard on the efficiency aspects, given the general comments contained in the DARD Position Report. These claimed that "a number of initiatives are being actively pursued on this front". In its most recent discussions with DARD, the Committee sought details of these initiatives. DARD officials reported that a Business Excellence Programme, using the EFQM Excellence Model, was underway throughout the Department's business areas. The Committee is therefore satisfied that DARD is attempting to address internal efficiency issues, but members cannot comment on whether or not specific improvements have been made, or whether there will be, or have been, any cost savings attached to greater efficiency.

In terms of re-prioritisation, the Committee urged the Department to include specific examples of the consequences of cuts in services resulting from application of the indicative minima to the Department's budget. The Department did so, and the Committee believes that they are realistic assessments of the effect on each work area. None of these consequences is attractive to members, particularly the cuts in two grant schemes and the provision of fewer enhancements to flood protection. They are, the Committee notes, matters that will affect delivery of the Department's PSA targets. The Committee also notes that DARD has bid for funds to re-instate all of these actions, but that the necessarily high bids for animal disease compensation funding has distorted the prioritisation of these important areas. The Committee's recommendation above would overcome this difficulty and allow reinstatement of funding to these work areas.

It is obvious to the Committee that further re-prioritisation would have extremely negative consequences for the delivery of DARD's objectives.

6. How should the Executive deal with the issue of pay and price pressures?

Although the Committee considers that it may not be appropriate to make a policy response to this particular point, members note that the Department has not lodged pay and price pressures, despite their overall bids for £54m in the 2003-04 financial year.

It could be argued, members believe, that if sufficient provision has been built into the baseline for DARD's pay issues, then all Departments should be able to live within their baselines in the same way.

7. What more should departments do to contain administration costs?

The Committee has debated, with DARD officials, the in-year management plan proposed for 2002-03, which aims to save some £3million. Members were appraised of, and are content with, the process undergone by the Department. Those heading up DARD Business areas were told that activities supporting PfG and PSA commitments must be left alone, as they tried to identify the areas of work which could be delayed or stopped. Even with this instruction in place, members were somewhat concerned to note delays in recruitment in certain areas, and delays or cancellation of Research and Development work, particularly in the area of animal diseases.

It is also worth noting that much of DARD's work is related to statutory requirements (such as diagnostic testing) and the administration of EU policies and programmes. Both Agriculture and Fisheries are very heavily regulated by Europe, and the continued availability of EU funding is dependent on fulfilling often complex administrative requirements. The Committee therefore acknowledges that certain administration costs are not wholly controllable by the Department.

That said, the Department has publicly committed itself to a process of modernisation and this, together with a move towards meeting e-government objectives (for which bids have also been lodged) should help the Department to contain its administration costs.

Committee members trust that their views will be given appropriate consideration and look forward to the report by the Committee for Finance and Personnel and the next stages of the process. Members have agreed to copy this response to the Minister, Brid Rodgers, for her information.

PAUL MOORE
Clerk, Committee for Agriculture and Rural Development

RESPONSE BY ASSEMBLY COMMITTEE:
COMMITTEE FOR CULTURE, ARTS AND LEISURE

27 June 2002

Thank you for your 7 June letter seeking input from Committees to allow you to co-ordinate a composite response to the Executive's Position Report (EPR). My Committee considered the Department of Culture, Arts and Leisure's draft Departmental Position Report in April. The various issues we explored with the Minister at that stage related closely to many of the resource-based questions posed in Section 4 of the EPR.

Reliability of assessments of pressures and easements

The Committee is content that the pressures identified by the Department are very real. In particular, it would strongly support the case for the restoration of the £3.3m reduction made by the application of the indicative minima exercise. While the EPR indicates how DCAL would be forced to apportion the reduction, in stark terms, the effect of such a cut could wipe out the entire budget of either PRONI, Waterways Ireland, or the North South Languages Body at one go. It also represents almost the whole budget for sport.

In terms of easements, none have been identified by DCAL. The Committee is broadly content with this position, particularly in view of the impending quinquennial reviews of several of its executive bodies, as well as the impact of developments in a number of areas eg NI Soccer Strategy, MAGNI review, European Capital of Culture bid, etc. The Committee has been assured that as areas of policy or service delivery are reviewed, opportunities for increasing revenue will be identified so as to keep programme requirements to a minimum. Clearly, the Needs and Effectiveness Evaluation (NEE) for DCAL will also be relevant, but as the outcome will not be know until the end of July, the Committee will not be in a position to comment until after the recess.

Planning for unforeseen issues

The Department has indicated that all emerging strategic issues have been identified, as well as known pressures within existing programmes. The Committee is conscious the DCAL does not have any 'extra fat' from which to take comfort in the face of unforeseen new pressures arising. That being the case, the Committee considers that it would not be unreasonable to deal with any such inescapable issues via bids in the in-year monitoring rounds.

Potential for re-prioritisation to address new issues

The Committee is content that the Department is unable to re-prioritise within its existing baselines to accommodate any of the new issues for which it has registered a bid. Neither is it in a position to re-prioritise existing services or programmes to enable those new areas which have been bid for to be delivered. In terms of opportunities for improved efficiency, the comments above in relation to quinquennial reviews and the NEE apply.

Rises in pay and prices

As pay issues are handled centrally, it would seem reasonable that Departments should not have to bear the additional cost of any settlements whose out-workings are in excess of the general assumptions previously made and advised to them. The Committee is conscious that pay awards had a major impact on DCAL last year, as the Department inherited the fall-out from a retrospective pay award resulting from a pre-devolution pay and grading review of library staff.

Administration costs

As a small Department which is only now finding its administrative feet, DCAL's core still finds itself with a number of key posts vacant. Indeed, much to the Committee's frustration, it has been unable to resource a legislation unit to undertake, for example, critical work in relation to the 1966 Fisheries Act. This is an area which the Committee will continue to monitor, particularly in the light of the outcome of the NEE.

Departmental Investment Policy

We are conscious that the 'Budget 2002 Guidance to Departments' specified that information should be provided on management and maintenance of existing asset bases. The Committee is, therefore, concerned that DCAL has indicated that it does not have a formal policy in place in relation to either asset management and maintenance, or investment. We would intend to follow this issue up with the Minister over the coming months and will also be seeking assurances that proper audits of assets have been undertaken in respect of NDPBs, such as Museums and Galleries NI and the Arts Council, and that formal policies are also in place for these bodies.

General

The Committee considers that the identification of bids across all its business areas is indicative of the need for proper resourcing of DCAL. Members anticipate that the outcome of the NEE will bear out this position. In terms of the quantum of bids being put forward by other Departments, DCAL's total of £23.9m is modest.

The Committee's recent report on its inquiry into Cultural Tourism and the Arts identified the scale of the economic and social potential of Northern Ireland's cultural and arts products. It also highlighted the extent to which we lag behind the other devolved administrations and, particularly, the Republic of Ireland, in recognising the economic and social importance of providing proper funding for spending areas such as those for which DCAL is responsible. The Committee remains convinced that relatively small amounts of funding, in the context of other 'big spending' departments, have the potential to have a major impact on the quality of life of our whole community, as well as enhancing our image abroad.

I hope that your Committee will find these comments helpful.

EAMONN ONEILL MLA
Chairperson

RESPONSE BY ASSEMBLY COMMITTEE:
COMMITTEE OF THE CENTRE

1 July 2002

I refer to Mr Molloy's letter of 7 June 2002 to the Chairs of Committees about the development of the new Programme for Government and the draft Budget to be introduced in September 2002. I attach the Committee's preliminary views on the budget proposals in relation to OFMDFM.

The Committee has replied separately to OFMDFM in relation to consideration of the Programme for Government in the Position Report.

HUGH FARREN
Committee Clerk

PRELIMINARY VIEWS OF COMMITTEE OF THE CENTRE
ON BUDGET PROPOSALS 2003-04

Resources

1. The needs and Effectiveness Evaluations do not extend to OFMDFM issues.

2. The Committee recognises the potential of the Reinvestment and Reform Initiative to have a significant impact on the capital investment deficit over the coming years. The Committee hopes to explore the potential for the Initiative to maximise the resources available to the Executive with the First Minister and Deputy First Ministers in the near future.

3. The Committee welcomes the current consultation on the use of Public Private Partnerships as a means of providing funding for public services. The Committee also acknowledges the valuable Inquiry on this issue carried out by the Committee for Finance and Personnel. However, the Committee has some concerns about whether sufficient robust evidence exists to support the assertion that PPPs can deliver value for money particularly in the Northern Ireland situation where projects are less likely to be sufficiently large to achieve economies of scale.

4. The Committee believes that there are very significant opportunities through electronic government to improve the delivery of public services. The Committee feels strongly that the forthcoming Review of Public Administration offers a unique opportunity to exploit that potential and re-engineer the way services are organised and delivered.

OFMDFM Issues

5. The Committee has had discussion and correspondence with OFMDFM on a number of the specific strategic issues and resource implications faced by the Department. The main points of these are summarised below.

The Committee noted the dramatic increase in estimated provision for the NSMC in 2005-06 relating to the provision of new accommodation. However, the Committee also recognises that this is an early estimate and that the various procurement options have yet to be considered.
The Committee is concerned that there is currently no allocation of Programme Funding for victims for the period of the spending review. The Committee has also highlighted the need to ensure, following any transfer of functions from the NIO to OFMDFM, that appropriate funding on a recurring basis will also be transferred to meet the needs of victims.
The Committee has raised concerns about the indicative budget for the Review of Public Administration and will be seeking further information on this issue.
The Committee has serious concerns about a bid for funding for the Louvain Institute. While recognising that there is support for the cultural history of the building the Committee believes it would be extremely difficult to justify the proposed expenditure from public funds and will be keeping the issue under consideration.
The Committee would wish to see OFMDFM identify the development of the Strategy for Europe as one of the main issues and pressure facing the Department. The Committee has also raised particular concerns about the proposals for secondments to Brussels.

RESPONSE BY ASSEMBLY COMMITTEE:
COMMITTEE for EDUCATION

REPORT: 2003/04

INTRODUCTION

The Education Committee welcomes the opportunity to give its comments on the Executive's Position Report with regard to the Department of Education. The Committee would like to highlight that further analysis will be undertaken when a copy of the Needs Assessment Evaluations and the Annual Report on Implementing the Executive's Programme for Government has been published.

Programme for Government

The Committee will submit our views on the Programme for Government to the Office of the First Minister and Deputy First Minister in due course. The Committee firmly believes that Investing in Education and Skills must remain one of the key priorities of the Executive given its role in personal, community and economic development. Within this overarching priority the Committee is of the view that investment in Early Learning/Early intervention initiatives and Capital Building projects must be given high priority. We believe that the investment in Early Intervention initiatives such as Reading Recovery projects and literacy/numeracy schemes is an investment in the future. We also believe that the infrastructure to deliver the key priority is essential and investment in it is an indication of the Executives commitment to the priorities in the Programme for Government.

2003/04 Budget

The Committee would point out that the budget must reflect the key priorities outlined in the Programme for Government and support their delivery. While we appreciate that the Executive faces some very difficult decisions, investment in education must receive a very high priority.

The Committee would make the following comments:

1. The Committee firmly believes that core baseline funding must be increased and is concerned that many schools are struggling with funding difficulties on an on-going basis and are facing teacher redundancies to avoid going into deficit. The Executive has proclaimed education to be one of the key priorities, therefore it must allocate funding to support this position to ensure stability, adequacy and a satisfactory provision of the core curriculum to all pupils.

2. The Committee is concerned that the potential benefits of the impact of specific initiatives are being compromised by the fact that the core baseline funding is inadequate and is also concerned that the Department of Education appears to be increasingly required to deal with and address social problems that are outside the Department's remit and for which it is not funded. With the Department's very tight financial position the Committee believes that this should be highlighted and if it continues, extra funding must be provided to ensure limited funding is not being directed away from core education services.

3. The Committee understands that over £100 million is currently required to bridge the gap with English schools and the gap will increase each year. This illustrates the unfair and inequitable situation facing our schools and the Committee believes that money should be allocated to schools on the basis of merit and needs of education in Northern Ireland.

4. The Committee is concerned that the £9.6 million reduction implied by the application of the indicative minima exercise in relation to Schools Capital would have a major impact on capital and would be exacerbated by the long-standing under-investment in the schools estate. The Department has indicated that if the indicative minima reduction continued into subsequent years, the schools capital budget would be under £90 million and the existing substantial capital works backlogs would increase further still.

5. With regard to maximising the opportunities presented by the Reinvestment and Reform Initiative, the Committee would wish to see the consideration of all the funding options including the use of private sector funding as part of the urgent development of the Strategic Investment Body which would take forward the remit of addressing the infrastructure deficit and identifying the best form of funding.

6. The Committee would point out that the main element of the Department of Education's budget is schools' recurrent costs. The Committee would wish to highlight that if the bids to meet these pressures are not met and these costs have to be absorbed within the indicative budget this would put at risk the Public Service Agreement targets in relation to Key Stage assessment outcomes and examinations. The Department has indicated that the £21.1 million indicative minima reduction for schools' recurrent costs would not allow the existing level of educational services to be sustained in real terms.

7. The Committee appreciates that there will probably be very limited scope for increases in spending. However we again would ask the Minister for Finance and Personnel and the Executive to recognise the priorities in the Programme for Government and meet all or part of the following bids:

School Budget Deficit

to provide additional staff and resources and
to improve schools' capacity to deliver the curriculum

Schools Estate

to reduce the major and minor works backlog, reduce
the number of temporary classrooms and promote
diversity and social inclusion

The Committee will continue to support the use of PPP/PFI where necessary to support the conventional Capital Build Programme but would point out that conventional funding will still form the most important element.

Literacy and Numeracy -Reading Recovery

Early intervention to improve reading, enabling
pupils to access the whole curriculum and leading
to improved pupil performance.

Special Educational Needs - Inclusion / Mainstreaming

Appropriate provision for Special Educational
Needs children in mainstream settings, without
reducing provision for other children.

CONCLUSION

The Education Committee recognises that difficult decisions have to be made and there is little room for manoeuvre. However, Investing in Education and Skills is one of the key priorities for the Programme for Government and the budget must focus on the delivery of these priorities. A number of inescapable pressures have been identified within the education budget and the Committee would strongly press for these bids to be met to avoid reducing the ability to deliver the targets set down in the Public Service Agreement. There is also a strong case for providing funding to improve services rather than just maintain the current position.

RESPONSE BY ASSEMBLY COMMITTEE:
COMMITTEE FOR SOCIAL DEVELOPMENT

23 July 2002

I had put off replying to your letter of 7 June in the expectation of seeing the Needs and Effectiveness Evaluation in relation to Housing but, in its continued absence, I felt it best to offer an interim response on behalf of the Committee for Social Development.

The Committee recognises the clear linkage between the Programme for Government priorities and the targets specified in the Public Service Agreement and so my comments are confined to what the Committee considers as the strategic priorities for the Department for Social Development. The Committee also draws your attention to the focus afforded to housing and regeneration in the Regional Development Strategy.

The recent announcements about additional funding for fuel poverty measures and homelessness are warmly welcomed by the Committee.

However, homelessness is a growing problem and the Committee continues to be concerned that insufficient resources are being directed to this sector. The Committee's report into homelessness called on the Executive to consider the report and arrange for the implementation of the Committee's recommendation at the earliest opportunity. At least some of those recommendations have financial implications and the growing trend of homelessness points towards a need to accelerate the social house-building programme.

The Committee is also convinced that the historic investment in social housing should be protected through a comprehensive maintenance programme and up-grading existing stock.

The Committee also remains convinced that the Warm Homes Scheme should be extended.

The Committee also considers that the issue of repaying high interest on loans for social housing should be investigated with a view to reducing the burden on the public purse.

So far as regeneration spending is concerned, it is the Committee's view that this has an important bearing on our ability to fulfil the hopes and aspirations of the Regional Development Strategy.

The Committee also considers that the voluntary and community sectors continue to need public funding to provide a range of services especially to those living in disadvantaged areas and in poverty.

On a general note the Committee accepts that efficiency savings in the two agencies may well play a part in reducing costs, but it is important that these services are not diminished since they play a crucial role in supporting those in poverty.

I am copying this letter to the First and Deputy First Minister.

FRED COBAIN
Chairman

RESPONSE BY ASSEMBLY COMMITTEE:
COMMITTEE FOR EMPLOYMENT AND LEARNING

27 June 2002

The Committee for Employment and Learning has agreed the following response in relation to the budgetary issues contained in the Executive's Position Report: 'Developing the Programme for Government and the Budget for 2003/04.' Members look forward to further Assembly debate on these issues in the new session, following consideration of the outcome of the Chancellor's Spending Review 2002 and the Needs and Effectiveness Evaluation of Higher and Further Education and Vocational Training.

1. Strategic Issues

The Committee strongly supports the main strategic issues identified in the Position Report to be addressed by the Department for Employment and Learning (DEL) over the period 2003 - 2006 i.e.

Employability, taking forward the Action Plan from the Taskforce on Employability and Long-Term Unemployment and addressing adult literacy in particular;
University Research and Development; and
Learner Support, including increasing participation in, and widening access to, education and training

The Committee has already raised in its submissions on both DEL's draft Service Delivery Agreement (SDA) and its draft Annual Business Plan for 2002/03, that there are no targets for progressing the Taskforce's work in the current year i.e. 2002/03. The Committee hopes to see positive progress in this area in the current year and calls for the urgent completion of the Taskforce's Action Plan, which was due to be completed in March 2002.

Early implementation of the work of the Taskforce and of DEL's 'Essential Skills for Living' strategy to tackle the problems surrounding adult literacy will be major priorities in the three-year period covered by the Budget 2002 process and the Committee would urge that all bids in these areas are met.

2. Spending Reductions in 2003/04

DEL has set out indicative minima reductions for 2003/04 amounting to almost £32m, but has stated that £24.8m of the reduction in its baseline provision will be needed to maintain current provision. Regarding these reductions, the Committee believes that current provision needs to be maintained and enhanced in both higher and further education and would particularly support bids in these areas.

3. Administrative and Programme Efficiency

The Committee recently criticised DEL for the lack of detail on programme efficiency in its draft SDA and this was not addressed in its finalised version. With regard to administrative and programme efficiency, paragraph 9.3 of DEL's initial draft Position Report merely stated that 'programme efficiency is addressed in DEL's ongoing programme of evaluations.' Members requested further detail of the efficiency savings aimed for in the programme of evaluations to be carried out in 2002/03, together with information on the efficiency savings achieved from those evaluations undertaken in 2001/02, to determine whether everything possible is being done to ensure value-for-money in all DEL's programmes.

The Committee noted that DEL's finalised Position Report had been amended to read that 'programme effectiveness is addressed in DEL's ongoing programme of evaluations,' and no details of efficiencies achieved were provided. The Committee is therefore still unclear as to how efficiencies in DEL's programmes are achieved.

With regard to the scope for savings on existing programmes to enable resources to be directed at the priorities in the Programme for Government, the Committee has identified the following:

(i) Revised Individual Learning Account (ILA) Scheme

The Committee has heard mainly anecdotal evidence of the success of the ILA scheme in returning people to education, alongside substantial statistical evidence of deadweight and has previously recommended that any new scheme is more effectively targeted at those most in need and safeguarded from abuse. Indications from DEL are that the revised scheme will be established by September 2002, at the latest.

(ii) Walsh Visas

The Committee believes that the bid for £2.5m for the Walsh Visa programme may be excessive, given the relatively small numbers involved and awaits the interim evaluation of the programme. In particular, we would like to know the cost per trainee.

(iii) ONE Service

The interim evaluation of the pilot of the ONE service found that costs were much higher than expected. The Committee believes that savings can be achieved in this programme as design improvements are made, before it is rolled out across Northern Ireland.

4. Needs and Effectiveness Evaluation

Members saw the Needs and Effectiveness Evaluation of Higher and Further Education and Vocational Training, as having a key role in the Committee's scrutiny of the Budget 2002 process. The Committee is therefore disappointed that it was not completed in line with the target in the Programme for Government.

5. Capital Investment in Higher and Further Education

Members noted in DEL's Position Report that current needs analysis indicates that, in comparison with England, an additional £85m may be required to address under funding, especially in higher and further education and student support and would urge the Executive to address this.

Members are extremely concerned at the significant backlogs in capital investment requirements for both maintenance and new build projects in higher and further education and in particular that it is 'not feasible to meet these needs in the short to the medium term.' The Committee is therefore strongly supportive of DEL's bids to address the backlog and would support bids to alleviate the current situation at Stranmillis University College in particular.

6. New Deal

The Committee noted that the New Deal programme 'is increasingly dealing with those hardest to help as they face multiple barriers to employment,' and has agreed in the past that the programme is not meeting the needs of the long-term unemployed. Accordingly, members would especially support bids for the New Deal programme to be allocated to help those with multiple barriers to employment.

7. Cross-cutting Issues

The Committee has been disappointed in the past at the lack of an effective inter-departmental focus on research and development and would wish to see this addressed as part of the Budget 2002 process, so that genuine cross-cutting initiatives will emerge. In general, we would wish to see the Executive Programme Funds used to a much greater degree to promote inter-departmental work.

The Committee's priorities for DEL's draft bids for 2003/04 - 2005/06 as set out in Annex D of DEL's initial draft Budget 2002 Position Report are set out in Annex 1 to this response.

DR ESMOND BIRNIE MLA
Chairman

ANNEX 1

COMMITTEE FOR EMPLOYMENT & LEARNING'S PRIORITIES

Category	Bid description	2003/04 (£000s)	2004/05 (£000s)	2005/06 (£000s)	Impact on outputs
Employability Bids	Adult Literacy Strategy	1,000	4,500	4,613	5000 extra adult learner places per year by 2005
Employability Bids	FE Strategic Restructuring	2,000	2,050	2,100	FE provision focussed on the needs of business and industry therefore improving employability
Employability Bids	FE Centres of Excellence	2,000	1,000	2,000	FE provision focussed on the needs of business and industry therefore improving employability
Employability Bids	Skills Training Initiatives	5,000	5,125	5,253	1,000 additional training places in key skill areas

Category	Bid description	2003/04 (£000s)	2004/05 (£000s)	2005/06 (£000s)	Impact on outputs
Research	Remove NI/GB Expenditure Differential	6,922	11,093	11,537	Match GB funding levels and raise standards in HE
Research	SPUR 2	4,000	5,000	5,000	Lever in £20m from private sector and raise HE standards

Category	Bid description	2003/04 (£000s)	2004/05 (£000s)	2005/06 (£000s)	Impact on outputs
Learner Support	FE Capital, inc access for people with disabilities	6,500	5,500	7,000	Access for disabled students, 2 major schemes
Learner Support	HE Capital, inc access for people with disabilities	19,150	19,250	16,450	Access for disabled students, 1 major scheme
Learner Support	Educational Maintenance Allowances	450	3,500	6,500	Consequences of GB roll-out? (marker)
Learner Support	Increase in fees/bursary thresholds	4,000	4,100	4,200	Consequences of GB roll-out? (marker)
Learner Support	Roberts Review of Postgraduate awards	2,000	2,050	2,100	Consequences of GB roll-out? (marker)

Category	Bid description	2003/04 (£000s)	2004/05 (£000s)	2005/06 (£000s)	Consequences if Bid not met
Essential to maintain services: Inflation Proofing	Further Education	0	5,160	13,640	4,000 FE places lost by 2005/06
Essential to maintain services: Inflation Proofing	Higher Education	2,620	9,417	16,484	2,000 HE places lost by 2005/06
Essential to maintain services: Inflation Proofing	Student Support	0	3,006	6,088	Increased fee contributions required or fewer places available
Essential to maintain services: Inflation Proofing	Preparation for Work	0	3,396	6,889	1,500 Jobskills places/Modern Apprenticeships lost

Category	Bid description	2003/04 (£000s)	2004/05 (£000s)	2005/06 (£000s)	Consequences if Bid not met
Other bids essential to maintain services	FE places	7,500	7,744	7,996	2,300 FE places lost
Other bids essential to maintain services	FE Capital	1,000	1,025	1,051	Increase in backlog of outstanding capital work
Other bids essential to maintain services	HE Capital	991	1,016	1,041	Increase in backlog of outstanding capital work
Other bids essential to maintain services	Jobskills	8,000	8,200	8,405	1,700 Jobskills places lost by 2005/06
Other bids essential to maintain services	New Deal	5,000	5,125	5,253	2,000 New Deal places lost by 2005/06
Other bids essential to maintain services	FE Lecturers pay	5,000	6,000	6,150	1,750 FE student places lost by 2005/06
Other bids essential to maintain services	FE MIS System Upgrade	3,100	1,350	750	Inadequate system to manage the FE sector
Other bids essential to maintain services	Roll forward of EPF funding of Adult Literacy	0	1,230	1,261	Loss of capacity to deliver Literacy/Numeracy programmes

Category	Bid description	2003/04 (£000s)	2004/05 (£000s)	2005/06 (£000s)	Consequences if Bid not met
Other bids essential to maintain services	Roll forward of EPF funding of Student Support	0	17,073	17,538	Cancellation of HE Bursary Scheme
Other bids essential to maintain services	Postgraduate Awards Stipends	435	446	457	Reduction in numbers of postgraduate awards available
Other bids essential to maintain services	Springvale Main Campus - Rephasing	- 2,654	- 1,146	3,170	Mismatch between funding and timing
Other bids essential to maintain services	HE places, including restoring and maintaining the 1,000 extra places from the Student Support Review	2,325	5,881	6,771	1,000 places lost by 2005/06
Other bids essential to maintain services	OITFET Development	750	775	803	Increasing OITFET backlog of tribunal cases

RESPONSE BY ASSEMBLY COMMITTEE:
COMMITTEE FOR ENTERPRISE, TRADE AND INVESTMENT

1 July 2002

You wrote to my Chairperson on 7 June seeking the Committee for Enterprise, Trade and Investment's comments on the EPR. The Committee has considered the report and asked me to forward its views.

1. Investment in our infrastructure

The latest UK Economic Outlook and Regional Trends survey, published by PricewaterhouseCoopers (PwC), has found that in key areas like GDP per head and workforce participation, Northern Ireland remains at the bottom of the UK regional league table. Stephen Kingon, PwC managing partner and Chair of the Centre for Competitiveness has stated that, "just to match the UK average level of GDP per head would mean doubling the output of both Northern Ireland's manufacturing and business services sectors[ii]."

Invest Northern Ireland's corporate plan states that, "It is not good enough to be the best in Northern Ireland; we are now benchmarked against the best there is internationally."

The Committee is concerned that the application of the reductions implied by the indicative minima exercise could adversely affect the delivery of a sustainable economy and impact on the Department of Enterprise, Trade and Investment's contribution to the four important areas identified.

The Committee would also like to emphasise the importance of driving forward sustainable economic improvements addressed within 'Investment in our infrastructure'.

2. Improved Service Delivery

The Committee welcomes an overhaul in the structures of public administration in order to make real gains in efficiency so allowing resources to be focused where they are most needed. However it may be appropriate to emphasise other issues relevant to improvements in efficiency and effectiveness.

The Committee also endorses the Department for Enterprise, Trade and Investment's analysis of the impact of the imposition of the indicative minima funding and strongly supports the Department for Enterprise, Trade and Investment's bid for reinstatement of the reductions implied by the indicative minima exercise.

I am happy to discuss.

CATHIE WHITE
Committee Clerk

RESPONSE BY ASSEMBLY COMMITTEE:
COMMITTEE FOR THE ENVIRONMENT

1. I refer to Francie Molloy's letter of 7 June 2002 seeking the views of Statutory Departmental Committees on the above. The Committee wishes to confine its comments at this stage to issues for 2003/04 and beyond, arising from the DOE's Position Report.

2. The Committee discussed with Senior Finance Officials from the Department how their work-in-progress draft budget Position Report impacts on the work of DOE. The Committee had further frank discussions on 11 April 2002 on a more complete draft of the DOE's Position Report, with the Department's Permanent Secretary and Finance Director. The Committee responded to the Department highlighting a number of serious concerns. The primary concern was the significant impact on the test of DOE budget areas of the urgent 'catch-up' work on the transposition and subsequent implementation of a major backlog of EU Directives. The extent of the backlog was reinforced by a follow-up presentation and discussion with the Minister and Senior Officials. This is now quantified and qualified in paragraph 4, 13-16 of the summary of DOE Position commencing page 113 of the Executive's Position Report. Total bids in the area of EU Environmental Directives alone for the 3 years of this Budget period are £11.4m, £13.0m and £14.6m respectively.

3. The Committee called on the Minister of the Environment to ask the Executive, in the strongest possible terms, for additional resources and to ring fence the budget to deal with this whole area of work. The Committee stressed that, since the fault primarily rests with the lack of action during 'Direct Rule', a strong case can and should be made to the Executive, and as necessary with HMT, that additional and ring-fenced resources should be urgently made available to DOE to address the inescapable EU and international obligations and to negate or minimise the real threat of infraction proceeding and fines. The Committee consider it totally unacceptable that budget pressures in this area should impact directly on the important 'catch-up' work in other areas of the Department such as planning, road safety and the built heritage.

4. The Committee views the Department's proposed cut in Resources Grant to District Councils by £6.4m, £8.0m and £10.8m to meet the 'indicative minima' Budget 2002 imposition and as a consequence of not rolling forward into future years the additional £2m allocated to DOE to this area for 2002/03, as totally intolerable bearing in mind the TSN impact on Councils and their services to ratepayers. Such a cut would also place additional financial pressures on Councils who are currently having to address major issues in relation to waste management and air quality - again arising from EU Directives. The Committee therefore see it imperative that the Department's total Local Government bid/resource need of £6.4m, £8.0m and £10.8m is met in full. The issue of restoring the £2m Resources Grant to District Councils in the 2001 Budget exercise is well documented in terms of the out cry from District Councils and the full support of the Committee for the Environment and many Members of the Assembly.

JOHN SIMMONS
Clerk to the Committee of the Environment

RESPONSE BY ASSEMBLY COMMITTEE:
COMMITTEE FOR FINANCE AND PERSONNEL

SECTION 3

RESOURCES

Using Resources More Effectively - Priorities

The Committee has considered the issue of being in the position to use its resources, not only "more effectively" but more importantly, in the "most effective way". The Committee agrees with the Executive's view that there is no quick way to change strategic direction which would require resources to be skewed to new areas of expenditure and therefore awaits further information on the Needs and Effectiveness Evaluations and the Strategic Investment Body's proposals. It is the Committee's view that where priorities are set and resources are targeted there should be tangible and transparent evidence of outputs and outcomes. The Committee will need an opportunity to consider the Needs and Effectiveness Evaluations which are due to be circulated to Committees by the Executive.

Financing our future

The Committee's view remains that all the funding options including conventional public finance, public private partnerships and the Reform and Reinvestment Initiative are considered and utilised to the advantage of the citizens of Northern Ireland. The Committee would like to see the urgent development of the Strategic Investment Body involving a social partnership, to address the deficit in public services. The Committee sees the Body as a strategic approach in producing funding and financing proposals which would ultimately achieve a deal flow of capital projects providing economic development in Northern Ireland.

The Committee has no objection to the use of Public Private Partnerships and has seen evidence of its use in the United Kingdom and the Republic of Ireland but it has already stated that its preferred source of finance is public finance. The Committee sees no reason to change that view at this point in time.

Executive Programme Funds

The Committee view is that each Fund should have its own strategic direction and intent clearly set out by the Executive, provided that this does not create inflexibility or inhibit an imaginative approach. The Committee also wishes to see a more cross cutting approach to the bids by Departments.

Public Procurement Review

The Committee wishes to see a co-ordinated approach between the Strategic Investment Body's investment programme addressing the infrastructure deficit and the Central Procurement Directorate which utilises the scale of the investment programme to maximise value for money.

Use and disposal of assets

The Committee agrees that the Executive Committee should seek advice from, amongst others, the Strategic Investment Body for ways of making better use of its assets. The Committee has noted the potential impact of the costs for capital and depreciation through Resource Accounting and Budgeting on available resources. The Committee recognises that this impact needs to be considered when decisions on capital investment, including the Government Office Accommodation Review, Public Private Partnerships, conventional public finance and Reform and Reinvestment Initiatives are being made.

E Government

The Committee recognises the advantages and potential for more efficient and effective use of resources through an E Government Strategy but has concerns that there is also potential for wastage by project costs to achieve the objectives of the strategy. The Committee has become aware initially through its Inquiry into Public Private Partnerships of the replication of high costs associated with very similar IT projects involving document imaging.

The Committee also sees the strategy as being enhanced by better use and sharing of information between Government Departments.

SECTION 4

DEPARTMENTAL ISSUES FOR 2003/04 AND BEYOND

Pressures and Easements

The Department has not identified any easements.

The Committee for Finance and Personnel relies on the Department's financial management systems for assurance on the assessment of pressures and easements. The Committee has received financial position reports and briefings at quarterly in-year monitoring rounds, end year position reports, Executive Programme Funds bidding rounds and Departmental position reports.

The Committee considered the Department's 2000/01 financial year final position which returned £3.9m for reallocation by the Executive Committee. The 2001/02 figure has not yet been confirmed but the Department has bid for £6.3m to be restored to its budget for project slippage and ring-fenced budgets. In addition the Department has identified new pressures of £12.7m, many of which are cross Departmental.

Resource Planning

The Department of Finance and Personnel faces many strategic issues and realistic assessments of resources required are difficult. The Committee recognises the planning difficulties associated with its programmes but is concerned with the rising level of end year flexibility and the high amount of resources identified as required to meet new pressures.

New issues

The Department of Finance and Personnel faces many strategic reviews and implementation programmes and has provided resource estimates for these in the Departmental Position Report. Some of the preparatory work for these reviews and programmes have resource implications and these have been reflected in the Department's bids in the June 2002 monitoring round.

The Committee has encountered several major reviews by the Department of Finance and Personnel and during this time has also encountered extensions to original timetables. This indicated that original resource and timing estimates, although well intentioned, were not realistic and incurred additional resource requirements. The Committee would like the Department to provide assurance that the delivery of results for reviews and implementation is realistic thereby providing additional confidence in relation to requests for additional resources.

The Committee supports the reviews and implementation work under way involving the Department of Finance and Personnel on Rating Policy, Public Procurement, Public Private Partnerships, Reform and Reinvestment and Legal Services.

Opportunities for improved efficiencies and re-prioritisation of resources

During the 2001/2002 financial year the Committee met with officials from two Departmental Executive Agencies, Land Registers and Rates Collection Agency, in relation to their business plans and performance. These Agencies utilise unit costs as performance measures and resource allocation tools and the Committee was pleased to see a tangible measure of inputs and outputs. The Committee would like to see further development of tangible performance measures and resource allocation methodologies but recognises that this is more difficult outside Agencies. The Committee was encouraged to learn about the establishment of a Business Improvement Team in the Department of Finance and Personnel to further examine opportunities for efficiencies. The Committee looks forward to learning about the results produced by this team.

Rises in pay and prices

The Committee recognises the existing efficiency target of 3% per annum against a planning assumption of 4.5% for pay and 1% for the increase in Employers' National Insurance. Efficiency planning to produce sufficient efficiencies to cover the planning assumptions is already under way. The Public Service faces the same pressures in this respect as the private sector although the latter has greater opportunity to address this by directly passing on increased costs to its customers. The Department faces an additional cost incurred by a decision taken by the Chancellor of the Exchequer on Employers' National Insurance and it remains to be seen how this will be addressed in the Chancellor's statement in July on SR2002. However, the Committee sees opportunity to address pay and prices by a strategic approach to three year pay bargaining which would support and facilitate the Executive's policy of setting three year budgets. The Committee will wish, at a later date, to examine the management and associated costs of sickness absence as a means of addressing shortfalls in efficiency and resources.

RESPONSE BY ASSEMBLY COMMITTEE:
COMMITTEE FOR HEALTH, SOCIAL SERVICES & PUBLIC SAFETY

3 July 2002

Thank you for your letter of 7 June in which you asked for the Committee's views on the Executive's Position Report and the proposed resource allocation to the Department of Health, Social Services and Public Safety.

The Committee considered the Department's draft Position Report in May when members took the opportunity to question officials in detail about the range of bids being made, both as part of the Department's mainstream funding and under the Executive Programme Funds. The Committee agreed the bids being made for 2003/04 against the aim and objectives set by the Department for health and social services. In examining the Department's budgetary needs the Committee also took account of the detailed priorities previously established by the Department in March in its Priorities for Action 2002/03 paper and the Minister's strategic plans for health and social services. These were based on the current Programme for Government priorities and objectives. A key part of the overall planning aims was to promote stability and partnership in the HPSS, which is needed to produce real gains for local communities across the health and social care fields.

The Committee agreed that significant gains could only be achieved if sufficient additional resources were injected into filling existing gaps in critical services and into development of services to meet those priorities and objectives. Members therefore welcomed the Minister of Finance and Personnel's statement in April that increased funding for health would continue to be a key priority for the Executive. And that the funds flowing from the Chancellor's Budget must go to health if real progress was to be made in improving health and social care.

Although the Executive made some preliminary findings from the Needs and Effectiveness Evaluation of Health and Social Care available the Committee was disappointed that the full study was not ready in time for Members to use it to inform their scrutiny of the Department's resource needs. This study has still not been made available and its absence has hampered the Committee's response to the Executive Position Report.

Members are convinced that health must be the key priority for the Executive and funding allocated accordingly. However, until such time as the Needs and Effectiveness Evaluation has been received and considered the Committee is not in a position to make a qualified judgement as to whether or not the specific spending priorities and bids identified by the Department and agreed by the Committee should be changed. The Committee took the view that historic underfunding of health and social services here has meant that significant extra funding is now needed just to address basic service provision inadequacies. Progress on major developmental work has been severely restricted due to this deficiency.

Although the Committee supported the Department's call for extra funding it is conscious of the need to make effective use of those funds and will be putting in place mechanisms to improve the scrutiny of the Department's use of its resources. Until such time as these mechanisms are in place it is not in a position to comment in detail on whether the resources allocated are being used to maximum effect. This includes considering the current Public Service Agreement and Service Delivery Agreement arrangements and the degree of accountability that is built into them. The Committee has questioned the effectiveness of these documents with regard to the information given and targets set.

One of the areas that the Committee will concentrate on is the Health Minister's ongoing priority to improve access to hospital services and reduce waiting times. The Committee plans to examine the impact of the sizeable investment against this priority in the autumn, following research into the pattern of expenditure and outcomes. It will then consider whether or not this spending priority should be changed and the money redirected.

Although the Committee recognises the potential for alternative forms of investment in areas such as hospital facilities the Committee cannot comment on whether the Department is making full use of other potential sources of finance until it has considered the Executive's paper on alternative forms of financing public service improvements.

The Committee has considered the Department's bids under the Executive Programme Funds on several occasions and has held the Department to account with regard for the need to meet the criteria set by the Executive. The Committee is, however, cautious about making a judgement on the effectiveness of the Executive Programme Funds until adequate time is allowed to judge the extent to which the projects funded have made any significant improvement to services. In the meantime the Committee welcomes the recent changes made to the structure and management of the Funds.

Finally, the Committee is very conscious of the need to hold the Department responsible for the good management of its resources, with particular regard to reducing administrative and procurement costs, and the use of its assets including improving e-government links. Related factors include implementation of workforce plans on the recruitment and retention of sufficient numbers of qualified and specialist staff, and the cost of the drug bill.

In the context of the Position Report the Committee does not wish to make specific comment on the questions raised in the Report at this stage. It will judge the management of existing resources and calls for additional resources over the period of the 2002 Spending Review for 2003/04 - 2005/06 against the latest service developments. These include the implementation of local health and social care groups, the re-structuring of acute hospital services and the plans to simplify the Health and Social Services administrative structure.

I hope this is helpful.

DR JOE HENDRON
Chairman

RESPONSE BY ASSEMBLY COMMITTEE:
COMMITTEE FOR REGIONAL DEVELOPMENT

June 2002

Your letter of 7 June refers.

In responding to the Executive's Position Report the Regional Development Committee was mindful of the expected limited increase in public expenditure in 2003-04. However, the Committee recognises that a certain amount of headroom has been created through the Executive's SR 2002 allocation of £125 million and indeed, through the RRI, with an additional £200 million capital injection over the next two years. It will be vitally important that these funds are distributed based on priorities within the Programme of Government.

Parts Two, Three and Four of the Executive's Position Report seeks responses to a number of questions. The Committee agreed at its meeting on 26 June 2002 that it did not feel that it was appropriate to provide a response to each question in Section Two. It agreed however, to provide the enclosed response which provides an overview of the key priorities and pressures facing regional development within the context of the Programme for Government. The Committee has however, provided responses to the questions listed in Sections Three and Four.

In compiling its response the Committee was cognisant of the guidance for departments provided by DFP. The Committee accepts that it is important that there is a clear linkage between the Programme for Government priorities and the targets specified in the Public Service Agreement.

INESCAPABLE BIDS

The creation of the indicative minima position had an adverse impact upon a range of DRD services. Roads resurfacing work will experience a dramatic decrease, as well as there being noticeable reductions in the number of traffic calming schemes, accident remedial schemes and traffic management schemes. In addition, the Water Service will not be able to meet all water quality and waste water compliance targets and it is anticipated that there will be limited progress towards leakage reduction targets.

In its presentation to the Regional Development Committee the Department for Regional Development highlighted a number of inescapable bids. The Committee conducted a careful scrutiny of these bids and agreed with the Department that these bids should be given top priority. It is imperative that every effort is made to obtain the £15 million needed to meet the areas described in Blocks A, B and C as outlined in Annex B of the Department for Regional Development's Position Report. Failure to meet these bids will undoubtedly result in cutbacks in other areas, presumably in areas such as roads and water infrastructure. Even minimal cutbacks can be difficult to sustain given the level of under investment in these areas over numerous years as well as the added impact of a £32 million reduction in services due to reducing baselines to the indicative minima position.

WATER INFRASTRUCTURE

As referred to above, Northern Ireland's infrastructure has suffered major under investment over a sustained period. The Programme for Government has identified the need to tackle the lack of under investment in our infrastructure as a key priority. The Programme for Government states that

"We recognise the serious deficiencies that exist in our essential physical infrastructure.. We will tackle these with a purpose and vigour".

Indeed, the Executive's Position Report states that investment in our infrastructure is one of the four key areas which needs to be targetted. In light of this, the Committee is hopeful that substantial additional funding will be made available to the Department for Regional Development for both our roads and water infrastructure.

The Water Service has a very substantial future programme of investment in Waste Water Treatment Works mainly driven by a need to comply with the Urban Waste Water Treatment Regulations (NI) 1995. The Committee is concerned that given the existing constraints on funding, Water Service will not be able to meet the compliance dates. Indeed it is unlikely that full compliance will be achieved before 2008, which could result in Infraction Proceedings from the EC. This could result in fines being levied on the UK Government, which in turn would then become the responsibility of the Executive. The Committee would therefore, strongly support the bids for the Water Service to help it achieve mandatory compliance levels, as well as helping it to reduce the risk of cryptosporidium contamination.

Efficiency savings will play a part in reducing costs, but neither they nor service reductions could provide anything like the scale needed to meet the underlying funding gap. The scale of the problem is highlighted by the fact that it is estimated that £3 billion of investment is needed over the next twenty years.

The situation is further compounded by the fact that the Department for Regional Development loses out when the read across from the Barnett Formula is calculated. There is no equivalent public expenditure in GB in relation to water and sewerage services because that service in England is privatised.

ROADS INFRASTRUCTURE

Major investment in our road network is also critical. As the Programme of Government rightly points out, our road network is critical to our economy, with 99% of all Northern Ireland goods transported by road. A well maintained road network helps reduce the time it takes to transport freight, which in turn helps improve business profitability and competitiveness. It contributes to the promotion of our tourism industry, providing faster and easier access to our key tourist attractions. Improvements in our road system will also help reduce road accidents, which we all acknowledge is unacceptably high in Northern Ireland.

The Committee welcomes the commitment in the PfG to the provision of an additional £40 million to be made available for the Trans European Network routes from Larne to Belfast and Newry to Dundalk, plus a significant contribution to the upgrading of the Westlink. However, as much as this funding is welcomed, our road network is still in need of major capital investment if it is to cope with the expected increase in traffic over the next ten years. This is particularly important for our provincial cities and towns, which with limited public transport services, are dependent upon the road infrastructure to support business and making services and employment accessible. Existing bottlenecks, such as Toomebridge clearly demonstrate the impact that our poor road infrastructure has on the movement of people and goods. The situation is further exacerbated by the major backlog in roads maintenance. The Minister during question time in the Assembly on 10 June, explained that a proper roads maintenance regime costs in the region of £86 million per year with a current backlog amounting to £145 million.

If this situation is to be addressed substantial investment must be made sooner rather than later. Consequently, the Regional Development Committee is fully supportive of the Department's bids for capital investment projects and structural maintenance for roads.

REGIONAL DEVELOPMENT STRATEGY

On 17 September 2001 the Northern Ireland Assembly adopted the Regional Development Strategy for Northern Ireland 2025 - "Shaping our Future". The Regional Development Strategy (RDS) will shape the social, economic and environmental well being of Northern Ireland up to the year 2025. The Committee believes that it is vital that funding is secured to ensure that the RDS is implemented. Although the Department is only seeking 850k to help oversee the implementation of the RDS this is vitally important work. The Committee has recently been presented a paper by the Department on the monitoring and evaluation of the implementation of the RDS. This paper clearly demonstrates the need for close monitoring to ensure that targets are met and the RDS vision is realised.

REGIONAL TRANSPORTATION STRATEGY

The Regional Transportation Strategy (RTS) is a vital component of the RDS. It is the purpose of the RTS to support the RDS and to move, over a 10-year period, towards achievement of the longer-term transportation vision. The Programme for Government states that

"We want to develop an effective, safe and reliable road network and a quality public transport system that can benefit society, provide real transportation choice for those living in both urban and rural communities and help us grow our economy in a sustainable way".

The Regional Development Committee has been conscious of this key PfG objective during its deliberations on the proposed RTS. The Committee recognises that there has been a lack of investment in the public transport system. This in turn has put more pressure on the road network, which has witnessed a sizeable increase in traffic volume. The provision of a reliable and accessible public transport system is also essential for improving social inclusion. Approximately 30% of all households do not have access to private transport.

Within rural areas, where there is little or no access to trains, a reliable and efficient bus network is critical if people are to have access to services and employment. There are genuine concerns that rural bus services may be significantly reduced if private operators continue to target the more profitable routes, forcing Ulsterbus in turn, to reduce services on the less profitable rural routes. Consequently, the Regional Development Committee is supportive of bids for additional funding for improving the Northern Ireland bus fleet. Similar investment is also needed in our rail system, which was highlighted by the AD Little report. Indeed, the extent of the problem was recently outlined to the Committee during discussions on the proposed discontinuance of the Antrim-Knockmore railway line.

Significant investment in our public transport will have a number of benefits such as improving social inclusion, alleviating congestion, particularly in the Belfast Metropolitan Area, and contributing to improving the economy and the environment.

However, all of this cannot be achieved without appropriate levels of funding. The proposed RTS assumes a funding level of £1,370 million above the 'existing funding level continued' scenario which reflects the 2000 Spending Review outcome extrapolated over the 10-year period. The Committee is concerned that it may not be possible to secure the additional funding that is required. If the RTS vision is to become a reality it is, therefore, critical that every effort is made to secure all the resources needed to make the RTS a reality.

The RTS assumes funding from the Reinvestment and Reform Initiative (RRI) of £425 million. The Department has already submitted bids of £270 million for RRI funding over the next two years. This level of bids reflects the infrastructure needs of DRD which are much greater than any other Northern Ireland Department.

The Committee believes that all the bids which relate to the RTS in the Department's Position Report should be given priority. This would include the £1.5 million bid for Bus Route Subsidies to enable the introduction of new provincial town services as outlined in the proposed RTS; the £13.5 million bid for Bus Replacement Grants required to achieve the target replacement ages by the end of 2005/06; and the £8.8 million bid to meet the ongoing railway safety needs detailed in the A D Little report.

CONCLUSION

While the total DRD bids amounted to £151 million this does not reflect the full need of the Department. Indeed, during a presentation to the Committee, the Department identified need in the region of £213 million. The Department for Regional Development has modified its bids on the basis of what resources are likely to be available.

I am copying this letter to the First and Deputy First Minister.

ALBAN MAGINNESS MLA
Chairman

ANNEX

SECTION 3: RESOURCES

Page 27 Para 63 - Using Resources More Effectively

The Regional Development Committee has not had an opportunity to study some of these initiatives in detail. The Position Report states that DRD's programmes are not included in the current Needs and Effectiveness Evaluations.

With regards the Reinvestment and Reform Initiative this has been discussed in the body of this paper. Along with the Infrastructure Fund the RRI provides an opportunity to make major improvements in our infrastructure. As DRD has the greatest infrastructure needs these RRI resources should be primarily targetted at roads, transport and water.

Page 28 Para 67 - Using Resources More Effectively.

How should spending priorities be changed from 2003-04 onwards?

What scope is there to save on existing public spending programmes to enable resources to be directed to greater PfG priorities?

The Regional Development Committee believes that the Department for Regional Development has correctly set out its spending priorities in line with its key Departmental objectives. Major considerations are the RDS, the RTS and in particular, investment in Water and Sewerage infrastructure.

The Regional Development Committee believes that it is more appropriate for individual Assembly Committees to comment on the spending priorities of their respective departments.

Page 30 Para 80 - Financing our future.

How should the Executive maximise the opportunities presented by the Reinvestment and Reform Initiative?

See the above submission for Committee's position on the RRI.

Page 31 Para 86 - Financing our future.

What opportunities exist to make full use of private sector funding as a means of improving the quality of public services?

The Committee is aware that the Executive is currently considering the opportunities which exist for Public Private Partnerships in Northern Ireland. It would be useful to wait the outcome of this review to assess the potential of private sector funding to improve the quality of public services.

The Committee accepts that there may be a need for Private sector funding to help deliver the level of quality and level of public services required. However, it will be necessary to closely scrutinise specific schemes to determine value for money and whether the private sector will be involved in the delivery of service.

Page 35 Para 98 - Executive Programme Funds.

What should be the strategic direction of the Funds and can they be used more effectively?

The Committee accepts that allocations from the EPF funds should reflect the priorities set out in the PfG. Although the Infrastructure fund has been subsumed within the RRI the Committee believes that allocations from this fund should be primarily aimed at helping to reduce the investment deficit in our roads and water infrastructure.

Page 37 Para 102 - Public Procurement Review.

What further opportunities exist to improve public procurement?

The Committee welcomes the proposal to create a central procurement Directorate, particularly if it results in greater efficiencies in the procurement process.

Page 37 Para 105 - Administration Costs.

What opportunities exist to streamline and improve the efficiency of public services?

The Committee believes that all public institutions must proactively seek to improve their efficiency. The Committee closely monitors the work of the Department for Regional Development and has noted that it has undertaken a number of measures to improve efficiency. The Committee will continue to monitor progress.

Page 38 Para 105 - Use and disposal of assets.

What opportunities exist to make better use of public service assets?

Lack of investment in roads and water has meant that these major public assets are in a poor condition. Substantial investment, approximately in the region of £3 billion is needed over the next twenty years to bring our water and sewerage up to an acceptable standard.

Page 38 Para 108 - E Government.

What opportunities exist to streamline and improve the delivery of public services through E Government?

The Committee believes that every effort should be made to maximise the benefits of electronic delivery of service, particularly in light of cultural shifts in methods of accessing and processing information.

SECTION 4: DEPARTMENTAL ISSUES FOR 2003-04 AND BEYOND

Page 43 Para 118

How reliable are the assessments of pressures and easements, which have emerged since the 2002-03 Budget allocations?

The Department has not identified any easements. The Committee has carefully scrutinised the Department's bids and believes that they are an accurate reflection of the level of need. The Committee will be monitoring the situation throughout the year.

How well has the Department planned to deal with any unforeseen new issues?

Given that most services and spending plans have little, if any built in surplus, particularly in light of the creation of the indicative minima, it is unlikely that the Department has the scope to set aside any resources to deal with any unforeseen issues. It is likely that in such circumstances there would have to be a reduction in other services to meet any new arising priorities.

What impact will new issues have on PfG/PSA targets and can these be accommodated by re-prioritisation within existing baselines?

Given the level of underfunding in water, transport and roads there is little scope for re-prioritising within the existing DRD baseline. Extra funding which may emerge from the RRI should be used to increase DRD's capability to improve the Roads and Water infrastructure.

If any important new issues cannot be addressed by the Department, what other public services or programmes might be re-prioritised to enable the new policy to be delivered?

Some of the new issues such as the RRI provide an opportunity for the Department for Regional Development to extend and improve service delivery. The Committee believes that the Water Service should be one of the main benefactors from additional resources emerging from the RRI.

What opportunities exist for improved efficiency and re-prioritisation of resources?

The Department for Regional Development is currently undertaking a number of efficiency reviews which may help in reprioritising some resources.

Page 45 Para 124 - Rises in pay and prices.

How should the Executive deal with the issue of pay and price pressures?

The Position Report states that many of the pay deals were agreed nationally or agreed to ensure parity. This obviously impacts upon Northern Ireland Departments' scope to award reduced pay deals. The Committee has asked whether the annual block vote grant ensures there is sufficient funding secured for pay comparable to that awarded in GB?

Page 46 Para 127 - Administration Costs

What more should departments do to contain administration costs?

The Committee is aware of efforts being made within DRD to monitor and reduce administration costs. The Committee through its scrutiny role pays particular attention to Departmental unit costs.

RESPONSE BY ASSEMBLY COMMITTEE:
COMMITTEE FOR SOCIAL DEVELOPMENT

23 July 2002

The recent announcements about additional funding for fuel poverty measures and homelessness are warmly welcomed by the Committee.

The Committee is also convinced that the historic investment in social housing should be protected through a comprehensive maintenance programme and up-grading existing stock.

The Committee also remains convinced that the Warm Homes Scheme should be extended.

The Committee also considers that the issue of repaying high interest on loans for social housing should be investigated with a view to reducing the burden on the public purse.

So far as regeneration spending is concerned, it is the Committee's view that this has an important bearing on our ability to fulfil the hopes and aspirations of the Regional Development Strategy.

The Committee also considers that the voluntary and community sectors continue to need public funding to provide a range of services especially to those living in disadvantaged areas and in poverty.

I am copying this letter to the First and Deputy First Minister.

FRED COBAIN
Chairman

[i] The Executive's Position Report to the Assembly: Developing the Programme for Government and the Budget for 2003-04, 18 June 2002.

[ii] Newsletter 26 February 2002

SESSION 2002/2003

FIRST REPORT

COMMITTEE FOR FINANCE AND PERSONNEL

The Executive's Position Report to The Assembly: Developing The Programme for Government and The Budget for 2003-04

REPORT ON THE OUTCOME OF CONSIDERATION BY THE STATUTORY DEPARTMENTAL COMMITTEES

TABLE OF CONTENTS

Executive Summary

Introduction

The Public Spending Framework

Consultation

Scrutiny and Monitoring by Departmental Committees

Executive's Position Report - Resource Issues

Executive's Position Report - Departmental Issues for 2003/04 and beyond

Conclusions

Appendices

EXECUTIVE SUMMARY

INTRODUCTION

THE PUBLIC SPENDING FRAMEWORK

APPENDIX 1

MINUTES OF PROCEEDINGS RELATING TO THE REPORT

APPENDIX 2

COMMISSIONING LETTERS AND RELATED DOCUMENTS

INDEX OF COMMISSIONING LETTERS AND RELATED DOCUMENTS

BUDGET CYCLE 2002 STATEMENT TO THE ASSEMBLY BY DR SEÁN FARREN MLA MINISTER OF FINANCE AND PERSONNEL

STATEMENT BY FM AND DFM ON EXECUTIVE POSITION REPORT ON PROGRAMME FOR GOVERNMENT & BUDGET

THE OFFICE OF THE FIRST MINISTER AND DEPUTY FIRST MINISTER

RT HON DAVID TRIMBLE MP MLA, FIRST MINISTER AND MARK DURKAN MLA, DEPUTY FIRST MINISTER PARLIAMENT BUILDINGS STORMONT, BELFAST BT4 3XX

SECTION 3 - RESOURCES

DEPARTMENT OF FINANCE AND PERSONNEL FROM THE MINISTER

APPENDIX 3

COMMITTEE RESPONSES RELATING TO THE REPORT

RESPONSE BY ASSEMBLY COMMITTEE: COMMITTEE FOR AGRICULTURE AND RURAL DEVELOPMENT

RESPONSE BY ASSEMBLY COMMITTEE: COMMITTEE FOR CULTURE, ARTS AND LEISURE

RESPONSE BY ASSEMBLY COMMITTEE: COMMITTEE OF THE CENTRE

PRELIMINARY VIEWS OF COMMITTEE OF THE CENTRE ON BUDGET PROPOSALS 2003-04

RESPONSE BY ASSEMBLY COMMITTEE: COMMITTEE for EDUCATION

REPORT: 2003/04

RESPONSE BY ASSEMBLY COMMITTEE: COMMITTEE FOR SOCIAL DEVELOPMENT

RESPONSE BY ASSEMBLY COMMITTEE: COMMITTEE FOR EMPLOYMENT AND LEARNING

ANNEX 1

RESPONSE BY ASSEMBLY COMMITTEE: COMMITTEE FOR ENTERPRISE, TRADE AND INVESTMENT

RESPONSE BY ASSEMBLY COMMITTEE: COMMITTEE FOR THE ENVIRONMENT

RESPONSE BY ASSEMBLY COMMITTEE: COMMITTEE FOR FINANCE AND PERSONNEL

RESPONSE BY ASSEMBLY COMMITTEE: COMMITTEE FOR HEALTH, SOCIAL SERVICES & PUBLIC SAFETY

RESPONSE BY ASSEMBLY COMMITTEE: COMMITTEE FOR REGIONAL DEVELOPMENT

RESPONSE BY ASSEMBLY COMMITTEE: COMMITTEE FOR SOCIAL DEVELOPMENT

The Executive's Position Report to
The Assembly: Developing The
Programme for Government and
The Budget for 2003-04

REPORT ON THE OUTCOME OF CONSIDERATION BY
THE STATUTORY DEPARTMENTAL COMMITTEES

MINUTES OF PROCEEDINGS
RELATING TO THE REPORT

COMMISSIONING LETTERS
AND RELATED DOCUMENTS

INDEX OF COMMISSIONING LETTERS
AND RELATED DOCUMENTS

BUDGET CYCLE 2002
STATEMENT TO THE ASSEMBLY BY DR SEÁN FARREN MLA
MINISTER OF FINANCE AND PERSONNEL

STATEMENT BY FM AND DFM ON
EXECUTIVE POSITION REPORT ON PROGRAMME
FOR GOVERNMENT & BUDGET

THE OFFICE OF THE FIRST MINISTER AND
DEPUTY FIRST MINISTER

RT HON DAVID TRIMBLE MP MLA, FIRST MINISTER AND
MARK DURKAN MLA, DEPUTY FIRST MINISTER
PARLIAMENT BUILDINGS
STORMONT, BELFAST BT4 3XX

DEPARTMENT OF FINANCE AND PERSONNEL
FROM THE MINISTER

COMMITTEE RESPONSES
RELATING TO THE REPORT

RESPONSE BY ASSEMBLY COMMITTEE:
COMMITTEE FOR AGRICULTURE AND RURAL DEVELOPMENT

RESPONSE BY ASSEMBLY COMMITTEE:
COMMITTEE FOR CULTURE, ARTS AND LEISURE

RESPONSE BY ASSEMBLY COMMITTEE:
COMMITTEE OF THE CENTRE

PRELIMINARY VIEWS OF COMMITTEE OF THE CENTRE
ON BUDGET PROPOSALS 2003-04

RESPONSE BY ASSEMBLY COMMITTEE:
COMMITTEE for EDUCATION

RESPONSE BY ASSEMBLY COMMITTEE:
COMMITTEE FOR SOCIAL DEVELOPMENT

RESPONSE BY ASSEMBLY COMMITTEE:
COMMITTEE FOR EMPLOYMENT AND LEARNING

RESPONSE BY ASSEMBLY COMMITTEE:
COMMITTEE FOR ENTERPRISE, TRADE AND INVESTMENT

RESPONSE BY ASSEMBLY COMMITTEE:
COMMITTEE FOR THE ENVIRONMENT

RESPONSE BY ASSEMBLY COMMITTEE:
COMMITTEE FOR FINANCE AND PERSONNEL

RESPONSE BY ASSEMBLY COMMITTEE:
COMMITTEE FOR HEALTH, SOCIAL SERVICES & PUBLIC SAFETY

RESPONSE BY ASSEMBLY COMMITTEE:
COMMITTEE FOR REGIONAL DEVELOPMENT

RESPONSE BY ASSEMBLY COMMITTEE:
COMMITTEE FOR SOCIAL DEVELOPMENT