FINANCIAL ASSISTANCE BILL

Explanatory and financial memorandum

INTRODUCTION

1. This Explanatory and Financial Memorandum has been prepared by the Office of the First Minister and deputy First Minister in order to assist the reader of the Bill and to help inform debate on it. It does not form part of the Bill and has not been endorsed by the Assembly.

2. The Memorandum needs to be read in conjunction with the Bill. It is not, and is not meant to be, a comprehensive description of the Bill. So where a clause or part of a clause does not seem to require an explanation or comment, none is given.

BACKGROUND AND POLICY OBJECTIVES

3. During the Assembly debate on the impact of global economic downturn on 15 December 2008, the First Minister and deputy First Minister announced that they intended to bring forward enabling legislation early in the New Year to protect local interests. They indicated that the legislation would provide the necessary permissive powers to take remedial action in response to any circumstances that the Executive agrees warrants rapid and effective financial intervention.

4. The Bill will provide the legislative framework within which the Office of the First Minister and deputy First Minister and other Departments will be able to act promptly to provide financial assistance in exceptional circumstances. The Bill will also provide the legislative framework to enable financial assistance to be provided to tackle poverty, social exclusion or patterns of deprivation when funding arrangements are unsatisfactory. The aim of the Bill is to provide the Executive with flexibility in the allocation and distribution of resources across all Departments so that it may be able to respond quickly and effectively to any crisis situation or to tackling poverty and social exclusion.

CONSULTATION

5. Because of the urgency of the need to acquire the necessary enabling powers to develop a rapid response capacity to address the local impact of the global economic downturn, it has not been possible for the Office of the First Minister and deputy First Minister to undertake pre-legislative consultation on the policy proposals underpinning the Bill.

OPTIONS CONSIDERED

6. The options were to do nothing or to seek to take new statutory powers to provide the First Minister and deputy First Minister with a rapid response capacity for giving financial assistance to help to alleviate the effects of exceptional circumstances as, and when, they arise.

7. Lessons learnt from recent crisis situations, is that the Executive needs to be prepared, both financially and legislatively, to deal with exceptional, extreme and unanticipated circumstances. The do nothing option was considered to be an inappropriate response for dealing with such situations. The preferred option was to introduce urgent legislation to provide the First Minister and deputy First Minister with the necessary powers to act in certain circumstances and situations. The legislation will provide them with the flexibility to take remedial action to respond to circumstances that the Executive agrees warrants rapid and effective action.

OVERVIEW

8. The Bill contains 6 clauses. It gives the First Minister and deputy First Minister, acting jointly, the power to determine that either exceptional circumstances, or unsatisfactory funding arrangements for tackling poverty, social exclusion or deprivation, exist and that financial assistance should be provided. It also enables the First Minister and deputy First Minister to designate a Northern Ireland department (or departments) for the purposes of making regulations to establish a scheme to provide financial assistance to help address the circumstances or situations specified within clauses 1 and 2 of the Bill. Where the First Minister and deputy First Minister do not designate a department to make a scheme, the Office of the First Minister and deputy First Minister will make the scheme itself.

COMMENTARY ON CLAUSES

Clause 1 – Exceptional circumstances: power to provide financial assistance

Clause 1 gives the First Minister and deputy First Minister, acting jointly, the power to determine that exceptional circumstances exist and that financial assistance should be provided to prevent, control or mitigate any aspect or effect of those circumstances. It also enables the First Minister and deputy First Minister to designate a Northern Ireland department for the purposes of making regulations to establish a scheme to provide the financial assistance.

Subsection (1) gives the First Minister and deputy First Minister, acting jointly, the power to determine whether exceptional circumstances exist, whether it is desirable to provide financial assistance to prevent, control or mitigate any aspect or effect of those circumstances and whether financial assistance should be provided in accordance with a scheme or schemes established under this clause.

Subsection (2) enables the “relevant department” to make regulations to establish a scheme to provide, in exceptional circumstances, financial assistance to prevent, control or mitigate any aspect or effect of those circumstances. Any regulations made under this clause must be made within 3 months of the making of the determination under subsection (1).

Subsection (3) provides a definition of the expression “relevant department” used subsection (2). It means either the Northern Ireland department designated by the First Minister and deputy First Minister for the purposes of making regulations under this clause or (if no department is designated), the Office of the First Minister and deputy First Minister.

Subsection (4) provides that any regulations made by a Northern Ireland department following designation under subsection (3) must be approved by the Office of the First Minister and deputy First Minister.

Subsection (5) provides that any regulations made under this clause will be subject to “negative resolution procedure”. This means that the regulations will be laid before the Assembly as soon as possible after they are made.

Subsection (6) provides for statutory consultation if a scheme established under regulations made under this clause imposes functions on a public body other than the department making those regulations. It requires the department with responsibility for making the regulations to consult with the particular public body concerned before making the regulations.

Subsection (7) provides that the determination under subsection (1) and the designation under subsection (3)(a) must be in writing and may both be contained in the same document.

Clause 2 – Unsatisfactory funding arrangements: power to provide financial assistance

Clause 2 gives the First Minister and deputy First Minister, acting jointly, the power to determine that a situation exists which requires financial assistance to be provided to tackle poverty, social exclusion or patterns of deprivation. They must also determine that existing funding arrangements are unsatisfactory to address the situation. It also enables the First Minister and deputy First Minister to designate a Northern Ireland department for the purposes of making regulations to establish a scheme to provide the financial assistance.

Subsection (1) gives the First Minister and deputy First Minister, acting jointly, the power to act where they determine that a situation exists which requires financial assistance to be provided to tackle poverty, social exclusion of patterns of deprivation based on objective need but there are no arrangements in place for providing that assistance, or where such arrangements are in place, they are, or are likely to be, ineffective, inadequate or unsatisfactory.

Subsection (2) enables the “relevant department” to make regulations to establish a scheme to provide financial assistance to tackle poverty, social exclusion or patterns of deprivation based on objective need. Any regulations made under this clause must be made within 6 months of the making of the determination under subsection (1).

Subsection (3) provides a definition of the expression “relevant department” used in subsection (2). It means either the Northern Ireland department designated by the First Minister and deputy First Minister for the purposes of making regulations under this clause or (if no department is designated) the Office of the First Minister and deputy First Minister.

Subsection (5) provides that any regulations made under this clause must be laid before the Assembly in draft and subsequently approved by a resolution of the Assembly. This means that the regulations must be approved by the Assembly before they can be made and brought into operation.

Subsection (6) provides for statutory consultation if a scheme established under regulations made under this clause imposes functions on a public body other than the department making those regulations. It requires the department making the regulations to consult with the public body concerned before making the regulations.

Subsection (7) provides that the determination under subsection (1) and the designation under subsection (3)(a) must be in writing and may both be contained in the same document.

Clause 3 – Schemes for financial assistance

Clause 3 specifies the matters which may be included in a scheme contained in regulations made under clause 1 or clause 2 of the Bill.

Subsection (1) provides that a scheme may:-

(a) determine eligibility for the financial assistance;

(b) determine the form and extent of the financial assistance to be provided;

(d) make provision for applications to be made for financial assistance and for the applications to be made in a specified manner, to a specified person, by a specified time and contain specified information;

(e) impose conditions or restrictions in relation to its operation;

(f) impose functions on public bodies in relation to its implementation;

(g) make provision for ensuring that the scheme is brought to the attention of those persons who are likely to be eligible for financial assistance under it;

(h) make provision for its general administration, including provision for reviewing decisions taken under the scheme and for dealing with disputes about eligibility or entitlement arising under the scheme; and

(i) make provision for any other matter which appears to the department making the scheme to be necessary or appropriate for its efficient and effective administration.

Subsection (2) enables the “relevant department” to place a time limit on the duration of a scheme contained within regulations made under clause 1 or 2. It also enables the “relevant department” to include within a scheme any saving provisions which it considers necessary to deal with any matters or proceedings that are outstanding at the time the scheme ceases to have effect.

Clause 4 –Financial assistance

Clause 4 provides that financial assistance provided under a scheme may be given in any form. The financial assistance may be provided directly, or indirectly, to those entitled to receive it. Such assistance may be repayable in specified circumstances.

Subsection (1) allows financial assistance provided under a scheme established under either clause 1 or clause 2 of the Bill to be given in any form, including by way of a grant, a loan or a guarantee.

Subsection (2) provides that financial assistance given under a scheme may be subject to such conditions as may be specified in, or determined in accordance with, the scheme.

Subsection (3) permits those conditions to include conditions for the repayment of the financial assistance in specified circumstances.

Subsection (4) specifies that financial assistance provided under a scheme may be provided directly to those entitled to receive it, or indirectly. If the financial assistance is provided indirectly, it can, for example, be given to a public body to provide financial assistance to those who are entitled to the assistance.

Subsection (5) enables financial assistance to be provided under the Bill even though other powers may exist for giving that assistance.

Clause 5 – Interpretation

Clause 5 sets out the definitions of various terms used in the Bill. It defines the following terms –

“the relevant department” – in relation to establishing a scheme for providing financial assistance, means the Northern Ireland department designated by the First Minister and deputy First Minister, or (if no such designation is made) the Office of the First Minister and deputy First Minister;

“OFMDFM” – this is an abbreviation of the Office of the First Minister and deputy First Minister;

“public body” – means:

a Northern Ireland department;

a body established by or under a statutory provision. This means any provision of an Act or a statutory instrument made under an Act;

a statutory undertaker within the meaning of the Planning ( Northern Ireland) Order 1991. Article 2 of the 1991 Order defines a “statutory undertaker” as meaning persons authorised by any statutory provision to carry on any railway, road transport, water transport, inland navigation dock or harbour undertaking or a gas undertaker, or an electricity undertaker or a universal service provider (within the meaning of the Postal Services Act 2000) in connection with the provision of a universal postal service (within the meaning of that Act)or the airport operator (within the meaning of the Airports (Northern Ireland) Order 1994) of any airport to which Article 25 of that Order applies; or

any body which exercises functions wholly or mainly of a public nature and which are prescribed in regulations made for this purpose by the Office of the First Minister and deputy First Minister. These regulations will be subject to negative resolution procedure in the Assembly.

“scheme” – means a scheme contained within regulations made under clause 1 or clause 2 of the Bill; and

“specified” – in relation to a scheme, means specified in the scheme.

Clause 6 – Short title and commencement

Clause 6 covers the title of the Act and its commencement.

Subsection (1) sets out the title of the Act. The Act may be cited as the Financial Assistance Act ( Northern Ireland) 2009.

Subsection (2) brings the Act into operation on the day after it receives Royal Assent.

FINANCIAL EFFECTS OF THE BILL

9. The provisions of the Bill give the First Minister and deputy First Minister the power to take remedial action in response to circumstances and situations that the Executive agrees warrants rapid and effective action. The aim is to ensure that public monies are deployed as effectively as possible in response to any crisis situation or to tackling poverty. Consequently, the anticipatory provisions of the Bill do not have an immediate financial cost. However, should a scheme be established under the Bill to provide financial assistance, the scheme would require the provision and allocation of public monies. The actual amount of money allocated will clearly be dependent on the nature of the circumstance or situation being addressed and decisions taken at that time about budgetary allocations.

HUMAN RIGHTS ISSUES

10. No human rights issues are anticipated.

EQUALITY IMPACT ASSESSMENT

11. The provisions of the Bill have the potential to have a positive impact on individuals, groups or areas suffering from poverty and/or social exclusion. As the Bill itself is of such a high level nature, it is not possible to determine what impact it is likely to have on any of the nine categories under section 75 of the Northern Ireland Act 1998. The development of the underlying schemes made under the enabling powers in the Bill may have equality implications and will be supported by Equality Impact Assessments, as appropriate.

SUMMARY OF THE REGULATORY IMPACT ASSESSMENT

12. Since the Bill does not contain any provisions that will result in an increased or adverse impact on business, charities or the community and voluntary sectors, no Regulatory Impact Assessment has been conducted. Subsequent regulations made under the Bill may have financial implications on these sectors and will be supported by Regulatory Impact Assessments, as appropriate.

LEGISLATIVE COMPETENCE

13. The First Minister and deputy First Minister have made the following statement under section 9 of the Northern Ireland Act 1998:

“In our view the Financial Assistance Bill would be within the legislative competence of the Northern Ireland Assembly.”