PUBLIC ACCOUNTS COMMITEE
End of Session Report 2008 - 2009
Remit and Powers
The Public Accounts Committee (PAC) is a Standing Committee established in accordance with Section 60(3) of the Northern Ireland Act 1998 and under Assembly Standing Order 56
“to consider accounts, and reports on accounts laid before the Assembly”.
The Committee has the power to:
- consider accounts and reports on accounts laid before the Assembly
- call for persons and papers;
- initiate inquiries and issue reports.
The PAC Process
The Committee’s work focuses primarily on the consideration of reports produced by the Comptroller and Auditor General (C&AG) and his organisation, the Northern Ireland Audit Office. These can be annual financial reports on public accounts or reports on the economy, efficiency and effectiveness of public spending.
The Committee selects and examines Audit Office reports that are material to its remit, and can assist in developing lessons to improve accountability and financial governance mechanisms in the public sector.
It calls the Accounting Officers responsible for expenditure examined in each report to give oral evidence. Members scrutinise the report and the evidence, and produce recommendations for improved financial systems and controls in a Committee report.
The Treasury Officer of Accounts (TOA), attends all evidence sessions on behalf of the Department of Finance and Personnel (DFP), answering Members’ questions and supporting Accounting Officers.
Through the Minister for Finance and Personnel, the Executive member with central authority for financial matters, the relevant Department responds to the Committee’s recommendations two months after publication of the report. This is called a memorandum of response. The TOA co-ordinates this response and promotes good practice across Departments.
Membership
The Committee has 11 members, including a Chairperson and Deputy Chairperson, with a quorum of 5 members.
The membership of the Committee since 9 May 2007 has been as follows:
Mr Jim Wells 3,4,5 |
Mr Patsy McGlone 1,8 |
1 With effect from 04 March 2008 Mr Thomas Burns replaced Mr Patsy McGlone.
2 With effect from 20 May 2008 Mr Paul Maskey replaced Mr John O'Dowd.
3 With effect from 1 October 2007 Mr Mickey Brady replaced Mr Willie Clarke.
4 With effect from 21 January 2008 Mr Ian McCrea replaced Mr Mickey Brady.
5 With effect from Tuesday 27 May 08 Mr Jim Wells replaced Mr Ian McCrea.
6 with effect from 15 September 2008 Mr George Robinson replaced Mr Simon Hamilton.
7 with effect from 15 September 2008 Mr Jim Shannon replaced Mr David Hilditch.
8 with effect from 29 June 2009 Mr Patsy McGlone replaced Mr Thomas Burns.
Committee activities, outputs and achievements
This report covers the work of the Committee from 1 September 2008 to 31 August 2009 (Assembly year 2008-09).
The Committee held twelve inquiries during this period. In chronological order, they were reported on as follows:
- Report on Statement of Rate Levy and Collection 2006-07
- Report on Delivering Pathology Services: The PFI Laboratory and Pharmacy Centre at Altnagelvin
- Report on Warm Homes: Tackling Fuel Poverty
- Report on Shared Services for Efficiency – A Progress Report
- Report on Brangam, Bagnall & Co: Legal Practitioner Fraud Perpetrated Against Health and Personal Social Services
- Report on Road Openings by Utilities
- Report of the PFI Contract for Northern Ireland’s New Vehicle Testing Facilities
- North/South Bodies
- Report on the Control of Bovine Tuberculosis in Northern Ireland
- Report on the Review of Financial Management in the Further Education Sector in Northern Ireland and Governance Examination of Fermanagh FE College
- Suspected contract fraud in ELBs
- Valence Technology
In addition, the Committee made three composite reports comprising inquiries conducted by correspondence.
Fraud
This year, the Committee has maintained its focus on fraud prevention, through its investigation of the Brangam and Bagnall case and its BELB maintenance procurement inquiry. Both reports include detailed recommendations designed to improve fraud prevention in the public sector.
Pfi Contracts
The Committee has continued to monitor the efficiency of PFI contracts, as evidenced by its inquiries into the contracts behind Northern Ireland’s new vehicle testing (MOT) facilities and new pathology services at Altnagelvin Hospital.
Management of Risk and Cost
The Committee has also investigated the management of risk and cost in significant public investment projects, giving a critique of the effective use of resources in diverse areas such as agriculture, fuel poverty, inward investment and shared public services.
Recommendations
In total this year, in its response to these inquiries the Committee has made 133 recommendations to improve financial accountability to the taxpayer. It continues to monitor Department’s progress in implementing them.
Meetings held
During the year, the Committee met formally 33 times. Eight of the meetings were evidence sessions that were conducted in the Senate Chamber; 20 were partly closed or closed; and 5 meetings were held externally, 4 of which were evidence sessions.
The external meetings were held at the Northern Ireland Audit Office (Belfast); the Stormont Hotel (Belfast); Altnagelvin Hospital; Intertrade Ireland (Newry); and CAFRE Greenmount College, Antrim.
The purpose of most closed sessions was to consider the approach to specific reports, enabling members to explore the facts and increase their understanding of the more complex findings in the reports.
Summary of Inquiries
The Committee took oral evidence from Leo O’Reilly, Accounting Officer of DFP, and senior officials from the Land and Property Services agency (LPS) on 18 September 2008 in relation to the Comptroller and Auditor General’s report on the ’Statement of Rate Levy and Collection 2006-07’ The C&AG had been unable to give any assurance to the Assembly on the assessment and collection by LPS of rates for the year 2006-07, due to significant system control problems which arose following the introduction of a new IT system.
The Committee gave priority to the topic because of the significant impact of rates revenue, assessed at £1 billion annually, on local and central government.
The Committee concluded overall that the Agency and the Department were trying to do too much in too short a time. It found that a “mission critical” IT system was introduced too quickly and with insufficient time for planning, review, risk assessment and detailed specification. In the Committee’s view, the budgetary and personnel implications of DFP having several reform projects running concurrently with the introduction of this system had not been properly gauged. In addition, the financial impact of neglecting arrears collection in the early days of implementation had been significantly underestimated.
The Committee made 28 recommendations as to how to address the adverse consequences of the deficient system, and more general lessons in implementing complex IT systems. It continues to monitor progress against the recommendations.
The Committee visited the facilities at the Altnagelvin Hospital Complex and took oral evidence on the NIAO report ‘Delivering Pathology Services: The PFI Laboratory and Pharmacy Centre at Altnagelvin’ from Dr Andrew McCormick, Accounting Officer, Department of Health, Social Services and Public Safety (DHSSPS), and supporting officials.
The development Centre was a key component of a £250 million redevelopment programme for the complex. The construction of the Centre cost £15.2 million.
The Committee commended the project and described it as a complex and innovative PFI project, which overall has been well managed. The Committee reiterated the need to monitor internal costs on PFI projects and to apply the Gateway review process as the project developed. The Committee was impressed by examples of good practice in the exercise, and by staff dedication and joined-up services on its visit.
The Committee met on 23 October 2008 to hear oral evidence from Mr Alan Shannon, Accounting Officer for the Department for Social Development, and officials and partners in relation to the Comptroller and Auditor General’s (C&AG’s) report ’Warm Homes: Tackling Fuel Poverty’.
The Committee recognised the positive contribution made by the Warm Homes Scheme, which had provided important assistance to more than 60,000 vulnerable households to help improve home energy efficiency.
However, the Committee was mindful that Northern Ireland has the highest levels of fuel poverty in the UK, estimated at almost 40% of the population. Its response to the C&AG’s report and the Department’s evidence was particularly robust in light of this.
The Committee considered that “the Department failed to manage the scheme effectively” and “was disappointed at the Department’s view that ..[delays].. were regrettable, but not failures in performance”.
The Committee highlighted the need to target the least energy efficient homes to maximize the impact of the scheme and insisted that performance and installation times could be improved. The Committee recommended that the scheme target rural homes, and made specific suggestions for the terms of the Department’s review of the scheme, including the adoption of a fuel poverty indicator tool and more competitive tendering.
The Committee heard oral evidence from Leo O’Reilly, Accounting Officer of the Department of Finance and Personnel, and supporting officials on 13 November 2008 in relation to the C&AG’s report into the NICS shared services programme of reform.
This programme aimed to create stand-alone or shared services centres to improve NICS capacity and capability. it was estimated that the seven key projects involved would total an estimated value of £3 billion.
The Committee chose to produce a progress report on this programme of work because of its considerable cost and the potential impact of the proposed reforms for public services and efficiency of government.
It took the opportunity to assert good practice recommendations to the Department, such as Gateway reviews at each policy implementation stage and continual monitoring of cost. The Committee was concerned at delays in implementation and at the suspension of the Workplace 2010 project, and insisted that timetabling for such sizeable projects must be realistic. It also found that risk and specifications had not been fully assessed before going to the market to tender.
Over a period of seven years, George Brangam, solicitor and owner of the legal practice of Brangam, Bagnall & Co was found to have fraudulently extracted at least £278,000 from six of the eleven health bodies to whom his practice provided legal services.
The Committee heard evidence from Dr Andrew McCormick, Accounting Officer of the Department of Health, Social Services and Public Safety, and supporting officials on the C&AG’s report on 4 December 2008.
The Committee welcomed recovery of both the amounts defrauded and £123,000 in costs, and welcomed also the Department’s undertaking to review its records management guidance.
The Department has now introduced new procedures which do not permit cheques in settlement of legal cases to be channelled through solicitors, when there is no sensible business case for doing so. This procedure would have prevented the majority of frauds perpetrated by George Brangam had it been in place.
Nevertheless the Committee reiterated that no level of fraud could be considered acceptable, and recommended not only that the Department carry out regular checks to ensure these new procedures are strictly applied but that the Department of Finance and Personnel ensure that similar procedures are rolled out across the entire public sector. The Committee reiterated the need for basic payment checks and supervision in this area.
Utilities in Northern Ireland have statutory rights to lay their equipment under the public roads network, delivering key services to local residents and businesses, and there were approximately 35,000 such road openings in 2006-07.
The Committee met on 22 January 2009 to consider the Comptroller and Auditor General’s (C&AG’s) report ’Road Openings by Utilities: Follow-up to Recommendations of the Public Accounts Committee’. It also considered the recommendations made by the previous PAC Committee in its April 2002 report.
The Committee found it most unsatisfactory that, in many areas, the actions taken as a result of the previous Committee’s 2002 recommendations did not measure up to what was promised. In the Committee’s view the Accounting Officer failed to assure members that utilities were bearing their full share of the costs of reinstatement. The Committee concluded that it was not acceptable that taxpayers should be left to pick up the bill for poor reinstatement of street works by utilities and urged that customer service and consultation with the public and businesses be systematically improved.
The Public Accounts Committee met on 12 February 2009 to consider the Comptroller and Auditor General’s (C&AG’s) report ’The PFI Contract for Northern Ireland’s New Vehicle Testing Facilities’. The PFI contract in 2001 envisaged specific test times and customer waiting times, and in the early years of the contract these were not achieved, costing £6 million to the customer. The Committee stressed that risks must be carefully apportioned at the planning stage of PFI projects. It pointed out that in this case the impact of risk (when delays occurred due to staff industrial action) fell on the customer although the liability for staff was the Agency’s.
The Committee was satisfied that the test facilities, customer satisfaction and overall performance including deadline compliance were of a high standard at the end of the project, despite early problems. Members fed in positive feedback from constituents and praised service levels as they launched the report.
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North/South Bodies
North/South Bodies are engaged in a range of important areas including tourism, trade and development, food safety, the promotion of Irish and Ulster Scots and the administration of EU funds. Their activities are funded jointly by the Northern Ireland Assembly and Dáil Ếireann in varying proportions.
The Committee decided to take oral evidence regarding the unique financial accounting and reporting arrangements of the bodies. .
The Committee made a useful first contact with North/South Bodies at the InterTradeIreland premises in Newry on 12 March 2009 . Two bodies, InterTradeIreland and the Special European Programmes Body (SEUPB). gave evidence to the Committee, and it examined this and issues of general application to all North/South Bodies.
The counterpart Committee of the Oireachtas took evidence from Waterways Ireland, the Food Safety Promotion Board, and Tourism Ireland. The Committees met in Dublin to discuss the bodies’ financial governance systems and overall accountability in North/South bodies.
The Committees will confer again in autumn 2009 to compare their findings and co-ordinate the publication of their reports.
The Committee heard oral evidence from Dr Malcolm McKibbin, Permanent Secretary of the Department of Agriculture and Rural Development (DARD) and supporting officials on 26 March 2009 at Greenmount Agricultural College regarding the NIAO report on the control of bovine TB. The Committee received detailed presentations regarding the development and spread of the disease, and members showed a strong appreciation of its impact on constituents in the farming community.
Over the last 10 years, DARD has spent some £200 million on its bovine TB control programme. The cost in 2007-08 was over £21 million.
The Committee acknowledged that progress had been made made in reducing the incidence of bovine TB in recent years, but noted also that the level remained significantly higher than in 1996 and many times greater than the 1986 level.
The Committee concluded that the Department had failed to meet the not inconsiderable challenge of eradicating bovine TB, making progress much too slowly and at prohibitive cost. It recommended that the Department adopt a much more strategic approach to achieve progress, shifting its focus to eradication of the disease rather than mere containment.
The Committee met on 7 May 2009 to consider the Comptroller and Auditor General’s report on the governance examination of Fermanagh College of Further and Higher Education. The Committee heard evidence from Dr Aideen McGinley, Permanent Secretary of the Department of Employment and Learning, and supporting officials.
The Committee reviewed the financial management of the 16 further education colleges up to 31 July 2007, when they were reorganised into six new regional colleges.
The Committee found instances of severe financial mismanagement, particularly in two of the former colleges, and made 18 recommendations for both Departments and their arm’s-length bodies to ensure high standards of financial management via robust systems, controls and supervision. The recommendations focused on strengthening governance arrangements for example by enhancing audit and management information systems, and on improving departmental monitoring of such bodies.
The Committee received briefing from Audit Office officials on the report ‘The investigation of Suspected Contract Fraud’ on 21 May 2009 and took evidence on 28 May from Department of Education accounting officer Will Haire and his officials, and David Cargo, Chief Executive of Belfast Education and Library Board. The Committee addressed this as a case study in managing the risk of fraud in procuring maintenance and other services from the private sector, and focused on the need for anti-fraud policies, rigorous accountability procedures and critical interventions; strict management of familial and other conflicts of interest; strong internal audit processes; and co-ordination of audit and anti-fraud functions.
The Committee made 30 recommendations, highlighting that anti-fraud vigilance required frequent training, improved tendering and procurement processes, changes in organisational culture such as empowerment of staff to challenge poor value for money and more meaningful supervision of financial governance procedures. The Committee’s report was ordered to be printed on 2 July 2009 and will be published on 10 September 2009, receiving a memorandum of reply outlining the Government’s response to the recommendations in autumn 2009.
The Committee received briefing from Audit Office officials on the report ‘Review of Assistance to Valence Technology: a case study in inward investment’ on 11 June 2009 and took evidence on 18 June from Mr Stephen Quinn, Permanent Secretary, Department of Enterprise, Trade and Industry (DETI), and officials from Invest NI. The Committee focused on the risk-taking culture in inward investment at the time; the neglect of existing controls in awarding funding; the failure to use bespoke mechanisms set up to safeguard the investment; and the lack of proper record-keeping and transparency in key decisions.
The Committee has asked the Department for further information and will report on this inquiry in autumn 2009.
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Retirement of Comptroller & Auditor General
John Dowdall, Comptroller and Auditor General (C&AG) for Northern Ireland, attended his final meeting of the Committee on 2 nd July 2009 prior to his retirement in September. Since he was first appointed in 1994, he produced over 150 reports, of which 85 were dealt with in PAC sessions in the Assembly and in Westminster.
The role of C&AG as independent auditor of the public sector means he can be seen as the eyes and ears of the Public Accounts Committee, the taxpayer’s watchdog. During his 15 years in the post, Mr Dowdall provided an efficient, professional and impartial service to PAC and to the Assembly as a new institution.
ANNEX A
Public Accounts Committee – Expenditure for the period 1 September 2008 – 31 August 2009
| Budget area |
Details |
Expenditure |
|---|---|---|
| Committee Travel - committee members and staff travel and subsistence in relation to visits and meetings outside Parliament Buildings | Includes the cost of committee visits to:
The Laboratory and Pharmacy Centre at Altnagelvin Hospital, Londonderry Stormont Hotel, Belfast Intertrade Ireland, Newry CAFRE Greenmount Campus, Antrim Audit Office external meeting – non evidence session. |
£5,628.48 |
| Printing of committee reports | Report on Managing Sickness Absence in The Northern Ireland Civil Service. Report on Sea Fisheries: Vessel Modernisation and Decommissioning Schemes. Report on Statement of Rate Levy and Collection 2006-07. Report on Delivering Pathology Services: The PFI Laboratory and Pharmacy Centre at Altnagelvin. Report on Warm Homes: Tackling Fuel Poverty. Report on Shared Services for Efficiency – A Progress Report. Second Composite Report on Issues Dealt with by Correspondence. Report on Brangam, Bagnall & Co: Legal Practitioner Fraud Perpetrated Against the Health and Personal Social Services. Report on Road Openings by Utilities. Report on The PFI Contract for Northern Ireland’s New Vehicle Testing Facilities Third Composite Report on Issues Dealt with by Correspondence Report on Control of Bovine Tuberculosis in Northern Ireland Report on Review of Financial Management in the Further Education Sector in NI and Governance Examination of Fermanagh FE College |
£ 10,053.83 |
| Advertising – the cost of public notices relating to committee inquiries, the committee stage of bills and meetings held outside Parliament Buildings |
|
£277.79 |
| General expenses | Cost of refreshments for committee meetings, working lunches, seminars, room hire and witness expenses. | £1429.83 |
| TOTAL | £17389.93 |