COMMITTEE FOR REGIONAL DEVELOPMENT

Committee Office Room 402
Parliament Buildings
Belfast
BT4 3XX
Tel: 02890 521970
Fax: 02890 525927
Email committee.regionaldevelopment@niassembly.gov.uk

Alan Doherty
Departmental Assembly Liaison Officer
Room 413a
Clarence Court
10-18 Adelaide Street
Belfast
BT2 8GB

4 June 2008

June 2008 Monitoring Return

Dear Alan,

1. The Committee received a copy of the Department’s June monitoring return in its papers for the meeting of 4 June 2008, and Members considered the issues raised in the return at the meeting today.
2. Members are disappointed to note that the Department’s June monitoring return was submitted to DFP on Tuesday 3 June 2008, before the Committee had had an opportunity to consider this issue. Members are aware that the timetable is set by DFP, and that Department has indicated that a revised response, reflecting the Committee’s comments would be submitted to DFP. However it is the view of the Committee that this situation is far from ideal and must not happen again.
3. Again, the Committee stresses that receipt of papers on Friday 30 May 2008, for consideration and response by the Committee at its meeting of 4 June 2008, provided insufficient time for in-depth scrutiny. Members are aware that the deadline for response is set by DFP; however Members must insist on earlier receipt of future monitoring returns so that adequate time can be allotted for scrutiny and consideration of the Committee’s response.
4. These problems contradict the Minister for Finance’s recent statement to the Assembly underlining the importance of the Committee’s role in in-year monitoring. The Committee has decided to write to the Committee for Finance and Personnel on this matter, and is seeking an undertaking from the Minister that this situation will not arise again.
5. The Committee decided to make the following comments on the Department’s June 2008 monitoring return.
6. The Committee notes that the Department of Finance and Personnel (DFP) minute sought details under the following headings:

   a. Reduced requirements (current expenditure and capital investment);

   b. Bids (current expenditure and capital investment);

   c. Proposed reductions/internal reallocations - to allow departments the opportunity to manage their own emerging pressures;

   d. Details of any technical issues to be addressed including changes actioned on the ISNI Delivery Tracking System; and

   e. Current position as regards expected level of Capital Receipts for 2008-09 to 2010-11.

and the tables at Annex A summarising the Department’s easements and pressures.

 Reduced Requirements

7. The Committee noted the reduced requirements of some £0.7m Capital Grant arising from a saving made when awarding the new contract to operate the ferry service to Rathlin Island.

Pressures

8. The Committee notes that the Department has identified pressures totalling some £0.7m Admin, £57.6m Other Resource and £11.6m Capital.

Admin Pressure

The Committee notes the identified Admin pressures of £0.7m needed to deliver the increased ISNI Roads Programme. The Committee would support this bid as a critical element in ensuring that the Roads Programme is delivered on time.

Other Resource Pressures

10. The Committee supports the DRD’s bid of £1.8m to meet increased safety costs on the railway Public Service Obligation (PSO), rising fuel costs and safety related expenditure aimed at eliminating the excessive numbers of temporary speed restrictions on the railway lines. The Committee would seek clarification on the amount of costs already absorbed by NITHC through efficiencies, and a breakdown of the elements of the bid attributable to rising fuel costs and those attributable to safety related expenditure. Pending receipt of this information, the Committee is of the view that every effort must be made to ensure that the recent growth in public transport passenger numbers is not undermined.
11. The Committee notes the Department’s bid of £3.6m is in respect of maintaining the street lighting stock, and would support this bid on public and road safety grounds.
12. The Committee notes the Department’s bids for £1.5m and £3.5m to meet the increase in NITHC rail and bus employer pension contributions to NILGOSC. The Committee is concerned that failure to fund these high priority pressures may result in reductions in services and / or additional fare increases, and for this reason would support the bid.
13. The Committee has signalled its support for increased funding for structural roads maintenance over the past year, and the road safety, connectivity and value for money arguments underpinning this support have been well rehearsed. The Committee supports the Department’s fifth, sixth and seventh bids of £20m, £16m and £11.2m for roads structural maintenance.

 Capital Pressures

14. The Committee notes that the Department’s top four inescapable capital pressures relate to projects that slipped from 2007-08 as a result of circumstances beyond the Department’s control. The Committee also notes that the Department would normally have applied for End Year Flexibility (EYF) on these projects but, following a change in DFP guidance, has instead included these bids as their top capital bids in this monitoring round.
15. The Committee supports the three bids relating to Warrenpoint Harbour Authority, and had indicated to the Department that it would support any bid for EYF for these projects in its response to the February monitoring round.
16. The Committee notes the slippage of £1.9m in work to refurbish and expand some Translink bus garage and workshop facilities, and that this will not now be completed until 2008-09. The Committee would support a bid for this £1.9m for refurbishment work.
17. The Committee notes that Roads Service also now has an opportunity to purchase land for the Bankmore Link Belfast City Centre scheme which is due to be completed in the latter part of the ISNI period. The NI Housing Executive (NIHE) has approached the Agency about this sale and Land and Property Services has indicated that the transfer would be at some £3m ‘existing use’ value. The June monitoring round indicated that Roads Service had not planned for this acquisition within the Roads ISNI allocation but is keen to purchase the land now at ‘existing use’ value, and if the Agency does not acquire the land now there is the risk that the NIHE could sell the land to a developer and Roads Service would then have to purchase the land at a later date at the more expensive ‘development value’. The Committee would support this action by the Department.

2007-08 ‘EYF’ Capital Not Required Until 2009-10

18. The Committee notes the category of bids previously identified as EYF in February monitoring, but which will now not be needed until the financial year 2009-10. The Committee notes that the slippage of £3.4m for the Signage and Lighting for the Home to School Bus Programme, and the target date for DOE to set the technical standard to introduce the necessary legislation of March 2009, and that Translink will not now complete the associated work until 2009-10. The Committee is of the view, given the safety implications of this bid, that this funding should be made available next year to enable DRD to meet the new statutory obligation.
19. The Committee notes the 2009-10 requirement in respect of the loan note facility for Northern Ireland Water (NIW) and that the Department will be seeking budget cover for this rolling loan note facility as part of the Budget process next year.

Water Reform Capital DEL Requirements

20. The Committee notes the legal obligation on the Department to provide NIW with the borrowing facilities it needs to deliver the agreed Strategic Business Plan, and the Department’s identification of an uncovered capital pressure of £55m in respect of this revolving credit facility in 2008-09.
21. The Committee understands that this has been the subject of correspondence between DFP and the Minister for Regional Development, who previously suggested that if DFP can guarantee to make the funding available for the revolving credit facility when needed, then the Department need not bid for it. However, in the absence of such a guarantee the Department states that it is obliged to bid for this pressure to meet its legal obligations. The Committee notes this information, and would request that it be kept informed of developments on this issue.

Proposed Reductions / Internal Reallocations

22. The Committee notes that the Department is not submitting any proposed reductions / internal reallocations in the June monitoring round.

Expected level of Capital Receipts for 2008-09 to 2010-11

23. The Committee notes the Department’s position in relation to asset disposals and capital receipts as set out in the June monitoring round return. The Committee would support the view that the impact of asset disposals must be considered in the context of the operational and revenue implications for the Department. Although Members recognise that the Department is at an early stage in this process, the Committee requests more detailed written and oral briefing on the work done to date on asset disposal.

Admin Reclassification

24. Finally, the Committee notes the resubmission of the Other Resource to Admin proposals outstanding following the outcome of the Final Budget 2007 exercise. Members note that frontline services would not be reduced, but rather that the Department would be spending more money on civil servants instead of consultants.
25. Members note the Department’s performance in the Finance and Personnel Minister’s statement on provisional outturn for 2006-07. Members decided to ask the Department to brief the Committee on its performance on underspend in 2006-07, in particular to provide briefing on its performance in terms of monthly profiling to identify those areas where improved profiling could yield better in-year use of resources and capital in key DRD programmes.
26. The Committee requests that this response be brought to the attention of the Minister at the earliest opportunity, and is content that its response be forwarded to DFP.

Yours sincerely,

Roisin Kelly
Clerk to the Committee for Regional Development