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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

Mitchel McLaughlin, MLA
Chairperson
Committee for Finance and Personnel
Northern Ireland Assembly
Parliament Buildings
Stormont
Belfast
BT4 3XX

28 November 2007

Dear Mitchel,

  1. Following Committee consideration of the draft Budget at its meetings of 7 November, 14 November and 21 November 2007, the Committee would make the following response to the request by the Committee for Finance and Personnel for committee views.
  2. The Committee agreed an outline approach to its scrutiny and consideration of the draft Budget 2007, draft PfG and draft ISNI at its meeting of 24 October 2007. This approach involved receipt of oral and written briefing from Departmental officials on 7 November 2007. Following this, the Committee sought oral and written evidence from the following stakeholder groups.
  1. With the exception of ERINI and NIC ICTU, all of the stakeholders above submitted written and oral briefing to the Committee. A summary of the main points raised by stakeholders in evidence is contained at Annex A to this paper.
  2. Following stakeholder briefings, the Committee had a meeting to discuss its emerging views with the Minister on 20 November 2007. Stakeholder views, together with written and oral briefing from Departmental officials and engagement with the Minister on 20 November 2007 formed the basis for the Committee for Regional Development’s response which follows.   
Key points arising from the Committee for Regional Development’s consideration of the draft Budget 2007
  1. Traditionally Committees complain that budget allocations for their Departments are too low, and they will tend to support their Departments’ calls for additional resources. In the case of the Department for Regional Development, the Committee is of the view that, objectively, the allocations for the Department for Regional Development in Budget 2007 are insufficient to meet the infrastructure, economic, social and environmental needs of Northern Ireland. For example, spending per capita on transport in Northern Ireland is £65 below spending per capita in England in the year 2005-06, and this against a backdrop of a more dispersed, lower density pattern of settlement. In addition, structural maintenance funding is £125m below the level identified in the Structural Funding Maintenance Plan, and the legacy of under-investment in water and sewerage services in Northern Ireland has been demonstrated in the Strand One report by the Independent Water Review Panel, published in October of this year.
  2. The Committee for Regional Development’s comments will address the following key points in relation to the Budget 2007 allocations to the Department for Regional Development (DRD):
Funding for roads structural maintenance must be adequate, transparent and secure.
  1. Structural roads maintenance has been underfunded year on year. Although the Committee was pleased to note the slight increase, compared to recent years, in structural maintenance budget allocations, the Committee was concerned to note that the allocations of £56m, £72m and £70m for the budget period is £125m short of the circa. £110m per annum identified in the Structural Maintenance Funding Plan. The Committee is concerned about the road safety consequences of continued under-funding in this area, and the Acting Chief Executive has highlighted these risks in the most recent Roads Service Annual Report and Accounts.
  2. Analysis of the bid documentation, together with briefing from the Department and discussions with the Minister, indicated that the strategy for funding structural maintenance has been to bid for 60% to 70% of the planned allocations as a high priority bid, with the balance lower down the priority list of bids. This has been done with the intention of seeking additional funding through the in-year monitoring rounds. The Department has a good record in managing capital funding with very low annual underspends in this area, and historically has been successful in bidding in this way. 
  3. However, the Committee is of the view that this approach is not a viable long term strategy for funding structural maintenance programmes. It is too dependent on being successful through the in-year monitoring round process. Given the pattern of year on year under-funding of structural maintenance programmes, the backlog this creates, and the outcome of the two in-year monitoring rounds so far this year[1], the Committee would call on the Minister and the Executive to recognise the value for money represented by planned structural maintenance and the public safety risks associated with continued under-funding of work in this area, by allocating adequate funding at the level identified in the Structural Maintenance Finding Plan in the final budget.
  4. The Committee further recommends to the Executive and the Minister that this amount be ring-fenced and clearly identified for the period of the budget. This will allow the industry to forward plan with confidence and to invest in developing the capacity required to meet Northern Ireland’s structural maintenance needs on time and budget.
Investment in roads infrastructure is essential to the social and economic well being of all of Northern Ireland.
  1. Investment in roads infrastructure is essential to the social and economic wellbeing of Northern Ireland. A good quality road network is critical to improving journey times within Northern Ireland and connectivity to and from our ports and airports, facilitating business, tourism and balanced regional development. In addition, a substantial amount of our public transport is roads based and access to health and social services, employment, education and training and cultural and sporting activities depends on an adequate, sustainable, safe and effective roads network.
  2. The Committee was concerned that the allocation for roads capital of £572m was significantly below the approximately £1bn ‘low scenario’ bid for in the draft ISNI. The current allocation would allow for the opening of the M1 / Westlink and M2 upgrades in 2009, the dualling of the A4 form Dungannon to Ballygawley and the completion of dualling the main route from Belfast to Dublin (opening of the A1 Beechhill to Cloghogue in 2010).  
  3. However, it is likely that the roads allocations would necessitate the deferral of some key schemes such as the A6 Castledawson to Toome dual carriageway and the A2 Maydown to City of Derry Airport. Spending on local transport and safety measures, bridge strengthening, carriageways widening and major works on local roads would all have to be less than envisaged over the 3 years to 2010/11. The Committee also expressed concern that a number of bypasses needed to improve traffic flow and air, noise and environment quality in towns may not now progress.
  4. The Committee calls on the Executive and the Minister to review the roads allocation in light of the importance of connectivity and free following roads network to continued economic development in Northern Ireland.
Investment in public transport (buses and railways) infrastructure is essential to the social and economic well being of all of Northern Ireland.
  1. Like roads infrastructure, a good quality, integrated network of bus and rail transport services is key to underpinning economic development, and access to education, employment, leisure and social services. Investment in public transport also brings environmental benefits, in the form of reduced carbon emissions, landscape, air and noise pollution.
  2. Investment in buses and trains in recent years has made public transport a more attractive option, and helped generate increased passenger journeys. Evidence from DRD has demonstrated that investment does not have to be in bus or rail; recent investment in bus and rail in Belfast and Londonderrry has resulted in increased passenger numbers on both modes of transport.  
  3. Of the £426.5m capital bid for, only £196m was allocated in the draft Budget; £137m for rail, £45m for buses, £12m for rapid transport, and £1.2m for improved ferry services to Rathlin Island. The Committee noted the split in rail funding for new rolling stock and rail and track works.
  4. Recent research has indicated that Northern Ireland’s railway expenditure remained almost stagnant between 2001/02 and 2004/05, with a substantial leap following in 2005/06 (expected to continue in 2006/07). In the other three regions the rate of growth remained constant until 2006/06 when all three experienced a slight decline. Total expenditure on rail in England is over 10 times greater than Wales, the region closest to it terms of spend. [2]

Ranked by total expenditure the four regions perform as follows:
1.     England - £16,994 million
2.     Wales - £1,371 million
3.     Scotland - £1,157 million
4.     Northern Ireland - £ 28 million[3]

In terms of per capita rankings, the following results are evident:
1.     Wales – c£463.18
2.     England – c£335.19
3.     Scotland - c£226.86
4.     Northern Ireland – c£16.47[4]

  1. There have been persistent shortfalls in annual spending allocations for capital investment in the public transport infrastructure. The Committee calls on the Executive and the Minister to address the failures of the past and to invest in public transport. Failure to address this historic under investment, and to adequately resource public transport will have an adverse effect on the environment, exacerbate social exclusion, and may jeopardise the recent and much welcome positive economic growth.  
  2. In addition to the general public transport needs outlined above, the Committee has some particular concerns, as outlined below.
  3. The Belfast to Derry/Londonderry rail line is a cause of significant concern to the Committee. Members have met with both Into the West and Northern Corridor Railway Group and heard evidence of public safety issues and speed restrictions as low as 10mph on stretches of track. Despite this, passenger journeys on this line have reached the 1 million mark. The Committee is concerned that these issues have remained unaddressed in the past, and are pleased to note that although there is no provision for the capital works within the current Budget, there is provision for preparatory works. However, it was concerned to note that applications for funding from EU sources could not proceed until the project was in place.
  4. Having championed the cause of women’s access to concessionary fares at age 60 years, the Committee welcomed the draft Budget provision for the extension of the concessionary fares scheme to all those over 60 years. However, it was concerned to note that that those bids for the extension of full concessionary fares to people with a disability; concessionary half fares to 16-17 year olds; reduced fares to people using rural transport services; and concessionary travel to those returning to work after a period of long term unemployment were unsuccessful.  
  5. Age Concern and Help the Aged, and IMTAC provided evidence to the Committee on the differential patterns of urban and rural use of the senior SmartPass and the barriers to those with disabilities posed by the limitation of the concession to single journey tickets. The Committee recognises these issues as significant barriers to those with disabilities, especially those in rural areas, and is keen to pursue this issue, with stakeholders, in its forward work programme.  
  6. The Committee was particularly concerned to note that the bid to provide hourly bus services in 29 towns and 35 villages was unsuccessful. The issue of access to public transport in rural areas is one of social inclusion as well as access to education, and employment. The Committee is of the view that adequately funded rural transport measures, developed in partnership with local communities, local councils and Translink is the best way forward in tackling this problem.  
  7. The Committee noted that the NILGOS bid to cover additional bus and rail pension contributions was unmet at the draft Budget. It is concerned that the options to cover this shortfall - increasing fares or reducing services – will both have negative consequences in terms of social exclusion, environmental damage and economic development.
Infrastructure investment must be environmentally sustainable.
  1. The Committee noted with some concern that, although the PfG includes the priority Protect and enhance Northern Ireland’s environment and natural resources, which it welcomes, there is little evidence of the radical rethinking of policies needed to deliver the 60%-80% reduction in carbon emissions by 2050 identified by the Prime Minister in his speech on 19 November 2007. The DRD allocation does not appear to reflect the need to address this in any immediate way. The ISNI Measure Investment Proposals make substantial reference to the environmental impact of differing forms of infrastructure investment; however it is not clear to the Committee that this has been followed through to the Budget and ISNI 2 allocation stage. For example, there has been a successful bid for 200 new buses in the draft Budget, which the Committee welcomes, however it could have been stipulated that these were hybrid / alternative fuel / low emission vehicles. The Committee notes that the average fleet age of buses (combined) is similar to that in England, Scotland and Wales, and for Metro services, the bus fleet age is approximately 3 years younger than those in England, Scotland and Wales. [5]
  2. On a related issue, PSA 22 Protecting our environment and reducing our carbon footprint does not contain a DRD objective to deliver this PSA. Given the impact of public and private transport on levels of carbon emissions, air, environment and noise pollution, it is worrying to the Committee that the role of DRD in this area has not been recognised.
Achieving planned Departmental efficiency targets must not be at the expense of essential investment, service levels or public safety.
  1. The Departmental briefing received by the Committee indicated that the Department is finalising plans to deliver efficiency savings of £22m, £44m and £65m over the period of the Budget. Of these efficiency savings, £0.8m, £3.1m and £5.4m must be Admin cost reductions in the Department’s DEL baseline. The Department provided the following table setting out in some detail the categories within which it aims to deliver efficiency related reductions at this stage. These are in addition to those that will be necessary in corporate service functions as a result of implementing the corporate reform programme.

[1] Bids were not commissioned in the June 2007 monitoring round, and the Department was not successful in its bids for additional structural maintenance funding in October 2007, and an additional £4.4m which could otherwise have been used for structural maintenance was used to offset the Northern Ireland Water subsidy pressures.

[2] Northern Ireland Assembly, Research and Library Services Research Paper 2007.

[3] Northern Ireland Assembly, Research and Library Services Research Paper 2007.

[4] Northern Ireland Assembly, Research and Library Services Research Paper 2007.

[5] Supplementary draft Budget 2007 and draft ISNI 2008 briefing paper from the Department dated 16 November 2007

 

Efficiency Delivery Plan - Categories

2008/09
£'000

2009/10
£'000

2010/11
£'000

Overall DRD Efficiencies

22,463

44,250

65,384

Water Efficiencies - to be incorporated within the NIW subsidy requirement

9,014

17,758

26,239

Remaining DRD Efficiencies

13,449

26,492

39,145

Of which Admin Efficiencies

830

3,130

5,366

Generation of additional income

3,494

3,952

4,412

Reduction in capital budget for plant / depot additions / refurbishment

2,500

2,500

2,500

Other Capital efficiencies

2,600

8,000

7,790

Reductions in rail / bus capital

1,100

5,950

4,500

NITHC Asset Disposals

0

0

11,600

Core Costs

475

510

527

Bus route subsidy

2,450

2,450

2,450

Subtotal

12,619

23,362

33,779

Service Delivery Efficiencies (Admin)

830

2,995

5,099

Reductions in Core Costs (Admin)

0

135

267

Admin Subtotal

830

3,130

5,366

Total

13,449

26,492

39,145

  1. Although the narrative accompanying this table states that the Department would not anticipate service levels and operating capacity to be adversely affected by the planned efficiency measures, the Committee has some concerns in relation to the following issue.  
  2. The impact of the removal of the bus route subsidy is dependent on the extent to which Translink will reduce services, which is still uncertain. The Department states that it will be trying to ensure that services are maintained and that the efficiencies should be managed by generating additional income or better cost management with Translink. Taken together with the unmet bid for additional bus and rail NILGOS pension contributions, this pressure will be difficult to manage.  
  3. The Committee is of the view that the promotion of social inclusion, particularly in rural areas, and the positive environmental benefits of increased public transport use must be factored into any decisions to achieve efficiency targets through service reduction.  
  4. The Committee also heard from the Department that no Admin bids were met at draft budget stage. The Department has identified some £6.0m, £8.6m and £11.8m in Admin pressures over the budget period. These arise in areas such as roads infrastructure investment, rapid transit, public transport reform, trust ports governance and legislation, sustainable development and rail safety legislation. The Department is of the view that these pressures, together with absorbing the negotiated pay award and meeting the efficiency targets outlined above, in the absence of new funding, would inevitably impact on services and require DRD to reduce the number of funded posts in the Department.  
  5. The Committee understands that DFP has indicated that it would consider applications to switch Resource cover to meet Admin pressures, and in line with this, the Department has identified potential cover from Other Resources, in the amount of £0.4m, £1.4m and £3.4m over the budget period, which could go some way towards meeting the Admin pressures it faces.
  6. However, this still leaves the Department with uncovered Admin pressures of £5.6m, £7.2m and £8.4m. The Committee supports the Department’s Admin bids, and is of the view that failure to provide adequate Admin cover for the development of capital projects will adversely impact on the Department’s ability to deliver on its planned infrastructure investment, and its legislative and reform programmes.
Decisions by the Executive on the outstanding issues in Strand One together with those in Strand Two of the Independent Review of Water should not fall to the DRD budget but be funded by the Executive.
  1. Water reform issues were identified by Members as a top priority for the Committee as early as May 2007, and since that time the Committee has enjoyed a constructive engagement with the Department and the Independent Water Review Panel on the ongoing Executive Review of Water and Sewerage Services. As the recent Committee sponsored debate on the Independent Panel’s Strand One report illustrated, the Committee’s view has much in common with the Executive’s response to this report. There are a number of issues on which the Executive has reserved its opinion, pending receipt of additional information and research. Of particular concern to the Committee are those issues which could have financial consequences for the Departmental budget. Those arising from Strand One which most clearly relate to the Departmental budget include:

a. The level of efficiency targets and the achievability of same;
b. The funding of roads drainage;
c. The partial waiver of the dividend; and
d. The affordability tariff.  

Any costs arising from the Executive’s decisions on the outstanding Strand One issues, together with the Strand Two issues yet to be addressed, including decisions on enhanced affordability arrangements and any costs arising from proposed changes to the governance and accountability arrangements, must in the view of the Committee, be accompanied by budgetary cover where responsibility and costs fall to the Department for Regional Development.  

  1. The Committee heard from the Minister that the Executive has agreed to deal with the financial implications of its decisions on the recommendations of the review, and welcomes this approach. The Committee is strongly supportive of the view that the Department for Regional Development should not have to find from within its existing budget, funding to cover roads drainage and any other costs arising from decisions taken by the Executive.
Clarification, simplification and harmonisation of the terminology used in the draft Programme for Government, PSAs, draft Budget and the draft ISNI is needed.
  1. The Committee understands that, because of the timing of restoration, the Programme for Government, ISNI and Budget process for this year has been somewhat shorter than normal. However, it is the view of the Committee that the time scale this year was too short to allow sufficient time for Committee consideration and the Assembly process.  
  2. The Committee would like to see clarification, simplification and harmonisation of the terminology used in the Programme for Government, the Investment Strategy, and the Budget.  
  3. Within the Programme for Government there is one overarching aim, five strategic and interrelated priorities of which one is the top priority, two cross-cutting themes and 38 goals, in addition to 23 PSAs, encompassing 95 objectives above a myriad of actions and targets.  
  4. Within the Investment Strategy, which it states shares the overarching aim of the Programme for Government, there are six investment pillars encompassing 23 sub-pillars.  
  5. Within the Budget, each department’s DEL is split between capital and investment, which are delineated into objectives labelled by a letter rather than an activity, although they should align with the Department’s objectives, and below that into spending areas. The spending areas align closely with the sub-pillars of the Investment Strategy because of the relationship between the capital budget and the ISNI. However the departmental objectives used to organise the Budget are at a different level to the objectives used in the PSAs and differ again from the PSAs themselves.
  6. The Committee is of the view that aligning the PSAs more closely with the Budget documents (Departmental objectives and spending areas) would allow Committees to assess what their Department is to achieve with the funding allocated to it, which would in turn enhance ongoing Committee scrutiny.
  7. There is also the question of the hierarchy and relationship between the PSA objectives and targets in the PSA annex to the PfG, and the key goals listed in the PfG. This is not clear, nor is it clear that when a commitment is given to monitoring and reporting on progress, what exactly is to be monitored and reported on.  
  8. It is the view of the Committee that the Departmental Position Report and Executive Position Report stages of the budget process under the previous Assembly provided useful and timely information to Committees and should be considered for inclusion in the process for next year. In addition to the alignment of budget allocations to priorities and actions, the publication of an annual report illustrating both spend and delivery would begin to provide the information needed by Committees and the Assembly to discharge their scrutiny and advisory functions.
  9. On behalf of the Committee for Regional Development, I wish to thank you and the Committee for Finance and Personnel for your co-ordination work on the draft Budget. I am forwarding a copy of this letter to the Minister for Regional Development.

Yours sincerely,

Fred Cobain
Chairperson
Committee for Regional Development

Annex A
The Committee for Regional Development timetable for consideration of the draft PfG, draft ISNI and draft Budget 2007
  1. The table below summarises the approach taken by the Regional Development Committee to its scrutiny of the Departmental allocations, actions and targets in the draft PfG, draft Budget 2007 and draft ISNI
Wednesday 7 November
2007

Briefing from officials on draft budget, draft ISNI and draft PfG
Wednesday 14 November 2007

Briefing on Research & Library Services paper on the draft budget
Stakeholder views

  • Quarry Products Association
  • Inclusive Mobility and Transport Advisory Group IMTAC
  • Help the Aged / Age Concern
  • Northern Ireland Council for Voluntary Action
  • Federation of Small Businesses
  • Confederation of British Industry
* Tuesday 20 November
2007 		Meeting with the Minister for Regional Development
Wednesday 21 November 2007 Consideration of an outline Committee response to the draft PfG, draft ISNI and Budget 2007.
26 & 27 November
2007 		Take note debates on the draft PfG, draft ISNI and draft budget
28 November 2007 Regional Development Committee response to the Committee for the Office of the First Minister and Deputy First Minister on the draft PfG and draft ISNI, and to the Committee for Finance and Personnel on the draft Budget 2007.
  1. In addition to the above, ICTU and ERINI were invited to submit oral and written evidence but declined due to the timescale.  
  2. The reader may wish to note that this approach to scrutiny was agreed at the Committee meeting of 24 October 2007, however the meeting with the Minster scheduled for 20 November 2007 was agreed at the meeting of 7 November 2007.
Summary of issues raised by stakeholders:
  1. The following are some of the issues raised by stakeholders in written and oral submissions at the meeting of 17 November 2007. In the coming weeks, the official report transcript of these sessions, together with copies of written submissions, will be published on the Committee for Regional Development’s web page.  
  2. Help the Aged and Age Concern
  1. IMTAC
  1. FSB
  1. QPA
  1. CBI
  1. NICVA