Select Committee on Northern Ireland Affairs Minutes of Evidence

Examination of Witnesses (Questions 1 - 19)




  1. You are most welcome and thank you very much indeed for coming over to see us. If you have had the opportunity of reading examinations we have done with other witnesses before, you will know that at this stage I say first that if at any stage you want to gloss an answer—in other words, if you want to add to an answer you have already given—either here and now or later in writing if there is something you think should have been added which was not added, or indeed you wish to correct something, you should feel absolutely at liberty to do so. We in the same way will feel free in writing afterwards to put any questions to you which, on reading the transcript, we feel perhaps we ought to have asked, if that is acceptable. We will try and arrange that the questions follow a logical order, but that means they may come from different corners of this horseshoe. We were proposing to take Resource Accounting first and then move on to the other section hereafter, but probably most of us will ask questions under either section. Now, I do not know if there is anything you wanted to say to us before we start. We have been told who you are, but if you would like, for the sake of the shorthand writer, to tell us yourselves that would be grand?

  (Mrs Brown) Thank you very much for your welcome. I am Doreen Brown. I am Director of Resources of the Northern Ireland Office. This is Mary Madden, who is Head of our Financial Services Directorate, and this is Michael Cassidy who also works in the Financial Services Directorate.

  2. I think it might be helpful to us, before I turn to colleagues who may have specific questions to ask, if either Mrs Madden or Mr Cassidy told us a bit about the Financial Services Directorate so that we have a clear idea of what it actually does?
  (Mrs Madden) The Financial Services Division looks after the Law and Order Vote on behalf of the Accounting Officer and the Secretary of State. The Law and Order Vote has a sum of slightly less than £1 billion and we take receipt of that and we look after it in relation to the spending right across the whole department. That is one aspect of our responsibility and that is Vote 1 of the expenditure, and Vote 2—which is a matter before this Committee this afternoon—is another aspect of our role. Mr Cassidy might like to add.
  (Mr Cassidy) I am Head of Accounts. Basically our role is to prepare the department's Statutory Accounts and to pay its creditors. It is in the first context that I have been responsible for the implementation of Resource Accounting in the department.

  Chairman: Very good. This is a novel occasion for us. Let me just test whether any other Member of the Committee wants to ask you any questions about your functions before we actually get down—I think I have reticence. Mr Burgon?

Mr Burgon

  3. Thank you, Mr Chairman. Two questions; the first is, what are the principal differences between the cash based Estimates and the resource based Estimates and what advantage is expected to accrue from the introduction of the resource bases?
  (Mrs Brown) There are a number of differences between the cash based Estimates and resource based Estimates, the main one being that there is greater emphasis on the capital budget and managing capital in resource based Estimates. There are a list of items that are different between the two; in fact if I could read them out to you. Resource based Estimates include estimate of the cost of capital charges, depreciation, other non-cash items—for example, notional audit fees—increases or decreases in stock, increases or decreases in debtors, increases or decreases in creditors and increases or decreases in provisions. I think the rationale behind resource based Estimates is that they give a clearer picture of the true cost of money than the cash alone does.

  4. The second one; how were the proposed requests for resources chosen? Are they more or less restrictive in terms of expenditure control than the ambit of the current Estimates?
  (Mrs Brown) Sorry, could you repeat that?

  5. Yes, it must be my accent. How were the proposed requests for resources chosen and are they more or less restrictive in terms of expenditure control than the ambit of the current Estimates?
  (Mrs Brown) The request for resources are the statements of the department's main objectives. They essentially reflect the broad functional areas of responsibility of the Northern Ireland Office. That is RfR1 to 4. So they coincide with our four main operational directorates and the smaller organisational units associated with those directorates. So really there is no great difference between using RfRs and what we had in the past.

  Mr Burgon: Okay.

Mr McCabe

  6. Good afternoon. I am trying to work out what kind of information we are likely to get in the future and how we are going to be able to make sense of it. The first thing I really wanted to know was will there be a direct read-across from the Estimates to the figures that appear in the departmental report?
  (Mrs Brown) Certainly the level of detail in expenditure plans which is currently provided in the departmental report will be maintained, even in moving to resource based Estimates and the expenditure under each RfR will be analysed fully by specific functional activity.

  7. So the short answer is yes, the level of detail in the report will remain the same—that is the intention—and it should be fairly possible for anyone reading that to make the comparison with the Estimates and the detail in the report.
  (Mrs Brown) Yes.

  Mr McCabe: Thank you very much.

Mr Thompson

  8. Good afternoon.
  (Mrs Brown) Good afternoon.

  9. What classes of expenditure are included within the Departmental Expenditure Limits and in Annually Managed Expenditure respectively? What criteria are employed to decide what falls in each category?
  (Mrs Brown) The Departmental Expenditure Limits that cover departmental programme expenditure on an accruals basis, administration costs and capital spending; that is the resource budget DEL. The resource budget AME covers programmes which are managed on an annual basis and examples of that would be police pensions and European peace and reconciliation receipts and also the accruals consequentials of DEL programmes for the SR2000 period; for example, depreciation and the cost of capital charge.


  10. I am sorry. Could you just say that again? You dealt with police pensions and the European items?
  (Mrs Brown) Yes, the European peace and reconciliation receipts. The AME also covers accruals consequentials of DEL programmes for the SR2000 period only and examples of that are depreciation and the cost of capital charge and provisions.

  11. I want to make absolutely sure I have understood. I understood what you were saying about accruals, but you then went into certain DEL categories and I was not sure what they were?
  (Mrs Brown) In my last answer talking about the accruals consequentials of DEL programmes?

  12. Yes.
  (Mrs Brown) That is for the SR2000 period only and the examples there are depreciation and the cost of capital charge and provisions.

  13. Take me through in words of one syllable the last bit about the DEL, the SR2000 period?
  (Mr Cassidy) Yes. For the planning period 2001 to 2004 which we are still currently negotiating with the Treasury, the Annually Managed Expenditure element of the resource account will include the accruals deriving from the programmes that are defined as DEL, that is those programmes which fall within Departmental Expenditure Limits. For the future thereafter the expectation is that those accruals will fall within the DEL programmes themselves.

  14. I see. That is after 2005?
  (Mr Cassidy) Yes, that would be our expectation. Frankly, what we are following here is a mechanical requirement of the Treasury at the moment.

  Chairman: Yes, well those are familiar. Right. Had you concluded, Mr Thompson?

Mr Thompson

  15. What criteria are employed to decide what falls into each category?
  (Mrs Brown) The categories are determined by Treasury and if something falls into one of the lists—for example, the resource budget DEL covers administration costs, capital spending, therefore automatically capital spending is part of the DEL.

  Mr Thompson: Thank you.

Mr Hunter

  16. Further to that question, I do not see, forgive me, that Treasury determines actually answers the question `what criteria'? Could you tell us what criteria the Treasury uses?
  (Mr Cassidy) The distinction between these two areas of control, these two control limits, is one imposed by the Treasury. Normally we would not enquire as to why—I mean, this is something to do with their own overall expenditure control mechanisms and as far as we are concerned we simply follow the definitions that are prepared or prescribed for us.

  Mr Hunter: Thank you.


  17. Before I turn to Mr Beggs, when you gave us police pensions and the European peace and reconciliation programmes, where those examples or were they the totality?
  (Mrs Brown) They were examples.

  18. Would you like to give us some more examples?
  (Mrs Brown) I will look for more examples. I think we will have to come back to you on that[1]. Those are the main elements.

  19. But the two you gave us are the two most significant ones, are they?
  (Mrs Brown) Yes.

  Chairman: Okay, thank you. Mr Beggs?

1   See Ev. p. 26. Back

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