Select Committee on Northern Ireland Affairs Minutes of Evidence

Examination of Witnesses (Questions 20 - 39)



Mr Beggs

  20. Good afternoon. What classes of expenditure fall outside any form of limits, either Departmental Expenditure Limits or Annually Managed Expenditure?
  (Mr Cassidy) Nothing in the NIO.

  Mr Beggs: Nothing in the NIO? Thank you very much.


  21. I am going to go back, not because of the answer to that question but because I think it is important we should get this absolutely clear in our minds. Can you go back to a definition on Annually Managed Expenditure? In other words, am I right in thinking that it is the Treasury which decides that for you?
  (Mrs Brown) Yes.

  22. I think it is not unfair to ask you to go back to the examples of Annually Managed Expenditure as to why the Treasury would put them into those categories?
  (Mrs Madden) Treasury have produced a Resource Accounting Manual which they have agreed with the Public Accounts Committee and that Manual sets out all the accounting policies and also in the White Paper which introduced Resource Accounting and Budgeting right across expenditure across the whole of the Whitehall departments and through consultation and agreement with Parliament they have determined what expenditures fall into what categories. So the Resource Accounting Manual is the accounting procedure and the Resource Budget inside determines what is in the Departmental Expenditure Limits and what falls into the Annually Managed Expenditure. The Annually Managed Expenditure is generally things like the social security budgets and those things which, because of the commitments, have to be looked at annually and the Departmental Expenditure Limits are a three year examination of what the limits are. So they are slightly different in character; one is obviously annual and one is three years. Treasury then determine, having regard to that categorisation, what expenditure falls into those broad categorisations.

Mr Grogan

  23. The estimate is clearly dominated by the transfer to the Northern Ireland Consolidated Fund, what information is going to be supplied to the House on the planned use of RfR5?
  (Mrs Brown) The resource estimate of which RfR5 will be a part will go to the House, but in relation to RfR5, the detail lying behind the estimate will be a matter for the devolved administration.

  24. Right, so it would be reported to the Assembly?
  (Mrs Brown) Yes.

  25. And in the resource to cash reconciliation it is noticeable that there is a substantial decrease in the heading `Provisions', about £110 million. Have you plans to explain such changes specifically as a matter of principle and what does this particular change relate to, this rather substantial decrease?
  (Mrs Brown) The decrease relates to three areas. The first is payments made during 2000-01 in respect of pensions paid to prison officers who are leaving under the early retirement scheme. That is £102 million. The next element is payment made in respect of criminal damage compensation during 2001 and that is some £12 million, and the third is an increase in provisions for criminal injuries compensation, that is £4 million.

  26. Does that add up to a little bit more than £110 million?
  (Mrs Brown) Yes, it does, but it is a net figure. The criminal injuries compensation is an increase so set against the other two that comes out with £110 million.

  27. Right. As a matter of course would those sort of increases/decreases be reported to the House or the Assembly?
  (Mr Cassidy) The detail of those figures would not normally be explained on the face of the resource estimate.

  Mr Grogan: Thank you, Chairman.

Mr Clarke

  28. Good afternoon. I am just returning back to RfR5 and the Estimates giving this information on funds from European institutions. At present in the Estimates an aggregate figure is stated in the relevant Estimate. Might it not be helpful to include a figure and a note, or could you expand a little more for us?
  (Mr Cassidy) We certainly can analyse the funding figure now, but as to whether it is normally appropriate to include that analysis in the Estimate; the Estimates have again a prescribed format which does not usually include notes of that kind of detail.

  Mr Clarke: Thank you, Chairman.


  29. I am looking at pages 172 and 173 of the Supply Estimates for 2000 and 2001, the main Estimates. Is that a document that you have in front of you?
  (Mrs Brown) No.

  30. In that case it may well be that it is not productive for me to ask any questions. We can always follow up in writing hereafter. Now is there any other question about Resource Accounting which any of my colleagues want to ask? In the absence of any questions, I will ask you what I sometimes ask at the end of a much longer session; is there any question that you are surprised that we have not asked you?
  (Mrs Brown) No, I cannot think of anything that I would have expected that you did not ask.

  Chairman: All right. Well let us proceed on to the other set of questions and let me give you time to adjust your own papers. Mr Beggs?

Mr Beggs

  31. Would you like to tell the Committee what expenditure is the £7.17 billion provision sought for on Class XV, Vote 2, intended to cover?
  (Mrs Brown) That is the expenditure by Northern Ireland for five months. It is the net cash figure required to fund the level of public expenditure which Treasury has agreed with the devolved administration for its services in Northern Ireland and it takes into account also miscellaneous revenues earned by the Northern Ireland Consolidated Fund which must be paid over to the UK Consolidated Fund, for example rates, income and interest on loans. So it is essentially the budget for the devolved administration.

  32. Thank you. How is the overall figure arrived at? The Barnett Formula deals with increases—it has done since 1979—but how was the base figure determined?
  (Mrs Brown) Yes, the Barnett Formula deals with variations and the Barnett Formula can be traced back to 20 odd years when a base line was established. Clearly in successive public expenditure rounds the Northern Ireland administration held negotiations with the Treasury to try to get uplift over and above Barnett. So it is the process of Barnett setting the base line initially, successive negotiations between the, not the devolved administration, but the Northern Ireland administration during direct rule, with Treasury which has led to the figure that we have now.

  Mr Beggs: Thank you.

Mr Clarke

  33. Within the Assembly, what options are open to devolved Ministers if they determine a particular policy area that they decide requires additional high expenditure relative to expenditure in England? What options are open to them?
  (Mrs Brown) I have to be quite careful that I do not talk too much about the devolved administration since I am not part of the devolved administration, but essentially Barnett is the main thing that applies. If the devolved administration wanted to access additional funds it would have to make its case to Treasury and Treasury would consider it on its merits. It would have to be a process of special negotiation.

  34. So are we saying there they can get additional funds?
  (Mrs Brown) They can ask for additional funds. I believe the Treasury line is very firmly in favour of Barnett as the basis of allocation and they would therefore, I believe, want to hold fairly tightly to the line that Barnett is it unless there is some special circumstance. One special package that I can think of is the Chancellor's economic package, but it would not be regarded as the normal or routine way of doing business, by Treasury anyway, to depart from Barnett.

  35. So are we saying that unless there was an exception that there would be an expectation that if they wanted to make changes then they would be required to make corresponding savings elsewhere within the Grant in Aid that they have?
  (Mrs Brown) That is my understanding, yes. Given that I am not part of the devolved administration or part of Treasury, that is my understanding of the way the system works.

  36. Just developing that a little bit further then; what arrangements exist to permit Northern Ireland public expenditure to increase if UK Ministers announce an increase in a particular area themselves?
  (Mrs Brown) That would be Barnett.

  37. That would be permissible and possible?
  (Mrs Brown) Yes, if it was in one of the sub-programmes which are deemed to be comparable sub-programmes and taken into account in the Barnett calculations.

  38. You see where I am going now in terms of specifics. If, as is widely rumoured, the UK Government announces substantial additional funding for the railways, will this automatically lead to an increase in the corresponding financial provision available to the Assembly of Northern Ireland?
  (Mrs Brown) If it featured in the list of comparable sub-programmes, yes. If it did not, no.[2]

  39. So that would be the criteria?
  (Mrs Brown) If it were something new it would be a case of Treasury deciding, perhaps on the basis of representations and special negotiation from the devolved administration that it should be classified as a comparable sub-programme.

2   See Q108, Ev. p. 25 and Appendix 5, p. 28. Back

previous page contents next page

House of Commons home page Parliament home page House of Lords home page search page enquiries index

© Parliamentary copyright 2001
Prepared 29 June 2001