Examination of Witnesses (Questions 20
WEDNESDAY 28 JUNE 2000
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
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
(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
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
26. Does that add up to a little bit more than
(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.
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
(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?
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 increasesit has done
since 1979but 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.
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
(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.
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