This is the third Monitoring Round of the 2007-08 financial year and Members will be aware of the role and purpose of the in-year process – it is, in simple terms, to help the Executive make the most of the resources at its disposal.
The first stage in this process is the identification, by departments, of resources allocated in previous budget processes which, for a variety of reasons, will not be spent in this financial year.
In overview terms, Mr Speaker, reduced requirements declared by departments in this Monitoring Round amount to £107.4million in respect of current expenditure, and £132.3million in respect of capital investment.
The level of reduced requirements declared in this round is much greater than the levels identified at the corresponding time in previous years, and the amount declared to date for this financial year is some 12% greater than the totality of all reduced requirements declared last year.
Mr Speaker, I believe this position firmly indicates that departments have robustly reviewed their in-year financial position, and sought to declare reduced requirements at a time when the Executive can make best use of those resources, rather than simply allowing the amounts to fall as year end underspend, as has often been the case in the past.
This robust assessment of in-year requirements also indicates that my Executive colleagues are working to improve the level and quality of financial management within departments, and I would commend them for that, and encourage them to continue to build on this as we move forward.
Mr Speaker, I cannot overstate the importance of seeking to embed the highest standards of financial management within the public sector, and in this context I am grateful to the Committee for Finance and Personnel for their valuable and positive contribution made to this issue last week, as part of their response to the Draft Budget. I look forward to continuing to work closely with them on this issue in the future.
However, while acknowledging this improving position regarding reduced requirements, I must also register a note of caution regarding another aspect of financial management – particularly in the context of the parallel Budget process.
Mr Speaker, we must recognise that the amounts being identified as reduced requirements in this monitoring round represent allocations made to departments in previous Budget processes, in response to bids from those departments. While recognising that some of this lower need may arise as a consequence of greater than planned efficiency within departments, the more significant factors are:
Original resource needs were overstated by departments; or Departments have not delivered the planned level of public services underpinning those budget bids.
Mr Speaker, I think all Members will agree that neither situation is acceptable, and my colleagues on the Executive and I must bear this in mind as we move to consider final Budget proposals for the next three years.
This will take the form of a robust challenge to, and scrutiny of, departmental spending proposals; and by seeking to further develop a culture of delivery, with appropriate mechanisms to monitor and indeed drive performance.
Details of all the reduced requirements declared by departments are set out in Table 1 of my Statement.
Against this level of reduced requirements, departments have submitted current expenditure bids in the amount of £82million and capital investment bids amounting to £134.5million.
Mr Speaker, turning firstly to the position as regards current expenditure, the Executive is uniquely in a position to address all the bids submitted by departments. I do not propose to explain each item in detail, however this Monitoring Round has allowed significant resources to be allocated to priority services, such as Education, Health and Regional Development, while addressing other important issues raised by departments.
For the Department of Education, the main component of their £15.3million allocation will allow the department to meet the additional costs, some £12million, arising from the classroom assistants’ dispute. The allocation of £17million to the Department of Health, Social Services and Public Safety will allow the Department to allocate £14million towards addressing the costs associated with the Review of Public Administration, which would otherwise fall to be met during the Budget period. This allocation will remove the need for the Department to divert resources, over the Budget period, away from other areas to address the RPA pressure.
For the Department for Regional Development, additional resources of £28.5million will allow the Department to address a number of issues, most notably, the ongoing costs of the Water GoCo and investment in roads structural maintenance.
In terms of capital investment, the Executive has agreed to allocate £74.1million to departments. This includes £22.7million to the Department for Regional Development to meet the increased land costs associated with the A1 Beechhill to Cloghogue scheme and to allow the completion of the Newry / Dundalk scheme. Almost £50million has been allocated to the Department for Social Development for a range of social housing initiatives, including Co-ownership, the Warm Homes scheme and the Social Housing Development Programme. This will allow the Department to achieve its target of starting 1,500 new social houses in this year, and under the Co-ownership scheme will assist 525 applicants into home ownership.
Mr Speaker, the consequence of the level of reduced requirements and bids met is that, for current expenditure, the level of planned over-commitment is now £63.5million. This is in line with our target of £50million, at the conclusion of the February Monitoring round, and represents very satisfactory progress in terms of management of this key issue.
In terms of capital investment, we now have unallocated resources of some £57million. This reflects the fact that many departments have identified slippage in planned projects, and the simple fact that it is difficult to accelerate other capital projects to consume these resources at this relatively late stage in the financial year. This position emphasises the points I have made about the need for continued improvements in financial, and indeed project, management.
However, all unspent resources will continue to be available for carry forward, for use by the Executive in the future.
Going forward Mr Speaker, there is a final opportunity to review the in-year position in February. However, the February Monitoring Round offers a limited opportunity to address issues, due to the timing of the Round and the constraints imposed by the Spring Supplementary Estimate position.
In conclusion Mr Speaker, I would again highlight the good work that has taken place by departments to robustly assess their in-year requirements and I am confident that, aligned with our ongoing work in terms of improving the level and quality of financial management across all departments, we will see better financial performance at all levels within departments.
I commend the December Monitoring position to the Assembly.
Notes to Editors:
1. The statement with additional tables is also available on the DFP website: http://www.dfpni.gov.uk/index/news.htm
2. Media enquiries only to DFP Press Office on 028 9052 7644 or 028 9052 27375. Out of office hours please contact the Duty Press Officer via pager number 076 9971 5440 and your call will be returned.
