End of Session Report 12 May 2011 – 31 August 2012

Democratic Unionist Party	Mr Sydney Anderson
	Mr Alex Easton
	Mr Paul Girvan
	Mr Adrian McQuillan1
Sinn Fein	Ms Michaela Boyle3 (Chairperson)
	Mr Daithí McKay6
	Mr Mitchel McLaughlin
Social Democratic and Labour Party	Mr John Dallat (Deputy Chairperson)
	Mr Seán Rogers
Ulster Unionist Party	Mr Michael Copeland
	Mr Ross Hussey

Meetings held

During the year, the Committee met formally 38 times. Ten of the meetings were evidence sessions, 9 of which were conducted in the Senate Chamber, Parliament Buildings with the other conducted at NICVA’s headquarters in North Belfast. Thirty one meetings were partly closed or closed.

The purpose of most closed sessions was to consider the approach to specific reports, enabling members to explore the facts and increase their understanding of the more complex findings in the reports.

Summary of Inquiries

PAC selects the reports it covers on the basis of public interest, the order of expenditure involved and the lessons that can be learned from the report.

Report on Managing Criminal Legal Aid

Criminal legal aid pays for legal advice and representation in court for people who could not otherwise afford it and ensures that there is fair and equal access to justice in Northern Ireland. However, the provision of legal aid for those charged with a criminal offence comes at a significant cost to the public purse.

The Committee was aware from the C&AG’s report that until recently, expenditure was rising every year with costs almost trebling over the last decade, with no comparable increase in the number of cases. Also, the Northern Ireland Legal Services Commission (the Commission) has overspent on its budget every year since it was set up in 2003. Cost control and value for money in managing criminal legal aid were not evident in the period covered by the C&AG’s report. 

On this basis, Members agreed to take evidence from the Department. The Committee found that over the report’s ten-year scope, nearly £400 million was spent on criminal legal aid in Northern Ireland, making it the most expensive system in the world; and that the system was unnecessarily complex. No one was wholly accountable for the large sums of public money spent on criminal legal aid, even though 98% of applications were granted and no financial contribution was expected from successful applicants.

Under the Very High Cost Cases (VHCC) regime that existed between 2005 and April 2011, VHCC cases were paid at a significantly higher rate than standard cases, and the fees involved were only decided when the case was concluded. The Committee welcomed the fact that VHCCs were abolished from April 2011 and, as a result, the Department estimates a cash saving of over £18 million a year.

The Accounting Officer accepted that during the period of the report, there had been “playing pretty fast and loose with public money, and where there was a loophole, exploiting it”, adding that since devolution the loopholes had been closed, in his view, quite effectively.

The Committee made 9 recommendations for change, 8 of which were accepted, and conceded that progress had been made since devolution. The remaining recommendation is being addressed by proposals under review by the Committee for Justice.

Report on Reducing Water Pollution from Agricultural Sources: The Farm Nutrient Management Scheme

The Committee chose to take evidence on this report because the total grant paid out in the Farm Nutrient Management Scheme (FNMS) amounted to £121 million, making this the largest capital grant scheme ever run by the Department of Agriculture and Rural Development (DARD).

DARD introduced the scheme in 2005 to help farmers comply with the Nitrates Directive.  It provided 60% capital grant support, up to a maximum grant of £51,000, towards the cost of building additional slurry storage required to prevent leaching of nutrients and eutrophication. 

Almost 4,000 farmers proceeded with a project, at an average grant per farm of some £31,000.  In 2007, the programme budget was increased to £144 million, to ensure that all applicants could be funded. 

The Committee found that there was a fundamental uncertainty over the impact of FNMS on water quality and thereby the scheme’s value for money.  The Department conceded that it had no evidence to demonstrate the extent to which FNMS is making a difference to water quality in Northern Ireland. The Committee also found that in a number of key aspects, the Farm Nutrient Management Scheme was poorly planned and badly managed, including a substandard economic appraisal; and that DARD was slow to respond to the 1991 Nitrates Directive, taking eight years to begin its designation of ‘Nitrate Vulnerable Zones’.

Following the Committee’s first evidence session on 15 June 2011, additional information was requested from the Department on the varying valuations — £200 million falling to £10 million, and finally between £2.28 million and £5.87 million — of a departmental asset, the Crossnacreevy site. The initial £200 million informal valuation was the means by which the Department secured an additional £89 million to fund the scheme.  In reviewing this data, the Committee noted important details that had not previously been disclosed by the DARD witnesses.  As a result, the Accounting Officer was recalled. 

The Committee made 12 recommendations, and 11 were accepted.  The recommendation that the Department take steps to ensure that this type of situation — where there is no proven linkage between the Department’s expenditure and the intended outcomes — will not be repeated in any future grant scheme, was accepted. However, DFP did not accept the recommendation that processes are put in place to ensure that departmental bids for funding are underpinned by a rigorous cost analysis and, where appropriate, independent professional scrutiny on the basis that this would be inappropriate for the initial stages of the bidding process.

The Committee stated that the Accounting Officer’s evidence re Crossnacreevy lacked frankness, openness and credibility, and wrote to the Head of the Civil Service and the Accounting Officer of DFP with its concerns. The Committee received replies from both officials and the DARD Accounting Officer addressing these concerns and undertaking to take steps to ensure that this would not occur again.

Report on Creating Effective Partnerships Between Government and the Community and Voluntary Sectors

The Committee agreed to take evidence on this report because members were conscious of the value of the contribution made by the Voluntary and Community Sectors to improving society and delivering public services through both its dedicated workforce and volunteers.

The Committee found that the complexity of the public sector’s relationship with the Sectors has contributed to over-bureaucratic, disproportionate and risk-averse approaches to monitoring of funding and lack of focus on what is actually being delivered. However, the Committee saw the new Concordat between Government and the Sector as a fresh start for more effective relationships through properly joined-up working. The evidence session on this inquiry was held at the offices of the Northern Ireland Council for Voluntary Action, a hub for many voluntary bodies, enabling the Committee to demonstrate the accountability process direct to stakeholders.

The Committee made 11 recommendations for tangible improvements. These were for practical actions to reduce the level of bureaucracy through the adoption of proportionate monitoring and audit; focus on outcomes; and ensuring funding is agreed and payments released to organisations on a timely basis.

Of the 11 recommendations, 9 were accepted.  The Committee undertook to register its concern at the significance of this report by requesting an MOR update after 12 months to monitor progress on its recommendations.

Report on The Use of Locum Doctors by Northern Ireland Hospitals

The Committee decided to take evidence on this case because it found alarming the extent of rising reliance on hospital locums in the Health Service and a lack of informed workforce strategy for locums as demonstrated by the C&AG’s report.

Properly managed, locums play an important role in helping hospitals achieve flexibility; but excessive use can be costly. In the four-year period to March 2011 almost 8 per cent of Trusts' overall medical staffing expenditure related to locums. Payments to external recruitment agencies for locums totalled £74 million while payments to substantive staff working over and above their contracted hours (internal locums) totalled just over £35 million.

The Committee learned in the evidence session with the departmental Accounting Officer and supporting officials from the Department and the Western Trust that arrangements for pre-employment checks for locums are not always formalised and there is a risk that checks may not be completed in every case.  In addition, Trusts unable to fill doctor shortages by using contracted agencies or internal locums, face the difficult choice of using staff supplied by non-contracted agencies or suspending services.

The Committee was concerned that management information was insufficient to respond to concerns not only for efficiency but patient safety and risk of harm. In particular, the lack of reporting of adverse incidents involving locums prevented an assessment of harm by locums as compared to substantive staff; similarly the Committee was concerned that controls for information sharing re poorly performing locums were not complied with sufficiently to allow hospitals to make an informed employment choice next time.

The Committee made 9 recommendations to improve management, safeguards and controls in respect of locums.  All but one recommendation were accepted. In respect of the European Working Time Directive, the Department does not accept that it is for Trusts to monitor compliance with the Directive for doctors working as locums outside the Trust as this would be onerous. 

The Committee looks forward to receiving an update on the Regionally Managed Medical Locum Service (RMMLS) before end September 2012.

Update Report on the Use of Consultants

Aggregate spending on external consultants for management consultancy, financial services and IT by the NICS is significant.

Over the period 2005-06 to 2010-11, departments (including agencies, non-departmental public bodies and health trusts) have spent more than £150 million on external consultancy services. The Committee reported on this matter in 2008 and noted that consultancy spend appeared out of control. 

However, the latest annual spend is approximately £14 million, compared with a peak of £42 million in 2006-07.  The Committee was pleased to note significant improvement in the C&AG’s update report and chose to hear evidence of this positive development.

The Committee learned in the evidence session that around two thirds of external consultancy contracts continue to be let without any documented evidence of whether opportunities for skills transfer exist or could be put in place. To miss this opportunity prevents the public sector from developing its own capacity, bringing specialist skills in-house. 

The Committee found that compliance with business case controls had improved considerably, questioned the value of the current use of the system of post-project evaluations in learning from consultancy expenditure. The Committee noted that given that competitive tendering is the best way to achieve value for money, there remained too many single tender actions – one in five —for consultancy.

The Committee also commented on cost increases in contracts and contract overruns or extensions, such as the Account NI contract, which snowballed from £0.97 million to £9.6 million and was four years late.  Although the Accounting Officer did not agree, this clearly represented an overrun and should have been re-tendered and opened to competition.

The Committee made 9 recommendations of which one was not accepted and one was deemed already to be met by current practice. The DFP response did not agree that the new Compliance report should deal with good practice and lessons learned, but preferred that these be included in the post-project evaluation process.

Report on the uptake of Benefits by Pensioners

The Committee was extremely concerned that although the estimates are limited, the latest available figures¹ suggested people of pension age here could be missing out on benefits in the range of £31 million to £197 million.

Members of the Committee had a great deal of experience of helping pensioners engage with the benefit system and were keen to learn what progress was being made in this area. The Committee was also conscious that as benefit expenditure does not come out of the Assembly’s Block grant from Westminster, increasing such expenditure does not therefore compromise the delivery of other public services locally.

The Committee found that almost 20 per cent of Northern Ireland’s 307,000 pensioners are classified as living in poverty, though The Department for Social Development (DSD) does not currently have an accurate estimate of the size of the benefit uptake gap. The current benefit system is complicated, and many pensioners do not understand the way in which the system works.  Pensioners can be reluctant to engage with government agencies and share their personal circumstances with officials. Conversely, the independent advice sector and other voluntary and community bodies are perceived as trusted third parties.  Also, the Committee was concerned at the extent of historical underpayments and overpayments. 

The Committee reinforced the need to continue efforts to simplify the benefit regime and offer assurance to the public that benefit entitlement will be calculated correctly first time. 

The Committee recommended that benefit-paying agencies formally adopt improving uptake as a core business objective; initiate research work with immediate effect to produce robust uptake estimates, inform uptake strategy and set challenging targets for the future; and consolidate their efforts to increase the impact of outreach activities by working more closely with the voluntary and community sectors.

The Committee made 11 recommendations, 8 of which were accepted and 3 of which were noted. DSD noted recommendations of a new datasharing strategy, a web-based access tool for all benefits and a single agency approach to administration and delivery of benefits.

Report on the BioScience and Technology Institute

The Committee chose to do this inquiry when it learned of the range of issues which arose in the C&AG’s report. This project was so badly handled by the BTI board and funding bodies that the Committee saw it as a case study in how not to run an innovation project.

BTI was incorporated in November 1998 to provide biotechnology incubator facilities, through the development of a specialist building at Belfast City Hospital (BCH).  The company was to be commercially sustained. The project secured grant of £2.2 million from four public funding bodies, and loan funding was provided by the bank (initially £1.5 million) and a private donor (£1.2 million). 

The location of the BTI project at the Belfast City Hospital site was seen as fundamental to the success of the project.  Despite this, DETI and its agencies each approved a move to a site called Harbourgate.  Crucially, however, they did not carry out a re-appraisal of the project to confirm that it remained financially viable and that its strategic objectives remained deliverable at the new location.  This was a major breach of procedures and one that led directly to the ultimate demise of the project.

As the project failed to reach any of its objectives, the Committee concluded that it provided no value for the public funds committed to it.  No sums have been recovered by Government, so some £2.2 million of taxpayers’ money has been totally wasted.  

The Committee found instances of suspected fraud, serious breaches of control and failure by the Department to ensure that proper standards of corporate governance were applied within BTI, particularly regarding procurement and conflicts of interest. 

During the evidence session it was made clear that while departmental witnesses adhered to NICS guidance describing engagement with the Committee from the point of view of ministerial accountability and the NICS as an employer, in deciding datahandling issues the Committee would have regard to other sources such as FOI and data protection law and the decisions of the Information Commissioner.

The Committee made 13 recommendations, all but one of which were accepted in the Department’s response. The MOR did not state acceptance of the Committee’s recommendation that disciplinary issues be dealt with much more urgently but reiterated guidance in force which expresses this as an aim of the NICS as employer.

Report on the Transfer of Former Military and Security Sites to the Northern Ireland Executive and Ilex Accounts 2010-2011

The Committee decided to pick up on this report given the considerable public interest in the use of the sites gifted to the Executive, and the growing cost of preparing the sites for use.  As part of the Reinvestment and Reform Initiative (May 2002), six former Military and Security sites were transferred free of charge to the Office of the First Minister and Deputy First Minister (the Department). These sites offered the opportunity for economic and social regeneration either through using the proceeds from their disposal (Malone and Magherafelt) or through developing Masterplans. Up to 31 March 2012, £62 million has been spent, mainly in relation to the Maze/Long Kesh, Crumlin Road Gaol and Ebrington sites.

The Committee found that a condition of the transfer of the sites was that the Executive would bear the cost of making them ready for use. As detailed checks were not completed prior to their transfer the potential cost of remediation and maintaining and making the sites safe and secure was unknown.

The Committee concluded that the Department could and should have gotten a better price for the Malone site, sold for £3.8 million despite valuation at £5 million, and that LPS advice to the Department appeared to have been driven by expediency rather than to achieve maximum value.

Proceeds from the sale of Malone and Magherafelt Barracks sites, totalling £4.7 million, were to be ringfenced specifically for projects which would represent a tangible benefit to the peace process.  However, proceeds from the sales may not been used for the intended purpose.  Furthermore, the Department told the Committee that cash available and not immediately required must go back to the Consolidated Fund. However, it could not give a clear answer if the £870,000 has been lost to the Northern Ireland Block; but from the evidence provided this seems to be a strong possibility.

Having identified a gap in legislation that means that Councils and the Environment Agency are unable to fully regulate contamination of land and enforce the “polluter pays” principle, the Committee recommended that the Department of the Environment, in consultation with Councils, fully assesses the financial, environmental and health risks associated with having a regulatory regime that falls short of that in place in other regions.

The Committee made a range of recommendations focusing on the lessons learned from disposal of the Malone site and the role of LPS in advising departments on disposal. Of 11 recommendations, 9 were accepted. DFP replied that it would refer to Accounting Officers the Committee’s recommendation on clear mandates to arm’s-length bodies, and reiterated existing review mechanisms for these arrangements. However DFP did not accept the Committee’s recommendation that sealed bids be used for sales of land and buildings unless there are compelling reasons not to.

The Committee examined the resource accounts of Ilex because the C&AG had serious reasons for qualifying the company’s accounts — primarily expenditure without approvals. The Committee was concerned at the extent of expenditure without proper approvals or business plans and was surprised given the Chief Executive’s previous experience as an Accounting Officer in two major departments.   The Committee recommended that the sponsor arrangements for the company be streamlined. 

Report on Safeguarding Northern Ireland’s Listed Buildings

As the MOR for this report has not yet been received, this inquiry will be addressed in next year’s end of session report. Meetings on this inquiry have however been included in the statistics above as they took place in the 2011-12 year.

Ministerial Directions

When a Minister wishes to proceed with a course of expenditure against the advice of his or her Accounting Officer, a Ministerial Direction is notified to PAC.  This means that the accountability line for this expenditure will be to the Minister rather than the Accounting Officer.

Titanic Studio

At its meeting on 1 June 2011 the Committee considered correspondence from the Comptroller and Auditor General detailing financial provisions for the Titanic Studio. 

The direction was sought by the Accounting Officer of the Department of Enterprise, Trade and Investment for £4.8 million since he could not support the project on the basis on value for money and uncertainty as to its viability.  After receiving the direction the accountability of the spending decision would pass to the Minister.

The Committee agreed that the C&AG should monitor the conditions attached to the direction and to report back to the Committee when they are met.

Shackleton Site

At its meeting on 5 October 2011 the Committee considered correspondence from the Comptroller and Auditor General relating to financial provisions for the Shackleton site in Ballykelly.

The direction was sought by the Accounting Office of the Office of the First Minister and deputy First Minister following the acquisition of the former military site by the department following the a cash offer of £1.5 million by the Ministry of Defence (MoD).

Following advice on its value, potential remediation costs and attributable holding costs the Accounting Officer concluded that he was unable to support its ownership on value for money grounds since remedial costs alone were indicated to be between £5.9 - £8.1 million.

The direction was issued on the basis that the site upon the completion of all necessary remediation works would offer a higher return to the public purse than the offer by the MoD.

Excess Votes

Excess Votes are part of the Assembly’s control framework over Government spending.  On behalf of the Assembly the Committee scrutinises the circumstances in which departments have exceeded the monies voted to them and authorised by the Assembly and will recommend in its report whether approval for further resources should be granted to regularise the excess expenditure.

This year there were two Excess Votes; one in the Department for Social Development and one in the Department for Culture, Arts and Leisure.

Department for Social Development

The Department for Social Development obtained additional resources when the Executive gave its approval to an increase in expenditure of up to £11.15 million for the Housing Programme.  The additional spending had been approved by the Executive through its budget procedures. However, the total spend was greater than the amount voted in the Department's Estimate before the Assembly, and the Department therefore incurred an excess vote of £10.2 million. In its report to the Assembly the Committee recommended that the expenditure should be regularised.

Department for Culture, Arts and Leisure

In this instance the Committee found that the Department incurred an impairment charge of £3,392,000 on Land and Buildings which had not been anticipated, following a year end valuation of the Public Record Office of Northern Ireland's (PRONI) new premises.

The valuation recorded £25,288,000 as against the Department's figure of £28,680,000. An impairment review had been undertaken by the Department during the year; however, the Public Record Office of Northern Ireland's building was omitted, as at the time of the review it was classified as an asset under construction.

The Department's Supply Estimates included a provision for £270,000 of expenditure. This provision, before taking account of the PRONI premises, was exceeded by £96,000 as a result of other, more minor asset impairments.

Adding this excess to the PRONI impairment charge of £3,392,000 resulted in a total AME excess of £3,488,000. DFP advised the Department that it could not provide virement approval for this excess expenditure as to do so would infringe the Assembly's control over such expenditure.

In its report the Committee reinforced its expectation that all Departments should have robust procedures in place to estimate and monitor their use of resources but recommended that the expenditure should be regularised.

Other issues

The Committee continued to work on whistleblower cases throughout the year, and to promote good practice in respect of whistleblowers in the public service.

The Committee has also sought to develop its relationship with Accounting Officers in the aftermath of events impacting on accountability in the NI Water and FNMS inquiries.

The Committee continues to highlight areas in which best practice can improve, such as fraud, whistleblowing and datasharing.

The Committee reported to the Assembly in a take-note debate in June and is undertaking a comparative stream of work with PACs in other legislatures to strengthen and refresh its working processes.

Recommendations

In total this year, the Committee has made 85 recommendations to improve financial accountability to the taxpayer. It continues to monitor departmental progress in implementing them. Of these recommendations, 63 (81.8%) have been accepted by the Government to date.

A further 7 recommendations were made to improve financial accountability to the taxpayer, which are currently being considered by the Government who will formally respond to the Committee in an MOR from the Minister for Finance and Personnel in the next mandate.

Where its recommendations were noted rather than accepted outright, the Committee sought clarification from the relevant Department via the Treasury Officer of Accounts of the reasons for this. The Committee has agreed to continue to seek outstanding clarification of MORs on Procurement and Performance in NI Water, Adult Literacy and Numeracy and the Quality of Care in Homes for Older People. Where it deemed necessary the Committee referred noted recommendations to the relevant statutory committee for continued scrutiny of implementation.

ANNEX A

               Public Accounts Committee

 Expenditure for the period 23 May 2011 – 31 August 2012