Report on the Draft Budgets 2020-21 of the Northern Ireland Assembly Commission, the Northern Ireland Audit Office and the Northern Ireland Public Services Ombudsman

Introduction

1. The Committee began its scrutiny of the draft Budgets 2020-21 for the Northern Ireland Assembly Commission (NIAC), the Northern Ireland Audit Office (NIAO) and the Northern Ireland Public Services Ombudsman (NIPSO) at its meeting on 13 February 2020. In undertaking this work, the Committee noted that it fulfils this role in place of the Department of Finance (DoF) in recognition of the independence of the three non-Ministerial bodies. In that regard, the Committee agreed that it would follow the protocols/methodologies (Appendix 1) used by the previous Audit Committee in relation to agreeing the annual budgets and estimates for the three non-Ministerial bodies. The Committee also agreed that it will subsequently review the protocols in light of any lessons learnt from the current financial cycle.

2. Prior to the meeting on 13 February 2020, the Committee received written submissions from the NIAO and NIPSO (Appendix 2). The Committee received oral briefings from both the NIAO and NIPSO at the meeting on 13 February 2020 on their respective draft corporate/strategic plans; their 2019-20 year-end position; and their preparation for draft Budget plans 2020-21. Members had noted that, as the first meeting of the NIAC would not take place until Wednesday 19 February 2020, NIAC officials would not be in a position to brief the Committee on its draft Budget 2020-21 until after that date.

3. The Committee subsequently received a submission from the NIAC (Appendix 2) and an evidence session with NIAC officials was scheduled for Wednesday 4 March 2020. During that meeting, the Committee considered other written evidence, including correspondence from the Public Accounts Committee (PAC) and DoF, together with follow-up written responses from the NIAO and NIPSO (Appendix 3). Further oral evidence was also taken from the NIAO and NIPSO at that time (Appendices 4 & 5).

4. On Thursday 5 March 2020, the Committee agreed its report on the draft Budget 2020-21 position for the NIAC, NIAO and NIPSO (Appendices 4 & 5). The Committee agreed to lay a copy of its report in the Assembly Business Office and to send a copy of the report to DoF, indicating that it has agreed that the Executive’s budget should make provision for the figures set out in this report.

Northern Ireland Assembly Commission

5. In undertaking its consideration of the NIAC draft budget 2020-21, the Committee noted the statutory functions of the Assembly Commission, in particular the legal requirement to meet all costs associated with Members by way of salaries, allowances, expenses, members’ staffing costs, pension contributions etc. The Committee is mindful that these costs are determined by the Independent Financial Review Panel (IFRP) and that the current arrangements for payments to Members are set out in the Assembly Members’ (Salaries and Expenses) Determination (Northern Ireland) 2016. The Committee, therefore, recognises that these costs cannot be withheld or altered either upwards or downwards by the Commission and as such, the costs are not under the control of the Commission.

6. During its evidence session with NIAC officials on 4 March 2020, members explored a range of issues including: the financial implications of the “New Decade, New Approach” (NDNA) agreement; income generation options; anticipated staffing resources in light of the now fully functioning Assembly; and the proposed elements of the Commission’s capital works programme. Members also discussed how the Assembly’s budget and staffing resources compared to those of the National Assembly for Wales and the Scottish Parliament.

7. In considering the financial implications of the outworking of the NDNA agreement, members noted that there was no current provision in the Commission’s budget for 2020-21 for simultaneous translation services as detailed in NDNA. The financial impact of this will only be known when the Committee on Procedures has considered the issue. As such, this is a matter which could potentially require additional funding in-year and the Committee may wish to revisit the issue at a later date.

8. In terms of income generation, while noting that a balance must be stuck in relation to the use of Parliament Buildings as a private function venue and as a working legislature, the Committee would encourage the Commission to maximise opportunities for generating additional income and recovering costs where appropriate.

9. Members noted the additional costs associated with the employment of Agency staff and that this will be an on-going expense until all recruitment has been completed for permanent Assembly staff.

10. Members received assurances on a range of other issues, including: the Commission’s use of Shared Services; the breakdown of the Capital plan; and in relation to the Assembly’s business continuity measures to minimise disruption to service delivery as a result of COVID-19.

11. While recognising the aforementioned cost elements which are outside the control of the Commission, members noted a number of issues arising from the operation of the Assembly Members (Salaries and Expenses) Determination (Northern Ireland) 2016. This included issues in relation to the repair and insurance of constituency office equipment. Members also discussed necessary security measures at constituency offices, particularly in light of risks in relation to lone workers. More generally, the Committee noted that the Assembly Commission had begun a process of consultation with MLAs and parties on the options for future arrangements for the provision of financial support to members.The Committee would encourage the Commission to ensure that this process is expedited as a matter of priority.

12. The NIAC budget-setting protocol (Appendix 1) requires that, in considering the Commission’s draft budget, the Audit Committee should have due regard to the evidence provided by the DoF. The Committee has noted that the DoF is content that the budget plan figures presented by the Assembly Commission represent a realistic budget profile and that the DoF will incorporate these into its assumptions as it prepares advice on the Executive’s 2020-21 Budget (Appendix 3).

13. Arising from its scrutiny of the NIAC draft budget plan for 2020-21, and having due regard to the evidence provided by the DoF, the Audit Committee agreed that the Executive's draft Budget document should make provision for NIAC having a Resource budget of £44,847K and a Capital budget of £1,093K in 2020-21.

Northern Ireland Audit Office

14. The Committee has noted the important role and function of the NIAO in relation to financial audit, public reporting and reviewing the economy and the effectiveness and efficiency of government. Members are aware of the Audit Office’s crucial work in relation to governance and counter fraud as well as the key support it gives to the Northern Ireland Assembly and citizens of Northern Ireland.

15. During its evidence session with the Comptroller and Auditor General (C&AG) and NIAO officials on 13 February 2020, as well as hearing about the general areas of work of the Audit Office, the Committee was briefed on the NIAO’s new business model and on the transformation work undertaken in the three years since the previous Audit Committee last met. Members noted the Audit Office’s new strategic direction and vision for the future, along with the significant restructuring process which the Office has gone through in the preceding years. The NIAO officials also explained changes arising from the restructuring, including progress in digitalisation as well as a refreshed governance structure, including the appointment of an Advisory Board and a Remuneration Committee.

16. From a financial perspective, NIAO officials outlined the reduction in the Audit Office’s net Resource requirement from £8.1m in 2011-12 to £6m in 2018-19, a reduction of around 26% during that period. Members noted that this has been due mainly to the incentive to generate efficiencies during a time of austerity, which led to flexibility in the workforce. This has included use of the Voluntary Exit Scheme and significant restructuring of the senior management team.

17. The Committee questioned NIAO officials on a number of key issues, including the implications of staff restructuring for Audit Office outputs. Members were advised that the current staffing structure has enabled the NIAO to become more effective and efficient. This was further addressed in follow-up correspondence from the NIAO which outlined the impact on the skill base of staff and outputs of the NIAO as a result of the restructuring.

18. The Committee has received assurance from the NIAO that the new flexible staffing structure of the Audit Office has enabled it to maintain a full portfolio of work during the interim period without a functioning Assembly. Members have noted changes made by the Audit Office to its range of public reporting products that enable outputs to be delivered in quicker timescales and with less resource. This, combined with adequate resourcing through the draft Budget 2020-21, has provided the Committee with an assurance that the important work of the Audit Office can be maintained and delivered going forward. 

19. The Committee would encourage the NIAO to continue to prioritise its workload having regard to its strategic priorities. The Committee notes that a reduction to the NIAO’s budget could cause difficulties leading to a potential reduction in the public reporting output and could pose a risk to the work of the PAC and the wider Assembly. The Committee has noted concern about potential budgetary reductions, which may affect the ability of the Audit Office to provide a professional public audit service, and its ability to play a leading role in driving out further efficiencies and value for money savings across the public sector.

20. Members sought clarification of the benefits envisaged from the significant capital investment required over the coming years for the Audit Office’s accommodation project. This project will allow the Audit Office premises to be modernised and developed with efficient, modern, open plan office space which could assist NIAO’s recruitment by attracting professional qualified accountants, graduate trainees and apprentices. It would also allow the Audit Office to exploit increased tenancy opportunities; with potential income generation in the years to come (estimated to be in the region of £1m depending on market rates). The Committee was assured by NIAO officials that assistance has been sought from the Strategic Investment Board and from Construction & Procurement Delivery (through the DoF), in terms of availing of appropriate expertise on the accommodation project.

21. Members questioned NIAO officials in relation to the costs incurred by the Audit Office in respect of “contracted out costs”, which involves “sub-contracting” out audits during work peaks. In noting that the cost of this service has increased, as reflected in the draft budget, the Committee would encourage the Audit Office to keep this cost under review and ensure that a high quality service is provided in return.

22. Whilst cognisant of the legislative position of the C&AG as corporation sole, members noted that the Audit Office is considering options in relation to a more modern corporate governance approach. The Committee is keen to explore this going forward and in the context of the Audit Office’s Business Transformation Programme.

23. The Committee received an assurance from the NIAO that it has effective financial management processes and controls in place to prevent overspend and to reduce the risk of underspend. This has included independent assurance from Internal Audit following an examination of the Audit Office’s Budgetary Control processes during the 2018-19 financial year and an External Audit examination of the NIAO annual report and accounts.

24. Subsequent to the evidence session on 13 February 2020, the Committee forwarded a series of follow-up questions to the Audit Office and the written response to these questions was received on 27 February 2020 (Appendix 3). 

25. At the evidence session on 4 March 2020, the Committee probed NIAO officials further and received additional assurances in relation to the draft Budget 2020-21. Members noted the detail of the Capital budget for 2020-21, as well as the overall estimate for the NIAO accommodation project over the six-year timescale envisaged for the project. The Committee received a commitment from NIAO officials that they will provide the Committee with regular updates in this regard. During this session, the Committee also discussed the uncertainty around the continuation of some revenue streams. Finally, members also received further assurance about the Audit Office’s role and ability to support PAC and the wider Assembly in light of current staffing structures.

26. The NIAO budget-setting protocol (Appendix 1) requires that, in considering the Audit Office’s draft budget, the Audit Committee should have regard to the evidence provided by the DoF and PAC. In this regard, the Committee has noted that the DoF is content that the budget plan figures presented by the Audit Office represent a realistic budget profile and that the DoF will incorporate these into its assumptions as it prepares advice on the Executive’s 2020-21 Budget. The Committee has also noted the PAC’s comments in relation to the budget plan for 2020-21 (Appendix 3).

27. Arising from its scrutiny of the NIAO’s draft budget plan for 2020-21, and having regard to the advice of the DoF and PAC, the Audit Committee agreed that, the Executive's draft Budget document should make provision for the NIAO having a Resource budget of £10,965K and a Capital budget of £330K in 2020-21.

Northern Ireland Public Services Ombudsman

28. The Committee has noted the key role played by the NIPSO in promoting good governance and improving accountability in public administration, as well as providing remedy in individual cases. Members have noted the range of complaints investigated across all public bodies including health and social care, housing, education and the local and central government sectors.

29. During the evidence session on the 13 February 2020, as well as receiving an overview briefing on the work of the NIPSO, members questioned the officials on a range of issues including: the vacancy in the post of the Northern Ireland Public Services Ombudsman; and the projected increase in complaints to be investigated by the NIPSO.

30. The Committee considered statistics provided by the NIPSO in relation to the projected increase in maladministration complaints investigated by the NIPSO not only since the 4 years from the NIPSO’s inception but also the projected increase in the coming years across all sectors.

31. Members were struck by the wide remit of the NIPSO, particularly in light of the extension of its functions due to the Public Services Ombudsman Act (Northern Ireland) 2016 (the 2016 Act). Alongside this new remit, the NIPSO now has the power to publish investigation reports where it is in the public interest to do so; this power has increased the public profile of the Office and, in turn, has led to an increased workload. However, the Committee considers that this is an important role for the NIPSO in terms of ensuring that lessons learnt through investigations are shared across the public sector in an effort to improve public services generally.

32. Another important function arising from the 2016 Act is in relation to the Complaints Standards Authority. The commencement of this function will lead to the development and implementation of a simplified and consistent approach to complaints handling by public bodies. While recognising that there will be a lead-in time for this role to become fully operational, the Committee is looking forward to receiving updates from NIPSO officials as this area of work progresses. However, it is clear to the Committee that there will be financial implications from this additional function, not only during 2020-21 but also on a recurrent basis in future years.

33. The Committee received an assurance from the NIPSO in relation to the mechanisms which the Office has in place to deliver its functions efficiently and effectively. This includes an independent Audit and Risk Committee; externally appointed auditors; a corporate risk register; and the operation of a quarterly Quality Assurance Framework to ensure that those coming into contact with the office receive a quality service. The Committee was similarly assured about how the NIPSO maintains quality standards, including agreed key performance indicators and performance monitoring and adherence to the Ombudsman Association Service Standards Framework.

34. While the Committee notes the limited scope for the NIPSO to generate income, it has been advised that this is kept under regular review. In that regard, members noted that there may be opportunity to generate potential income from training provision related to the Complaints Standards Authority role on a cost recovery basis from other public bodies.

35. The NIPSO has emphasised that any reduction to its budget would be extremely difficult for it to manage given the current and projected future demands on the Office.

36. It is important that the NIPSO operates on a secure financial footing to ensure that adequate resource is directed into preventative measures in an effort to reduce the increasing number of complaints finding their way into the Ombudsman’s office. Members have noted the Complaints Standards Authority role and both the need for increased work at a local level to ensure that people know exactly where to go with their complaints and also to ensure that complaints reach the NIPSO at the right stage. The Committee is keen to see that the necessary budget is directed at these areas given their preventative nature and the resource implications of investigating complaints at a later stage.

37. The key priority moving forward for the NIPSO will be to fill the Ombudsman vacancy, as the current Acting Ombudsman’s powers will end on 15 July 2020; to that end the Audit Committee wrote to the Assembly Commission asking for an update in relation to the appointment process given the role of the Assembly Commission in this regard. The Assembly Commission wrote to the Audit Committee indicating that it has agreed to proceed with a recruitment competition as a matter of priority and will be publicly advertising for this post in March 2020. Members are reassured that this will be expedited.

38. Subsequent to its first evidence session on 13 February 2020, the Committee forwarded a series of follow-up questions and the NIPSO’s written response to these was received on 25 February 2020 (Appendix 3).

39. At the evidence session on 4 March 2020, the Committee probed NIPSO officials further and received additional assurances in relation to the draft Budget 2020-21. The areas explored included: a detailed breakdown of the NIPSO’s capital budget: and the necessity for and benefits of NIPSO’s replacement complaints handling system.

40. The NIPSO budget-setting protocol (Appendix 1) requires that, in considering the NIPSO draft budget, the Audit Committee should have regard to the evidence provided by the DoF. The Committee has noted that the DoF is content that the budget plan figures presented by the NIPSO represent a realistic budget profile and that the DoF will incorporate these into its assumptions as it prepares advice on the Executive’s 2020-21 Budget (Appendix 3).

41. Arising from its scrutiny of the NIPSO’s budget plan for 2020-21 and having regard to the advice of the DoF, the Audit Committee agreed that, the Executive's draft Budget document should make provision for the NIPSO having a Resource budget of £3,319K and a Capital budget of £90K in 2020-21.

Conclusions and Recommendations

42. During the evidence sessions with the three non-Ministerial bodies, the Committee questioned officials on a number of generic issues. This included the use of Shared Services to achieve efficiencies and the need to explore options to generate income.

43. In respect of Shared Services, NIAO officials confirmed that the Office utilises a number of NICS Shared Services, including IT Assist, HR Connect in respect of payroll and Civil Service Pension Scheme. In addition, as alluded to earlier, the NIAO is also making use of Construction & Procurement Delivery in relation to its accommodation project. The Committee welcomes the appropriate use of NICS Shared Services, whilst noting the Audit Office’s need to recognise professional ethical standards and the C&AG’s independence.

44. The Committee is also assured in respect of the NIPSO’s use of NICS Shared Services and that these are availed of in an appropriate and best value manner. It was also noted that the NIAC avails of some of the Shared Services, including procurement frameworks in respect of property maintenance.

45. The Committee has noted that all three non-Ministerial bodies pursue options to generate income, and members will wish to monitor progress in this regard given the current budgetary pressures across the public sector.

46. Given the potential impact of COVID-19 at the current time, members explored the risk of service disruption and any potential need for additional budget provision. The Committee is satisfied that all three non-Ministerial bodies are making appropriate provision in this regard, including in relation to business continuity and risk management.

47. The Committee has noted that, in recent years, budgets for Northern Ireland government departments and non-Ministerial bodies have typically been limited to a one-year basis. As a result, public bodies have experienced a degree of uncertainty as to whether adequate recurrent funding will be available in subsequent years. The Committee would welcome confirmation from the Minister of Finance that a multi-year budget will be used from 2021-22 onwards, as indicated in recent announcements.

48. Given the budgetary pressures across the public sector, the Committee would encourage all three non-Ministerial bodies to ensure that they maintain effective financial management processes to avoid overspend and minimise underspend going forward.

49. The Committee welcomes the level of savings that has been achieved to date by the Audit Office and members will be closely monitoring the significant accommodation project going forward, including in terms of the income generation from office letting.

50. The Committee recognises the extenuating circumstances in relation to the Ombudsman vacancy and welcomes the assurance that this is being addressed as a matter of urgency by the Assembly Commission.

51. Members would also highlight the NIPSO’s concerns in relation to the drawbacks of receiving in-year monies of a non-recurrent nature for additional staff resources. This has posed a difficulty in terms of minimising year-end underspend as the monies could not be used for recurring staff costs. The Committee believes that this type of scenario highlights the need for a more strategic approach to budgetary allocation centrally.

52. While recognising the separate roles of the IFRP and the NIAC, the Committee has identified a number of issues requiring review, including: pay disparity in terms of Members’ staff; and necessary security measures in constituency offices, particularly in relation to lone workers.

53. While recognising the particular time constraints associated with the Executive’s draft Budget process on this occasion, the Committee would highlight that this has had implications in terms of limiting the scope for scrutiny of all three non-Ministerial bodies. In particular, members would highlight that, on this occasion, there has been only one opportunity to gather evidence in respect of the Assembly Commission; and, given the range of issues discussed, the need for follow-up consideration is clear.

54. The Committee is mindful of the separate and important roles that all three non-Ministerial bodies play in scrutinising, challenging and holding government departments and public bodies to account and in safeguarding the public purse. Given their unique remit and functions, all three non-Ministerial bodies will have their part to play in this regard over the course of the next financial year.

55. Finally, the Committee has utilised the previously established protocols /methodology for agreeing the draft Budgets 2020-21 of the three non-Ministerial bodies. The Committee will wish to review these in light of the experience of the 2020-21 financial cycle and to assure itself that they provide a robust scrutiny and accountability framework for the future and which recognises the independence of the three non-Ministerial bodies.

56. In conclusion and in light of the aforementioned deliberations, the Committee is of the view that the proposed budgets presented in respect of all three non-Ministerial bodies are appropriate and should be included in the Executive’s draft Budget document for 2020-21.

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