Northern Ireland Budget Process should be More Accessible and Linked to the Programme for Government

The Northern Ireland Assembly Public Accounts Committee has today published a report, entitled Review of the Northern Ireland Budget Process. The report looks at the way the Department of Finance (the Department) and the Northern Ireland Executive (the Executive) carry out their responsibilities to produce a budget for Northern Ireland. Currently, Westminster provides £5.8 billion plus an additional £1.7 billion to tackle the impact of the COVID-19 pandemic.

The report follows on from previous reviews, the most recent being a 2021 Comptroller and Auditor General report, which compared the Northern Ireland budget process to the Organisation for Economic Co-operation and Development’s ten principles of budgetary governance. These principles set out international best practice and, to date, Northern Ireland has only fully met Principle 1: manage budgets with clear, credible and predictable limits for fiscal policy.

Chairman of the Public Accounts Committee William Humphrey MBE MLA said: “Since 2008 there have been a number of reviews of the budget process and there are significant areas in which our local budgetary process needs to be made more effective and transparent.

“One issue of great concern is that a number of Departments do not provide their Assembly committees with sufficient information on funding requests prior to the agreement of a final budget. This seriously impedes the scrutiny function of committees and we believe this is an area that requires significant reform.

“At the same time, we are pleased that the establishment of the Northern Ireland Fiscal Council should help to drive improvements in this important process.”

Another issue of concern is that budget documents contain very technical information, making it difficult for both the public and Assembly committees to interrogate proposed spending. The Committee was encouraged that the Department has been working to help develop training for non-finance professionals.

The Committee’s report also stresses that it is important that the budget process should be linked both to the Programme for Government and the Investment Strategy for Northern Ireland. Without such a joined-up approach, the advantages of any multi-year budget will not be fully realised.

A further issue, noted in the report, is the structure of Northern Ireland Departments as individual legal entities presents challenges in agreeing budgetary priorities and allocating resources. This situation is further complicated by some monies from Westminster being provided directly to local recipients and emphasises the necessity of greater collaboration and communication between Westminster and the Executive.

The report also highlights the need for resources to achieve improvements in the budgetary process, above and beyond those required to prepare the budget. Without an increase in these, implementing the recommendations of this and previous reports will prove problematic.

Chairman Humphrey concluded: “This report includes a number of very important recommendations that will help the Department and the Executive to improve the budgetary process to the benefit of all people in Northern Ireland. We believe that the Department requires both sufficient and skilled resources to make the necessary and desirable changes that will substantially improve the budget process and the efficient allocation of funds.”

ENDS

Notes to Editors

Read the full Report, Review of the Northern Ireland Budget Process.

The Committee’s recommendations from the Report are:

Recommendation 1

The budget process can, by necessity, be complex, and terminology can be difficult for non-finance professionals to understand.  Education and training on the budget process and terminology is therefore vital to improving accessibility.

The Committee recommends that the Department introduces a financial education programme to help and support Members and non-financial staff within the Civil Service to better understand and interrogate the budget.

Recommendation 2

Ensuring sufficient detailed, timely information is presented by departments to scrutiny committees is key to supporting their challenge function and the Committee is concerned that some departments may still be falling short of these expectations. 

The Committee recommends that:

• the Department issues clear guidance to departments on providing sufficiently detailed, timely information on funding bids to scrutiny committees to enable them to undertake their challenge function on spending decisions;
• the Memorandum of Understanding between departments and the Assembly on the provision of budget information to scrutiny committees should be finalised by the end of 2022; and
• the Department should also undertake an annual survey of committees to monitor whether these requirements are being met, and publish its outcome.

Recommendation 3

In order to exploit opportunities to realise efficiencies from the certainty that the proposed multi-year budget gives to public bodies to plan their activities the Committee believes that the Department needs to take the lead in encouraging greater collaboration.

The Committee recommends that the Department takes the lead in driving collaborative, cross-sectoral efforts to secure efficiencies through the multi-year budget process.

Recommendation 4

The Committee is concerned at the lack of a strong centre to government in Northern Ireland, with the powers needed to compel departments to collaborate and help dispel the silo mentality that has built up.

The Committee recommends that, together with the Head of the Civil Service and The Executive Office, the Department considers what changes to powers or structures are necessary to ensure a stronger centre to government in Northern Ireland, which can compel departments to take actions when needed; break down the silo mentality; and enable a more joined-up and efficient public sector.

Recommendation 5

To enable stakeholders to assess what proposed funding will actually achieve and how it fits into the strategic priorities set in the Programme for Government and the Investment Strategy for Northern Ireland, the processes for producing these documents will need to be reworked and a clear link should be in place between the priorities set and the funding proposed.

The Committee recommends that, together with the Executive Office, the Department aligns the processes to produce the budget, Programme for Government and the Investment Strategy for Northern Ireland. The budget itself must be aligned to the planned outcomes in these documents.

Recommendation 6

Whilst some long-term fiscal planning is undertaken by the Department, in the absence of a multi-year settlement it tends to be at a basic level. The Fiscal Council advised the Committee that there was room for improvement in this area.

The Committee recommends that, regardless of the period covered by a budget settlement, the Department improves the degree and detail of its longer-term fiscal planning, building on guidance from the Fiscal Council on budget sustainability.

Recommendation 7

The Finance Committee report of 2008 on the budget process recommended that departments undertake a critical evaluation of programmes and resources within their existing budget baselines.  Without linking the budget to the Programme for Government (PfG) and undertaking a critical review of existing programmes there is uncertainty whether public money is going to the areas of greatest priority.

The Committee recommends that within the next two years the Department completes a strategic evaluation of all major policies and programmes within departmental baselines, to assess how they support the PfG and enable policy and programme prioritisation for future budgets.  This exercise should include a strong independent challenge.

Recommendation 8

The Committee notes the challenges in the budget process that arise from issues outside of the Department of Finance’s control, but considers there is merit in ensuring HM Treasury understands the impact these have on the NI budget process and exploring whether anything can be done to mitigate the risks.

The Committee recommends that the Department continues to press HM Treasury on:

• the importance of co-ordination and good communication to ensure that funding issued directly to local recipients matches the Executive’s agreed strategic priorities, and that suitable accountability mechanisms are in place; and
• the risk to value for money and encouraging negative behaviours which comes with having tight limits on budget carry, exploring whether there are opportunities to amend the current arrangements in the Budget Exchange Scheme.

Recommendation 9

The Committee believes firmly that improvements to the budget process should be prioritised and more resource should be made available to achieve the change required.

The Committee recommends that the Department ensures that sufficient time and skilled resource are available to the Central Expenditure Division (CED) to implement the recommendations within this report, particularly when legislative change is required.

Recommendation 10

The Committee understands that some of the change required to the budget process will take time to implement, but this cannot wait in the hope that resource will free up to allow it.  A start must be made on planning the reform required to a realistic, but challenging timetable.

The Committee recommends that the Department produces a project plan by the end of 2022, detailing each of the changes required for the budget process reform programme, along with a timetable.

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Debra Savage

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Northern Ireland Assembly

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Email: debra.savage@niassembly.gov.uk