Audit Committee position to the Finance Minister on the draft Budgets for the Northern Ireland Audit Office, Northern Ireland Public Services Ombudsman and Northern Ireland Assembly Commission 2025-26

15 November 2024

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Room 276
Parliament Buildings
Email: committee.audit@niassembly.gov.uk

Dr Caoimhe Archibald MLA
Finance Minister
Department of Finance (DoF)
2^nd Floor Clare House
303 Airport Road West
Belfast
BT3 9ED

15 November 2024

Emailed to: private.office@finance-ni.gov.uk

Dear Minister

Ref: NIA 58/22-27

Draft Budgets 2025-26 for the Northern Ireland Audit Office (NIAO), the Northern Ireland Public Services Ombudsman (NIPSO) and the Northern Ireland Assembly Commission (NIAC)

As you will be aware the Audit Committee has been taking limited evidence from the above three non-Ministerial Public Bodies (NMPBs) on their draft Budgets for 2025-26. As any agreed budgets for these bodies will be reflected subsequently in their main estimates for 2025-26, this scrutiny is integral to the exercise of the Audit Committee’s statutory function of agreeing the estimates (which the Committee performs in place of the DoF in recognition of the independence of the bodies from Executive departments).

The Committee has been working over the last number of weeks to agree its position on the draft budgets for the bodies. To do this, the Committee endeavoured to carry out its scrutiny in line with the timeframe for the Budget process (which is again limited). This has meant that the Committee has had only a short period of time to agree a position following advice received from your Department outlining the indicative timing for the 25/26 Budget, including Executive agreement of a draft Budget on 21 November 2024. Accordingly, the Committee is setting out its position in this letter rather than by a formal Committee report as would be the norm.

The Committee received evidence at its meeting on 16 October 2024, including written and oral evidence from the NIAO and the NIPSO. The Committee considered written and oral evidence from the NIAC at its meeting on 13 November 2024.

Following its meeting on 16 October 2024, the Committee agreed to seek your Department’s views on the draft Budget submissions from the three NMPBs. The Committee also agreed that any response received from your Department would be forwarded to the three NMPBs as applicable, with a request that they respond to the Committee on any specific issues highlighted by your Department. The Committee also noted a previous request from DoF that the Committee considers the wider public expenditure position when approving the budget plans.

Whilst the Department’s response to the submissions from the three NMPBs was not received until shortly before its meeting on 13 November 2024, the Committee noted this as part of its deliberations. In light of the tight timeframe, the Committee proceeded to finalise its position, as outlined in this correspondence. Officials from the three NMPBs were in attendance to clarify aspects of their budget position and they took this opportunity to address the points raised in your Department’s response as applicable.

The Committee has examined issues particular to the budget considerations of each of the three bodies. The detail of the Committee’s limited scrutiny is contained in the Hansard reports of the oral evidence received, which, in respect of the NIAO and the NIPSO has been published on the Committee’s webpages. The Hansard report concerning the evidence provided by the NIAC will be published in due course.

Therefore, following appropriate evidence gathering and deliberation, the Committee agreed its position on the       2025-26 budget plans of the three bodies, having sought the views of your Department and, in the case of the NIAO, having sought the view of the Public Accounts Committee (PAC). I have summarised the Committee’s position on each body below.

The Northern Ireland Audit Office

Members of the Committee are cognisant of the central role played by the NIAO in terms of supporting the work of the Assembly and holding Government Departments and other public bodies to account, by providing important financial audit and public reporting services. The Office’s work will have increasing importance moving forward given the well-publicised current and future pressures on public spending.

Scrutiny of the NIAO’s draft Budget commenced at the Committee meeting on 16 October 2024. NIAO officials briefed the Committee on the work it had undertaken since spring 2024. This included the move towards increased focus on staff, aligning skills, cost and efficiency, as well as     on quality and governance. Officials also informed Members about: the ongoing and increasing pressures going to market for independent services; value for money (VFM) standards; investment; and staff structure changes.

Another challenge for the NIAO, in both this and the upcoming financial year, is the cost pressures and challenges associated with continued recruitment to achieve the appropriate balance in skills and expertise within the Office. Members questioned officials further on this issue, including the recently agreed outturn by the NIAO in the October Monitoring process, as well as other issues including: ongoing efficiencies of the Office; potential revenue raising initiatives; and other pressures faced by the Office.

At this meeting, the Committee asked officials to justify their request for additional funding over and above the previously agreed 2024-25 Budget, in particular in light of the returned funds in October monitoring. Officials indicated that, if additional funding above the previous baseline is not provided, it will have consequences across all the NIAO’s work but public reporting work would be particularly impacted given the statutory role in respect of financial reporting work.

Members noted that this could lead to a reduction in the NIAO’s support, for not only the PAC but also the wider Assembly. This would undermine the public audit function and vital scrutiny work. The Committee considers that this support is integral to safeguarding the public finances of Northern Ireland, particularly in light of the NIAO’s role in monitoring the spending and VFM of the public sector.

As part of its evidence gathering and in accordance with the NIAO budget-setting protocol, the Audit Committee also requested a view from the PAC. The PAC responded to this request on 8 November 2024, and stated

“(PAC) Members wish to recognise the important and valuable role of the NIAO and its staff in delivering effective public scrutiny and ensuring value for money within the Public Sector. The Committee is keen to ensure that the NIAO provide value for money and remain cognisant of the challenging reality of budgetary pressures across the public sector.

(PAC) Members recognise that it is unlikely that the NIAO will spend their full allocated budget for the 2024/25 financial year, however members are satisfied that this is the result of the need for highly skilled, specialist staff, and the significant recruitment and retention challenges being faced by the NIAO and wider public sector, which has resulted in a lower than forecast headcount. Recruitment exercises are continuing which will necessitate funding continuing to be available for these roles.

In considering the information available, the Public Accounts Committee is supportive of the NIAO’s draft budget submission.”

Arising from its scrutiny of the NIAO budget plan for 2025-26, the Audit Committee  agreed that the Executive's Budget document should make provision for NIAO  having a Resource DEL Budget of £11,153K (excluding the recently announced increase to Employers’ National Insurance contributions) and Capital DEL Budget of £40K. The Resource DEL broken down as follows: £10,993K of Non-Ring-Fenced DEL and £220Kof Ring-fenced DEL.

The Northern Ireland Public Services Ombudsman

At the initial evidence session on 16 October 2024, the Committee was informed that the NIPSO has worked to deal with its increased workload whilst living within its current budget through efficiencies and adapting its approach. Looking toward to the new financial year, NIPSO wishes to: increase focus on its   learning and development work; implement the findings from its Pay and Grading exercise; and continue to drive forward its role in relation to the Complaints Standards Authority. As such, the figures submitted to the Committee for 2025-26 contain uplifts from the previous agreed budget to address these important areas.

Members questioned officials on the proposed overall increase to the budget. In respect of this, the NIPSO seeks to replace lost staff to ensure a greater focus on learning and development work, which it believes will lead to increased awareness and insight from continuous learning about complaints, in an effort to contribute to improvements in  public services. It also hopes the enhanced pay and grading conditions will have a positive impact on its recruitment and retention of staff.

Members also questioned officials on the proposal to continue to enhance the NIPSO’s capacity in investigations and the extent to which the findings from these investigations can have significant and far-reaching consequences. Members acknowledges the very difficult work the Ombudsman’s office undertakes, including the emotional impact on investigators.  Lastly, Members      probed officials on the extent to which any budget increase represents value for money and will actively monitor developments in this regard for further assurance going forward.

Members are also mindful of the potential for longer-term savings and returns on investment, which would lead to improvements to the delivery of public services arising from learning and development, from providing access to cost effective administrative justice for citizens seeking redress, and from the continued and expanded provision for a successful Complaints Standards Authority leading to a positive impact and standard raising work in all sectors.

Arising from its scrutiny of the NIPSO budget plan for 2025-26, the Audit Committee agreed that the Executive's Budget document should make provision for NIPSO having a Resource DEL Budget of £5,150K (excluding the recently announced increase to Employers’ National Insurance contributions) and Capital DEL Budget of £0K. The Resource DEL broken down as follows: £4,950K of Non-Ring-Fenced DEL and £200K of Ring-fenced DEL. It should be noted that, in agreeing the Resource DEL budget figure, the Committee requires a further briefing on the outcome of the abovementioned Pay and Grading exercise (which will be scheduled for the Committee’s next meeting in January 2025); therefore, the Committee’s final decision on that component of the Resource DEL Budget and the related distribution of funds is subject to the outcome of that briefing.

The Northern Ireland Assembly Commission

On 13 November 2024, the Committee also received a briefing from the Assembly Commission on the submission it made in relation to a draft Budget for 2025-26. Members noted that the indicative forecast submitted by the Commission took the previously agreed 2024/25 Budget as its starting position.

As with previous scrutiny of the Commission’s budget, Members noted that the Commission has a legal requirement to meet all costs associated with Members by way of salaries, allowances, expenses, Members’ staffing costs, pension contributions etc. As such there is a large element of the Commission’s budget, which is controlled by factors external to the body itself – i.e. the duty on the Commission to pay such costs.

During the oral evidence session with Commission officials, a number of issues in relation to the indicative budget for 2025-26 were raised, including the pressing need to enhance the scrutiny the Assembly provides, as well as the resources outworking’s of that scrutiny, and the ongoing and potential financial impact of roof repairs to Parliament Buildings.

Members recognised, in particular, the need for increased budget for additional posts within legal and parliamentary services to perform increased support and scrutiny, as a result of recommendations made from the RHI Inquiry and systemic weaknesses identified in the “Mediahuis judgement”.

Officials explained that, for a number of years, the NIAC has strived to maintain staffing numbers at minimum (or below minimum) levels due to the stop-start nature of Assembly business and the associated reputational risk with investment during non-sitting periods. As a result, the NIAC is now significantly understaffed when compared with counterparts in the Scottish Parliament and the Senedd. The NIAC has made it clear that this must now be addressed, both via increased human resource and tertiary provision, such as fit for purpose IS services and support to MLAs.

Furthermore, members noted that most of the capital works planned are needed to continue to address under-investment in the fabric of the building in the last number of years to face the challenge of the fully functioning legislature. This includes significant and ongoing refurbishment to several key spaces in Parliament Buildings. The Committee asks that the NIAC ensures that these works continue to progressed as quickly and efficiently as possible. In that regard, the Committee noted the successful work to upgrade Committee rooms and broadcast facilities carried out in the last few months.

In relation to the budgetary provision made in 2025-26 for roof repairs, the Committee noted the Commission’s ongoing litigation process in relation to the roof issues, and that this could have a potential financial impact for the Commission’s future Budgets.

Arising from its scrutiny of the NIAC Budget for 2025-26, the Audit Committee agreed that the Executive’s Budget should make provision for the Assembly Commission having a Resource DEL Budget of £64,197K and Capital DEL Budget of £3,061K.

In agreeing the aforementioned position in relation to the 2025-26 budget plans of the three NMPBs, the Audit Committee has been mindful of the wider public expenditure position and the expectation that Departments will absorb significant budgetary pressures.

The Committee noted that the three NMPBs have worked hard in recent weeks to adhere to the tight timescales imposed by your Department’s indicative timetable for Executive agreement.

The Committee will seek assurances from the three NMPBs that they will deploy their budget allocations to maximum effect and endeavour to realise savings and efficiencies where possible during the course of the financial year ahead. Accordingly, the Committee will be monitoring finances carefully over the next year and would encourage the NMPBs  to identify any in-year surrenders at the earliest opportunity.

The Committee looks forward to the inclusion of the figures set out above in the  Executive’s forthcoming Budget for 2025-26.

On a final point, and on behalf of the Committee, I wish to express disappointment at the timing of your Department’s response to my letter of 22 October 2024 seeking views on the budget submissions of the three NMPBs. To receive a letter, containing detailed commentary on the submissions, less than an hour before the Committee meeting is due to commence, is not helpful in assisting the Committee to perform its important scrutiny function. Also, in terms of some of the commentary provided, which related to operational issues, I should reiterate the importance of acknowledging the independence of the three NMPBs and the related remit of the Committee in that regard. That said, the Committee welcomes the input from DoF in terms of how the budget submissions of the three NMPBs sit within the wider public expenditure context.

Yours sincerely,

Alan Chambers MLA Chairperson

Audit Committee

cc.

Chairperson of the Committee for Finance

Chairperson of the Public Accounts Committee

Dorinnia Carville, NIAO

Margaret Kelly, NIPSO

Lesley Hogg, NIAC