9 FEBRUARY 2015 NI AFFAIRS COMMITTEE NORTHERN IRELAND OFFICE (NIO) MEMORANDUM ON THE 2014-15 SUPPLEMENTARY ESTIMATE (SE) This paper explains the background to and consequences of changes sought in the SE for 2014-15. Northern Ireland Office - Introduction The NIO Supplementary Estimate for 2014-15 seeks the necessary resources and cash to support the functions of the NIO. These are continuing functions and no new functions have been added since the 2014-15 Main Estimate. The main purpose of this Memorandum is to provide the NIAC with an overview of the NIO 2014-15 Supplementary Estimate, which is part of the supply procedure. It also gives information on the budgetary changes of the NIE and changes to the cash grant payable to the NICF by the NIO. The Supplementary Estimate seeks approval to a net resource requirement of 14,931,151,000 and a net cash requirement of 14,932,339,000 and for 2014-15 the NIO Departmental Expenditure (DEL) limit, net of depreciation and impairments, will increase from 21,583,000 to 27,551,000. The Memorandum is split into sections covering: (1) Summary of the NIO plans for 2014-15; (2) An overview of the Office s Administration Costs; (3) An overview of DEL and AME totals; (4) Details of the grant paid to the Northern Ireland Consolidated Fund; (5) Details of Barnett consequentials for 2014-15; (6) Control Totals for the NIE including breakdown by main programme of AME spending; (7) Reconciliation of the SR 2010 settlement for NIE and current Control Totals; and (8) Details of the NI Block 2009-10 to 2015-16. This memorandum has been agreed with HM Treasury.
Section 1: Summary of NIO Plans for 2014-15 2014-15 is the fourth year of the 2010 Spending Review period. From the baseline set in the 2010 Spending Review, the NIO agreed an overall real terms reduction, over the four years, of 25 per cent (and a real terms reduction of 33 per cent in its administration budget). This is in line with the targets set for the other Territorial Offices (SO/WO). Following the collapse of the trial of John Downey in February 2014, the Prime Minister commissioned an inquiry into the on-the-runs (OTR) administrative scheme. On 12 March 2014 Lady Justice Hallett was appointed to conduct an independent review of the scheme. The Review s terms of reference as originally agreed were to produce a full public account of the operation and extent of the administrative scheme for OTRs; to determine whether any letters sent through the scheme contained errors; to make recommendations as necessary on this or related matters that are drawn to the attention of the inquiry. Lady Justice Hallett s report was received by the Government on 16 July 2014, and laid in Parliament the following day. In late September 2014, the Secretary of State for Northern Ireland announced that cross-party talks involving the five parties in the Northern Ireland Executive, the UK and Irish Governments, would commence on Thursday 16 October. The talks focussed on four key areas: finance and budgets (including welfare); the legacy issues of flags, parades and the past; institutional reform and the functioning of the Assembly and Executive; and outstanding commitments of the Agreements. The overarching objective was to ensure that the Executive can once again operate effectively; ensuring political and economic stability. The talks culminated in the Stormont House Agreement of 23 December 2014. Section 2: Overview of the Northern Ireland Office s Administration Costs The key purpose of the NIO remains to support the Secretary of State for Northern Ireland in promoting the best interests of Northern Ireland within the United Kingdom. This Estimate provides for the administration costs of the NIO, including the salaries of the Secretary of State and her Minister and payments to the Northern Ireland Consolidated Fund.
Section 3: Overview of NIO DEL and AME totals for 2014-15 Departmental Expenditure Limit (DEL) The following adjustments have been made to the Control Totals for NIO since the 2014-15 Main Estimate: Resource Reserve claim to support the outcome of legacy legal cases of 1,800K Reserve claim for capability support expenditure of 410K (admin budget) Reserve claim to support the funding of the Hallett Review of 510K Budget transfer from the NIE for Admin purposes of 46K (admin budget) Budget exchange carryforward of 187K from 2014-15 to 2015-16 in relation to required maintenance at Stormont House that wasn t carried out this financial year (admin budget) Budget exchange carryforward of 80K from 2014-15 in relation to publication costs that will be now be incurred in 2015-16 due to delays in publication Reserve claim for the funding of the 2014 European elections of 3,363K Budget transfer from the Cabinet Office for mailing costs relating to the 2014 European elections of 106K Capital Capital Reserve claim to support new arrangements at Hillsborough Castle of 1,250K The Departmental Expenditure Limit current control totals for the NIO are set out in the table below: 000 nominal Main Estimate Changes Supp Estimate Resource DEL (RDEL) 21.583 5.968 27.551 o/w RDEL excluding depreciation 19.810 5.968 25.778 o/w depreciation ring fence in RDEL 1.773 0.000 1.773 Administration Budget* 15.227 0.269 15.496 o/w non-ringfenced RDEL administration budget 14.730 0.269 14.999 o/w depreciation ringfence administration budget 0.497 0.000 0.497 Capital DEL 0.241 1.250 1.491 * This is part of the RDEL control total and not an addition to it.
Annually Managed Expenditure (AME) In addition, the Estimate contains a reduction in AME (non-cash) funding for the NIO of 1,800,000. The Main Estimate has been changed as a result of; Utilisation of existing provision for legal cases
Section 4: Cash grant payable to the NICF The Estimate also allows for the payment of a cash grant to the Northern Ireland Consolidated Fund. All expenditure by the NIE is charged to the NICF. This expenditure is shown in the NIO Estimate. Since the Main Estimate, provision has increased by 285,500,000. The table below reconciles the spending aggregates of the NIE with the cash grant payable to the NIE. RECONCILIATION OF GRANT PAYABLE TO NORTHERN IRELAND CONSOLIDATED FUND 2014-15 million Main Estimate Changes in Supplementary Current position Departmental Expenditure Limit 11,208.7 155.6 11,364.3 Annually Managed Expenditure (inc Other AME & Reg Rates) 9,564.7 173.3 9,738.0 RRI Borrowing 300.0-35.1 264.9 Total Managed Expenditure (DEL, AME & Other AME) 21,073.4 293.7 21,367.2 Less Non Cash charges -3,332.9-68.6-3,401.5 Less Non Voted (DEL, AME & Other AME) -10,995.2-738.3-11,733.5 Voted Other Expenditure outside DEL 7,638.4 552.6 8,191.0 Utilisation of Provisions 1,096.8 10.6 1,107.4 Movement in debtors/creditors 199.2 103.1 302.3 Supply Expenditure 15,679.7 153.1 15,832.9 Interest Payable 79.2-1.9 77.4 District Council Rates 532.0 7.9 539.9 Other Services 9.0-0.1 8.9 Total Expenditure 16,300.0 159.1 16,459.1 Income Add in RRI 300.0-35.1 264.9 District and Regional Rates 1,198.6 2.9 1,201.5 Interest Receivable 70.3-6.2 64.1 Miscellaneous receipts 111.4-88.0 23.4 of which: NICF Balance 0.0 0.4 0.5 Continental Shelf 1.6 0.1 1.7 Misc - NIHE, Land Annuities etc 7.2-7.1 0.1 Excess Accruing Resources 2.6 0.6 3.2 CFERS 90.9-78.9 11.9 EU CFERS 9.1-3.1 6.0 Total Income 1,680.3-126.4 1,554.0 Cash grant payable to the NI Consolidated Fund 14,619.7 285.5 14,905.2
Section 5: Barnett Consequentials From time to time, the Treasury will adjust the budgets of UK departments with the devolved administrations receiving Barnett consequentials of these adjustments. The majority of these budgetary adjustments take place at major fiscal events such as the Autumn Statement and Spring Budget. The table below details the Barnett consequentials for the financial year 2014-15 received by the NIE since the announcement of the 2010 spending review in October 2010. Barnett consequentials for 2014-15 announced since the publication of the 2014-15 Main Estimate are shown at the foot of the table. Barnett Consequentials for 2014-15 since 2010 Spending Review Fiscal Event UK Government Measure Resource/Capital Barnet Consequential ( m) Budget 2011 Apprenticeships Resource 0.141 Business Rates - Enterprise Zones Resource 1.891 Sub total 2.032 Notes Autumn Statement 2011 Highway Agency - additional motorway schemes (M6 J10A-13, M3 J2-3, road pinch point fund) Capital 7.209 Additional LA major transport projects Capital 1.943 Highway Agency reserve schemes (A45 tollbar & A453 widening) Capital 3.351 M1/M6 J19 junction improvement Capital 1.999 A14 J7-9 Kettering Bypass Widening Capital 2.056 Accelerate M25 J13-27 Capital 1.689 Accelerate M1 J39-42 Capital 1.689 New link road to Manchester airport Capital 1.887 East-West rail project. New rail line from Oxford to Milton Keynes/Bedford. Capital 0.706 Rail winter resilience Capital 0.028
Tackle local problems on the rail network more quickly Capital 0.254 Electrification of trans-pennine Capital 0.564 Station accessibility improvements Capital 0.056 Regional Growth Fund Capital 20.258 100 free schools Capital 10.062 Basic need capital Capital 4.528 Housing: Get Britain Building (loan & equity) Capital 0.168 Housing: Get Britain Building (expected income) Capital -1.342 Housing: Empty Homes Capital 0.704 Work Programme Resource 3.358 JCP Offer Resource 1.344 Get Britain Working Resource 1.046 Skills Resource 2.309 DWP DEL savings Resource -0.581 Early Years Childcare Resource 12.812 Rail fares increase by RPI+1% instead of RPI+3 from 2012 for 1 year only (2012) Resource 3.790 Business Rates deferral Resource -1.126 Pay restraint Resource -14.969 Sub total 65.792 Budget 2012 Get Britain Building Capital -0.490 Support for free advice services Resource 0.563 DWP Fraud and error initiatives Resource 1.676 Sub total 1.750 Financial Transactions Autumn Statement 2012 Empty Homes Capital 1.677 Affordable housing Capital 5.903 Private Rented pump priming (financial transactions) Capital 5.031 Public land (NHS Trust Acquisitions) Capital 0.335
Large scale development Capital 2.079 Large scale development (financial transactions) Capital 3.119 Public Land (Investment fund ) Capital 4.293 Accelerate delivery of 4 road schemes Capital 1.509 Roads pinch point fund Capital 5.870 HA and LA road maintenance and renewal Capital 3.891 Development funding for Highways Agency Pipeline Capital 0.839 Cycling investment Capital 0.839 A1 enhancements (Leeming to Barton) Capital 3.689 A1 enhancements (Lobley Hill) Capital 0.436 New A5-M1 link road Capital 2.281 Dualling A30 Temple to Carblake Capital 0.268 Basic need: c.100 new free schools, academies and 18,000 school places by expanding good schools in areas experiencing the greatest demographic Capital 19.889 pressures Schools Maintenance Capital 5.266 Regional Growth Fund 4 Capital 3.522 Flood defences: fund full pipeline, inc. making land available for development in Leeds, Sheffield, Exeter, Derby, Ipswich Capital 2.851 Enterprize Zones infrastructure funding Capital 1.140 FE new building and maintenance Capital 0.570 Start up loans - funding for 2 more years Capital 1.006 AMSCII Capital 0.604 Council Tax Freeze Resource 7.557 Empty property business rate relief Resource 0.268 LEP Capital Pots Resource 0.335 Start up loans - funding for 2 more years Resource 0.335 Skills in Digital Industries Resource 0.084 LHA hardship fund Resource 1.278 UC - cut all disregards by 400 from 2014-15 Resource -4.794
RDEL Reduction Resource -39.402 Sub total 42.569 Budget 2013 Affordable Housing Capital 3.522 Start up Loans (Reserve funded) Capital 0.503 First Buy Capital 40.248 Build to Rent Capital 12.578 Start up Loans (Reserve funded) Resource 0.168 Growth vouchers Resource 0.671 Sickness Absence Review Resource 1.133 RDEL Reduction Resource -19.440 Sub total 39.382 Financial Transactions Financial Transactions Autumn Statement 2013 Free School Meals Resource 14.928 Free School Meals Capital 2.327 Small Business Rates Relief one year extension to April 2015 Resource 13.931 Business Rates 1000 discount for 2 years (Retail properties up to 50K incl. food properties) Resource 9.775 Business Rates cap at 2% for 1 year Resource 7.580 Business Rates: Reoccupation Relief (50% for retail) Resource 0.133 Relax single property criteria for SBRR Resource 0.166 Increasing HE student numbers by 30k in 14/15 Resource 3.325 FE apprenticeships Resource 0.332 New Enterprise Allowance Resource 0.144 Help to Work Resource 5.350 Rail fares RPI + 0 Resource 0.997 Warm Homes Discount Resource 8.974 SALIX: energy efficiency loans Capital 0.839
Rebates for Energy Efficiency Capital 3.075 Rebates for Energy Efficiency Resource 0.280 Energy Efficiency for Landlords Capital 0.839 Affordable Rent to Buy Capital 0.000 Builders Finance Fund Capital 1.662 Housing: Infrastructure to unlock housing on large sites Capital 1.662 RDEL Top slice Resource -20.929 Supporting Work Interventions Resource 3.922 Sub total 59.314 Budget 2014 Apprenticeship Grants for Employers Resource 2.826 Postgrad Apprenticeships Resource 0.332 Magna Carta 800th Anniversary Resource 0.033 Flooding - Extra maintenance funding Resource 0.665 Flooding - Extra capital funding for maintenance Capital 1.995 Road repair challenge fund (potholes) Capital 5.586 Development Benefits Resource 0.033 DWP DEL Funding Resource 0.217 Cathedral Repairs Capital 0.332 Landfill tax: uprate lower rate by inflation and reducing landfill communities fund Resource 0.166 Custom Build Capital 0.133 Sub total 12.319 Financial Transactions Financial Transactions Financial Transactions Financial Transactions Autumn Statement 2014 Rail fares Resource 0.729 Household energy efficiency measures Capital 0.837 Kew Gardens Resource 0.050 Sub total 1.616
Total Barnett Consequentials 224.774 of which: Resource 14.408 Capital 210.366
Section 6: 2014-15 Control Totals for the NIE including breakdown by main programme of AME spending Resource and capital DEL for NIE The following adjustments have been made to the Control Totals for NIE since the 2014-15 Main Estimate: DEL changes million 100m support from Reserve Resource DEL 100.000 Barnett Consequentials - Autumn Statement 2014 Resource DEL 0.779 Barnett Consequentials - Autumn Statement 2014 Capital DEL 0.837 Barnett Consequentials - Council Tax Freeze Resource DEL 10.906 Block Grant Adjustment for Air Passenger Duty Resource DEL -2.139 Budget Exchange Resource DEL 14.444 Budget Exchange Capital DEL 21.545 Budget transfer to NIO: Stormont Rent Resource DEL -0.046 Cash Management Charge Resource DEL -0.018 DEL reduction: Delay in implementation of Welfare Reform Resource DEL -87.000 DOJ carryforward of 2013-14 underspends Resource DEL 15.000 Reserve Claim: Blue lights charities Resource DEL 0.279 Reserve Claim: Coastal Communities Fund Resource DEL 0.600 Reserve Claim: PSNI Security Funding Resource DEL 16.500 Reserve Claim: PSNI Security Funding Capital DEL 10.200 Reserve Claim: Student Loans Student Loans 53.700 Total 155.587 The current control totals for the NIE are set out in the table below: Main Estimate Changes Supplementary Estimate m nominal Resource DEL (RDEL) 10,158 123 10,281 of which: RDEL excluding depreciation 9,678 69 9,748 depreciation ring fence in RDEL 379 0 379 student loans ring fence in RDEL 100 54 154 Capital DEL 1,051 33 1,084
Annually Managed Expenditure (AME) The following changes have been agreed since the publication of the 2014-15 Main Estimates:- Programme 2014-15 Changes Supplementary Estimate m m m Expenditure funded by Regional Rates 666.6-5.5 661.1 Borrowing under Reinvestment & Reform Initiative 300.0 85.8 385.8 Depreciation & Impairments 429.2-35.1 394.1 Provisions 105.1 23.5 128.6 Social Security Benefits 5,532.7 153.6 5,686.3 Student Loans 293.2-16.6 276.6 Public Sector Pensions 2,299.5 50.3 2,349.8 Capital - Public Corporations 260.8-137.0 123.8 Other -22.4 19.0-3.4 TOTAL 9,864.7 138.1 10,002.8
Section 7: Reconciliation of the SR 2010 settlement for NIE and Control Totals Changes to Northern Ireland Executive Control Totals for 2014-15 since 2010 Spending Review RDEL Ring-fenced depreciation Ringfenced student loans Capital DEL m m m m SR 2010 settlement 9,529.175 355.829 100.433 803.785 100m support from Reserve 100.000 0.000 0.000 0.000 Barnett Consequentials - Council Tax Freeze 10.906 0.000 0.000 0.000 Barnett Consequentials: Budget 2011 2.032 0.000 0.000 0.000 Barnett Consequentials: Autumn Statement 2011 7.983 0.000 0.000 57.809 Barnett Consequentials: Budget 2012 2.240 0.000 0.000-0.490 Barnett Consequentials: Autumn Statement 2012-34.338 0.000 0.000 76.907 Barnett Consequentials: Budget 2013-17.468 0.000 0.000 56.850 Barnett Consequentials: Autumn Statement 2013 48.909 0.000 0.000 10.405 Barnett Consequentials: Budget 2014 4.273 0.000 0.000 8.046 Barnett Consequentials: Autumn Statement 2014 0.779 0.000 0.000 0.837 Block Grant Adjustment for Air Passenger Duty -2.139 0.000 0.000 0.000 Budget Exchange 14.444 0.000 0.000 21.545 Budget Regime Change: Housing Benefit 114.547 0.000 0.000 0.000 Budget Regime Change: Housing Executive 1.050 5.500 0.000 6.900 Budget Regime Change: NDPBs into DEL 12.588 17.594 0.000 28.081 Budget Regime Change: Small benefits 6.002 0.000 0.000 0.000 Budget Regime Change: Social Fund 13.720 0.000 0.000 2.770 Budget Regime Change: Student Loans 1.362 0.000 0.000 0.000 Budget Transfer from Cabinet Office: Law 0.030 0.000 0.000 0.000 Commission Budget Transfer from NAO: Audit costs of 0.388 0.000 0.000 0.000 Justice Budget Transfer from -1.190 0.000 0.000 0.000
NIO: Administration Budget Transfer to NIO: Stormont Rent -0.046 0.000 0.000 0.000 Cash Management Charge -0.018 0.000 0.000 0.000 DEL reduction: Delay in implementation of -13.000 0.000 0.000 0.000 Welfare Reform DEL reduction: Delay in implementation of 0.000 0.000 0.000 Welfare Reform -87.000 DOJ carryforward of 2013-14 underspends 15.000 0.000 0.000 0.000 Reserve Claim: Blue lights charities 0.279 0.000 0.000 0.000 Reserve Claim: Coastal Communities Fund 0.600 0.000 0.000 0.000 Reserve Claim: PSNI Security Funding 16.500 0.000 0.000 10.200 Reserve Claim: Student Loan imparments 0.000 0.000 53.700 0.000 Current Control Totals Supplementary Estimate 2014-15) 9,747.608 378.923 154.133 1,083.646
The Northern Ireland Block 2009-10 to 2015-16 2009-10 2010-11 2011-12 2012-13 2013-14 2014-15 2015-16 outturn outturn outturn outturn outturn plans plans '000 '000 '000 '000 '000 '000 '000 Northern Ireland Office Resource(3) Northern Ireland Office Administration Costs 15,112 15,530 14,641 13,351 12,876 15,496 15,430 Northern Ireland Office - other(3) 33,582 17,682 11,601 8,765 12,374 12,055 5,036 Northern Ireland Office Resource(3) 48,694 33,212 26,242 22,116 25,250 27,551 20,466 Northern Ireland Office Capital Northern Ireland Office 301 8,280 162 1,284 307 1,491 380 Northern Ireland Office Resource + Capital DEL(3) 48,995 41,492 26,404 23,400 25,557 29,042 20,846 less depreciation & impairments -2,836-2,196-1,858-1,764-1,533-1,773-2,100 Northern Ireland Office DEL (4) 46,159 39,296 24,546 21,636 24,024 27,269 18,746 Northern Ireland Executive Northern Ireland Executive Resource 9,632,807 9,963,784 9,856,210 10,040,967 10,174,627 10,280,665 10,308,485 Northern Ireland Executive Capital 1,277,142 1,192,128 1,000,383 968,898 930,844 1,083,646 1,099,326 Northern Ireland Executive DEL(3) 10,909,949 11,155,912 10,856,593 11,009,865 11,105,471 11,364,311 11,407,811 less depreciation & impairments -342,262-369,953-420,460-576,938-450,862-533,056-550,363 Northern Ireland Executive DEL(4) 10,567,687 10,785,959 10,436,133 10,432,927 10,654,609 10,831,255 10,857,448
Total Northern Ireland Block (4) (5) (6) 10,613,846 10,825,255 10,460,679 10,454,563 10,678,633 10,858,524 10,876,194 Notes (1) Totals may not sum due to roundings. (2) Includes Budgetary Changes as a result of Clear Line of Sight (3) Including depreciation & impairments (4) Resource + capital - depreciation & impairments (5) By convention Departmental Expenditure Limit budgets are expressed as resource and capital less depreciation & impairments. Therefore the resource and capital numbers in this table will not sum to the Departmental Expenditure Limit: the difference being depreciation & impairments. (6) Northern Ireland Office DEL + Northern Ireland Executive DEL less depreciation and impairments