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Select Committee on Northern Ireland Affairs Minutes of Evidence


CLASS XV, VOTE 2 ESTIMATE, 2000-01

Memorandum submitted by the Northern Ireland Office

  This paper provides guidance on the role of the Northern Ireland Office (NIO) with regard to Class XV Vote 2. Transfers to the Northern Ireland Consolidated Fund—2000-01.

SUMMARY

  1.  It is a responsibility of the Secretary of State for Northern Ireland to secure Northern Ireland's share of public expenditure. There are separate financial allocations for NIO and for the devolved institutions. Class XV Vote 2 covers the transfer of funds from the United Kingdom Consolidated Fund to the Northern Ireland Consolidated Fund in support of expenditure by the Northern Ireland departments and certain transfers from European funds to Northern Ireland departments. The United Kingdom Parliament votes the necessary provision to the Secretary of State for Northern Ireland who makes a grant in aid to the Northern Ireland devolved administration. The Permanent Under Secretary in the NIO is Accounting Officer for the Vote.

FUNDING THE NORTHERN IRELAND ADMINISTRATION

  2.  The Northern Ireland Administration is not funded solely by the grant in aid made by the Secretary of State for Northern Ireland but also by funding from locally financed expenditure, the European Commission and through borrowing. The arrangements for funding the Northern Ireland Assembly are those set down generally for the funding of devolved administrations in the Treasury document: "HM Treasury—Funding the Scottish Parliament, National Assembly for Wales and Northern Ireland Assembly—A Statement of Funding Policy" (31 March 1999).

CHANGES IN FUNDING ARRANGEMENTS

  3.  Prior to the commencement of devolved government in Northern Ireland, the provision in Class XV Vote 2 covered the subvention to the Northern Ireland Consolidated Fund in respect of the difference between spending by the NI departments and Northern Ireland's income from rate and other receipts and from its attributed share of United Kingdom taxes. At that time, separate payments were made from the United Kingdom Consolidated Fund to the Northern Ireland Consolidated Fund in accordance with section 15(5) of the Northern Ireland Constitution Act 1973 on account of the sum payable to the Northern Ireland Consolidated Fund under section 15(1) of that Act, being the Northern Ireland estimated share of United Kingdom taxes.

  4.  Under the new constitutional arrangements implemented under the Northern Ireland Act 1998, Class XV Vote 2 provides for all transfers from the United Kingdom Consolidated Fund to the Northern Ireland Consolidated Fund. Consequently, the provision in Class XV Vote 2 has increased substantially with the change in arrangements.

MECHANICS OF TRANSFERS

Grant in Aid

  5.  Requests for funds are made by the Northern Ireland Department of Finance and Personnel (DFP) to the NIO on an average of two or three times per week. Usually the increment of grant in aid transferred on each occasion lies between £50 and £60 million. On the basis of these requests, NIO, having provided notice of the demand to HM Treasury, authorises the transfer from the United Kingdom Consolidated Fund (Paymaster General Account) to the Northern Ireland Consolidated Fund (Northern Bank). In these transfers, no funds are received into or withdrawn from the Northern Ireland Office's bank accounts.

European Funds

  6.  European funds due to Northern Ireland departments are received into the UK Paymaster General Account. The NIO, having established with HM Treasury the receipt of the funds and their purpose, authorises the transfer of the funds to the Northern Ireland Paymaster Account (Northern Bank)—and occasionally for certain funds to the Northern Ireland Department of Agriculture and Rural Development (First Trust Bank)—on a date agreed with DFP and the Northern Ireland department to which the funds are due, having provided notice of transfers over £10 million to HM Treasury. In these transfers, no funds are received into or withdrawn from the NIO's bank accounts.

ESTIMATE

  7.  Changes to the budget for the Northern Ireland administration are largely determined on an automatic basis by application of the "Barnett" formula. The determination of the Estimate for Class XV Vote 2 for 2000-01, and the detail of what the provision is intended to cover, was a matter of direct negotiations between HM Treasury and DFP. Although the Estimate was presented on behalf of the Secretary of State for Northern Ireland, the NIO did so on the basis of the analysed information on proposed expenditure supplied by DFP but played no part in the negotiations leading to the determination of the Estimate. Accordingly the NIO is unable to provide details of what the provision in the Estimate for Class XV Vote 2 is intended to cover above those in the published Estimate.

SUPPLEMENTARY ESTIMATES

  8.  The NIO is not expected to play any part in the detailed determination of Supplementary Estimates for Class XV Vote 2 in 2000-01 and cannot comment on the criteria that may be used for Supplementary Estimates should they arise.

SPEND DURING 2000-01

  9.  Of the total provision for 2000-01 of £7,171 million in Class XV Vote 2, £1,360 million had been transferred from the United Kingdom Consolidated Fund to the Northern Ireland Consolidated Fund at 22 June 2000. To the same date £107.4 million had been transferred during 2000-01 to the Northern Ireland Paymaster Account from European Funds. NIO has received no advance profile for 2000-01 of when the transfers of funds are likely to be required.

  10.  NIO receives no information on how the grant in aid made to the Northern Ireland Consolidated Fund is utilised within the Northern Ireland devolved administration. Accordingly, NIO is unable to supply any information on spend by the Northern Ireland departments.

NORTHERN IRELAND DEPARTMENTS

  11.  The responsibilities of the Northern Ireland departments and the principal areas of expenditure with which each is concerned were described in Annex A to the Memorandum submitted by NIO to the Committee in January 2000, summarising the powers and responsibilities of the Secretary of State for Northern Ireland.

THE SECRETARY OF STATE

  12.  The Secretary of State will represent Northern Ireland's interests in any Cabinet discussion of Northern Ireland financial matters and will provide information on the wider political context of any bid for additional resources made by the devolved administration.


 
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