Examination of Witnesses (Questions 1
- 19)
WEDNESDAY 28 JUNE 2000
MRS DOREEN
BROWN, MRS
MARY MADDEN
AND MR
MICHAEL CASSIDY
Chairman
1. You are most welcome and thank you very much
indeed for coming over to see us. If you have had the opportunity
of reading examinations we have done with other witnesses before,
you will know that at this stage I say first that if at any stage
you want to gloss an answer—in other words, if you want
to add to an answer you have already given—either here and
now or later in writing if there is something you think should
have been added which was not added, or indeed you wish to correct
something, you should feel absolutely at liberty to do so. We
in the same way will feel free in writing afterwards to put any
questions to you which, on reading the transcript, we feel perhaps
we ought to have asked, if that is acceptable. We will try and
arrange that the questions follow a logical order, but that means
they may come from different corners of this horseshoe. We were
proposing to take Resource Accounting first and then move on to
the other section hereafter, but probably most of us will ask
questions under either section. Now, I do not know if there is
anything you wanted to say to us before we start. We have been
told who you are, but if you would like, for the sake of the shorthand
writer, to tell us yourselves that would be grand?
(Mrs Brown) Thank you very much for your
welcome. I am Doreen Brown. I am Director of Resources of the
Northern Ireland Office. This is Mary Madden, who is Head of our
Financial Services Directorate, and this is Michael Cassidy who
also works in the Financial Services Directorate.
2. I think it might be helpful to us, before
I turn to colleagues who may have specific questions to ask, if
either Mrs Madden or Mr Cassidy told us a bit about the Financial
Services Directorate so that we have a clear idea of what it actually
does?
(Mrs Madden) The Financial Services Division looks
after the Law and Order Vote on behalf of the Accounting Officer
and the Secretary of State. The Law and Order Vote has a sum of
slightly less than £1 billion and we take receipt of that
and we look after it in relation to the spending right across
the whole department. That is one aspect of our responsibility
and that is Vote 1 of the expenditure, and Vote 2—which
is a matter before this Committee this afternoon—is another
aspect of our role. Mr Cassidy might like to add.
(Mr Cassidy) I am Head of Accounts. Basically our
role is to prepare the department's Statutory Accounts and to
pay its creditors. It is in the first context that I have been
responsible for the implementation of Resource Accounting in the
department.
Chairman: Very good. This is a novel occasion
for us. Let me just test whether any other Member of the Committee
wants to ask you any questions about your functions before we
actually get down—I think I have reticence. Mr Burgon?
Mr Burgon
3. Thank you, Mr Chairman. Two questions; the
first is, what are the principal differences between the cash
based Estimates and the resource based Estimates and what advantage
is expected to accrue from the introduction of the resource bases?
(Mrs Brown) There are a number of differences between
the cash based Estimates and resource based Estimates, the main
one being that there is greater emphasis on the capital budget
and managing capital in resource based Estimates. There are a
list of items that are different between the two; in fact if I
could read them out to you. Resource based Estimates include estimate
of the cost of capital charges, depreciation, other non-cash items—for
example, notional audit fees—increases or decreases in stock,
increases or decreases in debtors, increases or decreases in creditors
and increases or decreases in provisions. I think the rationale
behind resource based Estimates is that they give a clearer picture
of the true cost of money than the cash alone does.
4. The second one; how were the proposed requests
for resources chosen? Are they more or less restrictive in terms
of expenditure control than the ambit of the current Estimates?
(Mrs Brown) Sorry, could you repeat that?
5. Yes, it must be my accent. How were the proposed
requests for resources chosen and are they more or less restrictive
in terms of expenditure control than the ambit of the current
Estimates?
(Mrs Brown) The request for resources are the statements
of the department's main objectives. They essentially reflect
the broad functional areas of responsibility of the Northern Ireland
Office. That is RfR1 to 4. So they coincide with our four main
operational directorates and the smaller organisational units
associated with those directorates. So really there is no great
difference between using RfRs and what we had in the past.
Mr Burgon: Okay.
Mr McCabe
6. Good afternoon. I am trying to work out what
kind of information we are likely to get in the future and how
we are going to be able to make sense of it. The first thing I
really wanted to know was will there be a direct read-across from
the Estimates to the figures that appear in the departmental report?
(Mrs Brown) Certainly the level of detail in expenditure
plans which is currently provided in the departmental report will
be maintained, even in moving to resource based Estimates and
the expenditure under each RfR will be analysed fully by specific
functional activity.
7. So the short answer is yes, the level of
detail in the report will remain the same—that is the intention—and
it should be fairly possible for anyone reading that to make the
comparison with the Estimates and the detail in the report.
(Mrs Brown) Yes.
Mr McCabe: Thank you very much.
Mr Thompson
8. Good afternoon.
(Mrs Brown) Good afternoon.
9. What classes of expenditure are included
within the Departmental Expenditure Limits and in Annually Managed
Expenditure respectively? What criteria are employed to decide
what falls in each category?
(Mrs Brown) The Departmental Expenditure Limits that
cover departmental programme expenditure on an accruals basis,
administration costs and capital spending; that is the resource
budget DEL. The resource budget AME covers programmes which are
managed on an annual basis and examples of that would be police
pensions and European peace and reconciliation receipts and also
the accruals consequentials of DEL programmes for the SR2000 period;
for example, depreciation and the cost of capital charge.
Chairman
10. I am sorry. Could you just say that again?
You dealt with police pensions and the European items?
(Mrs Brown) Yes, the European peace and reconciliation
receipts. The AME also covers accruals consequentials of DEL programmes
for the SR2000 period only and examples of that are depreciation
and the cost of capital charge and provisions.
11. I want to make absolutely sure I have understood.
I understood what you were saying about accruals, but you then
went into certain DEL categories and I was not sure what they
were?
(Mrs Brown) In my last answer talking about the accruals
consequentials of DEL programmes?
12. Yes.
(Mrs Brown) That is for the SR2000 period only and
the examples there are depreciation and the cost of capital charge
and provisions.
13. Take me through in words of one syllable
the last bit about the DEL, the SR2000 period?
(Mr Cassidy) Yes. For the planning period 2001 to
2004 which we are still currently negotiating with the Treasury,
the Annually Managed Expenditure element of the resource account
will include the accruals deriving from the programmes that are
defined as DEL, that is those programmes which fall within Departmental
Expenditure Limits. For the future thereafter the expectation
is that those accruals will fall within the DEL programmes themselves.
14. I see. That is after 2005?
(Mr Cassidy) Yes, that would be our expectation. Frankly,
what we are following here is a mechanical requirement of the
Treasury at the moment.
Chairman: Yes, well those are familiar. Right.
Had you concluded, Mr Thompson?
Mr Thompson
15. What criteria are employed to decide what
falls into each category?
(Mrs Brown) The categories are determined by Treasury
and if something falls into one of the lists—for example,
the resource budget DEL covers administration costs, capital spending,
therefore automatically capital spending is part of the DEL.
Mr Thompson: Thank you.
Mr Hunter
16. Further to that question, I do not see,
forgive me, that Treasury determines actually answers the question
`what criteria'? Could you tell us what criteria the Treasury
uses?
(Mr Cassidy) The distinction between these two areas
of control, these two control limits, is one imposed by the Treasury.
Normally we would not enquire as to why—I mean, this is
something to do with their own overall expenditure control mechanisms
and as far as we are concerned we simply follow the definitions
that are prepared or prescribed for us.
Mr Hunter: Thank you.
Chairman
17. Before I turn to Mr Beggs, when you gave
us police pensions and the European peace and reconciliation programmes,
where those examples or were they the totality?
(Mrs Brown) They were examples.
18. Would you like to give us some more examples?
(Mrs Brown) I will look for more examples. I think
we will have to come back to you on that[1].
Those are the main elements.
19. But the two you gave us are the two most
significant ones, are they?
(Mrs Brown) Yes.
Chairman: Okay, thank you. Mr Beggs?
1 See Ev. p. 26. Back
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