Northern Ireland Affairs Committee
Oral evidence: Devolution and democracy in Northern Ireland—dealing with the deficit, HC 613
Wednesday 24 January 2018
Ordered by the House of Commons to be published on 24 January 2018.
Members present: Dr Andrew Murrison (Chair); Mr Gregory Campbell; Mr Stephen Hepburn; Lady Hermon; Kate Hoey; Nigel Mills; Ian Paisley; Jim Shannon.
Questions 1 - 89
Witnesses
I: David Sterling, Head of the Northern Ireland Civil Service; Hugh Widdis, Permanent Secretary of the Department of Finance, Northern Ireland Executive.
Examination of Witnesses
Witnesses: David Sterling and Hugh Widdis.
Q1 Chair: Gentlemen, good morning. Thank you for coming to talk to us this morning. Clearly this Committee is very focused on what is going on in Belfast, especially today with the resumption of talks. We wish those talks all the very best. David, could you kick off with a few words on where you think we are at the moment?
David Sterling: Thank you, Chair. Thanks to the Committee for inviting me and Hugh Widdis along this morning to brief you in our respective capacities as Head of the Civil Service and Permanent Secretary of the Department of Finance. I hope we will be able to provide you with some context as to how the machinery of government in Northern Ireland has been working in the absence of Ministers. As you will know, for around a year, we have had no functioning Assembly and no Executive. I want to put on record on behalf of the Civil Service that we want to see a functioning Executive and Assembly back quickly. The talks are resuming today and we hope those will be successful. As civil servants, we will be doing all we can to facilitate that process and get an Executive back quickly.
Over the last year, we have sought as far as we can to keep the wheels of government in motion. But our system of government was not intended to function in the absence of elected representatives, with the exception of a short period of time around elections. Without Ministers, we have no one with a democratic mandate to set new policies. Without a functioning Assembly, we have no one to make laws or immediately hold public bodies to account. We continue to exercise the powers and functions that we have to the best of our ability.
Inevitably, this means that civil servants staffing those departments are in a difficult position. On the one hand, there is a clear and perfectly valid expectation by the citizens of Northern Ireland that they will continue to get high quality public services. There is a very clear desire from all my colleagues in the Civil Service and the wider public sector to provide the best services we can.
On the other hand, our capacity to make progress and respond to emerging issues is limited. As time goes by without political structures operating, we are losing time to tackle some of the very big issues facing Northern Ireland: the need for major transformation across many of our public services, the need to respond to the economic challenges that we face, and the need to address some of the long‑standing societal problems facing our citizens. All those areas require ministerial decisions and ministerial interventions.
So far, we have not encountered a shutdown moment; we have been able to keep things going, in large part because the Government have put a budget in place for 2017-18. One of the big challenges we face is the fact that we do not have a budget in place for next year, beginning 1 April. I am sure you and the members will want to explore that.
I will pause there and say we are very happy to take questions on any of these issues. I fear Hugh and I will not have the answers to all your questions today, but we will certainly endeavour to provide you with any supplementary information and encourage colleagues to come along and talk to you, if you would find that helpful.
Q2 Chair: Thank you. Can I first express my admiration for the way that the Civil Service in Northern Ireland has been able to keep things going in the absence of Ministers? It is an unusual thing for any civil servant to have to cope with, and I think the people of Northern Ireland have been well served by civil servants attempting to keep this thing going.
You have highlighted some of the difficulties that we face, in particular things that require ministerial intervention or decisions. One of the things you did not mention, of course, was the voice of Northern Ireland in respect of the Brexit negotiations. As it happens, this Committee was in Brussels on Monday, talking to Michel Barnier, among others. The strong impression we got was that Northern Ireland was perhaps struggling to have its voice fully heard, alongside Scotland and Wales. I am wondering what you think about that, and what needs to be done—in fairly short order, given the rate of progress with these talks and the tight timeframe—to ensure we can remedy that deficit.
David Sterling: This is a huge issue for Northern Ireland. We have been engaged at a quite deep level with our colleagues in Whitehall departments such as DExEU, BEIS and DEFRA. In all the departments, there has been very close engagement between Northern Ireland officials and Whitehall officials.
However, we are largely providing factual information. We are responding to questions about possible future scenarios, impacts and that sort of thing. We do not, at the minute, have Ministers to offer a view on what policies might be in the best interests of Northern Ireland moving forward. There are many areas where the absence of that is definitely going to create difficulties for us. If you take DAERA, for example, when the UK has exited the EU there will be a need for new policies on support for farms, rural development and environmental protection. Northern Ireland has unique issues and challenges in that area, and it is very clear to us that we need ministerial input to help begin to formulate the policy that will be in the best interests of Northern Ireland after the UK leaves the EU. At the minute, we are in a bit of a vacuum there.
Q3 Chair: We hope for the best in terms of the talks that are now underway, but we have to prepare for the worst, which would be a return to direct rule. What measures are being taken to enhance your team in anticipation of that as a possibility?
David Sterling: I have one postscript on the Brexit issue. We will have about 500 pieces of legislation to process on the back of the EU (Withdrawal) Bill. Much of that legislation will require regulations by affirmative resolution, which will obviously require a resolution by the Assembly. At the moment, that is a particularly big challenge facing us.
Q4 Chair: The implication of that is quite severe, because you do not have Ministers in Northern Ireland at the moment. What happens if the current round of talks sadly fail and you continue not to have Ministers in Northern Ireland?
David Sterling: On a general point, if there is essential legislation and there is no functional Assembly, I would be advising the Secretary of State that that legislation would need to be taken through Parliament here.
Q5 Chair: The timeline for that is obviously very tight indeed, so this cannot really be delayed.
David Sterling: No. There are a number of big issues. We have budget legislation for the current year, 2017-18, in place, and the Secretary of State took that through Parliament in November. We will need supplementary estimates to give authority to adjustments that have been made since then. We will also need a vote on account for next year.
Q6 Chair: We will come back later in the session to the affirmative resolutions to which you refer. Can I bring you back to the point about your team, and what needs to be done to prepare for the possibility that this round of talks will not be successful?
David Sterling: Our focus is on doing all we can to encourage a successful resolution to the talks. However, there have been discussions with the Northern Ireland Office on a contingent basis, to cope with circumstances where the talks might fail, which we hope they will not, about how the Civil Service in Northern Ireland would respond if the Government decided to introduce direct rule. There is a limited amount of contingency planning going on in that regard.
Q7 Chair: Does that mean more resources? Will you potentially need more civil servants, or differently structured civil servants?
David Sterling: No, I do not think there is any expectation that additional civil servants would be needed. It would simply be reconfiguring what we have and adapting to what might be necessary if direct rule was introduced. Some people like me will recall this in the past.
Q8 Chair: There is speculation that Sue Gray, who has been characterised as being the most powerful woman in the UK, may be on her way to Northern Ireland. Are you able to comment on that?
David Sterling: I cannot comment on that at the moment. I have seen the press speculation. There are certain issues still to be resolved, and until they have been it would not be fair of me to comment. I would say that some of the speculation behind this is perhaps a little ill founded. I hope all will very quickly become clear.
Q9 Kate Hoey: Given that all the media know about these things, when do you think you might hear this non‑announcement or announcement?
David Sterling: I am hopeful that this will become clear today. There has been an open competition to fill vacancies at Permanent Secretary level, so that is what we are dealing with. It is just the conclusion of the process underpinning that open competition.
Q10 Ian Paisley: Good to see you, David and Hugh. You are very welcome to the Committee. Can I say, right at the outset, that I acknowledge you are in the worst of all situations? You have to administer the Province without politicians or Ministers in place, and that is incredibly difficult. I accept it is not where you want to be. Obviously we would all like to see a much better situation in place, but we are where we are.
This morning you have characterised that you have kept the wheels in motion. A lot of people might feel that it is more like treading water in many areas of their public and daily life. That is understandable. Can we clear one thing up? At the end of the day, is it correct that you are the accountable officer for Northern Ireland?
David Sterling: No. I am the Head of the Civil Service, but the constitutional position is that we have nine departments in Northern Ireland. Each is headed up by a Permanent Secretary, who is an accounting officer. In normal circumstances, the Permanent Secretary would be under the direction and control of a Minister. All power normally flows through the Minister. I am not in a position to direct or control the individual departments of Permanent Secretaries. However, we work as a board, which is like a management board for the Northern Ireland Civil Service, but that is largely about the management of the 23,000 civil servants. I am not in the business of directing or controlling the operation of individual departments. The NICS board is no substitute for a functioning Executive.
Q11 Ian Paisley: The buck does not stop with the Head of the Civil Service; it stops with nine Permanent Secretaries.
David Sterling: Yes, eight Permanent Secretaries plus the accounting officer in the Executive Office.
Q12 Ian Paisley: All right. God so loved the world that he did not send a committee, but in this instance we have a committee running Northern Ireland. Specifically, in terms of running Northern Ireland, we also have the added issue of what is happening here at Westminster, with my own party supporting the current Administration and keeping them in place on a confidence and supply basis. On the basis of that, £1 billion of additional resources were given to all the people of Northern Ireland. That £1 billion is to help with healthcare, infrastructure, broadband and other specific provisions to help everyone. Can you let us know what the current state of play is with that money? Is it being spent? Is it being allocated? If not, why not, and when will it be allocated?
David Sterling: The £1 billion was allocated in a number of areas. Some of it is resource and some of it is capital. The only money that we have drawn down so far is £20 million of the £50 million that was made available to address health and education pressures over two years. That was £100 million. We drew that down to address particular challenges in the health and education sector this year.
However, our conclusion was that the pressures faced in both those sectors next year was of a different order of magnitude, and therefore we would not draw down the full £50 million this year; instead, we would seek agreement from Treasury to carry that forward to next year. Our expectation is that we will draw down the full £80 million there.
There is also ongoing work regarding planning for the sensible spend of the other moneys. However, this is another area where the absence of Ministers is handicapping us. For example, I refer to the £75 million over two years, the £150 million available for expansion of broadband. It is very welcome, because there are particular challenges with the development of broadband in Northern Ireland. We will need a ministerial steer on how that money is to be used. Should we focus on superfast or ultrafast? Should we have a preference for supporting business or domestic, and how should the balance of spend be allocated? What about the rural-urban split? There are quite significant issues where it would be improper for civil servants to be deciding on the allocation of that resource. There are policy issues, which only Ministers can determine.
Coming back to your central question, before Christmas the Department of Finance published a document setting out some budget scenarios. We are very concerned about the absence of a budget for next year. That document that identified certain budget scenarios was predicated on the fact that the full £1 billion would be drawn down over the next two to three years.
Q13 Ian Paisley: Some people may think that ministerial steer can only be given by devolved Ministers. Is it the case that that ministerial steer can be given by direct rule Ministers, if there is no Executive in place?
David Sterling: In my view, it would be best given by Northern Ireland Ministers.
Q14 Ian Paisley: I know what would be best, but we are where we are. I am asking a factual question: can that ministerial direction be given by non‑devolved, direct rule Ministers?
David Sterling: Yes. If there was direct rule, policy on any particular issue could be given by direct rule Ministers.
Q15 Ian Paisley: Are you urging the Secretary of State—to put this delicately—to get the finger out and essentially direct that that money is spent expeditiously?
David Sterling: At the moment, I have been advising the Secretary of State that the major issue we face is the fact that we do not have a budget from the beginning of April. The Chancellor set the budget for England on 22 November. The Scottish and Welsh Governments set their budgets before Christmas.
Q16 Ian Paisley: I do not want to get confused. This is additionality. This is additional to our budget. This is effectively cherry-on-top stuff. That does not require a budget to be allocated; is that correct?
David Sterling: The expectation is that it would be allocated as part of a budget.
Q17 Ian Paisley: It would be nice. That is ideal, but how is urgently expediting it achieved? We will go on treading water, waiting and waiting, and it is never spent. Most of the public out there, the people you and I are with every single day, want it spent.
David Sterling: No, absolutely. That is why I am emphasising the point that what we really need is a budget for next year. We need a budget for next year in which the confidence and supply money is allocated and decisions are taken on how best it should be allocated. It would be very hard to force decisions on confidence and supply money when we do not have a budget.
Q18 Ian Paisley: Even though confidence and supply money is already specifically allocated to five sectors and five specific projects.
David Sterling: Yes. As I say, without there being a budget for departments, it is hard to see how you would allocate the confidence and supply money.
Q19 Ian Paisley: I would have thought you would tell the Permanent Secretary, “There is the money. Spend it”. The Department of Health has a major £350 million reform programme. “Spend it. You are the accounting officer in the Department of Health. There is an additional £350 million. Spend it. There is £50 million on mental health needs. Spend it, sir”.
David Sterling: Work is ongoing to determine how this money would best be spent. My point is that departments do not have certainty about what their total allocation is for next year.
Q20 Ian Paisley: This is additional, and irrespective of us even having a devolved Government in operation. The whole point of that resource is that it is a bonus, no matter what is happening in Northern Ireland. Spend it.
David Sterling: Yes. If we go back to the broadband issue, our difficulty in spending it is that we need a policy steer on how to do so.
Q21 Ian Paisley: I agree with that, but that is essentially you speaking to a Minister, not to a devolved one, because there are none, but to the Secretary of State, and saying, “Give me direction: ultrafast, superfast, rural split, city split”. That is essentially making that call with a Minister.
David Sterling: The step before that is that we need certainty about what the overall budget for Northern Ireland is.
Q22 Ian Paisley: No, you do not. You have this money. It is cherry-on-top money, which you have accepted. It is additional, and already into five specific areas. Spend it. What is the reluctance to spend the money?
Hugh Widdis: I do not think there is a reluctance, as such. In fact, there is keenness on the part of the departments to get on with transformation and to take guidance from Ministers about what that transformation might be.
I suppose I would make two points. First, a department cannot lawfully spend money until it has been appropriated to it. The mere fact that it is in the confidence and supply document is not enough. It will have to be appropriated in Parliament first and then appropriated in Northern Ireland.
Q23 Ian Paisley: That is a 45-minute exercise.
Hugh Widdis: That letter of appropriation cannot be done until a budget is set for Northern Ireland as a whole. That is one of the things that we have been saying need to be done by the beginning of February. Exactly what that budget might be like is clearly something for Ministers to decide, and that is made very clear in the budget.
Q24 Ian Paisley: If I was a member of the general public watching this, the words flashing through my head would be, “Sir Humphrey”. They want this money spent. They want allocations for mental health, reform of our health service, broadband and the infrastructure situation in the city of Belfast, heading on to the M2. They want that money spent and they do not understand all of the jargon-speak. You and I play this game; we are in this game and we understand it. Out there, the public do not understand why this money is not being allocated and spent. There are no strings on it. It is a bonus; you have won the lottery. Please spend the money.
Hugh Widdis: All I am trying to do is explain what the factual position is. The factual position is that no department can lawfully spend money unless it has been properly appropriated to it. In order to appropriate it to it properly, one of the things we need first is a budget. As David and I have said, our view is that we need a budget agreed by early February as the first stage in that process. There is then a formal allocation to be done.
Q25 Kate Hoey: Can you not just agree a budget for what you are actually going to spend this extra money on, forgetting the general money that you will have?
Hugh Widdis: One could agree a budget in the sense that one could replicate the tables that are in the confidence and supply agreement and indicate where those moneys are going to go. As David has said, there are policy decisions within each of those. In relation to the ultrafast broadband, he has identified some of the decisions where a politically accountable ministerial decision would be needed, in order to indicate what the policy preferences are.
Q26 Kate Hoey: Have you started to ask for that ministerial direction from the Secretary of State?
Hugh Widdis: The Department for the Economy is working through what the different options are. They will be ready to be put in front of an Executive Minister, if an Executive Minister comes back in.
Q27 Kate Hoey: Even if everything goes brilliantly, there will not be an executive Minister for a short while. Why are we not getting on with the Secretary of State giving direction?
David Sterling: At the moment, the Secretary of State has not indicated that she would be prepared to take decisions that are probably for the devolved Administration.
Q28 Kate Hoey: The Secretary of State has actually said to you, as Head of the Civil Service, “I do not want to be asked to make any decision on anything to do with this extra money until there is an Executive”.
David Sterling: The Secretary of State’s focus is quite rightly on getting the devolved institutions back into place.
Kate Hoey: That is just ridiculous.
Ian Paisley: Do you see what I mean by “treading water”?
Q29 Mr Campbell: The Secretary of State has said that she wants to report to Parliament by 7 February, before the parliamentary recess, in terms of the progress of the talks. You are envisaging a budget timescale of early February, which would appear to coincide with that. Are we talking about a decision having to be taken on the budget before Parliament rises on 8 February?
David Sterling: Yes. My view, which I have expressed to the Secretary of State, is that every department in Northern Ireland needs certainty about what its total spending allocation will be from 1 April. That includes the confidence and supply money. The Permanent Secretary in the Department of Health is facing particular challenges. The confidence and supply money will be of considerable assistance there, but until he has certainty about what his total budget is going to be it is very difficult for him to plan on how best he uses that money.
That is why I am saying that you cannot divorce these two things. If we were in a slightly more benign public expenditure climate, with public expenditure rising, it might not be such a big issue. The reality is that our public expenditure over the next two years is flat in cash terms, which means that in real terms we are facing a 2% to 3% cut over the next two years. Given the increasing pressures in our health system, schools and other areas, if we meet those pressures and do nothing otherwise, other departments will overspend. Ministers will have to decide how to allocate resource that is very stretched at the moment. That can only be done through a budget.
Q30 Mr Campbell: Just so we are absolutely clear on this and there cannot be any ambiguity, setting aside progress in the talks beginning today leading to a resolution before 7 February, which we all hope will happen, on or before 7 February, the Secretary of State makes a statement to the House of Commons. A budget has to be set, and the confidence and supply money, in addition to the other budgetary requirements, begins to be spent immediately thereafter.
David Sterling: The minimum we need for good government in Northern Ireland is this: if there is no Executive in place by the first or second week in February, the Secretary of State needs to say, “If there is no Executive by the end of March, this is a budget that I would put in place”. By the end of March, we will need to have supplementary estimates for 2017-18, and a vote on account for 2018-19, which would provide certainty to departments about the money that is going to flow to them.
Q31 Mr Campbell: Parliament rises on 8 February. We need to be absolutely clear and unequivocal that, if a decision is not taken on or about the 7th, it cannot be taken until the end of February in Parliament, because of recess. That is why I am particularly zoning in on 7 February. We need to be clear. Is that D-day? That is what we need clarity on.
Chair: Is it D-day?
David Sterling: It will be incredibly difficult for us if we do not have budget certainty by 8 February.
Q32 Ian Paisley: David, you mentioned some of the things that you are putting in place. Am I right in believing that you have put in a special civil servant with a specific brief on Brexit to deal with those issues? If so, can you explain what role that person will have?
David Sterling: Yes. I have asked Andrew McCormick to head up the international relations division in the Executive Office. That is simply because the collection of Brexit-related issues that we face in Northern Ireland is so great that we need some additional resource there, and somebody with Andrew McCormick’s experience and ability. Andrew is the right person to co-ordinate our preparations for Brexit across all nine departments. That was why I asked him to do it.
Q33 Ian Paisley: Mr Chairman, it would possibly be very useful for us to hear evidence from Mr McCormick when he has read himself into that brief, given our own report. You will make him available to us.
David Sterling: Yes.
Q34 Jim Shannon: Gentlemen, thank you for all that you do and are trying to do in a very difficult position. We understand that. Just to follow through from Ian, I think it was you, David, who referred to the broadband. I do not know how many letters I get about broadband, nearly every week.
Ian Paisley: They are letters; they are not emails, because they cannot get through.
Jim Shannon: Mine are probably all letters, I suspect, but that is just me. The problems occur with small businesses, farmers and those who live in rural areas. David, if you do not mind me saying this, being very respectful, it seems that decisions are being put off rather than being made. You will say, “Of course, there is going to be rural spend and urban spend”. I would like you to focus on the people who just do not have broadband in my constituency. They would settle, at this moment in time, for any contact. I have already expressed this at our DUP group, and Ian will know this. Greg would have heard about it as well. We have extra money allocated for broadband. Ian calls it the “cherry on top of the cake money”. I cannot understand why that money is not being used.
I asked the question, “If all that money was available tomorrow, would we have the people in place to put the broadband in?” In other words, it is not just a matter of having the strategy; it is a matter of having the system and the mechanics of it to make it happen. Where are we with broadband in Northern Ireland, and where are we with the extra moneys that have come in? There are a couple of other things I want to ask as well, but I am happy to take them one at a time, if that makes it easier.
David Sterling: I suppose the challenge for the Department for the Economy is that, first, there needs to be some policy clarity about how the money is best spent. I am sorry if it sounds like I am repeating myself. You have made a very good case that there should be a focus on those who currently have very poor broadband. Others might argue that there should be a focus on improving broadband for businesses, and there may indeed be an argument that we can do those different things. There needs to be a balanced approach, but that will require ministerial decision.
The first thing we need is policy clarity. Then we would need to construct a specification, and there would then need to be a procurement. In whatever way this is configured, a lot of this money will be spent digging holes in the ground. It will require quite a big procurement and implementation exercise, running over a couple of years or more. That is where we are. I will assure you that officials in the Department for the Economy are doing all they believe they can do at the moment, in the absence of Ministers, including the provision of advice on different options for how this might be spent.
Q35 Jim Shannon: There are a number of departments, but I want to mention two others. The roads department is not a sexy department. It perhaps does not always get the money or focus that it should. Back home, you drive down the roads and potholes are everywhere. I understand the money for street lighting will run out next year. They are two simple things. Money has been set aside for those at the department. I am just wondering where the focus and strategy is within a department that will have 3% less next year than it has this year.
I cannot underline the importance of health. In August last year, a number of MPs had a meeting with the Permanent Secretary for the Department of Health. I outlined to him my four takes, and there were many more. There were lots more. As a party, we have secured lots of extra money specifically targeted towards the Department of Health. As the Permanent Secretary, Richard Pengelly was keen to spend that money if it was coming. I cannot understand why we cannot have the money for children’s diabetic insulin pumps that he wanted.
I cannot understand why we cannot have out-of-hours funding for doctors and GPs, which we wanted and the money is on its way towards. For the life of me, I cannot understand why we cannot deliver the social care packages for each of the trust sections where their responsibility lies. The money that we have secured is extra money to be used for that purpose. Then there is the money for the nurses’ pay. We put those four things into that scenario. He is keen to spend it. I am trying to be really careful with what I say, David. Why are you holding that back? I cannot understand it.
David Sterling: Nothing is being held back.
Q36 Jim Shannon: We have not spent it.
David Sterling: You referred to the challenges for the Department for Infrastructure. DfI is facing particular budgetary challenges. It is spending around £60 million this year on road structural maintenance. It estimates that it should be spending well over £100 million a year to address the needs of the roads. There is a considerable backlog on that, running into the hundreds of millions of pounds. Translink is facing particular difficulties as well. All these are issues that will require decisions by an Executive, looking at the challenges facing the Department for Infrastructure alongside the challenges facing other departments. Decisions will need to be taken on prioritisation.
If I come to health, nobody is holding any money back. We have been able to provide quite significant additional in-year resources to health this year. But the problem the Permanent Secretary faces is that he does not have clarity about what his total budget for 2018-19 is going to be. Yes, there is the £80 million of confidence and supply money, which will be of huge assistance, but he will not know how best to spend that until he knows what his total overall budget is going to be. That is why I have been making such a strong point this morning about the need for a budget and for clarity about what the total allocation to all departments will be from the beginning of April. I do not think this is an unreasonable request. We are at the end of January and very close to the beginning of the next financial year.
Hugh Widdis: Even that money for immediate pressures, in the confidence and supply agreement, is described as being for health and education. There is a fundamental policy decision there: out of that money, how much pressure will we relieve in education and how much pressure will we relieve in health? That is a fundamental budget decision. It is appropriate that that should be taken with ministerial authority.
Q37 Jim Shannon: The point I am trying to make is that nobody knows better where that money needs to be spent, like I said, than the Permanent Secretary of the Department of Health. I just cannot get my head around the issue. He knows where it needs to be spent. Let him spend that money and take the pressures off that department. It would certainly help the winter pressures.
We had a period of direct rule from 2002 to 2007. I would have thought that you would have a fair idea of how to deal with the impasse we have had at the Assembly for almost a year, and how civil servants could make sure the moneys are being spent and things are moving on. In past periods, there have been impasses, suspensions and difficulties. Here we are today, still in one of the biggest ones. It is very frustrating. I know the responsibility lies with elected representatives; I am not saying it is with civil servants, but you probably have a fair idea of how to work the system.
David Sterling: We have had periods of devolution interspersed with direct rule before, but this is unique. We have never had a period of one year with no Ministers at all. I am frankly surprised that we have managed to survive as long as we have. To me, it is totally unprecedented and unacceptable, to be frank.
Q38 Chair: It is greatly to your credit that you have survived so long without the ministerial direction that our constitutional system requires.
Hugh Widdis: Just on one point that Mr Shannon made, it may well be the case that nobody knows better than officials in education and health, although we have no monopoly on wisdom. That does not provide them with the democratic mandate or the right to take decisions that ordinarily and in the circumstances should be taken by Ministers. The mere fact of knowing some of the answers is not enough to impose them on Northern Ireland. That is not where the power flows from. The power flows from Parliament and the Assembly granting the power to a department to do things, subject to the direction and control of Ministers.
Jim Shannon: Those who want diabetic insulin pumps want to see them today. Those who want social care packages at home want them today. Those who want GP out‑of‑hours services want them today.
Chair: That is a point that was made earlier by Ian Paisley.
Q39 Lady Hermon: Thank you both very much indeed for coming along this morning and being so frank with us. David, I turn back to a comment that you made a few minutes ago. How would you describe the position that the Civil Service has found itself in for this past year: limbo-land? Would that sum it up? It has not been direct rule and it has not been a functioning Assembly. It has been an unprecedented set of circumstances in Northern Ireland, and it must have been very difficult for all of you.
David Sterling: We find ourselves having to continue to try to deliver public services in an arrangement that was simply not designed for this particular set of circumstances. We have as far as possible tried to continue to progress policies that were put in place by previous Ministers and the previous Executive. Context changes with the passage of time. Circumstances change. Policy should adjust in line with those changes in context. We are missing that at the moment. We have not had Ministers who can give advice, direction and guidance as circumstances change. We have not reached a shutdown point, but the reality is that public services are suffering as a consequence of this because we are not getting the direction that we need. We are not getting the transformation decisions that we need across a whole range of services.
Q40 Lady Hermon: We are not going to reach a shutdown point.
David Sterling: No, although without a budget we will find it very difficult to continue to deliver services.
Q41 Lady Hermon: How is morale among your colleagues? Is there a sense of frustration?
David Sterling: There is a strong sense of frustration. We are 23,000 civil servants; we are part of Northern Ireland and part of society. We passionately care about the community of people. There is a huge sense of commitment among civil servants to provide good public service, so there is frustration. It is not confined to the 23,000 civil servants because it impacts on all public servants. We fervently want to see an early return of Ministers and a functioning Executive and Assembly.
Q42 Lady Hermon: Since the collapse of the Executive a year ago, in January, what has been the level of engagement between you and the leaders of the main political parties represented in the Assembly?
David Sterling: I would meet people from the parties on a fairly regular basis. Indeed, individual departments have fairly regular engagement with MLAs on constituency business. I have certainly made it clear that any request for a meeting from a political representative should be agreed.
Q43 Lady Hermon: When you say you meet people from the political parties, what level are we talking about? Are we talking about the leader of the DUP?
David Sterling: All levels, from leaders of the parties to individual MLAs who may be coming together on particular constituency interests. It is a whole range of levels.
Q44 Lady Hermon: How often have you met the DUP leader, Arlene Foster, and the Sinn Féin leader, Michelle O’Neill?
David Sterling: I could not put a number on it, but it would be every few weeks.
Q45 Lady Hermon: Really, as regularly as that?
David Sterling: Yes.
Q46 Lady Hermon: Likewise, Hugh, would you meet them?
Hugh Widdis: No, not quite as often as that. Members who are former Ministers and are interested in things that may have happened in their policy areas would be in touch with me and departmental Permanent Secretary colleagues to touch base and see what is happening. When we released the budgetary outlook briefing document, we made it clear to the parties that, if they wanted to come and talk to us about the content, the detail and what it all meant, we were happy to talk them through it. It is at that kind of level. It is not just me; it is other people in the department who would know some of the detail on those issues very intimately.
David Sterling: For example, during the storm events we have had, I would certainly make a point of keeping the parties informed about what we are doing to address those particular issues.
Q47 Lady Hermon: You initiate that contact with the party leaders.
David Sterling: Sometimes I initiate it; sometimes party leaders would call me. All the party leaders have my mobile phone number, so we are available for discussion. We provide briefings on a range of issues.
Q48 Lady Hermon: Are you reflecting—I want you to say of course you are—to the leaders of Sinn Féin and the DUP the urgency with which the people of Northern Ireland need and deserve to have their Executive and their Assembly functioning again? Is that a repeated conversation that you are having?
David Sterling: Yes. They know that.
Q49 Lady Hermon: Yes, but I would like to think the Head of the Civil Service of Northern Ireland is emphasising that to them every time they meet you.
David Sterling: Absolutely, yes.
Q50 Lady Hermon: May I take you to a couple of things you have said? You said in your introductory words that you have no power. I accept this, because we are not in suspension of the Assembly. We do not have direct rule. We are in this limbo-land. It is a very unprecedented set of circumstances. You have no power to set new policies. You have also said that the ability to respond to changing circumstances is limited.
Could I take you back a year ago to Judge Hart? That is the report delivered in January 2017 on historical institutional abuse. There were recommendations in that report that were quite clear, and were delivered while we still had an Executive and an Assembly functioning. I am extremely concerned that the victims and survivors of historical institutional abuse have not received the compensation that was recommended. What are you doing about that? I will take answers from the two of you. This is a serious issue; it is not changing circumstances or new policies. It was a report that was issued last January, before the collapse of the Executive.
David Sterling: This is an issue that probably causes us more concern than anything else.
Q51 Lady Hermon: “Than anything else”, did you say?
David Sterling: Yes, pretty much.
Lady Hermon: Good.
David Sterling: This is having an immediate impact on a group of people who have been horribly abused. I met the victim groups in August and I am meeting them again next week. The terms of reference for Sir Anthony Hart’s inquiry required that his report would be considered by the Executive, and the Executive would decide how they are going to respond to the recommendations in his report. That did not happen.
I suppose this is a point I should have made generally. If we had known a year ago that we were going to be without Ministers for a year, we might have done things differently. At regular points throughout that year, we have been waiting in expectation that a deal would be done. The reality of where we are with the HIA report is that I have required the team dealing with this to prepare draft legislation, which would have the effect of implementing the Hart recommendations in full.
Q52 Lady Hermon: The draft legislation would be where?
David Sterling: I have said to the Northern Ireland Office that the point at which that draft legislation is ready will probably not be before the summer.
Q53 Lady Hermon: Not before the summer?
David Sterling: No. It is quite complex legislation. If there is no Executive in place, I will be asking the Secretary of State to take that legislation through Parliament.
Q54 Lady Hermon: As a priority, obviously.
David Sterling: Indeed. Two things are required: the establishment of a redress board and the establishment of a commission. The commission would look after the interests of individual victims. The redress board would be comprised of a number of retired judges, and would adjudicate on individual cases when it comes to the payment of redress or compensation. Without that redress board, it would be very difficult to make payments. Indeed, there have been calls for interim payments to be made.
Q55 Lady Hermon: That is just what I was about to say. Why can we not make interim compensation payments?
David Sterling: The difficulty is that Sir Anthony Hart was very clear: redress should be paid to anyone who had suffered or witnessed abuse and had been under 18 at the time. He said that payments should be made on the balance of probabilities. Again, he recommended the creation of this redress board to deal with that. The victim groups do not necessarily agree with all that Sir Anthony Hart has recommended. Some groups would like him to have gone further. If we were to make interim payments, we would have to be putting in place some arrangement like the redress board.
My view is that that would simply be a distraction from focusing on the important thing, which is getting the redress board in place. We hope that, in tandem with that, we will very quickly have Ministers back, who can take the policy decisions that are needed on the back of Sir Anthony Hart’s recommendations.
Hugh Widdis: It is clearly a TEO matter. It is for the Executive Office and Ministers to make those decisions when they come back. There will be budgetary implications, but we will quite happily work through those with the Executive.
Q56 Lady Hermon: Let me just get clarity around this. You do not think the required draft legislation will be in place before this summer.
David Sterling: The draft legislation will not be ready before the summer.
Q57 Lady Hermon: That is enormously disappointing, I have to say.
Finally, could I just take you to a completely separate issue, but one that has quite rightly taken up a considerable amount of time in this Committee? That is the situation facing Bombardier and the thousands of people it employs. How do you think the dispute between Bombardier and Boeing—a very unfair dispute that was initiated by Boeing in America, which Ian described as spiteful—has been impacted by the absence of a functioning Assembly and Executive? Please be candid with us.
David Sterling: I do not think the absence of an Assembly has had a major impact.
Lady Hermon: That is very interesting.
David Sterling: As things stand at the moment, the US International Trade Commission has now considered the case, which was considered by the US Department of Commerce. We are expecting it to adjudicate in early February.
There has been intensive lobbying by the UK Government on behalf of Bombardier. Northern Ireland politicians have been actively involved in that. I know the party leaders of DUP and Sinn Féin have both been heavily engaged in that, along with other elected representatives. The strongest possible case has been made on behalf of Bombardier. To be honest—this is a personal view—I am not sure having an Assembly and an Executive in place would have made much difference.
Q58 Lady Hermon: You do not think that having someone in the position of the First Minister and the Deputy First Minister, acting jointly, going together shoulder to shoulder and lobbying—
David Sterling: It would have helped.
Q59 Lady Hermon: You have just contradicted yourself. You said, in fact, it would not make much difference. Of course it would make a difference.
David Sterling: No. I am saying it would have helped, but whether it would have made any fundamental difference is open to question.
Q60 Lady Hermon: Yes, but it is their function to represent the people of Northern Ireland in elected office as First Minister and Deputy First Minister. It would undoubtedly have been helpful. We can agree on that.
David Sterling: Yes.
Q61 Kate Hoey: Thank you both very much for coming on what seems likely to be a very interesting day for the Northern Ireland Civil Service. Can I ask you to give us a couple of examples that the public might be interested in of specific things that are not happening because they need a ministerial decision?
David Sterling: We have talked about Brexit and the work that is going on there. Hugh, maybe you want to talk about the implications in your department.
Hugh Widdis: Every year in the Department of Finance, we must set a rates order. It is only on setting the rates order that we are entitled to gather the rates. If that had not been done last year, we would not have been able to collect around £1.2 billion out of 2017-18, which goes into public services in Northern Ireland. That was done here, but that is an indication of the kind of thing.
This year we will have to set another one. That will be another decision, which we cannot take in the sense of setting the right figure for the rate. Should it be more than inflation to bring in income? Should it be less than inflation to make things easier for the people and businesses in Northern Ireland? That is a policy decision, so we cannot take that policy decision. If we cannot get an Executive back, we will be asking for that to be to be taken as a policy decision by the Secretary of State and legislated for here.
Take, for example, the various rate reliefs. There is a rate relief for rural ATMs. The way that is structured is that it needs to be replicated and legislated each year. We do not have anywhere to legislate for that this year. That is a policy decision that it would be wrong for us to take, to say that certain businesses should get preferential conditions to others. If there is no policy decision, that will also have to be terminated. Similarly, there is a back in business rate relief for premises that have been empty. Those are policy decisions I am not empowered to take. I can implement them; the department can go and collect the money at the right level, but the department is not empowered to take decisions that are properly for Ministers.
Q62 Kate Hoey: Under the present limbo situation, as Lady Hermon described it, in those situations you cannot go to the Secretary of State and say, “I want to do this”.
Hugh Widdis: We certainly can.
Q63 Kate Hoey: How many times do you do that, every month?
Hugh Widdis: In relation to the two examples I mentioned, we have discussed with NI officials whether that is something that might be entertained and done. It will be for them and the Secretary of State to decide where. But if you replicate that across the whole system you end up with a multiplicity—dozens, scores, possibly hundreds—of decisions that we would be pestering the NIO to get the Secretary of State to take, in a situation where it is not constitutionally appropriate, because we are in this limbo, as you describe it. It is for them to decide what they will do and what they will not. It is for us to decide what we cannot do, and therefore what we would bring to them and ask them to do in the absence of Ministers.
Q64 Kate Hoey: I suppose what I am trying to find out are the big issues for the average person living in Northern Ireland. Of course there is the health service issue and the extra money for that, and the rates issues. Waking up every day, what is making a Northern Ireland member of the public think, “Oh my goodness, we haven’t got an Executive. I won't be able to do any of this today”? What concrete difference is it making, apart from the overall uncertainty about budgeting?
Hugh Widdis: I would suggest that people might think about the rates and the bills that have to be paid every month. That is an important decision. A lot of governmental actions or decisions do not have an immediate impact. If a hospital is going to be closed tomorrow, what happens instead is that we put off transformation decisions that might make health or education more suited to the needs of the 21st century in three or four years’ time. Those are decisions that you really need to get on and take now.
David Sterling: It is the health service where the impacts are probably greatest. Mr Shannon referred to some of the issues that are affecting people daily. The big challenge in the health service is that a lot of work has been done to develop a road map for health service transformation. The Delivering Together agenda was launched in October 2016. A lot of work has been done in terms of planning how the service can and should be transformed over the next few years. There are some big decisions needed at a ministerial level about the nature of that transformation and reconfiguration of services.
There are other areas in health. The two previous Ministers were clear that the Health and Social Care Board should be closed down. Options for various structures have been developed, but ministerial decisions are needed to allow that to progress. There was a consultation on a new suicide prevention strategy, completed in 2016. Ministerial and Executive approval of that strategy is required before services can be procured in accordance with it, as with the reforms of community pharmacy services and a variety of other areas where decisions were made.
The reality is that we have particular challenges with waiting lists in Northern Ireland. I would not for a second suggest that, if we had an Executive back tomorrow, you would see an immediate and dramatic improvement in the waiting lists. However, the reality is that having Ministers in place to take some of the decisions that are needed about transformation would at least put us on a trajectory towards the delivery of improved services over time and better outcomes for citizens.
Q65 Kate Hoey: You said that, if you had known last year that it was going to take such a long time and it would be over a year without, you might have done things slightly differently. I may be completely wrong, but it sounds like the chances of getting the Executive back in the near future are not very high. Is it not time for the Civil Service to accept that it is not going to happen and get on with getting direct rule as quickly as possible?
David Sterling: That is not a call for us to make at all. It would be totally wrong for me to express such a view.
Q66 Kate Hoey: I understand that, but I mean in terms of taking things to Ministers for decisions. Is it not time to take some of those decisions, rather than saying, “We’ll wait”?
David Sterling: This is a particular difficulty that we face. By and large, we can proceed where it is clear that a new decision that is needed would be in line with the decisions of the previous Executive or Ministers. If something different needs to be done, we do not have the power to do that. Indeed, we would be open to the risk of challenge if we tried to introduce new policies. There have been some instances of that. We are at a stage now where we quickly need Ministers in place to take decisions.
Q67 Kate Hoey: I appreciate you are a civil servant, but do you feel any shift in opinion in Northern Ireland, in terms of whether, deep down, a lot of people now are saying, “Actually we have got used to not having an Executive. Yes, we would like the finance sorted out and the certainty, but do we really need an Assembly again? Are we not too small for that and should we not just go back to very important, busy MPs and direct Secretaries of State, with Northern Ireland Ministers perhaps coming from some of the parties that are represented here”?
David Sterling: It is not for me to comment on that, other than to say that the general public has a right to expect that government will provide the best possible public services. There is a frustration that we are not in a position to.
Q68 Kate Hoey: The Civil Service will be there whatever happens, which is important.
David Sterling: Yes.
Q69 Chair: What sort of ministerial structures are you anticipating in the event of a return to direct rule? I imagine you have given some thought to that, because you will need to be structuring yourselves appropriately. It seems unlikely that there will be a Minister for each of your departments; that would be a remarkable thing. I am wondering how they will aggregate.
David Sterling: That would not be a matter for us. That would be a matter for the Northern Ireland Office.
Q70 Chair: You must be considering these things, because it is going to affect the way the Civil Service is structured, apropos my comments earlier about Sue Gray.
David Sterling: I do not think that matter has anything to do with the contingency planning that is ongoing at the moment. All I can say is that the Civil Service will respond to whatever regime is put in place. We have been flexible in the past and we will be flexible in the future. Whatever may be decided, we will work within that arrangement as best we can.
Q71 Chair: That is fair enough. You have certainly demonstrated flexibility up to this point. You will probably have to be even more so, or at least as flexible, in the weeks ahead if, indeed, our worst prognostications come to pass and we are not able to restore the Executive.
Q72 Nigel Mills: To go back to a couple of things, Mr Sterling, in terms of the setting of next year’s budget, you agreed with Mr Campbell that 8 February was a pretty hard deadline. Do you need Parliament to have legislated for the budget, like we did in November, or do you just need the Secretary of State to publish what she wants the budget to look like, and the legislation for that can be a few weeks later?
David Sterling: That is the minimum that we would need: some clarity from the Secretary of State about what allocations for individual departments will be if there is no Executive at the beginning of the next financial year. That would allow departments to plan with some confidence for the delivery of services in the year ahead.
Q73 Nigel Mills: In terms of the money that was offered for the confidence and supply agreement, why was that not included in the Northern Ireland budget that we set back in November?
David Sterling: It was never expected that most of the confidence and supply money would be drawn out until 2018-19. A lot of the money is capital. The only money that there was ever any expectation that we would spend in the current year was the £50 million for pressures in health and education. We have drawn down £20 million of that.
Q74 Nigel Mills: That is in the budget for the current year now.
David Sterling: It is, and I think it will be included in the supplementary estimates.
Hugh Widdis: That is the intention, yes.
Q75 Nigel Mills: Can I just move on to a different subject? What is happening to all your staff who support the Assembly and support policy‑making across government in Northern Ireland? Are they being redeployed on to other work at the moment?
David Sterling: The Assembly is still up and running. It is still being used by MLAs for constituency business, and there are other events that take place there. The Assembly is a separate and independent body, but the Assembly has redeployed quite a significant number of its staff. Some are working in the Civil Service; some are working elsewhere. Indeed, some may be working in other jurisdictions.
Hugh Widdis: The Assembly Commission is a separate body, so we should not really answer for it, but it has moved very appropriately to split off and deploy anybody who is not engaged on critical continuing business, such as continuing security in the building or continuing to welcome visitors and the public in et cetera. If it is to do with committee staff, Hansard or research that is no longer being undertaken to the same degree, I think you will find that those people have been deployed elsewhere in the public service.
David Sterling: Within the Civil Service, those staff who were involved in supporting Ministers through private offices or in Assembly liaison roles have been redeployed on to other tasks at the moment.
Q76 Nigel Mills: Have any made their way to the NIO, doing the same job but in a slightly different way?
David Sterling: Not specifically as a result of this, no.
Q77 Nigel Mills: You are not transitioning them or anything like that. How long do you think limbo-land can last before it becomes absolutely unsustainable and damaging? Is it another month? Is it another six months? Could you do it for another year if you were required to?
David Sterling: I get asked this question a lot. I cannot say there is a date beyond which we will shut down. I will choose my words carefully, but I think the position we find ourselves in is unacceptable. It does not become any more acceptable with the passage of time. I never thought we could survive this long.
Q78 Nigel Mills: Your advice this time really is, “Agree a deal and get back into office, or we will have to do something else”.
David Sterling: We really look forward to an Executive coming back but, if it does not, we need ministerial intervention.
Q79 Nigel Mills: Is there a compromise, or a fudge, between real direct rule with Ministers being put in place from here, and where you are now, or is it a binary choice that you basically have Westminster Ministers?
David Sterling: It is not for me to speculate on what might happen if there is no agreement in the talks. That would be for others.
Q80 Nigel Mills: So you have not done work on any halfway houses, such as: “It would be nice to have at least a Minister who could do some important things, but we could limp on without actually having a Health Minister or an Education Minister”.
David Sterling: No, it would not be appropriate for us to speculate or plan on that basis.
Q81 Nigel Mills: Perhaps moving on to something else where you may not want to speculate or comment, is just “putting Humpty back together again” enough here, or is your view, as a very senior civil servant, that there needs to be some change in how the Executive and the Assembly are set up and operate, to make this long-term sustainable and effective?
David Sterling: One of the things that we find frustrating is that, when the Executive collapsed, a lot of work had gone into providing a draft programme for government, which is outcome-focused. Following consultation with the community at large, we had identified 12 outcomes, and, indeed, these were endorsed by the parties. People said, “These are the things that we really want government to provide for us”. There was a huge wave of enthusiasm behind the programme for government and the new outcomes-based approach, focusing very much on what works and what will make a difference to people’s lives.
If we get an Executive back and they pick up that programme for government and run with it, we could make a positive difference to people’s lives in Northern Ireland. It will be difficult and challenging. There will be some tough choices to be made along the way, but there is a prize worth pursuing.
Q82 Nigel Mills: So you are not going to say to us there are a few structural or procedural changes you would like to see to how the Executive or the Assembly work that could make it more effective in delivering what people want to see. A number of people are frustrated at how many things get blocked or not progressed under the current system. Perhaps we could find a way of doing better.
David Sterling: It is fair to say that, in talks, the parties themselves have been looking at these issues. Again, my understanding is that there is a broad measure of agreement that, if they reach an overall agreement, there are a range of things they would want to do in terms of improved governance and better machinery of government, which would address some of the problems we have faced in the past.
Q83 Nigel Mills: If I asked you to rate how effective you think government in Northern Ireland has been on a scale of one to 10—not in terms of policy but in terms of delivering what the policies were—where would you pitch the score?
David Sterling: That is a hard one for me to judge. If I were to offer an opinion like that, I would need to have some benchmark in mind. Forgive me; I will not be drawn on that.
Q84 Nigel Mills: I had a feeling that we might get there. Mr Widdis, you had some experience in Wales. How effective is the Welsh Assembly compared with Northern Ireland? Is there anything that can be learned from that?
Hugh Widdis: Just for context, my experience in Wales was on the internal Audit and Risk Assurance Committee for the National Assembly for Wales, rather than working directly for the Assembly or any governmental body in Wales. The Welsh Assembly Commission does an extremely good job at running its business. I also have a background working for the Northern Ireland Assembly, and I can assure you that the Northern Ireland Assembly Commission does an extremely good and efficient job at running its business.
Both organisations have things to learn from each other. Both organisations have learned from each other. Interchanges, such as me going there or different people going from different places, including from this institution and indeed the Scottish Parliament, only strengthen them and make them ever better at what they do. If you are asking me to say directly whether the Administration in Wales more generally and the departments in Northern Ireland compare well against each other, I would not be drawn into that in too much detail.
Q85 Chair: We are almost touching on political issues and those that relate to the way that, necessarily, there are political structures in Northern Ireland that do not relate in the same way to Wales and Scotland. I rather suspect, without putting words into the mouth of my colleague, that that is what we are rhetorically referring to, which is of interest in our investigation into democracy and how that might function into the future.
Q86 Ian Paisley: There are a number of what I would describe as perennial showcase events in Northern Ireland and some very, very special and one-off tourism events, which are massive for showcasing Northern Ireland and for helping the local economy in different regions: for example, the Irish Open, which is going to take place next year, the perennial of what was formerly the Milk Cup, the North West 200 and other massive events, as well as a bid for Northern Ireland to play a significant role in the Commonwealth Youth Games. These are all very, very important and things that give a very, very good beat to what Northern Ireland is very, very good at doing. Can you guarantee us that all the money to keep that show on the road is going to be made available to those perennial and one-off events?
David Sterling: I cannot answer that at the moment, because in the absence of a budget for next year the Department for the Economy, through which most of the funding for those events would flow, could not have certainty on what money it is going to have available and the extent of support it will be able to provide. I would need to come back to you with some further detail on that.
Q87 Ian Paisley: I am mindful that fairly significant organisations might be listening to that answer. You are in contract with some of them.
David Sterling: Yes.
Q88 Ian Paisley: It would be unimaginable that any of those events would not take place.
David Sterling: Put it this way: I have no reason to doubt that any contractual commitments would be fulfilled. I would be surprised at that, but it would be wrong for me to give any sort of assurance or guarantee about funding for events. I do not have the information about that at the moment, but we can come back to the Committee with further detail on that.
Q89 Ian Paisley: I would really appreciate that, and I think the Committee would appreciate that. Many of those organisations are volunteer organisations, and many of them are from outside Northern Ireland coming in. It would be very, very useful to give them assurances as soon as possible.
David Sterling: Yes.
Chair: Gentlemen, thank you very much indeed. The evidence you have given before us today has been very useful. I appreciate the constraints under which you operate. I also would like to reiterate our admiration and thanks for the hard work you have put in, which is unprecedented, as you pointed out, despite previous periods of direct rule. The length of time that you have had to manage the shop without the involvement of Ministers is unique and unprecedented. You certainly have our admiration for the way in which you have conducted that task.
Lady Hermon: We are unanimous in that.
Hugh Widdis: Thank you, Chair.
David Sterling: Thank you, Chair.
Chair: Thank you very much indeed.