«OFFICIAL REPORT (Hansard) Budget 2015-16: Department for Social Development 4 December 2014 NORTHERN IRELAND ASSEMBLY Committee for Social ...»
Committee for Social Development
Budget 2015-16: Department for Social
4 December 2014
NORTHERN IRELAND ASSEMBLY
Committee for Social Development
Budget 2015-16: Department for Social Development
4 December 2014
Members present for all or part of the proceedings:
Mr Alex Maskey (Chairperson)
Mr Mickey Brady (Deputy Chairperson) Mr Jim Allister Ms Paula Bradley Mr Gregory Campbell Mr Maurice Devenney Mr Stewart Dickson Mrs Dolores Kelly Mr Fra McCann Mr Sammy Wilson
Ms Deborah Brown Department for Social Development Mr Andrew Hamilton Department for Social Development Mr Ian Snowden Department for Social Development Ms Joyce Bill Social Security Agency The Chairperson (Mr Maskey): This morning, from the Department for Social Development (DSD), we have Andrew Hamilton, Deborah Brown, Ian Snowden and Joyce Bill. I formally welcome you to the meeting. I invite you to give us your best performance. [Laughter.] I remind members that the Committee for Finance and Personnel wants to collate all responses by tomorrow. We are aware of that and have asked Kevin and the officials to prepare a draft response. We are anxious to hear from the Department directly about the proposals for the draft Budget 2015-16. Without any further ado, Andrew, I hand over to you and your colleagues to present those proposals.
Mr Andrew Hamilton (Department for Social Development): Thank you, Chairman. I will say a brief few words of introduction and outline the very big picture. I will then hand over to Deborah, who will go through the details of where we propose to find the savings.
Thank you for giving us the opportunity to present the proposals for the draft Budget 2015-16. We have provided the Committee with information on our proposed approach to manage the allocation and a copy of the consultation document that we intend to publish this morning. Our proposals are subject to change as we go through the consultation process and take account of the views expressed. There is also a fairly important bilateral meeting planned with the Finance Minister, and we will also make representations to that.
At the outset, I emphasise that the proposals do not in any way impact on the benefits that are paid to claimants in the social security system, as those are funded through an entirely different budget that is 1 managed by the Treasury. In the paper, we have sought to outline the approach we have adopted to arrive at the proposed allocations. We have also provided additional details on the in-year and recurrent pressures the Department faces and how those will be managed. There is also a preliminary assessment of the impact of the draft Budget on service users, and we will want to look much more closely at the equality impact of our proposals over the next few weeks.
To help to guide us on where reductions should fall, the Minister provided us with a strategic steer on his priorities. It is important that I outline those for you at the start. Essentially, there are four parameters within the constraints of the Budget for which we should seek to provide an acceptable level of service in discharging our statutory responsibilities. People depend on the social security service, and we have to make sure that we provide an adequate service to meet their needs.
As far as possible, we should seek to protect the level of support that is available from the social fund and to help people to continue to live independently in their own homes through the Supporting People programme. You will see that we have protected those programmes and, in that way, are trying to alleviate the harsher implications of the most vulnerable people who depend on our services. As a result of that, management and overhead costs will need to be kept as low as possible so that we can sustain our front-line services. Also, when there are alternative sources of finance for specific services, we should consider accessing those to get the most out of the Department's budget. An example of that would be financial transactions capital (FTC).
We also have to honour our existing capital commitments. As with any capital budget, we have a number of capital commitments, and we have to see those through. For housing, we are trying to strike an appropriate balance between meeting the needs of new and existing tenants. We want to sustain our investment in efforts to combat fuel poverty and, as I said, we will want to exploit the potential of other funding sources such as financial transactions capital. We cannot keep everything at the same level as last year, but we want to try to sustain urban regeneration investment as far as we can. Those are the strategic priorities that have guided us as we brought forward our proposals.
The DSD baseline budget is £654 million, of which approximately £125 million relates to housing benefit rates, which has been ring-fenced. So our non-ring-fenced baseline is about £528 million, and it is against that budget that the cuts have been levied. The gross reduction is about £79 million, which is about 15% of our non-ring-fenced baseline. Against that, we have been given an additional allocation of £15·1 million, which is about 2·3% of our budget. That was very gratefully received, but it is a significantly lower proportion of our budget when compared with other Departments. The Department also faces a number of recurrent pressures, for which no funding has been secured and which we will have to continue to fund in future years. Those amount to £14 million and largely relate to pay and price, housing reform and the social fund.
In addition to those recurrent year-on-year pressures that have to be financed with recurrent money, we also face a number of in-year pressures, which amount to about £20 million. Those involve £2 million for the child maintenance reform programme, but a large proportion is staff costs. You will hear more about the implications for staff as we move through the detail, but, essentially, we will need access to a voluntary exit scheme, and that will not be available until midway through the year. That scheme will apply to the whole of the Civil Service, and funding will also need to be accessed by the non-departmental public bodies. That means that we will have to finance salaries for at least six months of next year, and that is contributing about £5 million for the Department and upwards of £8 million for the Housing Executive.
We are also facing pressures on the capital side of the landlord function, and we need to put some money into that next year. We are also facing pressures in urban regeneration, where we want to alleviate some of the harsher effects during the year, so there is a £2 million requirement there.
After taking account of the £79 million of cuts less the additional allocation of £15 million, which gives us £64 million, we then add the recurrent pressures of £14 million, which brings us up to £78 million.
When we add the non-recurrent pressures of £20 million, it leaves us looking at the need to make savings next year of around £98 million or £99 million.
That is the big picture. I will now hand over to Deborah, who will set out how we propose to manage that.
Ms Deborah Brown (Department for Social Development): Our starting point with that level of cut was to apply a 15% top-slice. However, we recognised that that needed to be adjusted to take
Table 2 of our paper outlines the recurrent cuts, and the 15% cut has been made against the baseline in the Social Security Agency (SSA) of £246 million, after removing £36 million for welfare reform and £19 million for the social fund. As explained earlier, savings cannot be made against the social fund as it is a demand-led expenditure and, therefore, must be protected. Similarly, we cannot make savings in welfare reform, as we anticipate pressures in the event that it proceeds.
It is anticipated that, to manage that level of cut, a reduction of funding for approximately 650 posts in the SSA will be needed. However, it is anticipated that approximately 300 new posts will be required for welfare reform, so there will be a net impact in that area of approximately 350 posts. Such a cut will inevitably have an impact. It will impact on clearance times, financial accuracy rates and, potentially, on increased rates of fraud and error.
In the Housing Executive, a £25 million cut equates to a cut of 15% and, in addition, £10 million can be managed through a reduction in loan repayments. That will have no impact on services. A range of actions is being considered by the Housing Executive for that level of cut, which will remove all the subsidy to the landlord function. It will also impact on regional activities and will inevitably have an impact on staffing. The Housing Executive has submitted a business case for a reduction of approximately 300 posts, but that could rise as high as 400. A £7 million cut is proposed for urban regeneration, which equates to approximately 12%, which is roughly the same cut that is in the draft Budget paper. That will include a reduction in neighbourhood renewal funding of approximately £3 million and further reductions in areas like Ilex and the Laganside function. In urban regeneration, to manage this level of cut, it is anticipated that there will be a reduction in funding for approximately 30 posts, but a further reduction of 145 will be required by April 2016 to manage the move of this function under the reform of local government. It must be remembered that this reduction in the number of posts would have been required regardless of the Budget cuts.
In the core Department, we anticipate reducing funding for approximately 75 posts in a range of our back office functions. After removing the posts that are affected by the reform of local government, we anticipate reducing the Department's number of posts by approximately 8%.
To manage the in-year pressures of £20 million as outlined by Andrew, funding will be made available from the SSA budget, as not all the welfare reform moneys will be required in 2015-16. However, this will need to be reinstated in 2016-17 to meet the pressures of welfare reform on the basis that it proceeds. This funding is available only because of the continued delays in welfare reform and the fact that some costs will be incurred only with the passage of legislation.
Table 3 in our paper outlines the proposed allocations after taking account of all those issues in order for the Department to remain within its revised allocation of £464 million. The Department is also pulling together its proposals for the change fund — a pot of £30 million — and we will come back with any proposals that are made under that.
Let us move on to capital. The proposed allocation for capital is £17 million lower than that provided in the current financial year. It provides for £216 million of expenditure against receipts of £97 million. If receipts at this level cannot be generated, it will reduce expenditure accordingly. The allocation includes £2·3 million of financial transactions capital and £10 million for the Together: Building a United Community (T:BUC) fund, and they cannot be used for any other purposes. That means that, when we exclude T:BUC and the FTC, our comparison with the 2014-15 baseline shows an effective reduction of £29 million.
This is a particularly challenging settlement, given the Department's range of programmes, targets and new initiatives. We set out in the paper how the £97 million of receipts will be met through the housing association grant (HAG) loan and grant repayments, house and landlord sales, loan repayments, crisis loan repayments and the urban regeneration receipts. Against that allocation, £47 million is currently required to meet existing commitments, including the FTC and T:BUC. Some £10 million has been allocated to T:BUC to support the development of shared neighbourhood pilots, and £16 million has been identified for crisis loans, which are paid to fund people in times of extreme need for crises.
They are used to meet daily living expenses or can be used to cover rent in advance of other accommodation costs, fuel and debt. It can be provided to help if someone has suffered a disaster like a flood or a fire. There is also an allocation to jobs and benefits office (JBO) accommodation. The main elements of capital for SSA include the FTC of £2·3 million for the north Belfast JBO and £2·8 million for the development of the Strabane JBO, which is being taken forward as a joint project with 3 the Department of Agriculture and Rural Development (DARD) and is contractually committed. Some £15 million is also being allocated to urban regeneration as a contractual commitment.
I turn now to the allocation of the balance. It is proposed to fund £95 million for 1,500 social homes and £3 million for land purchases. We intend to bid for the additional funding to achieve the target of 2,000 social homes. Some £10 million is available for co-ownership, and we hope to be able to increase that through in-year monitoring rounds. That £10 million will provide for 330 new homes.
Some £10 million is allocated to capital investment in existing stock, taking forward work on tower blocks, non-traditional housing, including no-fines and bungalows, as well as high-priority development. The affordable warmth programme will retain its existing level of budget cover of £16·5 million. Likewise, disabled adaptations will retain £6 million. This settlement does not allow us to provide the current level of funding for renovation grants, which will be reduced by £3 million to £10 million; that includes disabled facility and home repair assistance grants, both of which are mandatory.
Demand has been relatively consistent in recent years, so this could present a pressure in a year when the Housing Executive and the Department have little scope to manage it. Some £3 million is also allocated to the Building Successful Communities pilots. Master plans are being developed and will allow implementation to start. Vesting and other programmes have been allocated £4·3 million.
Some £25 million in total has been allocated to urban regeneration, based on £5 million in receipts.