Tag Archives: cuts

Northern Ireland spending on waterways

Sammy Wilson [DUP]: Looking through the list of capital projects, I see lock gates on the Shannon, bridge repairs on the Grand canal, enhancements of the Grand canal towpath, the Shannon Blueway and the multi-activity trail at Carrick-on-Shannon. Nearly every one of these projects is in the Irish Republic. Does the Minister see her role as fighting for projects in Northern Ireland or simply sitting there, handing over our money for projects in the Irish Republic?

Mr Wilson might not have noticed, during his terms in ministerial office, that waterways capital projects in each jurisdiction are paid for by the government of that jurisdiction. So NI money is not spent on capital projects in the republic; if NI politicians want more money spent on waterways improvements [as opposed to running costs] in Northern Ireland, it will have to come from the NI budget.

Unfortunately Mr Wilson’s party colleague, and successor as Minister of Finance and Personnel, Simon Hamilton, does not share Mr Wilson’s enthusiasm for erecting lock gates or towing-paths on the Erne [or whatever it was he wanted], for he has cut DCAL’s Budget [157-page NI budget and 28-page statement, both PDFs] and, in consequence, the amounts to be allocated to Waterways Ireland.

DCAL is wondering how to apply the chopper and is seeking views; a 190-page consultation document can be downloaded here [MS Word *.doc]. Neither DFP nor DCAL makes it easy to find the change from last year’s allocations, but DCAL says that the “savings” to be made by Waterways Ireland will be £468,000. As of today, that’s €630,727.

The Word document points out that

The budgets for the North/South Bodies are agreed by the North South Ministerial Council and are dealt with under different arrangements.  They are therefore outside the scope of this exercise.

So the document can’t say what the “front-line impact” of the cuts to Waterways Ireland’s allocation will be.

15% of WI’s current budget is paid by Northern Ireland and 85% by the republic. If the savings shown above are all to the current budget [which is not clear, though WI’s NI capital budget was pretty small anyway], then the total cut in WI’s current spending will be €5,204,847.

Note again that, without spending a lot more time on this than I currently have available, I cannot say from what base figure the cuts or savings are to be made.

Respondents to DCAL’s November 2014 consultation on the draft budget included only one who discussed waterways:

There was one response who stated that other sectors should be cut and funding to Waterways Ireland should be increased.

That was from an individual; it appears that no organisations commented on waterways issues and I cannot see any inland waterways-related voluntary body listed amongst those who submitted their views. As in the republic, arts folk seem to have been well organised.

The DCAL page contains a link to a surveymonkey page seeking responses.

 

War over waterways: Sinn Féin -v- the Free State

I reported here that, in June 2013,the North South Ministerial Council (in inland waterways format) approved, on the same day, Waterways Ireland’s business plan and budget for 2012 as well as its annual report and draft accounts for that year. In other words, it approved the budget and plan eighteen months after the start of the year to which they applied; it approved the plans for 2012 and, on the same day, approved the outcomes.

Furthermore, by November 2013, 88% of the way through 2013, it had not approved the budget for that year (I don’t know whether it has yet done so). And, as of today (22 January 2014), WI’s annual report for 2012 has not yet been published.

I wrote:

Is it possible that one minister wants to spend very much more or less on waterways than the other does? As the total current expenditure is fixed at 85%/15%, it seems to me that one side might very well come up with a figure that the other didn’t like.

Is it possible that DCAL, run by Mr Adams’s party colleague Carál Ní Chuilín, is more keen on cross-border bodies than is DAHG, run by Fine Gael minister Jimmy Deenihan? Or are both of them struggling to find savings to pay for the Clones Sheugh, or at least as a deposit for the SEUPB?

Or could it simply be that WI is having great difficulty in cutting its expenditure to fit within the limits imposed by the RoI budget?

I then sent enquiries to Waterways Ireland, the (NI) Department of Culture, Arts and Leisure (DCAL), the (RoI) Department of Arts, Heritage and the Gaeltacht and the North South Ministerial Council. From the repsonses, and from yesterday’s statement to the NI Assembly by Carál Ní Chuilín MLA, NI Minister of Culture, Arts and Leisure, it is clear that I was right in my first para; it is possible that the first sentence of the second para is right too.

There is a major disagreement between the northern and southern departments about the level of cuts to be applied to Waterways Ireland’s budget and it is not clear what mechanism can be used to resolve it. DAHG, applying Irish government policy, wants bigger cuts than DCAL does.

NSMC

After each North South meeting, the secretariat issues a rather bland communiqué; the inland waterways ones are here. I suppose that the secretariat can’t be expected to write “There was a blazing row at yesterday’s meeting, skin and hair flying, and the ministers aren’t speaking to each other”. I mean, they wouldn’t write that even if it were true, which I’m sure it isn’t.

On 9 December 2013 I wrote to NSMC (I omit salutations and irrelevancies here):

Are you able to say anything about why the NSMC Inland Waterways did not approve the 2012 business plan and budget for Waterways Ireland until eighteen months after the start of the year in question? As far as I can see from the minutes for meetings since 2007, that is a highly unusual degree of lateness.

NSMC replied on 11 December (with a copy to the RoI Department of Foreign Affairs):

[…] this is an issue for both Sponsor Departments and they can be contacted directly.

On the same day I asked:

Have you any responsibility for seeing that the terms of the WI Financial Memorandum [PDF] are observed? It seems to me that they have been ignored in this case.

Despite a reminder, I have not yet received a reply.

DCAL

I wrote to DCAL on 10 December 2013:

I would be grateful if you could help me to understand why the North/South Ministerial Council did not approve the 2012 budget and business plan until 18 months after the start of the year to which it applied.

DCAL responded on 11 December 2013:

Waterways Ireland had submitted a draft 2012 Business Plan detailing the activities required to achieve goals set out in their 2011/2013 Corporate Plan. Recognising the challenges presented by the economic climate there were extended negotiations to agree the 2012 budget. The DCAL Minister raised concerns about going beyond the required savings advised by both Finance Departments. Minister Ní Chuilín therefore sought, and received, assurances from Waterways Ireland that frontline services would be maintained.

I sent follow-up queries on 16 December:

I am not entirely clear on the implications of your third sentence: “The DCAL Minister raised concerns about going beyond the required savings advised by both Finance Departments.”

Do you mean that Waterways Ireland proposed to cut its spending by more than the percentage cuts suggested by the Finance Departments? Or to spend less than it received (or expected to receive), in euro, from the two sponsor departments? If so, why did WI want to do that?

I would also be grateful if you could tell me what WI’s “frontline services” are and why they are deemed to be more important than other services.

And I would be grateful for more information on the reason for the extended delay in approving the busiess plan and budget: eighteen months after the start of the year, which was presumably even longer after the plan was drafted. I would be surprised to find that seeking and receiving assurances took eighteen months.

Did the delay result in a breach of the terms set out in the Financial Memorandum governing WI’s affairs?

I would also be grateful if you could tell me what delayed the approval of WI’s 2013 budget. I note from the NSMC minutes that it was not approved in June 2013; the matter is not mentioned in the minutes of the November 2013 meeting but, on 19 November 2013, the RoI Minister for Public Expenditure and Reform replied to a written question from Gerry Adams TD saying, inter alia, that “The 2013 Budget allocation to the Body are subject to on-going discussion by the two Sponsor Departments.”

That suggests that approval of the 2013 budget is at least eleven months late. I note too that the 2014 business plan and budget, and the Corporate Plan 2014-2016, were not approved at the November NSMC meeting. And I note that An Foras Teanga [Foras na Gaeilge + Tha Boord o Ulstèr-Scotch], the other North-South body sponsored by your department and the Department of Arts, Heritage and the Gaeltacht, was also, in November, awaiting approval of its 2013 budget.

There are two further items on which I would be grateful for information:

(a) is it proposed that the Hutton recommendations be applied to Waterways Ireland (and other bodies in the North-South pension scheme)? If so, what is the expected effect on WI’s budget and on staff take-home pay?

(b) WI’s accounts for 2011 (the latest I have seen) suggest that your department paid less than 15% of the money WI received from its sponsor departments. Did your department pay 15% in 2012 and 2013 and will it do so in 2014? And how do you take account of the effect of currency fluctuations on WI’s income denominated in its working currency, the euro?

Despite a reminder, I have as yet received no reply.

DAHG

I wrote to DAHG on 26 November 2013 with several questions; I include below only that relevant to this posting.

On 19 November 2013, in a written answer to Gerry Adams, Jimmy Deenihan said […]: “The 2013 and 2014 Budget allocations to the Bodies are subject to ongoing discussion by the two Sponsor Departments and will require, of course, formal approval by the NSMC.”

I would be grateful if you could tell me (a) why Waterways Ireland’s budget had not been finalised when 88% of the year had passed and (b) how that affected budgetary management in the Body.

The department replied on 3 December 2013:

As you are aware, Waterways Ireland is co funded by the Department of Arts, Heritage and the Gaeltacht and the Department of Culture, Arts and Leisure, Northern Ireland.   The 2013 Business Plan and budgets have been discussed by Ministers at NSMC Inland waterways meetings and key priorities for 2013 identified.  Indicative budgets have been provided by the Departments to Waterways Ireland as a pragmatic measure for business planning and operational purposes and the body is operating within these indicative allocations.

On 9 December I replied:

Thank you. That answers my question (b) pretty well. However, you haven’t answered (a): why Waterways Ireland’s budget had not been finalised when 88% of the year had passed.

I would be grateful for information on the causes of this extraordinary delay.

I have been wondering whether the problems of WI’s budget were very difficult to resolve or whether there was some major disagreement between the northern and southern ministers. If there was such a major disagreement, what was it about?

The department replied on 17 December 2013:

The Departments are still in discussions to agree the budgets.  The position is The Department of Culture, Arts and Leisure in Northern Ireland is not prepared to agree a 2013 budget for the Body in excess of a minimum efficiency saving of 3% set out in the two Departments of Finance Funding Framework for the North South Bodies. As you are aware from the Parliamentary Question Reply this Department’s REV provision for Waterways Ireland for 2013 is €25.463m, a 6% efficiency saving on 2012. Given the pressures on the public finances and on the Departments budget allocation, the Department is not in a position to provide any additional funding that would maintain the proportionality of funding. 85% of current funding is provided by Department of Arts, Heritage and the Gaeltacht and 15% by Department of Culture,  Arts and Leisure, Northern Ireland.

I responded on 18 December 2013:

[…] Just to make sure I understand you properly: when you say “a 2013 budget for the Body in excess of a minimum efficiency saving of 3%” am I right to presume that the phrase “in excess” applies to the savings or cuts rather than to the budget itself?

I also asked three questions about items of background information relevant to this topic:

1. I am less familiar with the NI Executive’s budgetary process than perhaps I should be. I gather that there are multi-year budgets, linked to a programme for government, with annual estimates and possibly supplementary estimates. The multi-year element seems to be stronger than in Irish budgets, but I wonder whether (aside altogether from the current economic situation) it is difficult to make decisions within the constraints of the different budgetary timescales.

2. I have not yet checked all Waterways Ireland annual reports, but reading that for 2011 suggests that DCAL paid slightly under 14%, rather than 15%, of WI’s current expenditure. Are minor deviations from the 85/15 ratio unavoidable? Do they balance over time?

3. Do currency fluctuations affect the amounts actually paid by the two departments? If so, how are the effects taken into account?

I have not yet received a reply.

Waterways Ireland

On 6 January 2014 I wrote to WI:

I would be grateful if you could tell me the effect on Waterways Ireland of the continuing dispute between its sponsor departments over WI’s budgets and business plans.

On 8 January WI said:

Waterways Ireland enjoys a supportive and positive relationship with both departments.

On 14 January I said:

I am very glad to hear it, but I don’t recall asking a question about that.

I repeated my original question, to which I have not had a reply. As with NSMC, I don’t really expect WI to be able to say anything undiplomatic. However, I would have thought that there must be some inconvenience in working to “indicative allocations”. I wonder whether they are based on DCAL’s preferred level of cuts, DAHG’s preferred level or some compromise. And if compromise is possible on the indicative allocations, why can’t the main issue be sorted out?

Furthermore, the delay in publishing the 2012 accounts suggests that there has been some real difficulty in operating under the indicative allocations regime. Or perhaps there is some other row altogether.

NI Assembly

Reporting yesterday to the NI Assembly on the November NSMC meeting, the NI Minister confirmed that there was disagreement.

Karen McKevitt [SLDP, South Down]: […] The chief executive set out a strategic direction for Waterways Ireland for 2014-16. In that, she mentioned budget efficiencies. Can the Minister highlight to the House what those might be?

Carál Ní Chuilín [SF, Belfast North]: The Member is right: the new chief executive gave us a very good and detailed presentation. Indeed, the Member will be aware — if she is not, she will be when I finish my answer to her question — that there have been additional pressures on everybody across the board in achieving efficiencies. However, as I have repeated to the Member and to other Members, and despite the meetings that I have had with Minister Deenihan around any proposed additional efficiencies that the Irish Government are saying are required, I am totally reluctant to go above and beyond any efficiencies that we agreed previously, and I have stated that to the chief executive of Waterways Ireland. That is the position. Following that, the Finance Departments and, indeed, officials and Ministers will hopefully be submitting additional or new budget plans very soon. I think that issues relating to any agreement to additional efficiencies lie beneath the Member’s question, but I can categorically state that I have not agreed to those.

“Efficiencies”, by the way, means “cuts”.

The importance of waterways to Sinn Féin

I have remarked several times here that Sinn Féin asks many Dáil questions about waterways, notably the Clones Sheugh, with Maureen O’Sullivan providing recent competition. I wrote elsewhere recently:

Waterways Ireland is a political creation: its very existence reflects a nationalist and republican desire to show the benefits of all-Ireland institutions — and a unionist desire to confine such institutions to areas of minor importance. […]

In prosperous times, managing recreational waterways is a feelgood activity, combining opportunities for local and national politicians to get their photos in the papers with relatively low risk of political controversy. Nonetheless, WI had to tread warily, especially in its early years; it has almost (but not quite) entirely avoided such controversy.

Timing

I don’t know if there is ever a good time for disputes between your paymasters, but it’s not as if Waterways Ireland, and its new CEO, didn’t already have enough to worry about. To quote again from the same piece:

Compared with British Waterways and C&RT, Waterways Ireland has very little real property from which it might derive an income — and very few other sources of income. According to its accounts for 2011 (the latest available), its total income was over £38 million but it earned less than half a million pounds from licences, property, interest, operating income (including charges to waterways users) and other sources. The rest came from its two sponsor departments.

Charges to boaters have traditionally been low or non-existent: zero for a boat kept on the Erne or on one of the Shannon lakes, with modest charges for passing through Shannon or Shannon–Erne Waterway locks; on the Grand, Royal and Barrow, an annual charge of €128 covered lock passages and mooring. There was no licence fee. Waterways Ireland has begun to impose slightly higher larger charges but may meet resistance.

But there is no immediate prospect of imposing charges high enough to make a significant difference to Waterways Ireland’s budget. That budget is set by the North South Ministerial Council: each government pays for capital works (eg harbour improvements) carried out in its own jurisdiction, while the running costs are paid in a ratio intended to reflect the proportion of the waterways in each: 15% by the Northern Ireland Executive and 85% by the republic’s Government.

Some difficulty may be caused by different timings of the budgetary processes in the two jurisdictions, but a greater problem is that the fixed ratio can lead to deadlock. WI’s budget for 2012 was not set until July 2013, eighteen months late: its budget, business plan, annual report and draft accounts for 2012 were all set on the same day. Final accounts for 2012 had not been published and WI’s budget for 2013 had not been agreed by December 2013.

The cause of the delay was that the republic’s government wanted to cut the budget by more than the Northern Ireland Executive did. The Irish economy has had severe problems in recent years and the government was unable to honour its undertaking to pay for the restoration of the Ulster Canal from Lough Erne to Clones (a short stretch that crosses the border several times). Public expenditure has been cut for all government departments and public bodies but the scale of the cuts is larger than the Northern Ireland minister wants to see. If the republic’s government gets its way, by 2016 WI’s budget will be one third lower than it was in 2010.

That is not the only financial problem that WI faces. Staff transferred to it from Irish government departments carried with them their entitlements to pensions of half of final salary plus retirement lump sums of one and a half times final salary. And, as is the norm in the civil service, the pension system was unfunded. WI had quite a few staff in their fifties and, as they now retire, their pensions and lump sums have to be met out of WI’s normal income from its sponsor departments. The pace of retirement may even by accelerated by a desire to avoid charges arising from the Hutton pension proposals.

During the era of the Celtic Tiger, Waterways Ireland prospered: it acquired much new equipment, built new offices and developed and improved facilities for boaters and other users. It now faces a much more difficult financial future and it is hard to see how it can avoid reducing its level of service. At the same time, its new CEO is — rightly — determined to continue widening the appeal of the Irish waterways to more types of users: walkers, cyclists, anglers, canoeists and others.

Maybe the two ministers might get their act together.

I will report later on other items covered in Ms Ní Chuilín’s statement; the bad (if unsurprising) news is that she is still stuck on the sheugh, but perhaps she can persuade the Imperial Treasury to pay for it.

Waterways budgets: cut by one third in six years

I wrote here and here about the RoI budgetary allocations to Waterways Ireland for 2014, here about the difficulty of establishing exactly what WI’s budget is and here about some questions I have put to the Department of Arts, Heritage and the Gaeltacht on the matter.

But, while a focus on the procedural woods is important, I may have been neglecting the implicational trees. I am recalled to a consideration of the details by two written Dáil questions asked by Gerry Adams [SF, Louth] on 19 November 2013, one of Brendan Howlin, Minister for Public Expenditure and Reform, and the other of Jimmy Deenihan, Minister for Arts, Heritage and the Gaeltacht. Reading the runes is reminiscent of Kremlinology, but it seems to be possible that Waterways Ireland will have to make significant cuts in its spending, cuts that will reduce the services it provides to waterways users.

The questions and the answers

This is what Gerry Adams asked Brendan Howlin:

To ask the Minister for Public Expenditure and Reform the total budget for each All Ireland Body established under the Good Friday Agreement for the years 2010 to date in 2013; and any proposed budget reductions to the these bodies currently being considered.

And this is what he asked Jimmy Deenihan:

To ask the Minister for Arts, Heritage and the Gaeltacht the total budget for each of Waterways Ireland, Fóras na Gaeilge and Ulster-Scots Agency for the years 2010 to date in 2013; and any proposed budget reductions to these bodies currently being considered.

Ignoring the details given for bodies other than Waterways Ireland, we learn that its allocations from its two “sponsor departments”, DCAL in NI and DAHG in RoI, were:

2010 €38.99 million
2011 €35.18 million
2012 €31.15 million

These figures appear to include capital and current expenditure.

For some reason,

The 2013 Budget allocation to the Body are subject to on-going discussion by the two Sponsor Departments.

But Jimmy Deenihan said

My Department’s REV provision for Waterways Ireland for 2013 is €25.463m, a 6% efficiency saving on 2012. My Department’s Estimates provision for 2014 is €24.183m, a 5% efficiency saving on 2013.

The extent of the cuts

I don’t know how to get from a REV provision, or indeed an Estimates provision, to WI’s total budget for 2013 or 2014. One possibility is that the figures include capital and current expenditure. In that case, the RoI contribution to WI’s 2013 budget would be €21.383 million current and €4.080 million capital [PDF; see p160]; adding the NI 15% contribution to current would bring that to about €25.156 million; the €4.080 million capital makes €29.236 million. Perhaps there might be a small amount extra for NI capital spending. By the same logic [and I repeat that I don’t know whether this is the way to do it], the 2014 Estimates provision gives €27.752 million plus NI’s capital spending. Without NI capital spending, the total is 71% of the 2010 figure, so WI will have had its total spending cut by 29% in four years.

Another crude calculation is that the 2012 figure of €31.15 million is 80% of the 2010 figure. Knock off Jimmy Deenihan’s 6% in 2013 and 5% in 2014; the 2014 total comes out again at 71% of the 2010 figure.

But that’s not all. Brendan Howlin said:

In common with other public sector bodies North and South, the North South Implementation Bodies are expected to deliver their objectives in a cost effective and efficient manner. In order to provide a framework for this, my Department and the Department of Finance and Personnel, have issued guidance to the North South Implementation Bodies requiring them to achieve a minimum of 4% efficiency savings per annum in 2014, 2015 and 2016.

So we have to cut another 4% in 2015 and 4% in 2016, by which stage the total will be just under 66% of the 2010 figure: a cut of one third in six years.

Coping

The brunt of the cuts has been borne by the capital budget; we have no figures for expected NI capital spending from 2013 onwards, but on the RoI figures capital spending by 2016 will have been cut by 70%. That seems to have been the general pattern in the Irish public service: cut capital spending first, cut staff costs last.

WI’s operating income is negligible: in 2011 it was €71,000 from licences, €120 from property and €193,000 from permits, lock charges etc, as well as a few other bits and pieces; it is almost entirely reliant on its sponsor departments. So if it is to cope with reduced departmental income, it must either devise new and significant earning opportunities quickly or make serious cuts to its services.

WI’s spending is categorised under five headings, one of which (currency gains or losses and interest) involves a tiny amount. The other four are depreciation, which can’t readily be cut, staff costs, “programme costs” and “other operating costs”.

The “other operating costs” are:

Travel
Recruitment costs
Training and conferences
Contracted in services
Compensation/provision for liability claims
Premises running costs including utilities
Health and safety
Communications
Other operating lease rental
Printing and stationery
Computer running costs
Rent
Audit fee
Marketing and promotions
Insurance and legal fees
Pension administrator costs
General expenditure.

The 2011 total was €5,026,000. None of the individual items looks as if it could provide huge savings, although I imagine each category is being shaved.

The programme costs are allocated to individual waterways; in 2011 (the latest available accounts) the total was €8,082,000, and 63% of those were incurred on the Grand, Royal and Barrow. The Royal’s programme costs were up in 2011, with the reopening, but the Grand’s were cut by 25% and the Barrow’s by 17%. You can’t keep cutting at that sort of rate every year, but I suspect that the Grand, Royal and Barrow will continue to be cut more than the Shannon, Erne and SEW (the Lower Bann cost is tiny).

WI’s main cost is staff: €21,903,000 in 2011, up very slightly on the previous year. I don’t know what cuts have been made in hours or rates (I have heard that there is an overtime ban) but I suspect we haven’t seen the last of them.

At this stage, I imagine that the easy cuts have been made; further cuts may require some combination of

  • reductions in services to users
  • major changes in work practices
  • cuts in staff costs.

There are interesting times ahead.

One small pointer

I noted that, when Jimmy Deenihan spoke in the Dáil on 16 October 2013, he said that WI’s “core activities and targets” included

… keeping the waterways open for navigation during the main boating season.

The last five words [emphasis mine] may be significant: Mr Deenihan may have been hinting that boating is no longer to be regarded as a year-round activity.

Waterways Ireland salary reductions

Annex E of the Waterways Ireland Corporate Plan 2011–2013 [PDF] ssets out the Efficiency Savings Delivery Plan:

This Delivery Plan describes the measures Waterways Ireland will implement to achieve its target savings for 2011–2013.

Efficiency Programme

The Body will realise total efficiencies of £5,229,000/€6,377,000 from 2011-2013 as shown in the Total Efficiency Table below. […]

One problem for WI is that it expects to have to increase its pension costs by €1,175,000 over the three years, which means that WI actually has to save about €7.5 million over three years. It is showing a “Reduction in Capital Spend” of €3,102,ooo over the three years, plus reductions in Admin of €1,637,000 and in Resource of €2,813,000.

Here is how WI intends to achieve the Admin savings (€1,637,000 over three years):

Increase control in administration including negotiation of reductions in rates for Back Office Managed Services, new mobile phone contract and overtime control.

And the Resource savings (€2,813,000 over three years):

Controls over maintenance costs including lockkeepers agreement, salary reductions in Ireland and overtime control.

That looks as if most of the Resource savings are going to come from the wages bill; that in turn suggests that other costs have already been cut. The Resource reductions are allocated to waterways. In descending order of size the total figures for the three-year period are:

  • Grand Canal €910,000
  • Shannon Navigation €662,000
  • Royal Canal €503,000
  • Barrow Navigation €387,000
  • Shannon–Erne Waterway €232,000
  • Erne System €70,000
  • Lower Bann €69,000