Committee for Regional Development has “No confidence” in the Department’s budgeting abilities

Having had a motion of no confidence in the DRD’s ability to budget passed in the Assembly last night (including recycling my own reference to Oliver Twist but not necessarily as cleverly), a relationship which has at best been difficult appears to have descended into outright hostility between the Committee for Regional Development on the one hand and the Minister, Danny Kennedy, and his Departmental officials on the other.

I have written before about the difficulties faced with the 2015-16 DRD budget, and I am currently preparing a piece on the Coleraine-Waterside railway Phase 2 project which points out that firstly, cancelling the project wouldn’t free any money up to fix potholes or cut train and bus fares, and secondly the contract award was signed off by both Danny Kennedy and his DUP counterpart in DFP – probably recently enough to have been Arlene Foster.

The documentation in the first link on this article is interesting, particularly the paper from Translink, and it sets out a lot of things which weren’t obvious to the public.  The first of those is the reason why Translink’s fares went up in February: while concessionary fares reimbursement for 2014-15 rose by £2 million, fuel duty rebate and rail subsidy were cut by £10 million mid-year.  A budgeted intention to use up £9 million of reserves built up in 2012-13 turned into a budgeted net loss over the three years 2012-15 of £4.7 million, and the documentation confirms that Translink’s funding will be further reduced in 2015-16, in actual fact by £13 million, a little more than my earlier estimate.

It also confirms that not only are we not suffering lower fare increases than GB, fares have gone up by rather less than inflation – including the February rise, it came to 12.5% since 2011 against inflation of 14% over the same period and an increase in GB rail fares of 22.6%.  CIE fares have risen by up to 40%, against an even more hostile political background.  Translink actually asked for an increase of 10%, which was refused to my considerable relief as a passenger – but the fare increase is estimated only to raise £4 million in additional income, a figure which may dangerously assume that passengers will simply pay up.

The risk outlined in the documentation is that net current assets will fall dangerously close to or below the safe working capital of at least £15 million in the next two years if income is not increased – taking into consideration that selling assets would firstly almost certainly see the income earmarked for capital schemes, and secondly, given that NITHCo intended to dispose of certain properties including car parks a couple of years ago but the sale didn’t proceed suggests that they could not realise what they considered the assets to be worth.

There will be more to look at with the papers on water and roads, but I’m expecting a similar pattern of funding that with the greatest efficiency savings in the world simply isn’t adequate to provide the service expected.

The question therefore comes down to this:  how can a department with inadequate baseline funding ever be expected to balance its books?  Or are Danny Kennedy and his DRD officials missing some really obvious way that could somehow address the concerns of the Committee?  Does anyone have a practical alternative?

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