£1.23m Airport bail-out among 27 measures needing special approval

Nichola Mallon’s instruction to provide emergency funding to City of Derry Airport was the only Ministerial Direction at her department during the COVID-19 emergency.

By Kevin Mullan
Tuesday, 15th June 2021, 4:17 pm
Updated Tuesday, 15th June 2021, 4:18 pm

A report by the Comptroller and Auditor General, Mr. Kieran Donnelly, shows that the provision of £1.23 million in additional support for the airport last November required special intervention by the Infrastructure Minister.

According to Mr. Donnelly’s ‘Second Report – Overview of the Northern Ireland Executive’s response to the COVID-19 pandemic,’ DfI’s support for the Eglinton air hub was one of 27 special COVID-19 directions across all Stormont departments - the majority (15) were made by Economy Minister Diane Dodds in order to fast track business support grants.

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City of Derry Airport.

In the report Mr. Donnelly tells us that the Department for Infrastructure spent hundreds of millions of pounds on a range of initiatives during the crisis but only the Derry airport support package required a direction.

He states: “DfI told us that its 11 COVID-19 related initiatives, each in excess of £1 million, have a total estimated cost of £224.4 million.

“The majority of DfI’s additional financial support covers: loss of income in Translink, NI Water, Driver and Vehicle Agency (DVA), Belfast City and City of Derry Airports, car parking income and Rathlin and Strangford ferries; reduced licensing costs; and support for businesses through the deferral of tariff increases on non-domestic water rates.”

Mr. Donnelly declares that the only funding that required a ministerial direction was the provision of £1.23m for City of Derry Airport. That was part of a £4.4m package that was rolled out to both the north west aviation hub and Belfast City.

Emergency funding was approved last November.

There was, he notes, a ‘three-month support package to keep air travel to Great Britain open’ and that following this ‘a short term support grant (based on 50 per cent of the airport’s deficit for the financial year) was developed to help City of Derry Airport to remain operational’.

The report explains that ‘Ministerial Directions’ are when department Accounting Officers are directed to proceed with a spending proposal, despite concerns that the spending may breach regularity or propriety principles or may represent poor value for money.

As a result of the emergency there were more such interventions over the period from March 2020 to May 24, 2021 (27) - all related to COVID-19 - that in the previous 10 years.

The report sets out that, at March 31, 2021, the total estimated cost of the COVID-19 response relating to the north is estimated to be just over £6.2 billion (including an estimated £1.5 billion covering the cost of the Coronavirus Job Retention Scheme (the furlough scheme).

In his previous report (published on September 2, 2020), Mr. Donnelly reported a cost of over £2.0 billion but this excluded any estimate for furlough costs.

The £6.2 billion estimate comprises two main elements: the estimated cost to local departments of a range of measures to combat the impact of the pandemic (£3.9 billion)1; and the estimated cost of UK-wide schemes which apply to the north (£2.3 billion) covering, for example, increasing welfare payments.

Over 75 per cent of the total estimated cost of initiatives (or measures) required by departments relate to activities across three departments:

• Department of Health (DoH) (£1.06 billion (27 per cent) working at the front line, treating infected patients);

• Department of Finance (DoF) (£1.03 billion (26 per cent) offering a range of rate reliefs for individuals and businesses; and

• Department for the Economy (DfE) (£0.95 billion (24 per cent) offering support to local businesses struggling to survive as a result of the impacts of the pandemic.

A further £1.67 billion has been made available for almost 40,000 business loans, under the Bounce Back Loan Scheme and the Coronavirus Business Interruption Loan Scheme.

A further 14 loans have been approved for payment under the Future Fund.

Mr. Donnelly said: “February 2021 marked the anniversary of the first confirmed COVID-19 case in Northern Ireland.

“One year on and the pandemic continues to have a significant impact on our lives. Hospitals have been operating at almost full capacity and many non-COVID-19 related services (including cancer services) have had to be postponed.

“The impact on our economy has been profound with a drop in economic output of around 10 per cent over 2020. Wellbeing has suffered as we comply with restrictions and tragically, many lives have been lost.

“The Executive was required to introduce multiple measures quickly to contain the disease and support vulnerable individuals and businesses.

“My report gives an update on the cost of the most significant of these measures, but no assessment of the value for money of individual measures has been made at this point.

“There will undoubtedly be important lessons to learn, and this report provides my office with the basis for a programme of work evaluating how public money has been spent during this period.

“For example, as an initial step, we have begun three pieces of work to review:

• Arrangements surrounding the supply of personal protective equipment in Northern Ireland;

• The provision of grants through the Small Business Grant Scheme; and

• Administration of the Sports Sustainability Grant Scheme”.

Over the period from March 2020 to May 24, 2021, 27 COVID-19 related Ministerial Directions issued to departments had been notified to the NI Assembly Public Accounts Committee, as follows:

• DfE - 15 relating mainly to business support grant schemes;

• DoH - 5 relating to additional financial support to health care workers, carers and various health organisations;

• DoF - 3 relating to various financial assistance schemes;

• Department for Communities - 1 relating to Supporting People and homelessness sector frontline staff;

• Department for Infrastructure - 1 relating to funding for the City of Derry Airport;

• Department of Education – 1 relating to Special Schools Free School Meals; and

• The Executive Office - 1 relating to the Travel Agent support scheme.

Following a request from Stormont’s Public Accounts Committee (PAC), the Department of Finance has agreed that, going forward, Ministerial Directions will be published on its website, once PAC has been notified of them.

Last December, in evidence to the PAC, Mr. Donnelly told MLAs that the Permanent Secretary at DfI had raised value for money concerns about the £1.233m support package for City of Derry Airport.

Katrina Godfrey, DfI Permanent Secretary, wrote to the Auditor General Kieran Donnelly on November 16 about funding for the airport.

Mr. Donnelly, was asked about Ms. Godfrey’s assessment by the Committee Chair, William Humphrey: “What’s your opinion, Mr. Donnelly, on the assertion by Katrina Godfrey around the issue of value for money?”

He replied: “It’s always been the department’s assertion that you couldn’t construct a business case to actually have an economic appraisal that would give you a positive value for money verdict on the rules, as they go, for appraisals.

“There are arguments wider than that in terms of - maybe intangibles - in terms of benefits to the local community in the north west, and they are usually in these types of directions, the wider benefits that you can’t put a figure on, that are used to approve a direction.”

At the same meeting Mr. Donnelly confirmed there have been four ministerial directions of funding for the airport over the past 20 years or so - in 1999, 2007, 2011 and now in 2020.

He told the scrutiny committee: “If you do an appraisal by the book, you know, the airport isn’t going to wipe its face and financially it will need ongoing subsidy.

“That’s just a fact of life on it.”