Committee Reports > List of Committees > Dáil > 1940 > Committee of Public Accounts > Interim and Final Report - Appropriation Accounts 1939 - 1940

FINAL REPORT

PART I.—GENERAL OBSERVATIONS.

Minute of the Minister for Finance dated 9th December, 1940.

LAND COMMISSION.

1. The Committee notes that in view of the assurance received from the Land Commission the Minister for Finance is prepared to accord his covering sanction to the free Grant of £37 given in the case under review, subject to any observations the Committee may desire to make. Having given the matter further consideration the Committee is of the opinion that the proposal of the Minister to give covering sanction to the payment in question is not one to which the Committee would take exception.

The Committee also notes the view of the Minister on the general question of whether the powers of the Land Commission to make free Grants for construction or reconstruction of houses was implicitly limited when legislation was passed authorising the making of Grants for this purpose by the Minister for Local Government and Public Health, and desires to be informed in due course of the outcome of the discussions with the Land Commission.

PART II.—PARTICULAR ACCOUNTS.

Local Government and Public Health.

Qns. 25-80; Appendix III.

2. Under the Housing (Financial and Miscellaneous Provisions) Act, 1932, the Minister for Local Government and Public Health may make a contribution at a rate not exceeding 66⅔ per cent. of the annual loan charges incurred by a local authority in respect of money borrowed by them for housing purposes, where the Minister is satisfied that the houses have been provided for the accommodation of persons displaced by any operations of the local authority under the Housing of the Working Classes Acts, 1890 to 1931. In other cases the maximum contribution is 33⅓ per cent. of the annual loan charges.

The Committee had under consideration certain cases where contributions at the 66⅔ per cent. rate were paid although there were doubts whether payments at this rate were correct. In one housing scheme to provide accommodation for persons removed from houses in respect of which demolition orders were made, the orders in four cases were successfully appealed against in the Circuit Court, but notwithstanding this, the full contribution at the 66⅔ per cent. rate was paid in these cases. In another housing scheme 34 houses, built to accommodate persons displaced by operations of a local authority, were occupied by persons other than those for whom they were originally provided. It was also noted that included in this scheme were six houses with shops attached in respect of which contribution was paid at the rate of 33⅓ per cent. of the annual loan charges. The calculation of the contribution was based on the total cost of the dwellings and shops although the Act provides for contribution based on the cost of providing housing accommodation only, and the Attorney-General has advised that only the part of a building constructed and suitable for occupation as a dwelling house should be regarded as a “house” for the purposes of the Act of 1932. In another case 24 houses included in a re-housing scheme were let to persons who had been removed from houses which had been vacated as the local authority had declared them unfit for human habitation and had required those in control of them to execute such works as would render them habitable.

The Department contended that as the houses in question were originally provided to accommodate persons displaced by operations of the local authorities under the Housing Acts, the requirements of the Act governing the payment of contributions at the 66⅔ per cent. rate were fulfilled.

The Committee is inclined to the view that in administering the Act the Department sometimes adopts a strained interpretation of the relevant sections with the result that additional charges may be thrown on public funds. The Committee cannot regard the administration of the relevant statute in this way as satisfactory and it feels that all doubtful cases should be referred to the Attorney-General for his opinion and, if necessary, consideration should be given to the question of introducing amending legislation.

Qns. 90-111; Appendix III.

3. In connection with the grants to private persons and public utility societies for building, reconstructing, etc., dwelling-houses, the attention of the Committee was drawn to certain grants obtained by the secretary of a public utility society in February and March, 1935. It appears that the secretary, who was also a building contractor, applied for and received a grant of £45 in his private capacity for the erection of a house adjoining one erected by the society for a member (who was a son-in-law of the secretary) and for which a grant of £80 was paid to the society. Before these grants were paid, the Department’s Inspector had submitted reports giving the accommodation of the houses (one of which had a bathroom but no kitchen) and showing how the houses could be joined together to form one house which would then have a floor area in excess of the statutory limit. After the grants had been paid a further inspection was made and the Inspector reported that the houses had in fact been joined exactly as he had foreseen, and that the floor area of the house was now in excess of the maximum limit. Unsuccessful efforts were then made by the Department to recover the grants paid to the secretary, and subsequently the claim for refund was abandoned without reference to the Department of Finance. In this connection the Accounting Officer stated that it was decided not to pursue the claim for a refund as the Housing Code does not provide statutory means of recovery that could be successfully relied upon, and that the making of explicit provision will be considered in next legislation and consideration will be given to making it retrospective. It is noted, however, that subsequent legislation in connection with housing grants does not contain any such provision.

The Committee cannot but feel that the treatment of this case by the Department is open to serious criticism. In view of the Inspector’s reports before the grants were paid it should have been obvious that the intention was to join the houses together, that the floor area would then be outside the statutory limit and that, therefore, no grants should have been made. Even at this stage the Committee feels that the possibility of taking further steps towards the recovery of these amounts, which it considers to have been wrongfully obtained, should be considered.

Qns. 112-135; Appendix III.

4. The Committee has also considered the payment of grants in respect of the erection of two houses for an agricultural labourer who was also a member of the public utility society referred to above. He applied for a personal grant of £45 for one house while the society applied for a grant of £80 for the other house—this being the grant applicable where such society erects a house for occupation by an agricultural labourer. After instalments of the grants had been paid the Department’s Inspector reported that one house did not contain a kitchen and that in his opinion the houses would be joined to form one dwelling. Further inspection revealed that both houses had been let to a firm of contractors and in these circumstances applications were made, unsuccessfully, to the society and the individual concerned for a refund of the instalments paid to them. Subsequently the houses were vacated by the firm of contractors and the house for which the £80 grant had been allocated was occupied by the agricultural labourer. As, at this stage, the registration of the society had been cancelled the grant of £80 was reduced to £70 being the amount payable under the 1932 Act to an agricultural labourer who erects a house in a rural area for his own occupation, and the balance due on this grant and on the £45 grant were then paid to the applicant. The grant of £70 was paid under section 5 (1) (d) of the 1932 Act and the grant of £45 under section 5 (1) (e) of the same Act. Section 5 (1) (e) provides that a grant of £45 may be made “to any person (other than a person to whom a grant could be made under paragraph (c) or paragraph (d) of this sub-section) . . . .” The Accounting Officer stated that there is no statutory bar to payment of the two grants in question but it is not clear to the Committee that this interpretation is correct, and it considers that legal opinion should be taken on the point.

5. A grant not exceeding £40 may be made under the Act to any person reconstructing a house in his own occupation if such person derives his livelihood solely or mainly from the pursuit of agriculture or is an agricultural labourer. The Committee had under consideration a case where an applicant who applied for such a grant was considered ineligible as she did not come within the definition of a small farmer or an agricultural labourer, but in notifying her of this decision the Department intimated that if she had a son who resided with her in the house in question and who did agricultural work for hire on the land of some other person, he should make application for a grant. As this applicant had a son who complied with these conditions, the son made application for a grant, which was allowed. The question arose as to whether the son complied with the stipulation in the Act that the house to be reconstructed was “in his own occupation.” The Accounting Officer contended that this agricultural labourer applied for the reconstruction grant in respect of the house in which he lives and that the law does not stipulate the head of the household.

It appears to the Committee that this wide interpretation of the Act renders its administration difficult and open to abuse, and the Committee desires further information as to the conditions which in practice are required to be fulfilled before an applicant is paid a grant for reconstruction of a house “in his own occupation.” It would also appear to be desirable that the opinion of the Attorney-General should be sought as to the meaning to be attached to the phrase “in his own occupation.”

NATIONAL GALLERY.

6. Payment of a fully matured charge of £38 1s. 0d. for insurance of pictures undergoing repairs was postponed from the year 1937-38 to the financial year under consideration. It appears that had the payment been made in 1937-38 an excess on the vote for that year would have resulted. The views of the Committee on the practice of postponing payments which are due and fully matured with the object of avoiding an excess upon a grant, or for any other reasons, have been fully expressed in previous reports. The explanation of the Accounting Officer of the exceptional circumstances in which the payment in question was postponed is noted and also his undertaking that, in future, directions will be sought from the Department of Finance when any difficulty as to accounting procedure arises.

PRIMARY EDUCATION.

7. Attention was directed to a case in which arrears of salary amounting to £584 11s. 10d. had been paid to a teacher following court proceedings which were decided in his favour. It appeared that the manager of the school, who is regarded as the employer of the teacher, had been notified of the Department’s intention to withdraw recognition from the teacher consequent on falling average attendance, but had not himself informed the teacher of the position and the Department had sent no notice directly to the teacher. It was stated that no similar case could arise at present in view of the recent “panel” arrangements under which a teacher who has become redundant owing to a decline in the average attendance is allowed to continue to serve in his existing school until a suitable vacancy occurs. The Committee notes, however, that arrangements have been made that in future notices in reference to declining average attendances will be issued both to the manager and to the teacher concerned.

PUBLIC WORKS AND BUILDINGS.

Qns. 316-349; Appendix V.

8. The Committee considered a memorandum submitted by the Accounting Officer regarding the disposal of premises purchased for use as a Gárda barrack. This building was purchased for £500 in 1932 for use as a barrack, but it was subsequently decided by the Department of Justice that a Gárda station was not required at this place. As the property was not needed for other State use it was decided to dispose of it and an offer of £60 was accepted for it in 1937. It is clear that the property was allowed, through neglect, to deteriorate very considerably during the five years it was held by the Commissioners and that the loss incurred on sale was due mainly to this cause. The Committee, accordingly, desires to emphasize that every care should be taken to ensure that the arrangements made for the maintenance and protection of public property are adequate to safeguard against loss. The circumstances of this case indicate also the importance of definitely determining official requirements as regards buildings or accommodation before any steps are taken to acquire property and the Committee wishes to be assured that every precaution will be exercised in this direction in future.

GÁRDA SÍOCHÁNA.

9. A special rate of subsistence allowance to meet the extra expense necessarily incurred is granted to members of the Gárda Síochána on temporary service, who, owing to the absence of reasonable messing facilities, or the nature of the duties upon which they are engaged, are obliged to purchase their meals. The Committee’s attention was directed to two cases of temporary transfer for prolonged periods of a number of Gárdaí who were paid this special rate. In one case, although it appeared that messing facilities existed at the new station they were not availed of; in the other, messing facilities were not available and no steps appeared to have been taken to provide them. The additional charge to public funds arising from payment of the allowances at the special rate was over £500. The Committee notes the undertaking of the Accounting Officer that these two cases and also the general question of determining upon whom responsibility lies for providing facilities will be discussed with the Department of Finance and wishes to be informed in due course of the result of these discussions.

POSTS AND TELEGRAPHS.

Qns. 472-541; Appendix VII.

10. Reference was made in our examination of this vote to expenditure incurred in connection with the acquisition of a site for Post Office purposes. The site in question had been leased to the Agricultural Credit Corporation by the local authority in 1932 subject to a rent of £500 per annum and an assignment executed in June, 1937, transferred the Corporation’s interest to the Department of Posts and Telegraphs in consideration of the refund of the Corporation’s outgoings in respect of ground rent, costs of demolition, professional fees, etc. This arrangement was completed on the understanding that the Corporation would become tenant of portion of the building to be erected at an exclusive rent of £1,450 per annum. The Corporation subsequently withdrew from the arrangement and the Department of Finance agreed to their unconditional release.

The Committee has had under consideration a memorandum submitted by the Secretary of the Department of Finance which sets out the circumstances surrounding the transaction and the considerations which actuated the Minister in not requiring the Corporation to refund any portion of the consideration paid for the transfer of their interest. It appears that the Department of Posts and Telegraphs proposes to utilize the whole of the building to be erected on the site and to that extent the State will not be prejudiced by the refusal of the Corporation to rent part of the premises as arranged. It is noted also that the Minister was influenced by the fact that the Corporation was a concern in which the State was vitally interested, being the owner of the major portion of the share capital. The Committee appreciates the force of these considerations. It cannot, however, regard as satisfactory the arrangement by which the acquisition of the site in 1937 involved, in effect, the adoption of liability for ground rent from 1932.

11. Considerable deficiencies have occurred from time to time in the stocks of internal mail bags. In view of the loss to public funds involved, the Committee trusts that the new arrangements contemplated will result in a more effective control of these stores.

ARMY.

12. In the course of the comments regarding the transference of the coastal defences under the Agreement of 25th April, 1938, between the Governments of Éire and the United Kingdom, reference was made to certain payments for stores and property which were not transferable under the terms of the Agreement. The Committee is informed that the stores are necessary for the maintenance of the defences, that they are serviceable and that the prices paid for them are reasonable. With regard to the payments made for squash courts and tennis courts and recreational equipment, the Committee is informed that it is the practice to defray out of public funds, only the cost of maintaining the buildings, which are public property, all other charges arising from the use of the buildings and courts being met out of military funds. It is also informed that items paid for out of the Army Vote have been put to official use, and that the cost of the equipment not properly chargeable to the Army Vote will be recovered.

13. The Committee has had under consideration a case of rather serious import relating to irregular claims for expenses made by certain officers in respect of periods during which they were attending courses of instruction abroad. It has been informed of the reasons why it was not deemed advisable to have the officers tried for the offence before a military court. The Committee feels, however, that occurrences of this kind reflect credit neither on the officers nor the Department concerned, and it is of opinion that deterrent action appropriate to such offences is necessary to prevent them. It has been suggested that the system of verifying the correctness of claims might be improved, and the Committee desires that this aspect of the matter should receive attention.

14. The services of the personnel of the Air Corps continue to be availed of to provide technical assistance in connection with various matters relating to civil aviation, including the establishment of Transatlantic air bases, the development of commercial air services, and the discharge of the statutory functions of the Minister for Industry and Commerce. It has been found necessary to augment the technical staff attached to the Air Corps to enable this assistance to be rendered more expeditiously; but it has been pointed out that no provision has been made to meet recurring charges arising out of the performance of the services rendered. The Committee is informed that it has now been decided that the expenditure might be appropriately charged to the Army Vote and that suitable provision will be made accordingly.

15. Certain matters have been brought to notice relating to the attendance and supervision of civilian tradesmen employed in Army workshops, and the question of accounting for the time they are engaged on their respective trades. The necessity for a regulation to govern these matters has been stressed. The Committee, having considered the principal points of complaint, is of opinion that a more efficient system of control and record is desirable, and it will be glad to learn in due course that steps have been taken to this end.

16. With regard to delay in carrying out the necessary repairs to damaged aircraft to render them available for service, the Committee understands that it is due mainly to the non-delivery of the repair spares, and it appreciates the difficulties of the Department in the present circumstances.

17. Attention has been drawn to the gradual mechanization of the Defence Forces in the process of which a large quantity of stores acquired in recent years is rendered surplus to immediate requirements. The ultimate disposal of these stores must apparently await future developments. The Committee, while recognizing the necessity for the modern equipment of the Forces and the setting aside of otherwise serviceable equipment, trusts that the question of disposal of stores, especially harness and saddlery, not required for immediate use will receive careful consideration, and that meanwhile adequate steps are taken to preserve them.

18. On previous occasions attention was drawn to various aspects of the system of accounting for Army stores. In this instance the method of accounting for medical stores was the subject of discussion, and the Committee is concerned to observe that the officers charged with the custody of supplies issued to the service have furnished no certificates or accounts regarding them. It is informed that a regulation on this matter is under consideration and that it will be issued at an early date.

ARMY PENSIONS.

19. The Committee had under discussion some grants of pension under the Defence Forces (Pensions) Scheme to ex-members of the Forces in connection with whose engagements for long-term service certain sections of the regulations were waived by order of the Minister for Defence. The discharge of these men took place a short time after their re-engagement, and it seems that they were then eligible for pensions, whereas they would have received only gratuities had they not been re-engaged. The relevant enactments prescribe that the consent of the Minister for Finance is necessary to validate all regulations and orders involving financial commitments. The Committee is informed that the Department of Finance would have raised no objection to the grants in question as the men had sufficient service to warrant them, but the Committee takes the view, nevertheless, that the requirements of the enactments should be complied with as far as possible in matters of financial control.

With reference to this point the extent to which the Minister for Finance can delegate by general authority his functions under the Pensions Code was the subject of some discussion before this Committee and the view was expressed that the more rigid interpretation of the enactments involved a considerable amount of additional administrative work which was unnecessary. The Committee thinks that it should be possible to reconcile the legal and administrative requirements consistent with the avoidance of unnecessary work.

INDUSTRY AND COMMERCE.

Qns. 758-776; Appendix X.

20. The Committee notes that the assets and liabilities of the State in the undertaking established under the Industrial Alcohol Act, 1934, were, pursuant to the Industrial Alcohol Act, 1938, transferred to Monarchana Alcóil na h-Eireann, Teóranta, on and from the 21st March, 1939, the appointed day fixed for the purposes of the 1938 Act, and that in consideration of the transfer the Company issued shares for £238,756 to the Minister for Finance and in addition accepted a liability of £45,000 to the Minister. The net expenditure from public funds incurred in connection with the undertaking amounted to £308,114 18s. 6d. The expenditure not recouped amounted, therefore, to £24,359, which was regarded as a reasonable contribution by the State towards the expenses incidental to the development of the industry.

21. The action for compensation taken by the former managing director in connection with the termination of his employment by the Minister prior to the transfer of the undertaking was settled by agreement providing for the payment of £2,500 compensation plus £1,300 costs by the Company, to whom the concern had been transferred at the date of the settlement. It was explained to the Committee that every step in connection with the termination of the appointment was taken in close consultation with the Attorney-General’s Department, but that when legal action was taken the Company’s legal advisers were unanimous in the opinion that the settlement should be agreed to. The claim for compensation was based mainly on the insufficiency of the notice of termination of appointment. The Committee, while being satisfied that the action taken by the Department in terminating this appointment was justified, desires to stress the necessity for exercising the utmost care, when making an appointment of this nature, to safeguard against any claim by the employee should it be found necessary to dispense with his services.

22. The contract for the erection of the factories provided that all substitutions, additions or alterations for or to the works as laid down in the specifications should be authorised by an alteration order in writing by the Secretary of the Department. It was noted that payments amounting to £10,358 12s. 11d. were made in respect of items not covered by the original specifications and not authorised by an alteration order. The Department of Finance gave covering sanction for these payments and also agreed to waive the obligation requiring the Secretary of the Department to make an alteration order. It was explained that the departures from the contract were authorised by the architect and the former managing director without reference to the Department and that the Department of Finance and the Department of Industry and Commerce, while recognising that the procedure was unsatisfactory, were satisfied that the works were necessary and had been executed and that the charges were reasonable. The Committee feels that the former managing director should not have been allowed to assume powers specifically invested in the Department by the terms of the contract.

23. The Committee was informed that the normal procedure under which lists of contracts placed or purchases made exceeding £25 in value are submitted to the Government Contracts Committee was not followed in connection with the expenditure on the alcohol factories. It was explained that owing to the commercial nature of the undertaking it was not considered feasible to follow the normal course. The Committee is not satisfied that it was not practicable to follow the normal procedure in connection with purchases and contracts. In view of the nature of the undertaking, advantage should have been taken of every available safeguard against extravagance in the expenditure of public moneys.

UNEMPLOYMENT INSURANCE AND UNEMPLOYMENT ASSISTANCE.

24. Every application for unemployment assistance and every question arising thereon is, under the Unemployment Assistance Act, 1933, determined by an unemployment assistance officer and such determination is final, subject to certain rights of appeal. The Unemployment Assistance (Amendment) Act, 1935, provides that where an unemployment assistance officer reverses or revises a previous determination, such reversal or revision shall have effect only from the date thereof, unless the officer is satisfied that the original determination resulted from any false or misleading statement by the applicant.

The Committee was informed that a large number of cases arose in which revised determinations reducing or refusing unemployment assistance had to be made, although the officers when making the original determinations had all the facts before them. Amounts paid under the original determinations in these cases are not regarded as recoverable from the recipients and remain charged to the vote as having been paid under valid operative decisions of unemployment assistance officers.

The Committee learned that the number of overpayments, which was very large in the early years of the operation of the Unemployment Assistance Acts, has in recent years been considerably reduced. It is noted that the administrative machinery of the Department provides for suitable action with regard to officers responsible for overpayments. The Committee trusts that it will be found possible further to reduce the number of overpayments.

AGRICULTURE.

25. The attention of the Committee was drawn to the fact that a sum of £2,598 5s. 6d., which is charged to a suspense account, was paid to the Newmarket Dairy Company (1932) Ltd., in respect of licence tax on a quantity of butter exported to Belgium and subsequently consigned to and sold in the United Kingdom. It was also disclosed that the cost of the butter was £3,922 and that the charges incurred in connection with its export and sale, including the licence tax referred to, amounted to £3,880, a total of £7,802. The consignment was sold for £2,029, and the loss on the transaction was, therefore, over £5,700.

The butter was re-exported to the United Kingdom on the assumption, apparently, that the amount paid as licence tax in Belgium would be repaid, but it appears that it was not possible to obtain a refund. The Committee is not satisfied with the manner in which the transaction was handled and, in particular, is unable to understand why the precise position regarding the licence tax was not definitely ascertained before the butter was sent to the United Kingdom. It notes that the Department of Finance will be approached regarding the method of clearance of the amount charged to suspense and it desires to be informed in due course of the nature of the adjustment authorised.

Qns. 1036-1051; Appendix XIII.

26. The collection of levy on butter held in stock on 10th December, 1938, was under discussion by the Committee and the Department of Agriculture has submitted a memorandum on the matter. It is evident that the provisions of the Butter Stocks (Levy) Order, 1938, were not fully complied with and it is noted that it is proposed to report the position to the Department of Finance.

The Committee feels that where it is found impracticable to carry out fully the provisions of an Order, immediate consideration should be given to the feasibility of making an amending Order, and, further where financial provisions are involved, that the matter should be reported without delay to the Department of Finance.

OFFICE OF THE REVENUE COMMISSIONERS.

27. Attention was drawn to certain cases in which extra-statutory repayments of Excise Duty were made with the sanction of the Minister for Finance. The Committee was informed that the circumstances in which these repayments were authorised were exceptional, and unlikely to recur, and it recognises that some discretion must be reserved to the Revenue Commissioners and the Department of Finance in cases of this kind. It desires, however, to record its view that such discretion should be exercised only with regard to conditions of a temporary nature and that, where the necessity for repayment is likely to recur, steps should be taken to have the matter regularised by legislation.

COMPENSATION BOUNTIES.

28. The Estimate for this service provided, in relation to tobacco, for the payment of Bounties on tobacco manufactured from home-grown leaf on which drawback was paid; on tobacco grown in Éire after the 1st January, 1934, allocated to a manufacturer and subsequently destroyed as unfit for manufacture; and on unmanufactured tobacco grown in Éire and exported. It is understood that the portion exported was sold at approximately 1d. per lb. While specific statutory authority exists for the payment of the first two types of Bounty—section 5 of the Finance (Miscellaneous Provisions) Act, 1935 and section 23 of the Finance Act, 1938, respectively—no specific authority exists for payment of Bounty on unmanufactured tobacco exported. It is noted that owing to the adoption of a revised basis of allocation to manufacturers it is anticipated that the necessity for the exportation of unmanufactured tobacco will not recur. The Committee accordingly makes no comment on the payments under notice but it is of opinion that steps should be taken to secure statutory authority should the necessity for paying Bounty in similar circumstances arise again. It considers that the fact that express statutory provision has been made for payment of Bounty in certain circumstances renders it undesirable that payment unsupported by such authority should be made.

JAMES M. DILLON,

Chairman.

12th December, 1940.