Committee Reports > List of Committees > Dáil > 1941 > Committee of Public Accounts > Interim and Final Report - Appropriation Accounts 1939 - 1940

FINAL REPORT

LOCAL GOVERNMENT AND PUBLIC HEALTH.

Appendix IV.

1. Under Section 5 (1) (h) of the Housing (Financial and Miscellaneous Provisions) Act, 1932, a grant not exceeding £40 may be made 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 considered a case in which a reconstruction grant of £30 was made to a woman applicant who was an Old Age Pensioner and kept one or two boarders. The Accounting Officer stated that for the purposes of the Housing Acts she was deemed to come within the statutory definition of an agricultural labourer as being a person “not working for hire, but working in a rural district at some trade or handicraft without employing any persons except members of her own family”. Although he thought that there was no precedent for the decision that a lodging house keeper was an agricultural labourer he maintained that the nature of the reconstruction work indicated that the house was being prepared for visitors and, as the area was a fishing district, that it was not unreasonable to hold that the applicant came within the provisions of the Housing Acts. It is provided that any question which may arise as to whether a person is or is not an “agricultural labourer” shall be determined by the Minister for Local Government and Public Health, whose determination shall be final and conclusive, but no determination had been sought before the grant was made. The Accounting Officer, however, undertook to lay the facts of the case before the Minister for a decision and has reported (see Appendix IV) that in the Minister’s opinion in the case under notice the keeping of lodgers was not a trade or handicraft.

As payment of the grant of £30 was made in good faith and in view of the assurance of the Accounting Officer that the Minister’s decision will be acted upon in the future, the Committee does not desire to recommend disallowance of the item in question, but it hopes that in any case where doubt exists as to whether an applicant comes within the provisions of the Acts, the Minister’s determination will be sought before any payment is made.

2. The Committee had also under consideration a case in which a grant of £25 was made for reconstruction of a house. The work carried out included the erection of a porch, repairs and plastering. It appears that a previous application for a grant towards the cost of minor repairs and plastering had been refused on the ground that the proposed work did not constitute reconstruction. The Accounting Officer explained that as the work in respect of which the subsequent application was made consisted of more extensive repairs and of the building of a porch to the house, it was considered that a grant could properly be made.

On the facts as stated the Committee is not disposed to criticise the action of the Department in authorising a grant in this case, but it feels that the question of defining more precisely the meaning to be attached to the word “reconstruction” for the purposes of the Act should be considered.

OFFICE OF PUBLIC WORKS.

Appendix V.

3. The Irish Employers’ Mutual Insurance Association Ltd., with whom the Commissioners of Public Works had, for each year since 1933, taken out a policy of indemnification against their liability under the Workmen’s Compensation Acts, etc., went into liquidation in June, 1938. The claim lodged with the Official Liquidator covers actual and estimated expenses devolving on the Commissioners in consequence of the liquidation, together with the extra cost of taking out an alternative policy. It appears that although the acceptance of the tender of the Association for the Commissioners’ business was sanctioned by the Department of Finance on the condition that the risk involved would be fully covered by re-insurance, the extent to which the Association’s liability was re-insured is doubtful and, consequently, the sum that will ultimately be recovered from the liquidator on foot of the claim presented to him is problematical.

The Committee has fully considered the circumstances in which the policy of insurance was taken out each year with the Association and also a memorandum submitted by the Accounting Officer on the question of re-insurance. The Association commenced business in 1931 and, its tender being the lowest, the insurance of the Commissioners’ employees was placed with it as from 1st January, 1933. The rates of premium paid to the Association, which it appears was the only non-tariff Company to submit tenders, showed a progressive decrease up to the year 1937-38, although as a result of additional liabilities imposed by the Workmen’s Compensation Act, 1934, other Insurance Companies increased their rates by as much as 15 per cent. For 1937-38 the Association increased its premium rate very slightly. In seeking approval for the placing of the contract for that year the Office of Public Works represented to the Department of Finance that it was unnecessary to prescribe a specific condition of re-insurance with Lloyds as re-insurance would be effected by the Association automatically with one of Lloyds Syndicates, and the Department of Finance assented as “the business under the contract will become re-insured under the re-insurance treaties of the Association.”

In the course of the negotiations for the placing of the contract for 1938-39, delays in obtaining reimbursement of compensation payments made by the Commissioners were taken up with the Association with the result that all outstanding arrears were cleared in March, 1938. The quotation of the Association was almost £4,000 less than that of the only other tenderer—a Tariff Company. An examination of the actuarial balance sheet of the Association disclosed an unsatisfactory state of affairs, but nevertheless its tender was recommended for acceptance to the Department of Finance, before whom all the relevant facts were laid, and that Department approved of the Association’s tender on the condition that, as heretofore, re-insurance of the risk would be effected. Shortly afterwards it became clear that the Association was insolvent and needed immediately £10,000 if it were to continue business. This financial aid was not forthcoming and, as stated above, the Association went into liquidation in June, 1938.

It is noted that in October, 1938, the Commissioners asked the Liquidator for particulars of the terms and conditions of the reinsurances which the Association had effected and were informed that the Board had been made fully aware of the Association’s re-insurance contracts which were inspected by officials of the Board, and that all monies recovered on foot of contracts of re-insurance would be applied to the liquidation proceedings. It would appear, therefore, that although the Department of Finance was under the impression that specific re-insurances had been effected year by year, the re-insurances were in fact general, and the Board’s business was not specifically covered.

Having considered this matter fully in all its aspects the Committee has reluctantly come to the conclusion that the doubtful financial stability of the Association was clearly indicated at the time when the placing of the contract for 1938-39 was under consideration, and indeed for a considerable time before, and that the Commissioners were not justified in recommending acceptance of its tender to the Department of Finance. Furthermore, it finds it difficult to understand, as the Association’s re-insurance contracts were inspected by officials of the Board, why the position with regard to re-insurance was not clearly and accurately put before the Department of Finance. It must express its strong disapproval of the manner in which the question of the Board’s insurance was handled, not only in 1938-39 but in previous years.

GÁRDA SÍOCHÁNA.

4. The Committee’s attention was directed to certain expenditure resulting from an accident to a Gárda motor-car which occurred when the officer who was using and driving the car was returning from an unofficial journey. The Committee understands that the Department of Finance is prepared to give covering sanction for the sums involved, but that steps are being taken to specify the conditions under which official transport may be used for semi-official or unofficial purposes. The Committee will be glad to be informed in due course of the decisions reached.

PRIMARY EDUCATION.

5. The regulations provide for the grant of special increments to national teachers after three very favourable annual ratings which need not be consecutive but which should be received within a period of not more than five years. Until 1928 it had been the practice to hold annual inspections but since that year formal inspections have been less frequent unless required by special circumstances, and a system of voucher reports based on the result of incidental visits to the schools has been introduced. It appeared that special increments had been granted to a number of teachers concerning whose ratings no communications had been received from the inspectors in the year in which the increment was granted. The Committee whilst appreciating the force of the reasons put forward in explanation, mainly the shortage in the staff of the inspectorate, feels that if a regulation becomes unworkable in practice the proper course is to have it amended. It is noted that in future no special increments will be granted until the necessary vouchers have been received from the inspectors.

POSTS AND TELEGRAPHS.

Qns. 423-435, Appendix XIII.

6. Reference was made to a scheme under which land at Aldborough House, Dublin, held on lease by the Department of Posts and Telegraphs was acquired by the Dublin Corporation and the Department’s Stores Depot which had occupied the site was transferred to new premises. It appears that the governing principle of the scheme was that the Corporation should bear the cost of and incidental to the provision of alternative warehouse accommodation, and that this cost was estimated at £9,950, which sum was duly paid by the Corporation. The heating arrangements for which provision had been made in the estimate proved inadequate and it became necessary to instal a low pressure hot water system for which additional expenditure not exceeding £1,250 was sanctioned by the Department of Finance. The total expenditure, to the date of the Comptroller and Auditor-General’s report, on the provision of warehouse accommodation, including heating, was £11,137.

As the basis of the scheme was that the facilities granted to the Corporation should not involve any unrecouped expenditure from State funds, the Committee has had under consideration the position disclosed by the figures quoted above, and it has been furnished with a memorandum by the Accounting Officer on the matter (Appendix XIII). It would appear from that memorandum that the estimated cost on which the charge to the Corporation was determined was arrived at on the basis of providing accommodation equal to that which was being relinquished, that in fact superior and more commodious accommodation was provided, including a new cycle shed and enlarged staff Dining Room accommodation, and that taking these factors into account the excess on the scheme amounted to only £78. It is understood that the cost of the cycle shed and Dining accommodation is not included in the figure £11,137 mentioned above.

The Committee accepts the view that the provision of additional accommodation must be regarded as modifying the apparent loss on the scheme. It understands, however, that the fact that the new premises would be modern structures much superior to the premises being replaced was recognised and that on that account no charge was made against the Corporation in respect of the Department’s leasehold interest in the ground at Aldborough House surrendered to the Corporation, nor was any claim made in respect of the value of the site on which the new premises were erected, which site was already owned by the Department. The Committee will be glad if a statement can be furnished showing the financial effect of the scheme after taking into account the land values referred to.

7. The question of deficiencies in the stocks of internal mail bags was before the Committee last year and was referred to in its Report dated 12th December, 1940. Attention has been drawn to further deficiencies which have arisen and it is understood that examination of the matter is still proceeding in the Department. The Committee appreciates that the introduction of a watertight system of control might involve expenditure out of proportion to the results to be achieved. They trust, however, that the investigations which are being carried out will result in a considerable reduction of the loss under this head.

8. In the circumstances arising out of the emergency conditions the annual stocktaking carried out in the year 1939-40 applied only to one-third of the total stores held and the Committee has been informed that the saving effected by this modification amounted to £396. The Committee fully realises the need for all possible economy under present conditions, but having regard to the quantities and value of the stores involved, it is of opinion that the Department should consider, in conjunction with the Department of Finance, whether in view of the relatively small saving effected, the complete check of stocks should not be restored at an early date.

WIRELESS BROADCASTING.

Qns. 486-511, Appendix XVI.

9. In connection with the scheme of commercial broadcasting which was introduced in October, 1939, commission amounting to £1,576 18s. 0d. was paid to the advertising agents of the firms sponsoring the programmes ; the payments representing 15 per cent. of the booking fees. The Committee doubts whether the arrangement by which advertising contracts were placed through agents was desirable or necessary, particularly in view of the fact that the broadcasting service is free from ordinary commercial competition.

AGRICULTURE.

10. Two sums totalling £9,334 10s. 7d. were advanced to the solicitor of the Dairy Disposal Company, Limited, to enable him to complete the purchase, from the liquidators, of the fixed assets and goodwill of a co-operative agricultural and dairy society and of a co-operative creamery, the expenditure being charged to a suspense account in March, 1940. In one case, in which the advance amounted to £6,000, the purchase was not closed until June, 1940, while, in the other, difficulties arose in connection with the title to the property concerned, and, in November, 1940, a refund of the sum of £3,334 10s. 7d. advanced was obtained, together with £25 6s. 9d. bank interest which had accrued.

The Committee notes that it is difficult in such cases to fix a precise day on which money will actually be required for payment by the Company’s solicitor ; it is of the opinion, however, that potential loss of interest to the Exchequer demands that the interval between the making of an advance and completion of sale should be reduced to a minimum.

EXPORT SUBSIDIES.

11. From September, 1939, the export value of cheese and dried milk powder increased progressively. The basis of the export subsidy on cheese was not, however, revised until 1st November, 1939, while subsidy on exports of dried milk powder continued to be paid at the flat rate in operation since the commencement of the season; in consequence, exporters of the dairy products referred to obtained, during the latter part of the season, a net return in excess of that originally contemplated. The Accounting Officer justified the action taken by reference to losses which exporters had sustained in the earlier part of the season and to the Minister’s policy of securing for manufacturers a net return approximately equivalent to that obtainable from the production of creamery butter.

While the Committee recognises that discretion is reserved to the Minister in fixing and varying the rates of subsidy on exports of dairy produce, it feels that the method of recouping earlier losses by allowing subsidy to operate over a later period at a higher rate than would ordinarily be justified is objectionable. The Committee considers that a more appropriate arrangement would have been effected by revising the basis of subsidy early in September, 1939, and by limiting any additional payments to the sums necessary to recoup to individual exporters the ascertained amounts of the losses sustained.

ARMY.

12. Attention has been drawn to the provisions of the Defence Forces (Temporary Provisions) Acts in relation to the strength of the Forces under the control of the Minister for Defence and the extent to which these provisions have been observed. It is pointed out that the procedure followed in seeking annually the approval of the Oireachtas for the proposed numbers does not satisfy the statutory requirements, and this defect in procedure might lead to serious embarrassment. Having regard to the exigencies of the present situation and the policy of the State in regard to it, the Committee is not disposed to comment further on this matter for the time being. It wishes to affirm its opinion, however, that the statutory obligations relating to the strength of the Forces merit the serious attention of the Department on a return to more normal conditions.

13. The advisability of providing additional safeguards against irregular payments of marriage allowances and pensions was the subject of discussion before the Committee. The disbursement of the moneys provided for these services involves fortnightly or monthly payments to over 20,000 persons, and the entitlement to grants is verified quarterly by means of declarations signed by the grantees and witnessed by certain approved persons. If changes affecting entitlement are not disclosed by the grantees, there is apparently no other means of detection, as the persons qualified as attestors do not vouch for the accuracy of the declarations. In the particular case which gave rise to the discussion a sum of £376 was overpaid in a period of seven years, and it seems that these payments might have continued for a much longer time were it nor for the discovery by the Gárda in the course of their normal duties. The Committee was informed that, with the object of providing an independent means of verifying entitlement, the co-operation of Departments with suitable organizations for this purpose was sought, but without success; it was also stated that the exercise of an independent check in any large proportion of the cases would not justify the expense, and that it is doubtful if it would have the desired result. The Committee, nevertheless, is inclined to the view that it should be possible to avail of existing machinery to some extent to provide an inexpensive safeguard against losses arising from irregular claims. As the matter will have the further attention of the Departments concerned, the Committee would like to be informed of any decisions which may be reached.

14. In connection with the purchase of supplies for the Army— particularly mechanical transport and stores for the Corps of Engineers —the Department did not find it possible in many cases to adhere to the practice followed in normal times of inviting tenders for standard requirements owing to the dearth of supplies and the unstable markets. Stores were urgently required in larger quantities than usual to meet the immediate needs of the Army which had rapidly expanded, and also to provide for the future. The Committee appreciates the difficulties which the Department had to overcome in these circumstances, but it trusts that the control necessary to secure all possible economy in supply has not been relaxed.

15. The Committee has had under consideration the manner in which the Department of Defence dealt with a contract for the supply of a large number of huts. Tenders for the work were obtained and the lowest tender was accepted ; the contractor reported that he was unable to obtain timber, and the Department undertook to purchase it and deliver it to him. The original tender amounted to £15,665, and the net payments made by the Department amounted to £17,453, a sum of £52 having been retained to cover the cost of transport. The actual cost of the latter service was not shown but it would have exceeded £450 on the basis of the allowance made to the contractor for similar service.

With regard to the purchase of the timber it was stated in a statement submitted to the Government Contracts Committee that the prices paid by the Department were maintained at pre-war levels except in some cases in which a charge of 3 to 5 per cent. was included to cover the increased cost of cutting from larger sizes the sizes required. The additional allowances made to the contractor included

(a) 6½ per cent. increase in the contract price to cover the increased cost involved in accepting the timber in running lengths :

(b) the 2½ per cent. cash discount allowed to the Department for prompt payment, which the contractor claimed on the ground that he would have been allowed it if he had purchased the timber himself:

(c) £493 in respect of increased prices under the War Emergency Clause :

(d) an ex gratia allowance of £150.

The Committee is unable to reconcile some of the statements in support of the additional payments. The increase of 6½ per cent. on the full contract price would seem to have been sufficient to cover the increased charge paid to the suppliers for the timber and also any normal wastage incurred in cutting. It is stated that the wastage was abnormal and amounted in some cases to 40 per cent., but the Committee is unable to appreciate the reasons why wastage should be made the basis of payments to the contractor since the Department was obliged by the terms of the contract to accept back all unused and waste timber. It is not clear also why further payment was made in respect of increased prices in view of the statement that prices were maintained at pre-war levels ; and the transfer of the cash discount earned by official funds was not, in the view of the Committee, justified.

The Committee is not aware of the reasons why a supply of timber was not available to the contractor, but when the position became known the obvious course would seem to have been to invite tenders afresh, or at any rate to seek alternative means of having the work carried out. Though it is possible that this work could not have been done at less cost, the official procedure adopted does not commend itself to the Committee as conducive to economic expenditure.

JAMES M. DILLON,

Chairman.

4th December, 1941.