Committee Reports > List of Committees > Dáil > 1969 > Committee of Public Accounts > Report - Appropriation Accounts 1967 - 1968

MIONTUAIRISC NA FINNEACHTA

(Minutes of Evidence)

Déardaoin, 6 Feabhra, 1969.

Thursday, 6th February, 1969.

The Committee met at 11 a.m.

Mr. K. M. Fowler (for An tArd-Reachtaire Cuntas agus Ciste) called and examined.

VOTE 40—INDUSTRY AND COMMERCE.

Mr. J. C. B. MacCarthy called and examined.

404. Chairman.—Paragraph 63 of the Report of the Comptroller and Auditor General reads:

“Subhead H.—Córas Tráchtála (Grant-in-Aid)

63. Grants to Córas Tráchtála which, under the provisions of the Export Promotions Acts, 1959 to 1967, may not exceed £4,500,000, amounted to £3,387,885 at 31 March 1968, including £732,000 issued in the year under review.”

405. Have you anything to add to that, Mr. Fowler?

Mr. Fowler.—This paragraph deals with the grant-in-aid to Córas Tráchtála. The accounts of Córas Tráchtála are audited by the Comptroller and Auditor General and they include the accounts of two wholly-owned subsidiaries, Kilkenny Design Workshops, Ltd. which received a grant of £92,500 from Córas Tráchtála in the year 1967/68 and Ireland House Shop Ltd. in London. The shop made a profit of £1,553 in the year against a loss of £7,021 in its first year of operation which was 1966/67, the previous year.

Chairman.—Where is this shop?

Mr. Fowler.—It is in London.

406. Chairman.—Could I ask the accounting officer what financial control is exercisable by him over Córas Tráchtála?

Mr. MacCarthy.—Very little because it is an independent body and this is a grant-in-aid. My responsibility as accounting officer ends with paying them over their money. The accounts are audited, as the Comptroller and Auditor General mentioned by the Comptroller and Auditor General so there is an element of financial control. As regards their activities generally, of course, policy consideration would enter in there. The Board would consult with the Minister as to whether he had any views with regard to this, that or the other but that is essentially an informal consultation. When they send their budget for approval we come in at that stage every year with them and discuss their proposed expenditure under the various heads. If they are looking for, let us say, £½ million for the year they have got to justify their requirements. If it is seen, for example, there are any proposals included or if they contemplate continuing some activity, of which it can be shown that its effectiveness is impaired, that would all be discussed at that stage. Once the budget is agreed, presented to the Dáil and the money voted, then my sole function is to pay them out the Grant-in-Aid according as they ask for it.

407. In point of fact they spent £70,000 more than the Grant-in-Aid?—There is a Supplementary Estimate to come to rectify that. It is not a case of my having issued £70,000 too much out of the Vote. It is that they are that much short. The only way they can get this money is if the Dáil decide to vote it.

Deputy P. J. Burke.—This is a Department which is doing a very good job so far as the State is concerned.

408. Chairman.—Paragraph 64 of the Report of the Comptroller and Auditor General reads:

“Subhead J.—Grant to An Foras Tionscal (Grant-in-Aid)

64. The total amount of grants which may be made to An Foras Tionscal to enable it to carry out its functions was raised to £40,000,000 by the Industrial Grants (Amendment) (No. 2) Act, 1968. The charge to the subhead includes payments of £674,995 in relation to the establishment and management of industrial estates at Galway and Waterford. The aggregate amount of grants made to 31 March 1968 was £28,419,132 of which £1,096,355 related to the estates.”

409. Have you anything to add to that paragraph, Mr. Fowler.

Mr. Fowler.—This paragraph is in relation to An Foras Tionscal. Again, in this connection the accounts are audited by the Comptroller and Auditor General and presented to the Oireachtas. The Report of the Board for the year 1967-68 shows that four industrial concerns have commenced manufacturing operations at Waterford and one at Galway in the industrial estates. In the course of scrutiny of papers relating to grants made by An Foras Tionscal in earlier years a case was noted in which a company had obtained a grant of £165,000, the final instalment of which was paid in November, 1963. The company, because of failure to obtain orders, never achieved satisfactory production, its assets were sold in 1964 and it was subsequently wound up. By agreement, dated September 1961, the Company had undertaken not to dispose of any of the grant-aided assets without the prior consent of An Foras Tionscal but that consent had not been sought. The Industrial Credit Company Ltd., which had invested £110,000 in preference shares in the company, recovered some £18,000 from the liquidator so that the total loss to State funds was in excess of £250,000.

410. Deputy Healy.—Have we, in the light of experience, any check to safeguard State funds in a case like this? The State is losing an enormous amount of money?

Deputy P. J. Burke.—In other words, where a company like the one mentioned here by the Comptroller and Auditor General goes into liquidation, what provisions are there, as Deputy Healy referred to, to see that the Government or the subsidiary body lending the money would have some control on it?

Deputy Crowley.—What is the name of the company?—Precision Alloys.

Deputy P. J. Burke.—Ballyfermot.

411. Deputy Briscoe.—Were there any Irish directors in this company?—I think they were all Irish. Speaking from recollection, I think it was a fully Irish company.

Deputy P. J. Burke.—May I say they were responsible Irish directors, people who have put a good deal of money into Irish industry, but it just did not get off the ground.

Deputy Healy.—I cannot see much responsibility in turning round and foregoing an undertaking made to the State whereby they should make the State body aware of what was happening. I do not see much responsibility in foregoing that agreement altogether.

412. Chairman.—Is there no machinery available to the Department?—I am in a slight difficulty in dealing with this case. In fact, it concerns two bodies which are completely independent. One is An Foras Tionscal. Foras Tionscal is independent once it gets the grant-in-aid from the State. Again, like other bodies, once it has the grant-in-aid we just do not come in at all in its day-today dealings. The other body mentioned is not even responsible to the Minister for Industry and Commerce. That body is the Industrial Credit Company. We would have no responsibility as regards the cases it would assist. Provided that is understood, I can help you in regard to Foras Tionscal by giving general information. They have procedures for avoiding the type of situation mentioned in the report here. These have been built up over a period of years. The initial philosophy in connection with these grants was that the whole thing was to be taken out of the Civil Service machine on the basis that Civil Service attitudes were not the kind of attitudes that would encourage people to come in and establish industries and there would be a more dynamic and progressive attitude with outside bodies, free of Civil Service controls. That was the basis of the original establishment of An Foras Tionscal, Córas Tráchtála and these other bodies. They were left free. Foras Tionscal, from the beginning, took the view that there should be no strings attached to grants. They were very strong on that point. That has been mentioned many times in the Dáil on the annual Estimates and elsewhere. They felt they could not get businessmen to set something up, particularly if the businessmen were not Irishmen, if they left themselves open to possible bureaucratic intervention. Later on that was changed, but that policy went on for some time, but it was obviously something that was not fully justifiable. Obviously, one should have something to protect oneself from exploitation by a firm who would get a grant of a large amount of money, sell the place afterwards and put the grant in its pocket. That is rather extreme but it could happen. This was pointed out to Foras Tionscal and they introduced a system which obtained at the time of the case mentioned by the Comptroller and Auditor General under which the grantee agreed to abide by certain undertakings. They were written into the contract with him. One was that he would not resell the property without the consent of the Board, and certainly not in advance of the final payment of the grant. I think in a case like that the time mentioned was within a period of ten years. Again, this was a matter for An Foras Tionscal. I do not know how far they could enforce that in particular cases.

Speaking about the case mentioned by the Comptroller and Auditor General—the facts of which I know nothing about, incidentally—it would appear that these people sold certain assets and went into liquidation. The present form of contract is more precise because it provides that conditions may be attached to grants. There are other conditions like the condition that the whole of the product must be exported. Where that is there Foras Tionscal can revoke the grant if there is a breach of these conditions. Where they revoke the grant they can then, if necessary, sue the person concerned for the recovery of the whole or part of the grant. Similarly, there is a ban on the sale of the premises without their consent within a period of ten years. If they offend against that, they can also be sued. The position is more complicated with liquidation or receivership because nobody can dictate to the receiver, who has rights given to him by law.

All that is possible in these cases on this type of agreement, so far as I understand, is that An Foras Tionscal can get themselves recognised as a creditor. Therefore, if there is any breach of any of these conditions, they have a claim on the credit. They can get themselves recognised as a creditor but this would leave them in the same position as any trade creditor. The Industrial Credit Company has been mentioned and I think they would insist on getting a first charge.

Deputy P. J. Burke.—The same as the banks?

413. Deputy Crowley.—Does it not look a little suspicious that they sell off their estates and their premises and then go bankrupt?—In this particular case it seems that the industry never got off the ground.

414. How long was it operating?—Two to three years, I think.

415. Deputy Crowley.—They were in operation for only two to three years but the State was involved to the tune of £¼ million?

Mr. Fowler.—The amount of the ordinary shareholders was £122,500 and the Preference Shares of the Industrial Credit Company totalled £110,000.

416. Deputy Crowley.—So that the private investors themselves only put in about 20 per cent?

Mr. Fowler.—About one-third.

417. Deputy Crowley.—Would it not be advisable to demand a bigger involvement by private investors in relation to investment by the State?

Mr. MacCarthy.—In the general run of things, approximately 40 per cent is provided by themselves but it varies widely. When I say provided by themselves, I do not necessarily mean that it is their own money. It could be borrowed from the Bank or from some other source. In other cases an effort is made to ensure that the Irish contributor, whether it be an Irish bank or the Industrial Credit Company does not exceed a certain figure but, again, we do not come in officially on these cases.

418. Deputy P. J. Burke.—Mr. MacCarthy has given a very clear explanation. The only observation which I should like to make is that we are encouraging industry and the percentage of industries going down is very small when compared to the number of successes. Would it be possible in future dealings that we would have the same rights as a bank but perhaps this might deter industrialists from coming along to us?— The sort of last resort cases could go to a body called Taiscí Stáit. In all such cases we have the same rights as a bank. The Industrial Credit Company would have the charge and Taiscí Stáit would have a second charge but I think it would be very difficult in the case of a grant which, of its nature, is supposed to be free.

419. Deputy Crowley.—What was the turnover of the company in the first, second and third year?

Mr. Fowler.—We have not seen the account but from the information we have it appears that the products did not sell.

420. So there was virtually no turnover. What was the employment content of the company during the first year?

Mr. Fowler.—We have no information about how many were employed.

Deputy Burke.—There were quite a few people employed.

421. Deputy Crowley.—This information is very important in so far as the Committee is concerned and if we are to make any recommendation we should have all the facts available to us.

Mr. Fowler.—It is a private company and the only way in which we would be able to get hold of their accounts would be through the Company’s Office. The question we are mainly concerned with is the disposal of the assets without the consent of An Foras Tionscal. The only legal information we can get is what we can obtain from An Foras Tionscal.

422. Chairman.—There are other companies in receipt of substantial sums and these, after seeing what happened in this case, might think of doing the same thing?

Mr. MacCarthy.—I cannot answer that. If they got their grant after a certain date— three or four years back—they would not be in the same position. They might go ahead and do it but in that case they could be sued. It has, as I said, been tightened up. I do not know how many companies were subject to this kind of condition but certainly all the early people got their grants without any such condition. The fact that there is now a flourishing industry in these premises might help to reassure you in this particular case though it may not, of course, reassure you in general. It could be said, perhaps, that the word “loss” is a little tendentious. It is difficult to say what is a loss and what is not. There is an industry there now and, presumably, if these premises had not been there, there would have been an application for a grant from the present company.

423. Deputy P. J. Burke.—In other words, it is levelling itself out?—Yes. The premises might have been turned into an hotel or something like that but that did not happen in this particular case and there is an industry there.

Deputy Briscoe.—We do not wish to play down the success of the setting up of An Foras Tionscal. We have had some fantastic successes and very few failures. This is quite an achievement when we take into account that this country has not been a traditional one of business and we have achieved this in a very short time. When one takes into account the high technical expertise that is required today and the necessity of having the right people to assist developments, it is quite difficult to be successful but we have succeeded.

424. Deputy Crowley.—We have had successes but, at the moment we are concerned with the quarter of a million pounds that was lost and we want to make sure that this sort of thing does not occur again in so far as we can prevent it. I should like to put the same question to Mr. MacCarthy as regards turnover and to ask him if he has any idea of what their turnover was in the first, second or third year of trading?—No, and I am not sure whether An Foras Tionscal would have it. I understand from earlier discussions about this case that the proceeds of the sale did not in any way accrue to the shareholders; I understand the shareholders got nothing back out of it. The moneys would have been used, I think, for reducing the liability to general creditors. But this is very difficult for us because we are just not in it. Although it comes very badly from me as a civil servant to say this, I have to say it: there would not be any sense in saying we must take this activity out of the Civil Service, hand it over to a body of competent people and say to them: “You can operate alone. Use your own judgment. We know you may make mistakes but we hope you will not make too many.” and then saying after that: “You are certainly free to make the judgment but we are subjecting you to the whole Civil Service control procedure. If you decide to do something you will have to check it with the Department of Industry and Commerce”. We might as well not set them up if we do that. Through this other arrangement, under which the Foras is in the position to lay down conditions which they could enforce by going to the courts, they have, I think, gone as far as we can expect them to go.

Deputy Burke.—One of the directors concerned in this was a man who had put a good deal of money into industry and was not by any means a man of straw. Any Government or semi-State body would be inclined to give him more, possibly, than would be given to anyone else.

425. Chairman.—How is the giving of grants by An Foras Tionscal arranged as between the companies which produce for consumption at home and those companies producing for export? Are the grants given to exporters alone?—No, not necessarily. There was a very violent agitation by the Federation of Irish Industries against what they called subsidisation of competitors. In other words, if I am a biscuit manufacturer I would take a very poor view of somebody else getting a grant, thus putting him in a more competitive position than I am in. Therefore, where existing industry was capable of filling the requirements of the Irish market, a newcomer, whether he was an Irishman or a foreigner who applied for a grant was subjected to a 100 per cent export condition or 90 per cent export condition, under the Expansion of External Investment Act passed by the Oireachtas. There has been a change in relation to the third type of grant of Foras Tionscal, that is, the re-equipment grant, because it does not matter whether you are in competition with your next-door neighbour or not; you can still get a re-equipment grant.

Deputy Healy.—We all appreciate the success that has been achieved in industry in this country, but when we see a discrepancy like this it is our business to draw attention to it and see if there is anything we can recommend to tighten things up. Mr. MacCarthy has very clearly explained that the situation is better now than it was four or five years ago. Personally I am satisfied that this could not happen again.

426. Deputy Gilhawley.—When is the grant paid?—It is paid in instalments according as the different stages of the work go on.

427. Is there a period of time that a concern must be in operation before the grant is paid?—That I cannot answer. I do not think so.

Deputy Briscoe.—Perhaps I could throw some light on this, having a certain amount of experience. I understand it is pound for pound. If the State is giving a 50 per cent grant, then for every pound the firm puts up the State puts up another pound.

428. Deputy Gilhawley.—This concern we are talking about was three years in operation, we are told. Had it drawn the full grant alloted to it?—It had drawn the full grant.

429. Was that grant paid the first year?

Mr. Fowler.—No, it was paid in instalments, and the final instalment was paid in November, 1963.

430. Deputy Crowley.—What year of trading was that?

Mr. Fowler.—The agreement was dated September, 1961.

Deputy Crowley.—The second year.

431. Deputy Gilhawley.—If it was not showing a profit, say, in the first two years and if it was obvious it was going to close down, why was the final instalment of the grant paid?

Mr. MacCarthy.—Again, as I say, this is a matter where the Board of An Foras Tionscal would have to take the decision. If it would be of any help I would volunteer the suggestion that you would have to distinguish between capital expenditure and working capital. If a firm had actually incurred the capital expenditure towards which the State had promised to make a grant of, let us say, 30 per cent of whatever the amount was, then once the total capital expenditure had been incurred the grant was payable. After that it would be a matter really of working capital, which does not come within the scope of the grant at all. I think you would have to take the line that, once the man had put up the factory and it was certified to be satisfactory from an architectural point of view and once it was clear that he had spent the full amount of his contribution, you could not hold back the grant.

Deputy Crowley.—Very few companies make a profit in the first two years of trading. We had the situation where we put money into Castlecomer Collieries, even though it was not profitable, in order to keep it going and to provide employment.

432. Deputy Gilhawley.—That is not the point. The point I am trying to make is that, although these cases are few and far between, still the possibility is there that a company will draw its grant inside a certain time, say, three years, and then fold up. That has happened in Sligo, where the State gave a grant of £120,000 to the Sligo Spinning Company. They stayed there for the qualifying time and pulled out. They put on an addition to their parent factory in Ardee and I understand they got another grant for that?—Again I speak subject to correction, but if that case cropped up now under the form of contract which now exists I think you would find An Foras Tionscal pursuing the party in the courts for the recovery of the grant. However, on the general principle, I, not being a businessman, would think it strange if somebody said to me: “Right. You put up a factory for £100,000. I will give a grant of £30,000, but I will not give you the grant if the industry is a failure.”

Deputy P. J. Burke.—If a factory went down after two years, having been refused a grant, they could say that if they were given a grant they would have a chance of carrying on.

433. Chairman.—Paragraph 65 of the Report of the Comptroller and Auditor General reads:

“Subhead P.—Shipbuilding Subsidy

65. I referred in previous reports to payments of subsidy in respect of ships bulit by Verolme Cork Dockyard, Ltd. The charge to the subhead, £150,000, represents payments on account in respect of the fourth, sixth and seventh ships built by the company. The payments were made on the recommendation of a special committee appointed by the Minister to examine the company’s claims.”

434. Have you anything to add, Mr. Fowler?

Mr. Fowler.—This paragraph is for information in relation to shipping subsidies. The total subsidies which have been paid amounted to £1,176,000 at 31st March, 1968. This amount relates to completed subsidy for the first three ships, £776,000, and payments on account for the fourth, fifth, sixth and seventh ships, £490,688.

435. Deputy Healy.—We were told last year that the percentage of subsidy is being reduced as each ship is built. Is that continuing?

Mr. Fowler.—I think so.

Mr. MacCarthy.—It has been on a down-sliding scale. The last one for which a grant was approved was described as the tenth ship and the rate of subsidy in that case was eight per cent. That was on the loss incurred on the building of a bulk carrier for Irish Shipping Limited. The previous provisions were much higher. I think they ranged from 25 per cent, for example, on the first ship, 15 per cent, 12½ per cent, ten per cent and we are down now to eight per cent. It has been eight per cent in fact from the sixth ship onwards.

436. Chairman.—May I ask the reason for the delay in finalising the subsidy here?— It is an appallingly complicated business. The thing is done through the committee C. & A. G. has mentioned. This special committee was appointed by the Minister and it has to be absolutely satisfied that the loss on a particular vessel is genuine. They have got to get in all the bills and then the committee can argue whether it is proper to subsidise the loss. It is a tedious formula and a long procedure. I know this sounds particularly “Civil Service” but, if it were done more quickly it might result in our paying out greater sums. Undoubtedly this committee is very careful in its analysis and so long as Verolme are not grousing about the delay we have not anything to worry about.

437. Chairman.—Paragraph 66 of the Report of the Comptroller and Auditor General reads:

“Subhead S.—Promotion of Buy Irish Campaign (Grant-in-Aid)

66. The National Development Association (Forbairt), established in March 1967 under the Companies Act, 1963, took over the assets and liabilities of the National Agricultural and Industrial Development Association and the National Buy Irish Council. The accounts of the Association are audited by me. The provision in the subhead, £20,000, was paid to the Association as a grant towards the cost of the Buy Irish Campaign.”

438. May I ask if industry made any contribution?—Not very much. The position now is that it has been indicated to this body that for the future the grant-in-aid assistance will be conditional on a pound for pound contribution. In other words, for every pound they can raise from industry the State will give a pound. That is the decision but it has not been implemented.

439. May I ask in respect of the grant of £20,000 how much did industry actually contribute?—Nothing so far as I can say.

440. Deputy Briscoe.—In this new system of the pound per pound will it be balanced? —Not the £20,000.

441. I suppose this is policy but I am a bit disappointed at the reaction of the people of Ireland with regard to the whole idea of this. Are we just pouring money down the drain?—It may be an unfortunate point of time in which to make a judgment. In the original Buy Irish campaign industry was undoubtedly doing a lot itself by advertising. The State then came in to give it a fillip by the Buy Irish Committee. That went on for three years and it was then merged with the old NAIDA which had been a voluntary body. They formed a new organisation which is called the National Development Association but that was only established in March, 1967, under the Companies Act. It took over the assets and liabilities of the NAIDA and the Buy Irish body so we are really judging them on the basis of the first year’s operation. Again, I have not even got the accounts of the NAIDA so in saying they got nothing from industry I can only say as far as I know they got nothing. I imagine if they got much we would have heard of it.

Mr. Fowler.—I suppose I can give information on this matter. I have here the accounts for March, 1968, and they show the grant-in-aid of £20,000. The only other significant figure on the income side of the account is that they earned £6,018 from fashion shows, parades, fairs, etc. In respect of those fashion shows, parades and fairs they had incurred expenses of £14,000, so that there was a loss of about £8,000. They took over from the Agricultural and Industrial Development Association the assets and liabilities which are shown net at £6,296. Expenses on salaries amounted to £6,628, on office expenses £3,754 and rents and rates £8,290. In the first year of operation there was an excess of expenditure over income of £1,788.

Deputy Briscoe.—I would like to say here that if we were spending £100,000 or £200,000 a year I would be all in favour of it, providing it was achieving results. Maybe we will need more money to do this properly. It certainly has not been getting home to the people of Ireland. They know all about Buy Irish but they forget about it in the shops. I would be all in favour of some way of bringing this thing home to them. The cost is immaterial, it is how much is needed to do the job. Perhaps some new formula should be formulated. If the thing was done properly it could repay itself 100 times.

Deputy Healy.—This is the first year under the new body and perhaps we should leave it longer.

442. Chairman.—Paragraph 67 of the Report of the Comptroller and Auditor General reads:

“Subhead T.—Castlecomer Collieries, Ltd.

67. Reference was made in previous reports to the provision of financial assistance for Castlecomer Collieries, Ltd. A further £65,000 was paid to the company in the year under review bringing the total financial assistance from public funds to £180,480 at 31 March, 1968.”

443. As this paragraph deals with the Castlecomer Collieries could the Accounting Officer say anything about the closing of the mine?—I do not think there is anything I can say. As you know, it has been decided not to continue operation of the mine and that is purely a matter of Government policy.

It has been closed already?—Yes.

444. Deputy P. J. Burke.—On subhead K —Export Guarantee Arrangements under the Insurance Act, 1953—what does this consist of?—What is provided here is the grant we would have to make in the event of our making a loss on this scheme. It is an insurance scheme. The fact that there is no expenditure means that there was no loss. In all likelihood if there was a substantial loss the Dáil would get a special opportunity to look at it by Supplementary Estimate.

445. Chairman.—In respect of subhead J —Grant to An Foras Tionscal (Grant-in-Aid)—I notice that expenditure was less than the grant. There were three attempts made to estimate the grant? There was the original, a supplementary, and then some deduction?—We do our best with An Foras Tionscal. The great trouble is that they give their estimates at various points. The normal way with the main estimate is that we are talking about it in November and their tendency is to exaggerate the requirements and be optimistic about the amount they would spend. We try to cut them back to a realistic figure. We may be overpessimistic and leave them short. The situation is reviewed over the year to see if a Supplementary Estimate is needed. The mistake arose this year at the point at which the Supplementary Estimate was being sought. We must have looked for more by Supplementary Estimate than would be sufficient. That could arise from the fact that legal formalities would be a bit protracted. We find this always where we have a grants system. Even when they are, in the Technical Assistance Scheme, paid directly by the Department we have much the same situation. I could agree that it is unsatisfactory.

446. Chairman.—With regard to subhead R—Temporary Assistance for Industry— what was the purpose of this?—That was the scheme which was introduced when the British imposed their import surcharge some two or three years ago. The State here undertook, in the generality of cases, to pay 40 per cent of the surcharge for the exporters, with larger percentages where the percentage of his export business was high in relation to his annual turnover. We paid these on production by the exporter of the British customs receipts for the temporary import surcharge. We recouped him the 40 per cent.

Chairman.—That is now terminated?—

Yes, though some arrears of claims continue to come in.

Deputy P. J. Burke.—It worked very well.

447. Chairman.—With regard to subhead V—Flour Millers’ Losses—is that type of loss likely to be repeated in future years?—

Functions in regard to cereals have now gone over to the Department of Agriculture which has taken on the administration of the Cereals Acts. It is hard to say whether provision for losses would be repeated in future years. A very unusual situation arose in that year.

The witness withdrew.

VOTE 25—CHARITABLE DONATIONS AND BEQUESTS.

Mr. J. S. Martin called and examined.

448. Deputy Healy.—With regard to subhead A—Salaries, Wages and Allowances— might I ask is the vacancy mentioned in the explanation now filled?

Mr. Martin.—There is one typist’s post to be filled still.

449. Deputy Briscoe.—How many people altogether are employed in your office?—

Twelve, inclusive of the vacancy, apart from the commissioners who are an unpaid body and comprise of a board of eleven members.

Twelve people in your Department are entirely responsible for this particular section, Charitable Donations and Bequests, and nothing else?—Nothing else.

Deputy Healy.—They are not overpaid.

Deputy Briscoe.—In this age no one is overpaid?—We are the smallest in the entire list of votes.

You get into less trouble as well?—I can not go all the way with you on that. We get into tangles occasionally but a charitable view is taken of them.

Chairman.—Thank you very much, Mr. Martin.

The witness withdrew.

VOTE 47—SOCIAL WELFARE.

Mr. Ó hUanacháin called and examined.

450. Chairman.—Paragraph 85 of the Report of the Comptroller and Auditor General reads:

“Subhead E.—Payment to the Social Insurance Fund under section 39 (9) of the Social Welfare Act, 1952.

85. Payments from this subhead to the Social Insurance Fund in the year under review amounted to £13,219,000. These payments are subject to adjustment when the audited accounts of the Fund are available.”

451. Chairman.—Has Mr. Fowler anything to add to that?

Mr. Fowler.—Paragraph 85 is an informative paragraph dealing with claims that have been made on the Vote for the purpose of making up the deficiency between the income and the expenditure of the Social Insurance Fund. The adjusted figure based on the audited accounts of the fund is £13,356,828 which represents a State contribution of 38.3 per cent towards the income as compared with the contribution of £13,403,549 representing 40.1 per cent for the previous year—1966-67.

452. Chairman.—May I ask the Accounting Officer how the percentage contribution by the State to the fund varied during the last few years?

Mr. Ó hUanacháin.—It has fallen by a slight percentage. In the year 1967-68 the State contribution represented 38.3 per cent, in the previous year—1966-67—it was 40.1 per cent and in the year 1965-66 it was 39.4 per cent and in 1964-65 37.8 per cent.

453. Paragraph 86 of the Report of the Comptroller and Auditor General reads:

“Social Assistance Overpayments

86. Sums recovered in respect of overpayments of social assistance charged in prior years’ accounts were:—£26,178 in cash credited to appropriations in aid and £6,110 withheld from current entitlements. Overpayments amounting to £3,230 were treated as irrecoverable. The total amount of overpayments not disposed of at 31 March 1968 was £68,125 as compared with £68,559 at 31 March 1967. During the year twenty-one individuals were prosecuted for irregularly obtaining or attempting to obtain social assistance and convictions were secured in nineteen cases.”

Mr. Fowler.—This paragraph deals with overpayments of social assistance.

454. Deputy P. J. Burke.—How is that made up? Is it people on unemployment benefit or is it old age pensioners or people on special allowances?

Mr. Ó hUanacháin.—This item deals with social assistance and it covers old age pensions—non-contributory, widows’ and orphans’ pensions—non-contributory and unemployment assistance. It does not cover any of the benefits under the insurance scheme.

455. I suppose the most difficulty has been with the non-contributory pension?— Non-contributory old age pensions from the greatest part of these figures, unemployment assistance next, followed by widows’ and orphans’ pensions and then, of course, there are some smaller items like children’s allowances. There are also, of course, overpayments under the insurance scheme.

456. Chairman.—I take it that that arises when cases are misrepresented?—It would arise when means are not declared at the time of payment but are discovered later.

457. Deputy Gilhawley.—Overpayments amounting to £3,230 are shown as irrecoverable. In what circumstances do such cases arise?—These arise from cases where people die and have no next-of-kin or when people go to another country and it is not then possible or worthwhile for us to pursue the matter any further. We cannot write off an amount as being irrecoverable without the sanction of the Department of Finance.

Deputy P. J. Burke.—The figure £3,230 is very small for the whole country.

Deputy Gilhawley.—I am glad to know that overpayments are recoverable from the next-of-kin.

458. Deputy Healy.—On subhead A— Salaries, Wages and Allowances—have all the vacancies been filled or almost filled?— At the moment, or in the year of account?

Deputy Healy.—At the present time?— We always have a large number of vacancies unfilled. It is very difficult to get staff when you need them. When people die or retire or when girls get married we try to replace them as quickly as possible but the Civil Service Commission has its own way of dealing with the matter and they have their difficulties. There is always a time-lag.

459. Deputy Healy.—Would the difficulties be in the junior grades?—Mainly in the junior grades.

460. Deputy P. J. Burke.—With deaths, retirements and girls getting married, the percentage must be very high each year?— Yes, we have a very large turnover now. Most of the staff at headquarters are girls and, of course, for them, the turnover is very great. I cannot say if we have any figures readily available.

461. Deputy Briscoe.—Do many of these girls return afterwards?—If they are established civil servants they may not return after they get married.

Deputy P. J. Burke.—Of course, widows are re-employed?—Yes.

Deputy Briscoe.—It would solve a lot of problems if women who get married could be retained.

462. Chairman.—Has there been a drop in staff? I notice that on salaries, wages and allowances there has been a drop in the figures?—I think that is largely explained by the staff which had gone to the Department of Labour.

Deputy P. J. Burke.—That is true?—A limb was cut off.

463. Chairman.—On subhead I—Unemployment Assistance—has there been a not inconsiderable increase in unemployment assistance?—Yes.

464. How does that arise?—Firstly, there were increased benefit rates, assistance rates. Then there was the abolition of the unemployment period orders.

As regards the Western counties?—Not solely the West. It applies to a particular class of person.

465. Deputy Briscoe.—Have you any way of knowing how many of the unemployed, or what could be termed unemployable, have not been employed for, say, two years or more? In other words, could we get a realistic picture of the people who are out of work temporarily? We all know there are a lot of people who would never work in a fit and these are also included here. Is there any plan on foot in the Department to give a breakdown of this?

Deputy P. J. Burke.—In other words the hard core we have there that will never be employed?—We have the material there to provide the statistics on this point. I think some information is published in a booklet called “Trend of Employment and Unemployment”. The Department of Labour gets a special return on that subject now. My own comment would be that if employment was there for people whom we may think were a hard core they might not be a hard core.

Deputy Briscoe.—But somebody who has not worked for two years or more has a problem to rehabilitate, to get his confidence back?

466. Deputy P. J. Burke.—Yes, but you have a big number now that have gone on unemployment insurance from 65 to 70. That would be an interesting figure to get? —The figure is about 5,000 in that age group.

467. Chairman.—On subhead N—Extra Statutory Grants—what are these grants?— These are payments made to persons in various circumstances where, for instance, they are entitled to benefit but for some reason or another did not obtain the benefit, perhaps because of a statutory time limit, but where, in equity, it was felt they should get it when their title was certain.

468. Deputy P. J. Burke.—What type of persons?—Any type of beneficiary. For instance, where a person has a title to a particular benefit and because the time limit for paying that benefit has expired and the person’s title was not in doubt and there was no power under the statute to make the payment, the Minister has discretion, with the approval of the Minister for Finance, to make an ex-gratia payment.

469. We have come across the case of old age pensioners who through carelessness or some other reasons have not applied for the old age pension although they would be entitled to it. They apply for it at 73 years of age but they are only paid from the date they are certified. I thought this might cover them?—In that case it is statute-barred from a certain date.

Deputy Briscoe.—Is it three or six months?—Three months in the case of the contributory pension.

470. Deputy P. J. Burke.—You pay them only from the date they applied?—Yes, from the date of the claim, as laid down in the Act, in the case of non-contributory pension.

Chairman.—This extra statutory grant cannot be applied in such cases?—No.

471. Deputy Gilhawley.—On Extra Remuneration, the note states that an Inspector of Agents received £235 and two Agents £317 each for the performance of higher duties. What is the explanation for that? —This has been the practice for a number of years now because the future of the agency system is uncertain. In the meantime these people who are getting extra remuneration are performing the duties of what were higher posts in our agency service.

Deputy P. J. Burke.—This is necessary for the smooth running of the Department? —Yes.

472. Chairman.—Members have been circulated with a copy of the Social Insurance Fund Accounts.*

473. Deputy Briscoe.—On the accounts, are you in a position to calculate how many people do not bother claiming what they are entitled to? For example, you could take marriage benefit, maternity allowance or anything like that where people have actually sufficient stamps and do not bother. Have you any way of knowing how many are involved?—I do not think we have any statistics.

Deputy P. J. Burke.—There would be very few.

Deputy Briscoe.—There are some.

474. Deputy Healy.—In regard to the item in the accounts, Payments to other countries under Reciprocal Arrangement, £34,908, how do they arise?—This relates to our reciprocal agreement with Great Britain, including Northern Ireland, where the arrangements provide that people with certain contributions paid in one country may be paid benefits in the other country. The sum for adjustment is worked out with the assistance of the British Government actuary. Under this financial arrangement certain payments are made outside the country, depending on the movement of people and the type of people they are, their age and so forth.

475. Chairman.—If a person is entitled to certain social welfare benefit in Great Britain and that person comes back here does he receive the same amount of social welfare benefit or assistance as he would if he remained in England or is a deduction made here?—There is no deduction made here.

476. Does he receive the same amount?— It depends on what the benefit is. If he is in receipt of retirement benefit in England then he is paid retirement benefit by the British authorities when he comes to Ireland and we have nothing at all to do with it; but in the case where the insurance record of the person in England is linked with his insurance record here for the purpose of ensuring that the man’s entitlement to benefit will be continued, then it is a feature of this agreement that the benefit is at the Irish rate. That is broadly speaking what happens.

477. If a person has been employed entirely in Britain and then is on unemployment assistance there and comes back here does he get the unemployment assistance rate in Britain?—No. Each of the benefits must be looked at separately. Unemployment benefits are a very special case. The arrangement there is particularly limited. When a person comes from England a number of his contributions, 26, are transferred to this country to enable him to get certain benefits here if he is unemployed here. Of course, if he is unemployed here he gets our rate of benefit which is lower than the British rate.

478. If the person has worked in England only and has stamped his card so to speak why does he not get the unemployment benefit and the unemployment assistance he would get if he remained in England?— That is something we would have to pay from our own fund here and we would not have received the benefit of his contributions if he worked in England.

479. Would the British social welfare not be prepared to pay?—They would be prepared to pay if he remained in England because to their mind unemployment is unemployment in Britain not Ireland. They would not pay him benefit any longer if he comes to Ireland. Under the agreement if he comes to Ireland they would pay only a certain number of contributions to us. This is a limited number but enables us to pay him unemployment benefit here if he should need it.

480. Deputy P. J. Burke.—Under the Receipts from other countries under Reciprocal Arrangements is it only one country which is involved?—The Isle of Man and Northern Ireland are involved also.

Our payment to those areas is £34,908?— Yes.

481. Deputy Healy.—If a person left here after working for 30 years in the one job and went to England for maybe 12 months and then came back here would he forfeit all unemployment assistance or benefit because of that 12 months away?—It would depend. Unemployment benefit is what is known as short term benefit, not long term benefit. His entitlement to receipt of it is governed by his contribution in a particular year fairly close to the time he makes the claim. If he goes to England having been employed here for a very long time the ordinary contributions do not count for unemployment benefit unless he returns within a certain period. If he goes to England and has a year’s contributions there and comes back he is also covered by the reciprocal arrangement.

482. Deputy Healy.—This is perhaps a matter of policy but I know a man who had to go to England, after being employed 30 years here, because his daughter was ill and her husband had died. He stayed there for 12 months and when he came back he found it was the same as if he had never worked. I do not think that should be right.

Deputy P. J. Burke.—He was not working?

Deputy Healy.—He was not working in England?—All the contributions are not lost. They give, for example, entitlement to widows’ pension. Unemployment benefit depends on contributions in recent years.

483. Deputy P. J. Burke.—Supposing just for the sake of argument the man is 64 years of age. Take the case mentioned by my colleague Deputy Healy. The man is 64 years of age and stays in England for a year and one month and does not work there. He comes back here and registers as unemployed. He claims he is over 65 years and has been working all his life. What is his position?—Are you assuming he gets no credit for the short period in England?

We will say he visited a relative and was 65 years and one month. Would that man be deprived of benefit?—He might be deprived of unemployment benefit but he could perhaps get unemployment assistance, and while doing so, he could be gaining credits which would restore his title to unemployment benefit.

484. Chairman.—Under this reciprocal arrangement for social insurance you have receipts amounting to £162,000 odd and you have payments of £34,000 odd so you have made a net gain of £128,000 under the reciprocal arrangements. Could it happen that you would have a net gain at the expense of the insured person?—No. I do not think that could be said.

Chairman.—Where does it come from?

Deputy P. J. Burke.—There are more people coming in from England to Ireland than from Ireland to England?—No. More going from Ireland to England. As regards disability benefit, there is a certain addition given to us under the financial arrangements in respect of people who come back from England because of the higher proportion of such persons who are sick returning from England than of those going to England. When, under the reciprocal agreement, we pay benefit here on British contributions, we obtain something more than the average credit so that we can pay the benefit here.

Chairman.—That is all, Mr. Honohan. Thank you very much.

The witness withdrew.

The Committee adjourned.

* See Appendix 18.