Committee Reports::Interim and Final Report - Appropriation Accounts 1969 - 1970::28 June, 1973::Report




1. The Committee has recently received the observations of the Minister for Finance on paragraph 81 (a) of its Report dated 13 July 1972 and will examine them in due course. In regard to paragraph 81 (b and (c) and paragraphs 82-88 of that Report, the Committee notes the reply of the Minister for Finance to Dáil Question No. 47 of 20 June 1973 and will await developments.


2. In his minute dated 30 January 1968 the Minister for Finance promised to keep the Committee informed of development in the matter of the recovery of duplicate payment made to certain local authorities for water supplied to State owned premises. The Committee will be glad to learn whether this matter has been brought to a conclusion.


3. The Committee notes the statement of the Minister for Finance that the Chief State Solicitor was pursing a claim of £211 due to the Forestry Division and it would be glad to learn whether this sum has been recovered and, if not, whether there is a likelihood that it will be recovered in the near future. Having regard to the accumulating cost of pursuing the claim over a period in excess of ten years and the fall in the real value of money during that period the Committee has doubts as to the wisdom of expending any additional public moneys on the further pursuit of this claim.


4. The Committee notes that during the three years ended 31 March 1971, a cross-check of turnover tax returns with audited accounts presented for income tax purposes revealed irregularities in approximately 2,400 cases. In most of these cases little or no evidence of evasion was discovered and they were settled on payment of the amount due, with interest. The Committee further notes that of 75 cases in which evidence of evasion was discovered 45 were successfully prosecuted and the remaining 30 were settled on the basis of payment of arrears of tax together with interest and an appropriate addition for penalties.

The Committee is aware that with the introduction of value added tax, turnover tax is no longer leviable and it recalls that it has been claimed that the procedures for charging and collecting the new tax are such as to reduce considerably the opportunity for evasion. The Committee hopes that this claim will prove to be soundly based. Nevertheless it would like to be assured that, where possible, cross-checking will be continued in order to ensure that any irregularities that occur are promptly discovered and dealt with.


5. The Committee is seriously concerned to learn that it is not envisaged that will be any development on the question of a parliamentary review of State sponsored bodies until the main recommendations in the Report of the Public Services Organisation Review Group in regard to the restructuring of the public service have been decided on. The importance of the accountability of State sponsored bodies has been stressed by the Committee in a number of its recent reports and the Minister for Finance in his minute dated 21 April 1965 and in a number of subsequent minutes assured the Committee that the matter was under consideration. The Committee is strongly of the opinion that a decision on this very important matter is long overdue and cannot agree that it should be postponed until the recommendations of the Review Group have been decided on.

The Committee does not propose to repeat what it has said in previous reports on this subject. It considers that the need for urgent action should be obvious in the light of the ever-increasing share of voted money expended by these bodies. Indeed it feels that its work is stultified to a large degree by the failure to make these State sponsored bodies subject to public accountability. It urges once more that an early decision be reached and it is pleased to note that the Committee on Reform of Dáil Procedure in its Report dated 1 December 1972 also stresses the need for an urgent decision on this matter.

6. The Committee has on a number of occasions drawn attention to the considerable sums which have been paid out of public funds as professional fees in connection with large building contracts and has pointed out that as long as such fees are measured against costs instead of against work performed there would be little incentive to economy. A suggestion made by the Committee in an earlier report that it should be possible to negotiate a fee in the case of a large contract did not find favour with the professional bodies representing architects, quantity surveyors and civil engineers.

In his minute dated 29 January 1969 the Minister for Finance pointed out that the provision of profession services was referred to in the N.I.E.C. Report on Full Employment in the context of restrictive practices and hr indicated that the suggestion made in that Report that such practices should be capable of review by the Fair Trade Commission was under consideration in relation to the third programme for Economic Expansion. He added that the question of professional fees generally would fall to be considered in that connection.

The Committee notes that the Restrictive practices Act, 1972 provides for the holding of an enquiry into the conditions which obtain in regard to the provision of any service and it would be glad to be informed whether it is proposed to hold such an enquiry into the conditions which obtain in regard to the provision of professional services in connection with large building contracts and, in particular, into the level of professional fees charged in connection with such contracts.

7. In his Report on the Appropriation Accounts for 1966-67 the Comptroller and Auditor General drew attention to 1,000 cases in which employers had failed to send in monthly returns of Income Tax. under the P.A.Y.E. system. The Committee is glad to learn from the Minister that the number of such cases outstanding had been reduced to 22 by June 1971. It would wish to be assured that the necessary steps have been taken to keep the number of defaulting employers in P.A.Y.E. Cases at a minimum at all times.

8. The Committee notes the steps taken in recent years to improve the recruitment procedures for the Civil Service generally and also the special schemes designed to improve recruitment in particular grades. It hoped that these will succeed in reducing the not inconsiderable number of vacancies especially at entry grade levels which have persisted in some of the larger Department over a number of years. From its most recent examination of Accounting Officers the Committee has learned that such vacancies still occur though possibly not in such large numbers as existed previously. While the Committee would expect that improved recruitment procedures and special training facilities should go some distance solving towards the problem it considers that the importance of satisfactory salary levels and promotion prospects should not be underestimated. It wishes to be kept informed of the progress made towards a solution of the problem.


9. The Committee will be glad to receive further information on the subject of duplicate control of certain activities in the Department of Defence as soon as the examination of the recommendations of the Review Group relating to that Department has been completed.

Appendix 25.

10. The Committee welcomes the assurance by the Minister for Finance that the Department of Health exercises normal supervision and control over planning, development and expenditure in the case of hospital building projects financed wholly or mainly from the Department’s funds. These funds are made available by way of grant-in-aid moneys issued in the first instance to the Hospital Trust Board and distributed by the Board among hospital authorities.

The Committee notes that in recent years voted moneys have also been made available to the Trust Board towards meeting the deficits of voluntary hospitals. The Accounting Officer in evidence explained that, whereas the funds made available to the Trust Board from sweepstakes moneys were formerly sufficient to provide for the capital expenditure on building new hospitals in addition to meeting the deficits, these funds are no longer sufficient to meet even the deficits of the voluntary hospitals. As a consequence, an increasing share of the Board’s grants to hospital authorities falls to be met from Exchequer moneys. In the circumstances the Committee suggests that it is a matter for consideration whether such Exchequer moneys should in future be issued directly to the hospital authorities out of ordinary subhead moneys rather than indirectly out of grant-in-aid moneys as at present. Such a change would ensure that expenditure would be subject to audit by the Comptroller and Auditor General and to review by the Committee.

11. The Committee notes that the experts and the architect of the Department of Agriculture, who examined the documentation furnished by U.C.D. in relation to the capital works on Lyons Estate and who inspected these works, do not consider that there was extravagance in the planning of the buildings or in the actual costs of the work done. The Committee is not, however, entirely satisfied that sufficient attention was paid to the preparation of the plans and estimates for the development work or to its supervision. It wishes to be informed of the outcome of the appraisal by F.A.O. Mission of U.C.D.’s plans generally for the development if its Faculty of Agriculture and especially in relation to the development of the Lyons Estate.

12. The Committee notes that under the financial arrangements agreed with Córas Iompair Éireann the Departments of Education has full access to all accounts and information relevant to the school transport service. It wishes to be informed whether the Department’s officers have actually availed of such right of access in order to satisfy themselves that the C.I.E. charges in relation to the school transport service are fair and reasonable.

13. The Committee is pleased to learn that particulars of current expenditure on comprehensive schools will in be supplied to it. It considers that particulars of income, if any, should also be submitted and suggests that the information to be made available could best be supplied in the form of a receipts and payments account for each school.



Temporary investment of foreign borrowings outside the State

Appendix 48

14. The Committee noted that the opinion expressed by the Department of the Attorney General indicated that there was no ground for questioning the validity of section 4 of the Appropriation Act, 1965 as amended, having regard to the provisions of the Constitution. The Committee having again considered the matter in the light of the further comments of the Comptroller and Auditor General in his letter of 28 July 1971 and the discussion in the Dáil on 4 August 1971 is of the opinion that it is very undesirable that moneys borrowed for Exchequer purposes should remain outside the Exchequer Accounts longer than is necessary. It can see no valid reason why any such moneys should not be credited promptly to the Exchequer Account even while they remain temporarily invested outside the State and it recommends that the necessary amending legislation should be prepared.



Appendix 4.

15. The Capital Fund was set up under section 4 of the Central Fund Act 1956 to receive the equivalent of the proceeds of the Special Import Levy. The Fund might be applied for any purpose for or towards the cost of which public money are provided and which are conducive to the development or improvement of capital resources. The Special Import Levy was abolished as from 1 April 1959 and as from that date the income of the Capital Fund has been quite small, consisting of capital moneys repaid together with interest on advances from the Fund.

In the course of his evidence the Accounting Officer for the Department of Finance promised to consider a suggestion that it might make for financial tidiness of the Fund were wound up and he added that there might be room for some financial rationalisation not merely in relation to the Capital Fund but also in relation to other moneys. In a note which he has submitted the Accounting Officer informed the Committee that it was proposed to make provision in the next Finance Bill for the winding-up of the Capital Fund. He also stated that there were no other funds under the control of the Minister for Finance which did not continue to serve a useful purpose.

The Committee notes that section 41 of the Finance Act, 1972 provides for the winding up of the Capital Fund and it understands that the Funds has since been wound up and the balance in it transferred to the credit of the Exchequer Account. While the Committee welcomes the assurance that each of the other funds under the control of the Minister for Finance continues to serve a useful purpose, it considers that there might be some scope for financial rationalisation in relation to the numerous funds under the control of other State departments and it suggests that the Department of Finance as the central financial authority might examine this matter.


Appendix 5.

16. The Comptroller and Auditor General drew attention to the fact that although he had been the auditor of Irish Steel Holdings Limited since its establishment in 1947, the company at its annual general meeting in November 1969 passes a resolution appointing, with the prior consent of the Minister for Finance, another auditor. The Committee understands that in 1967 the Minister for Fiance refused to approve a similar proposal by this company. While the Accounting Officer of the Department of Finance did not inform the Committee of the factors which prompted the company to repeat its proposal or the Minister for Finance to approve it in 1969 he did say that what had happened in the case of Irish Steel Holdings Limited was not novel. He stated that some ten years earlier a policy decision had been taken that in the case of well-established commercial State bodies the Minister concerned would not oppose a request from any of them to appoint auditors other than the Comptroller and Auditor General.

In paragraph 5 of this Report the Committee repeats its call for an early decision on the public accountability of State sponsored bodies. Such accountability in its fullest sense requires that the accounts of a State body be subject to audit by the Comptroller and Auditor General and that its activities be subject to parliamentary review. In the circumstances the Committee considers that proposals by such bodies to dispense with audit by the Comptroller and Auditor General are to be deprecated.


Payments to Special Regional Development Fund Account (Grant-in-Aid)

17. In its Report dated 12 November 1970, the Committee expressed the view that grants and loans made from the Special Regional Development Fund might to some extent seem appropriate to the services provided by the Industrial Development Authority. In his minute dated 25 June 1971 the Minister for Finance stated that “the Industrial Development Authority would be precluded from assisting many of the projects aided from the Fund because the Industrial Development Act, 1969 does not envisage a role for the I.D.A. outside the industrial field nor does it empower the Authority to make loans. There is full consultation with the I.D.A. before industrial projects are assisted from the Fund”.

This matter came before the Committee once more when it was considering the Report of the Comptroller and Auditor General for 1969-70. In the course of his evidence the Comptroller and Auditor General pointed to the difficulty of ascertaining the total State assistance granted to an industrial concern because of the varying forms such assistance may take and because of the various agencies by whom it is made available.

State assistance for industrial, commercial and social purposes is made available by such agencies as Bord Fáilte Éireann, Gaeltarra Éireann, the Industrial Development Authority, the Agricultural Credit Company, Fóir Teoranta, Roinn na Gaeltachta, the Shannon Free Airport Development Company and the Special Regional Development Fund. While the Committee accepts that each agency has a special functional area nevertheless it is concerns lest there might be an overlap of function. The Accounting Officer for the Department of Finance has assured the Committee that as a general rule there is liaison between the various agencies with a view to preventing duplication of assistance. The Committee agrees that it is a matter of policy that the different aspects of State assistance should be handled by different agencies competent to deal with them. Nevertheless it is inclined to the view that some rationalisation might be profitably carried out. The administrative costs of servicing these various agencies is quite considerable and the cost of maintaining an efficient system of liaison between them so as to avoid overlapping cannot be insignificant. The Committee would welcome the further views of the Minister on this matter.


Appendix 13.

18. In paragraph 6 of its Report on its Report on the Accounts for 1968-69 the Committee referred to the large payments, totalling £75,519, made from the Vote for Transport and Power in respect of overtime. The Committee found it necessary to return to this matter in its examination of the Appropriation Accounts for 1969-70, in which year the sums paid from that Vote in respect of overtime had increased to £ 105,917. The Accounting Officer stated in evidence that these payments were made mainly to aviation radio officers attending to the maintenance and operation of radio equipment at the airports and that it would be very expensive to operate a service on a 24-hour shift seven days a week on a no-overtime basis. The Committee accepts that there will be always a need for some overtime but it is concerned at the high level of some of the payments made.

The Committee also wondered whether, in cases whether, in cases where sizable sums are being paid in respect of overtime duty, there was any system of inspection in operation to establish whether such duty was really necessary. A memorandum submitted by the representative of the Department of Finance indicates that the incidence of overtime is reviewed each year and that, ordinarily, authority for working payable overtime is given on the basis that it is cheaper or more effective to have the work done in the way than by employing extra staff. The memorandum added that, in relation to the overtime worked in the Department of Transport and Power, the question of employing additional staff with a view to eliminating overtime had been considered in the past but that it was found that this course could not be justified on economic grounds. The Committee is aware that vacancies in overtime grades are party responsible for large overtime payments being made to some of the airport staff and it hopes that the steps being taken to fill these vacancies will be successful. It recommends that this matter be kept under consideration.


Subhead E.—Scéimeanna Feabhsúcháin sa Gaeltachta

19. In the course of his evidence the Accounting Officer stated that grants totalling £97,652 were made by Roinn na Gaeltachta to 13 hotels and guest houses in the year under review towards the cost of improving their accommodation. These grants supplement grants made for the same purpose by Bord Fáilte Éireann. Bord Fáilte Éireann now publishes in its annual Report and Accounts a list of hotels and guest houses to which it has made accommodation grants, indicating the amount of the grant in each case. The Committee recommends that Roinn na Gaeltachta should publish particulars of its accommodation grants in note to its Appropriation Account.


20. The Comptroller and Auditor General drew attention to the fact that the cost of the extension to the National Gallery, for which a contact in the sum of £ 296,311 had been place, was expected to be in the region of £420,000. The increase in cost, apart from normal price variations (£23,000)was attributed mainly to inadequate estimates of cost for mechanical and electrical services (estimate £87,000; expenditure £124,500), the provision of restaurant and kitchen facilities, earlier excluded in the plans (£16,000), alterations to the entrance hall not included in the original specification (£15,000) and other measured variations (£20,000). The Comptroller and Auditor General was informed by the Accounting Officer that the increase in the cost of mechanical and electrical services, £37,500 on an estimate of £87,000, was due to increases under price variation clauses and to a number of variations and additions found necessary in the course of the work. The inclusion of the restaurant and kitchen facilities, originally provided for in the plans but later excluded, and the alterations to the entrance hall, for which no provision had been made in the original specification, would seem to indicate that this contract was carried out in a piecemeal manner. The Accounting Officer informed the Committee that the importance of accurate estimating is stressed over and over again and is fully appreciated by all the architects but in particular instances such as the National Gallery it is very difficult to see in advance all the detailed requirements. The Committee has on a number of occasions emphasised the necessity for adequate advance planning especially in large contracts and it is not entirely satisfied that shortcomings in the planning in the present case may not have contributed to the large discrepancy between the contract figure and the final price.

Appendix 41.


21. The Accounting Officer was questioned during his examination regarding the percentage of the land reclaimed with the aid of grants under the Land Project Scheme which had reverted to its undeveloped state. In a memorandum which he has submitted to the Committee he states that in a review of over 25,000 schemes, which were investigated in the 2-year period ended 31 May 1972, some 692 schemes or approximately 2.7% had not got the desired level of maintenance. The Accounting Officer added that this did not mean that the reclaimed lands had reverted to their original state but that they were deteriorating and if the neglect of maintenance continued over a number of years the lands would gradually revert to their original state.

While the memorandum submitted by the Accounting Officer does not indicate the actual of land that has been reclaimed with the aid of grants under the Land Project Scheme and the earlier Land Rehabilitation Project Scheme the Committee does not doubt that it is very sizable acreage. It has been estimated that a total of £55 million approximately, has been spent out of voted moneys under these two schemes. In the matter of maintenance of the reclaimed lands an overall failure rate of 2.7%, such as was revealed by the review mentioned above, would give grounds for serious for serious misgivings about the control and follow-up procedures in operation in connection with the Land Project works.



28 June 1973