Committee Reports > List of Committees > Dáil > 1980 > Committee of Public Accounts > Report - Appropriation Accounts 1978

MIONTUAIRISC NA FINNEACHTA

(Minutes of Evidence)

Déardaoin, 15 Bealtaine, 1980

Thursday, 15th May, 1980

The Committee met at 11 a.m.

DEPUTY O’TOOLE in the chair.

Mr. S. Mac Gearailt (An tArd-Reachtaire Cuntas agus Ciste) and Mr. C. K. McGrath (An Roinn Airgeadais) called and examined.

VOTE 7—COMPTROLLER AND AUDITOR GENERAL

Mr. P. L. Mac Domhnaill called and examined.

494. Chairman.—Did you suffer any loss of staff?

—We suffer constantly from the problem of losing staff, mostly to the semi-State sector and to other Departments. During last year, for instance, we lost two staff at a fairly senior level both of whom went to the semi-State sector as financial controllers. We also lost some staff to Revenue on the inspectorate side and some to the department of the Public Service on the computer side.

495. What is your current position in respect of staff?

—To make up the shortfall we have to recruit staff at the level of executive officer. If we lose staff at senior level we generally have to promote people into those posts. At present we have six vacancies altogether, four of which are on the audit teams, the others are typing staff in Head Office. We have four vacancies at present at the basic level of assistant auditor.

496. I presume you are making provision to have replacements for those people recruited?

—We immediately ask the Civil Service Commission to provide replacements. But, of course, replacement can take a little time. They have to go through the process of calling people and sending them to us; this takes some time.

497. Deputy Leyden.—What is your audit situation generally? Is the Western Health Board’s problem holding up your overall work? I presume the Health Board audits are dealt with by your office?

—No, the Health Board audits are the responsibility of the Local Government auditors.

498. Do you not have any contact with them at all?

—We do have contacts with the Local Government audit people. As is mentioned at various stages in the Report of the Comptroller and Auditor General, we do get the reports of Local Government auditors on areas where central government funds go through local authorities; for instance, in the case of motor tax accounts. We do get the reports of the Local Government auditors in relation to the Health Boards. In recent years we have reported to the Committee on the question of delay in the Health Board audits.

—I merely thought you would be fully aware of the situation—the difficulty with this High Court case and the frustrations and difficulties facing the whole audit control in the country at present. I wondered was it your responsibility?

—No, it is not our responsibility.

499. Deputy Filgate.—On subhead A—Salaries, Wages and Allowances—there is a note reading: “Saving due mainly to delay in filling vacancies and to staff changes involving appointments at lower salary points…”. Would the Accounting Officer elaborate on this explanation?

—This is the kind of thing I was mentioning. When a senior member of the staff retires, or perhaps goes to one of the semi-State sectors, somebody else has to take his place. He may have been on the maximum of his scale and the person promoted would come in at the minimum of the scale.

The witness withdrew.

MINUTE OF THE MINISTER FOR FINANCE ON THE COMMITTEE’S REPORT (Paragraphs 29 and 40) ON THE APPROPRIATION ACCOUNTS, 1977

Mr. M. P. Healy called and examined.

500. Chairman.—Paragraph 29 of the Committee’s Report concerns the armoured personnel carriers. As you will recall, we have discussed this with you in the past. Have the Army purchased any more personnel carriers or have they any intention of doing so?

—We have, as you probably know, a contract with the company for a supply of five. We got delivery of all five but there were difficulties which the Army identified and asked the company to rectify. They have an obligation under the contract to make good any defects which are noticed and they also have an obligation for one year after delivery to ensure that any further defects are also remedied. The Army found a number of things wrong and we are still in the course of negotiation with the company to put them right. I should add that at Question Time this afternoon in the Dáil the Minister for Defence will be answering seven questions about the deficiencies and delays that have arisen in fulfilment of the contract. There is no provision in the 1980 Vote for Defence to make any further purchases. That does not rule out the possibility that we will be buying more armoured personnel carriers, but not at present.

501. In paragraph 29 of the Finance Minute there is reference to the IDA’s feasibility study of proposals to purchase and they gave reasons. The Minute states:

(b) Exchequer savings through purchase of vehicles cheaper than those which could be imported;

While this may have been the intention, or the aspiration, has this proposal, in fact, worked out cheaper?

—Yes, they are cheaper than the imported armoured personnel carriers we have been buying. Our main holding of armoured personnel carriers is Panhard and they cost us more than the Timoney.

502. Have the Timoney been handed over to the operative units?

—They are not in operational use.

503. They are of no use to you at the moment until the problems have been rectified?

—That is true. They are not in operational use at all but on the contract price the figure is less than the contract price for an imported vehicle. All subsequent expenditure in relation to making good the defects will be the responsibility of the company, not of the State.

504. The Finance Minute also states:

The drawings, jigs, materials and constructions forming part of or relating to the research and development work on the three prototypes… remain the property of the Department.

Of what use are those to you? Have you any proposals for their further use?

—We are at perfect liberty to hand those over to another company and ask that company to produce them for us. In other words, we are not bound to Timoney. We have all the know-how in the jigs, drawings and other documents which would enable us to entrust this work to a different contractor.

505. Will you clarify further the question of whether or not this company has disposed of their drawings, plans and jigs to outside sources for production of a prototype?

—Not in relation to the vehicles we bought. The company insist that any business they did with any other countries relates to vehicles which are not the same as ours.

506. Would they be substantially different to the prototype you have?

—Yes. We have in a journal called Ground Defence International photographs and information in relation to at least a dozen other types of similar vehicles produced by Panhard, Shorland and Fiat in various other countries. There is not an awful lot of difference looking at the exterior of those vehicles. The specification for those vehicles shows that the BDX——

That is?

—That is the Belgian one which is made by Beherman—Demoen also from a design produced by Timoney but the specifications are not the same as the vehicle produced for the Army.

507. Are they substantially different? What are the differences?

—There is a difference in dimension, weight, power, speed, range, weaponry, antiguerrila systems. For example, the Belgian one is intended largely as a gendarmerie vehicle for riot control. It does not have the gunturret. which our vehicles have and which are required for the Army vehicles. We are assured that they are not the same. The reason Professor Timoney asked for permission to bring one of our prototypes to Belgium was simply to demonstrate his capacity to design a vehicle but not necessarily that he was going to commit himself to producing the same vehicle in Belgium.

508. Could he have under the contract with your Department if he wished?

—He did not sign the contract with us.

509. You own all the documentation, jigs and drawings relating to the prototype which is in your possession? Could he have produced that prototype elsewhere and sold it to, for instance, the Belgian forces?

—Presumably he had the design capability to produce it.

And you could not have stopped him?

—No. The Chief State Solicitor and the Attorney General advised us that, while to some extent he was committed to our terms by virtue of part performance of his contract and the correspondence, but not in a signed agreement, he was in the position that, while his commital to our contract was one thing, if we tried to stop him from doing something else for anybody else we would be, perhaps, unduly restrictive of his activities. There is no doubt about it that Professor Timoney has the design intelligence, brains and ability, and we see no reason why he could not have done the same thing for any other country.

510. Are you happy with the way the financing of this project was handled from the beginning?

—As far as the money side of it is concerned, we paid £180,000 on our research and development project and for that we got three prototypes. The actual cost of such a vehicle is more than the £60,000 per vehicle for three prototypes. It costs more to produce that vehicle for regular supply. We are paying more on our present contract than that so that the expenditure was by no means disproportionate on a research and development project. Very often, as you know, in other countries research and development run to vastly greater figures.

You misinterpreted me. I am asking not about the amount of money so much as the format adopted.

—With hindsight, I am quite prepared to agree that we might have tackled it differently, and we probably, in future, would never agree to allowing work to commence until the contract had been signed. This was a new venture and we had advice from the IDA about the procedures that we should adopt. I am not sure if it is mentioned in the Minute of the Minister for Finance, but we certainly would agree that no money would be paid from the Defence Vote on foot of an arrangement like that until agreement with the concern had been signed. There is one other point we should mention. A reference was made to a separate subhead in the Vote for any future research and development. We would have no objection to having a separate subhead for that. It is appropriate that that should be done if we ever had a similar research and development undertaking in the future.

511. In the Minister’s Minute on paragraph 40 of the Committee’s Report there is reference to the Department of Defence, which concerns the hireage charges for Army helicopters. The Committee is glad to note that the Department have a review procedure in operation on an annual basis. This, I presume, is working out satisfactorily?

—Very satisfactorily. You will remember that there were two aspects of this. One was commercial hireage and the other was the provision of Army helicopters as air ambulances fleets. We have arranged that, instead of actually charging the health authorities for the availability of the helicopters the transactions would be met by a note in the Appropriation Accounts, because the health authorities’ money which was being paid to us for this service came from the Department of Health. In future, there will be no unnecessary money transactions.

VOTE 46—DEFENCE

Mr. M. P. Healy further examined.

512. Chairman.—Paragraph 62 of the Report of the Comptroller and Auditor General reads:

“Fishery Protection

Expenditure of £7,883,571 including £4,435,250 charged to the Vote in the year under review has been incurred on the purchase and equipping of three fishery protection vessels and the leasing, equipping and operation of another vessel and of two aircraft for inspection and surveillance measures to be carried out in Irish fishing zones under the EEC system of conservation and management of fishery resources of Member States. A sum of 46 million European Units of Account, equivalent at the date of this Report, to approximately 31 million Irish Pounds, is recoverable in respect of eligible expenditure incurred in the implementation of these measures in Irish fishing zones in the period 1 January 1977 to 31 December 1982. Total expenditure in that period is estimated at £60.5 million of which £41.3 million, approximately, is accepted by the EEC Commission as qualifying for recoupment. The balance, £19.2 million, represents the operational costs of the purchased vessels in respect of which the Commission is not prepared to make any contribution. A claim for recoupment of £7,633,178 of the expenditure already incurred was submitted to the EEC in December 1978.”

Mr. Mac Gearailt.—This paragraph is for information. It refers to expenditure from this Vote on fishery protection vessels and aircraft to be used for inspections and surveillance in Irish fishery zones under the EEC system of conservation and management of fishery resources of Member States. I understand that the claim for recoupment of £7.6 million mentioned in the paragraph made in December 1978 has since been met.

513. Chairman.—There was a delay in recovering this sum. What caused the delay?

—The delay was in Brussels. The final arrangements under which the recoupment was to be set up simply had not been cleared. The Comptroller and Auditor General’s note refers in the last sentence to a claim for recoupment of £7,633,178, as opposed to an expenditure in the first line of £7,883,571. I am glad to announce that the full amount of £7,883,571 has been claimed and paid, so we are completely up to date. The claim in respect of 1979 expenditure will be submitted very shortly. It must, under the rules, be submitted by 30 June of this year. It is being prepared and we shall be in a position to submit it soon.

514. Paragraph 63 of the Report of the Comptroller and Auditor General reads:

“Subhead Z.—Appropriations in Aid

A sum of £507,516 brought to account as Appropriations in Aid in the year under review was received from the United Nations in respect of expenditure incurred on the provision of contingents of Irish troops to serve with the United Nations peace-keeping forces in Cyprus and Lebanon. I have been informed by the Accounting Officer that at 31 December 1978 the amount still due from the United nations in respect of expenditure which arose from requests for forces to serve overseas was as follows:

The Accounting Officer has stated that the question as to the action to be taken regarding the amount outstanding in respect of expenditure relating to Lebanon is being pursued urgently through the Department of Foreign Affairs.

Further expenditure amounting to £804,144 was incurred in replacing, with Army Reservists at home, troops serving in Cyprus. Of this amount £274,920 has been claimed from the United Nations and claims in respect of the balance of £529,224 have been prepared but not submitted. No recoveries have been effected in respect of this expenditure. The Accounting Officer has informed me that when the first of these claims was presented to the United Nations, the UN Secretariat replied that the relevant UN Fund was not in a position to provide for and bear these costs and pointed to the severe financial difficulties faced by the Fund. It noted that Ireland was the only country making such a claim and requested that the decision to present it be reconsidered. The Accounting Officer stated that following subsequent correspondence and discussion between the Departments of Defence, Foreign Affairs and Finance it had been decided that Government approval be sought to absorb the costs claimed in respect of the employment of reservists on the understanding that the United Nations confirms its agreement that such claims are admissible and would be regarded as having been absorbed by the Irish Government.

The Accounting Officer further stated that, in addition to the expenditure relating to the provision of troops and reservists, a sum of £434,070 of which £392,000 related to Cyprus, was due from the United Nations at 31 December 1978 in respect of pensions, allowances, etc. (Vote 47.—Army Pensions).”

Mr. Mac Gearailt.—This paragraph is for information. It sets out the position at 31 December 1978, as notified to me by the Accounting Officer, regarding recoupment from the United Nations in respect of the cost of providing Irish contingents for service with various United Nations peacekeeping forces.

515. Chairman.—In relation to the first operations listed, the Congo and Rhodesia, the sums outstanding are comparatively small and at this stage the Congo account is somewhat dated. What is the likelihood of recouping the sums of £873 and £422, respectively, at this stage?

—The money for Rhodesia should be all right, but the prospects for the Congo are very poor. The difficulty is that the United Nations fund each of these operations from a separate account. If they have money available on more recent operations, say the current UNIFIL one, that money cannot be diverted to pay us the balance due in respect of the Congo. I am afraid we shall have to forget about the Congo account. I understand from our colleagues in Foreign Affairs that they have found out from the United Nations that the only way in which more money could be provided for the Congo fund would be from voluntary contributions from some of the Member countries. If people decided, out of the goodness of their hearts, to make an additional contribution to the Congo fund at this late stage that would bring it back into the black. That would be our only hope, but we do not think that that is on.

516. The practical solution might be to write it off?

—We have not taken a decision to write it off as long as there is the faintest chance that there might be a voluntary contribution to the fund.

Another alternative, of course, is that a new account might open up on the Congo. I hope it will not.

Deputy Horgan.—Is there a prospect of bilateral negotiations with the Belgian Government?

517. Deputy Filgate.—There is a very insignificant sum outstanding in respect of Rhodesia. What is the up-to-date position in respect of the other accounts?

—That small sum of money is concerned only with the travelling and incidental expenses of an officer who was made available as a Staff Officer in relation to the possibility that there might be a United Nations presence in Rhodesia. He had to go to Rhodesia and to London. Some of these expenses were paid by the United Nations direct, but they owe us £422 for sums which we paid. We consider that the money will be paid and I do not think there is a problem there. In relation to Cyprus, the sum shown as outstanding in the Comptroller and Auditor General’s report is £21,211. There were three further claims in 1979, which bring that up to £41,000. We got a payment in June 1979 of £4,000 leaving the outstanding balance on 30 April 1980 at £37,000. We are constantly pressing the United Nations, through the Department of Foreign Affairs, to have these claims settled. We have not given up hope on Cyprus. In the Middle East, the figure shown was £69,022. The position is that there were some additional claims arising out of the Middle East operation. That £69,022 has gone up to £82,000 now. Lebanon of course is the big one. Lebanon is shown on the Comptroller and Auditor General’s Account as £2,989,000. It is described as partly estimated. That figure has been revised. We were including VAT and import duty and we learned that that will not be allowed because VAT and import duty are not a loss to the State. It is coming into another part of the State’s coffers so we cannot very well claim it from the United Nations. It had been tentatively included originally. That figure of £2,989,000 has now been adjusted to £2,349,000. There is a reduction of £640,000 there. Of course, the outstanding amount is building up all the time because it is a continuing operation. We have had payments made totalling £3.68 million. That is the up-to-date situation on payments. At present the outstanding amount is £4.8 million. We keep after these things and we are preparing further claims in respect of stores. The troop costs are the ones most readily recoverable because there is a standard figure per capita for the personnel supplied. That is not difficult. The preparation of stores claims is a very involved problem. We have to get long lists from the military of all the stores they have taken out to the mission area and, as the Comptroller and Auditor General would know, we have problems about checking these military returns before we present them for certification prior to submission of the claim. It is really a very time-consuming job but we are pressing these things forward all the time.

518. Deputy Leyden.—In relation to VAT and the importation of vehicles the Lebanon situation blew up pretty quickly and I know there was a rush on to get vehicles. There were stores’ problems. You had particular problems in relation to container refrigeration equipment. Is that correct?

—We did.

519. Is it true that the Irish firms had not the opportunity to tender for those vehicles in the normal way?

—No. I do not think that is the position. What happened was that, in view of the urgency which you mentioned, in preparing the material to be taken out to the mission area we had to short-circuit our normal tender procedure. In fact, a lot of the tenders were invited by telephone. As I understand it, the people who were complaining that they did not get an opportunity to quote were factors in Ireland, agents for equipment that is not of Irish manufacture.

That is right.

—I am not quite certain how many of these people got an opportunity to quote. The thing was done in a very rapid fashion. We got the congratulations of the Quartermaster-General afterwards who expressed his deep appreciation of the work done by the secretariat in the Department; getting all the stores etc. together at such very short notice. When the Minister and myself were in the mission area afterwards we found that the Irish contingent’s equipment was the envy of a lot of the other contingents who were out there. In particular, our refrigerated trucks were something that many of them would have given their eyes to have.

520. I understand there would have been a saving to the United Nations, or to the Exchequer, if the vehicles had been purchased here in Ireland, even through agents; that the Scania trucks were actually bought in England, imported here and then brought out again when, in fact, they could have been bought here in the State at the time. I know there was quite an amount of annoyance among the people here who felt they were not given a proper opportunity to tender and would have quoted a much keener price. Do the Army authorities have to go through the procedure of getting an import licence from the Department of Industry, Commerce and Tourism to bring in vehicles, a Scania for example, or can they bring them in, ad lib, without permission?

—I do not think there would be any problem about permission. I would be very glad to look into the matter that the Deputy mentions. If he wishes we could furnish a note on the position about tendering, what firms had tendered and see what the relevant prices were. I remember seeing the correspondence about some complaints that were made in regard to tenders being sought, but I got the impression that it was not so much a matter of Irish manufacture as Irish channels of delivery.

521. I would say you are correct there. They feel they would have been able to quote a much keener price than that at which you bought from the English agents and that there would have been a net saving to the Exchequer which, of course, is a matter that comes within the committee’s terms of reference. They made the allegation and can back it up with facts. I made a submission to the Department of Defence. I appreciate the urgency of the situation. I know there was a panic situation to get the equipment and that that is the reasoning behind the Departments action in this matter. In fact, tenders were received by telephone which is not the usual practice: they are usually advertised?

—We have to do it occasionally. One of the things we are not in a position to do, of course, is to give details of prices in tendering. We certainly would not spell out prices. In any note we would give we would have to indicate what the broad position was. Ministers are often asked in the Dáil for information about the cost of defence equipment and they have always said “if you give prices you put the competitors of the tendering firms in the position to know”. It has been the policy not to disclose prices. We can, nevertheless, indicate in general terms* what the position was about tenders from various people.

I think that, in the interest of efficiency and savings to the Exchequer, and the possibility of peace-keeping missions being requested by the United Nations in the future, the Department should have up-to-date information on all native suppliers of equipment required, particularly at short notice, for such operations.

—In the case of 99 per cent of the supplies that we buy we have up-to-date lists of firms who are capable of supplying equipment. I am not prepared to say that in the case of the refrigerated trucks, which is an unusual purchase, we would have a comprehensive list of suppliers. We endeavour to keep a list of all the equipment we are normally in the market for up-to-date and to ensure that everybody gets a chance.

That is fair enough.

522. Chairman.—I presume subhead J.—Mechanical Transport—has been covered by the Accounting Officer’s explanation?

—We had an excess on subhead J of £794,000. There were urgent unforeseen requirements for payroll escort and security duties. The Irish contingent in UNIFIL had to have mechanical transport supplied at very short notice. The trouble about the UNIFIL operations was that we did not know until March or April 1978 that we were sending a contingent out there. Obviously, the 1978 Estimates which were prepared in Autumn 1977 were put together without any knowledge of this.

523. Deputy Filgate.—On subhead H—Defensive Equipment—there is a saving of £238,000. There is no explanatory note on that under expenditure?

—We have some convention that when expenditure is within 5 per cent of the grant we do not have a note in the Appropriation Accounts. Defensive equipment is very expensive and any individual contract for defensive equipment whether it is for tanks, guns or ammunition is quite costly. If there is any breakdown in the contractor’s obligation to supply on time we are immediately in the difficulty that we run over the accounting period. We are left with money on our hands because we cannot pay for the equipment since it has not been delivered. This is what happens. The cost of ammunition is frightening. One round of ammunition for an artillery piece could cost £20 for just one shot. When one thinks of building up a reasonable stock of ammunition for the Army the gross cost is appalling. If there is any delay in delivery and we cannot get our payments out, we are left with money on hands. That money must be found in the next financial year and we pay against delivery when it comes along.

524. Deputy Morley.—On Subhead F— Civilians attached to Units: pay, etc—in what capacity would civilians be attached to units?

—We have a very large number of civilian employees in the Army. In the cavalry corps, the engineers and in the Naval Service most of their workshop staff are civilians. We train soldiers in the apprentice schools to be qualified fitters, mechanics, engineers and so on, but in order to save utilisation of military personnel we have very large numbers of civilian employees in all the military workshops. In the Naval Service there are shipwrights, fitters and various others. All these employees, as you can see, cost a fair sum. If we did not have civilian employees we would have to have a much heavier Army strength. The idea is that our Army people should be qualified to do these things because, if they have to move in a war into a combat area, we cannot take civilians along and we must have people to maintain our equipment. To a limited extent we can do that through the apprentice schools. We have an apprentice school at Naas where we train fitters and skilled personnel, but the numbers are nothing like as big as those of the civilian employees. A great number of engineering workers in the Air Corps and in the Naval Service are civilian employees.

525. Deputy Horgan.—On subhead B—Permanent Defence Force: Pay—in relation to the savings on pay of the Permanent Defence Forces, would the Accounting Officer elaborate on the explanatory note on this subhead which reads: The saving is due to a decrease in the other ranks strength of the Permanent Defence Force. Is this a long term trend?

—Soldiers can sign on for three years and 1978 was the end of a three-year period following a fairly big intake. While we do our best to keep trained soldiers at the end of their three years, there is a very real problem. Some of it is due to heavier duties, Border duties and security duties which take much more time so that personnel get less leisure time in the Army. They are called for duty more often and, unfortunately, it is a sort of “Catch 22” situation. When personnel are unhappy about the level of duties and they leave, the level of duties apportioned to those who are left is worse. We have launched a quite expensive recruiting campaign on television and in the newspapers. We are getting recruits in, but we are not stopping the wastage. We are endeavouring to counteract this situation as best we can.

526. In relation to the 1978 figures, would the Accounting Officer give a rough idea of what percentage of the 1975 intake decided in 1978 to renew their commitment to the forces and what percentage decided to call it a day?

—A total of 45 per cent did not extend their service.

That is a very heavy percentage.

—It is very worrying. We have conducted surveys at two levels. We have conducted surveys in the Army from the officers in charge of units asking them to report to us and to find out from every soldier who quits, why he is doing so. In addition to that we had an analysis done by an officer of the Department of Finance on the wastage of manpower in the Defence Forces. The largest element was the incidence of duties. People are not getting enough time off. They are being called for duties sometimes a few nights a week and this is not good from the point of view of making the job attractive.

527. Effectively in the case of Defence Forces we do not talk about voluntary overtime?

—There is no such thing as overtime. Theoretically a soldier is on duty 24 hours a day for seven days of the week. The duties are extensive in the sense that the number of hours worked in the week by a soldier could be far in excess of anything that anybody in industrial life would tolerate, and they get no extra pay for that. They get extra pay for security duties, Border duties and so on, but that is not by way of overtime. It is a fixed sum, not measured in terms of the number of hours they work.

528. In other words, in relation to extra payment for a situation that arises, probably in respect of any particular barracks if a number of soldiers are away on security duties they get extra pay for that, but the load which falls on those remaining behind is heavier and it not remunerated extra to normal duties?

—That is so.

529. Deputy Leyden.—The major complaint I have heard from the Army is on the question of housing. Houses are provided for them but the local authorities are relied on to provide them. If money were spent on that aspect of Army recruitment there might be a better response. Recruits would be more inclined to stay for a longer period if they had quality housing attached to the barracks.

Chairman.—I fully appreciate the Deputy’s concern for better housing facilities for Army personnel and the beneficial effect this would have on recruitment. However, I would like to point out that he may be bordering on the policy area here.

—We have done quite a bit in recent years. There are some beautiful new housing schemes in Renmore Barracks, Galway, and various other centres. The Curragh housing pool has increased considerably and we are doing a big job in Cathal Brugha barracks where the flats and married quarters that the troops had were very ancient. This is not good enough. I agree with the Deputy that if a boy coming from a good home or a young married man were to go into the 18th century-type place there would be no incentive for him to stay. We are very conscious of this.

530. Deputy Horgan.—What is the difference between subhead U—Transportation, etc.—and subhead X—Travelling and Incidental Expenses?

—U is for transportation, travelling and so on by members of the Permanent Defence Force. Subhead X includes the money for civilian officers of the Department.

531. In relation to the Permanent Defence Force and the wastage from the Permanent Defence Force has the Accounting Officer any indication of the relative attractiveness of the different sections of the defence forces? For example, is the Army less attractive than the Naval Service and is the Naval Service less attractive than the Air Corps? Is there any hierarchy of wastage in the service?

—The Naval Service is quite an attractive service, certainly to people who have a vocation for it. Maybe some people find that service on board ships is not what they would like, but the wastage from the Naval Service does not seem to be as bad and the recruitment is quite good. We are doing pretty well at the moment. The Air Corps is an attractive element of the Defence Forces but as far as the Army is concerned it depends on the unit of the Army that one is assigned to. One could not say that the Army as a whole is unpopular but there may be aspects of Army service in relation to particular units which seem to be less attractive than others.

532. In relation to subhead EE 2—Expense of Operation of Sail Training Vessel (Grant-in-Aid)—the Committee will agree that Captain Healy does a superb job in the operation of this vessel. Is there any element under EE. 2 for publicising the activities of the sail training vessel as a method of encouraging recruitment, particularly to the Naval Service, of young people, and its wider availability?

—There is a sail training committee, of which the Minister is chairman, and the secretary is a principal officer of the Department of Defence. Through the sail training committee publicity is generated. They do not put advertisements in the papers but the members of the committee are associated with maritime matters. They include the OC of the Naval Service and various people outside the publice service who have an interest in this. They are succeeding in making it known to young people that these facilities are available for sail training. The problem is that they cannot accommodate all the young people who want to go on cruises on the Creidne. The preceding subhead refers to the Asgard II which is in the course of construction.

533. When there is a surplus of requests over accommodation how are the available places allocated?

—I am not quite sure how the sail training committee operate, but I can find out and send a note* to the Committee.

534. On subhead AA—Military Educational Courses and Visits—would some of these payments be to military establishments outside the country?

—Very much so.

Could the Accounting Officer indicate what establishments are involved?

—Signal depots in Britain and elsewhere on military training courses. We had a lot of naval people at one time going on British Admiralty training courses. In that subhead we had a saving in 1978 because the British authorities are very slow in presenting their accounts to us and we were not getting them in before the end of the year, maybe not to our advantage. That is going to be eliminated because the British are now insisting on payment in advance and they have also boosted their tuition fees by astonishing amounts. We are now paying very high fees for these courses abroad so we shall not have any problem in future about getting accounts cleared before the end of the financial year.

535. Chairman.—On subhead V—Insurance—there is a very large sum expended —£4,075,810. What is covered there?

—This is social welfare insurance for personnel.

536. Could that be put in with subhead A under salaries, wages and allowances, as has been done in other Departments? Looking at it there might suggest that it is insurance cover apart from Social Welfare. It is strange to see it there on its own.

—It includes soldiers as well as civilian employees. For administrative purposes we regard it as one of the pay subheads as distinct from non-pay subheads in the Vote. Administratively we group them together. We can see about the advisability of combining it with pay rather than keeping it. separate

I put it to you because with other Departments it is usual to have social welfare shown in the Estimates under subhead A and designated as social welfare.

—We would be glad to look into that.

537. Deputy Horgan.—On subhead N—Animals, Forage, etc—I presume the only horses kept by the Department are in the Equitation School. They do not retain horses for offensive or defensive purposes?

—No, we have what are referred to as class II horses. There was a time when we had the occasional horse used for barrack or garrison duties. We have a second line of horses, the class II horses, for the purpose of initiating cadets into equitation to see whether we have any good material. There is a branch of the Equitation School in the Curragh where class II horses are available. Cadets can show their paces and if we find valuable material there they are drafted into the Equitation School in McKee Barracks, where they are given every opportunity to ride the best quality horses and become first class horsemen.

538. Deputy Leyden.—In relation to the Asgard II when is it expected to be in operation?

—The position is, of course, naturally that we spent less money in 1978 than we anticipated because the State payment due on the laying of the keel was not made as anticipated. We expect delivery in a matter of months. I think I am right, in saying that.

That is the sailing ship?

—Yes, I do not know whether it is in order but I feel the Committee could usefully go and see what is happening in the world of sailing there as regards the Asgard.

539. Chairman.—Where is it being built?

—In Tyrells in Arklow. If any member of the Committee wants to see the vessel when it is ready and available nothing would please us better. The Minister will be commissioning a new naval vessel next Thursday in Haulbowline. When she comes to Dublin we will be sending out an invitation to Members of the Oireachtas to come along and see this new vessel. It is very nice and we would be delighted to show her to all concerned.

540. Deputy Horgan.—Does the Accounting Officer anticipate that Asgard II will actually be commissioned in time for say sail training work this season or not?

—Not for this season. In fact we are assuming that the Creidne will be taking applicants who are on cruises this year. It is booked out, I think. I find that the Asgard II will be delivered in September.

VOTE 47—ARMY PENSIONS

Mr. Healy further examined.

541. Deputy Horgan.—On subhead G— Compensation for Death or Personal Injuries sustained by Members of the Local Defence force—how is it arrived at?

—We have an Army Pensions Board and applicants for compensation may have to appear before the Board. The rates of compensation follow the compensation trend under the compensation for injuries code administered by the Department of Social Welfare. As in the case of the personnel of the Permanent Defence Forces, an applicant’s case has to come before the Board which has a membership consisting of a chairman and two doctors. He has to establish (1) that he is suffering from the ailment of which he complains and (2) that it is attributable to his service. Very often that is one of the difficulties in establishing these claims because attributability can be very difficult to establish.

542. I take it that once somebody is awarded compensation under this subhead he is not entitled to proceed for disability pension in any other area?

—No, he is not, in fact, entitled to a disability pension as in the case of a person discharged from the Permanent Defence Forces but he may qualify for benefits, under the Social Welfare Acts. This is referring particularly to the members of the Local Defence Force. I think the compensation can be abated in relation to his earnings. These are all civilians who were all part-time soldiers in the sense that they were members of the LDF. There used to be a provision that he could have his benefits abated by reference to what he was earning during the period of illness.

543. On subhead I—MacSwiney (Pension) Acts, 1950 to 1964—the saving is due to the non-encashment of a pension warrant within the accounting period. That warrant remains cashable, I presume?

—Yes.

The witness withdrew.

MINUTE OF THE MINISTER FOR FINANCE ON THE COMMITTEE’S REPORT (Paragraphs 4, 5, 22, 23, 24, 25 and 55) ON THE APPROPRIATION ACCOUNTS, 1977

Mr. L. Ó Laidhin called and examined.

544. Chairman.—The final paragraph of the Minister’s Minute on paragraph 4 of the Committee’s Report states that the Department are still in communication with the Chief State Solicitor in connection with the agreement to be entered into with the college authorities guaranteeing the exclusive use of the college for the training of teachers. What progress has been made? What is the difficulty in relation to this undertaking?

—I would have liked the progress to be greater. It is satisfactory to the extent that there are no issues of principle or problems of substance in dispute. The only problem is that we have not got the legal documentation completed by the solicitors concerned. We have to keep the pressure on them.

545. It is a question of the completion of legal documents rather than a problem of principle?

—There is no problem of principle.

546. Deputy Horgan.—What kind of safeguards will be contained in the document when it is concluded?

—I have not seen it recently, but the usual provision is that it would be used for teacher training for either a certain period of years or maybe forever. My recollection of previous occasions is that there was a stipulated period of years. I gather from the papers in this case that there was not even a stipulation of a period, that it was going to be open-ended and if it were changed at all that there would have to be a refund made of any State expenditure. An open-ended commitment would be more acceptable to us than a fixed term of years.

In the case of an institution where the capital involved is very substantial, one would presume that there would be a provision to ensure that the building shall not be used otherwise except with the prior consent of the persons who supply the money, or the receipt of some kind of compensation?

—The only problem that would arise there is that it is only an extension to another building. You would have to take into account the terms under which the original building was funded.

547. Chairman.—In the Minister’s Minute on paragraph 5 of the Committee’s Report there is reference to local contributions in respect of community schools. Has this matter been finalised to your satisfaction?

—Agreement has been reached with all the parties concerned in relation to the documentation and the deed of trust. We have now approached every school concerned in relation to the question of nominating the trustees, giving us the names of the people on the board of management and, above all, agreeing on the size of the local contribution. Negotiations have to proceed with them in cases where there are amalgamations, because very often they will be asking us for a set-off against the buildings that they have to dispose of. There was a certain degree of agreement that they would cease to use their own secondary schools where they were amalgamated with community schools. It may be that, in those cases, we may allow some set-off against the full 5 per cent. We have approached them all and negotiations are proceeding.

548. Deputy Horgan.—In relation to the question of a set-off, presumably it is the case that, even though there may be an agreement which is not enshrined in any legal form, the authorities of the school which is being amalgamated would not continue to carry on the business of education in the catchment area of the new school. Nevertheless, they retain the ownership of the old school premises. There is no question of them transferring the ownership of the old school premises to the Department or any other public body. Is that the case?

—That would be our general approach unless it was proved to us that they were substantially at a loss. We would not be prepared to make payments in respect of goodwill.

549. In relation to the general statement which is often made to the effect that secondary schools in general are carrying on the business of education at a loss, in the sense that we are all aware of the frequent demands for increases in the level of funds, could the Accounting Officer explain how the question of a set-off could arise where a business which is running at a loss is being closed down?

—We have never accepted that they have been run at a loss. We could not accept that in any case, and we do not accept it.

550. So that the set-off may arise in cases in which the authorities who are managing a school which is being closed down actually stand to lose financially for the closure of their premises?

—Yes.

551. I note that in the Dublin Archdiocese agreement has been reached with the diocesan authorities that the local contribution will be five per cent negotiable downwards, in certain cases, to 4 per cent of the cost of the buildings and equipment. Could you give us some indication of the reasons why 5 per cent in one case should be 4 per cent in another?

—It was because of a great incidence of charge in the case of the Dublin Archdiocese arising from the very high proportion of new schools within the Archdiocese. The plea was made that the funds of the Archdiocese would not be able to meet the full cost and that at least some consideration should be given to their circumstances. So an arrangement would be acceptable that would be on average somewhere between 4 per cent and 5 per cent over the number of schools that would be involved in the next few years.

552. Is the Accounting Officer saying that negotiations are being carried out on a global basis or that they will be carried out on the basis of each individual school?

—In the case of the Dublin Archdiocese the negotiations will really be at diocesan level even though they may subsequently relate to other negotiations with the individual schools. It will be co-ordinated at the archdiocese level.

553. So the effective reason for not seeking to recoup the 5 per cent which was originally envisaged in the case of new schools in the Dublin Archdiocese is the pleaded shortage of resources on the part of the Archdiocese. Is there any quid pro quo from the Archdiocese in return?

—In return, of course, they are going to ensure that we get a contribution in all cases and that we will not have any real difficulty in getting a level of contribution to approximate, as close as possible, to 5 per cent, whereas in all the other cases we will have to do a lot of negotiation with each individual school. In the other cases the diocese have not accepted the same degree of responsibility as the Dublin Archdiocese has for the financing of a school.

554. Chairman.—You do not have any difficulty in collecting this contribution?

—I would not like to say.

Hopefully you will get over your difficulties.

555. Deputy Horgan.—Would it be unfair to take what you said as indicating that the Archdiocese of Dublin is being offered a discount for bulk payments?

—I would not put it that way. It was that when the negotiations took place with them they pleaded that the burden was particularly heavy for all schools, national schools and community schools, at the present time and that there should be some recognition of their difficulties.

556. Will any alteration in the original 5 per cent figure in the case of Government schools, or indeed of any other schools, be a matter of public record if it is required it should become one?

—It is an actual amount that will be specified in each case—we will start on the basis of looking for 5 per cent if we can get that much. It would be possible to calculate the percentage in relation to the total, as the total amount also will be specified.

557. I am not quite sure that I understand the section of the Minute dealing with the new schools outside the Dublin Archdiocese. It has been agreed that, in the case of new schools outside the Dublin Archdiocese which do not replace an existing secondary school, the standard local contributions should be 5 per cent and that the local contribution for community schools involving the amalgamation of a secondary school should be not more than 5 per cent. Do I take it that the second part of that sentence involves situations in which set-offs may be concerned? Is it also true to say that the contribution from vocational education committees will be 5 per cent in all cases?

—In all cases, yes.

558. The local contribution agreed with a religious authority may be paid in five equal annual instalments, free of interest. Does the same facility apply to vocational education committees?

—It does.

And it is to some extent academic in their case?

—I could not say that.

559. Assuming agreement is reached on this, is there any proviso for action to be taken in the case of failure to make any of the annual payments?

—Of the five annual payments?

Yes.

—The proviso under a normal deal would always be that you have the right to go and take repossession, if that is the word. The document will be drawn up in legal form if you want to cover anything of that kind.

560. Chairman.—On that legal document, will the demand be in the form of a statutory demand, within the normal meaning of statutory demands, from, say, the VEC?

—The VEC will sign the deed of trust in the same way as the other schools do: so that the obligation on them will arise as a kind of ordinary obligation of debt in the same way. We will not have to have a statutory document to oblige them to pay anything. They will have the normal commitments. It will be up to them to honour the commitments in the same way as they would any other debt.

561. In the event of non-payment have you the right to enter the fray at the next round when you can make a deduction in respect of that particular debt?

—In the case of the VEC we will, obviously, be in a position to make adjustments in their grants.

562. Deputy Horgan.—Is the Accounting Officer suggesting that is an effective sanction in the case of a VEC?

—I would not anticipate anything further from a VEC.

563. In relation to a VEC the question of payments does not arise until after the deeds have been signed, so there is no question about the payments so far?

—No, there would be legal drafts between the two.

564. Chairman.—The Minister’s Minute on paragraph 22 of the Committee’s Report concerns the rate of payment of higher education grants under the scheme of a particular local authority. What is the present position in relation to this problem?

—The present position is that, after the draft amendment that was made in the schemes for this year, we feel that this problem should not arise any more. As far as what has happened in the past is concerned, we have had a further approach from the Accounting Officer of the Department of Finance in relation to this question of accountability. I would like to make one comment, although I am hesitant to do so in one way, because I do not want to be establishing precedents referring to the internal workings of the Department and between the Department and the Minister. I would not like the Committee to get any impression that, in relation to this particular case, the ministerial decision I have referred to—in fact, it is what is called an administrative decision—was in any way in conflict with the advice given to the Minister from his Department. One could get the impression that the Minister made a decision in this matter that might have been his own personal decision and not one on which he was advised by the Department. I would not like to give the impression that the Minister was acting on his own.

Deputy Horgan.—I presume that we are operating on the assumption that the Minister is always advised by his Department unless there is evidence to the contrary.

565. Chairman.—The difficulty that faces the Committee here arises from the Minister’s decision, following advice by his Department, deeming awards made by this particular local authority to be in accordance with the provisions of the grants’ scheme and that no excess payments had been made, having regard in particular, to the advice given by the Attorney General’s Office in relation to the recovery of apparent overpayments of higher education grants by this body.

—The original advice from the Attorney General was based on information we presented to him at that time as we thought we knew it. When the matter was further examined and we had interviews with the representatives of the local authority concerned we found the situation entirely different. They had taken precautions at all stages to keep themselves within their legal position. The resolutions they passed and the steps they had taken would have established that they acted within their legal competence. At the same time, they were not acting on the basis which we would have expected them to have done or as we intended under the Act. What we had to ensure was that, for the future, they would act as we intended them to. If I can go one step further, having got them to agree to that, we had it in operation on that basis for one year. We knew this discussion took place with this Committee and we considered that, when the information came out in the published minutes, other authorities might get the idea and act on a basis that would not be in accordance with what we intended even though legally they might be, as we thought, perfectly entitled to do so. To avoid that we insisted that there should be an amendment of the scheme in 1979 in all cases to remove any possibility of doubt as regards what we intended and what they were entitled to do.

566. There was a loophole?

—An administrative loophole.

Deputy Horgan.—Compounded by urban growth?

—Yes.

567. Chairman.—What is the position now?

—It cannot recur because we have specified a limit of 15 miles within which nobody can be regarded as eligible for an away grant.

568. What amount was involved as against adjacent and non-adjacent grants in this case?

—We never got the evidence and we could not oblige them to give it to us. They said that there was no discrepancy because they acted entirely in accordance with the scheme the whole time.

569. They applied non-adjacent grant levels when obviously they should have applied adjacent grant levels?

—Yes, to everybody. We felt that could not have been correct or in accordance with what was intended.

You were lucky the other authorities did not see the loophole.

—I know, that is why we had to close it—in case of any further publicity.

570. Deputy Horgan.—Are you satisfied that the loophole has been effectively closed? I note that the addition that has been made to the appropriate paragraph of each local authority scheme of higher education grants indicates that there is a total exclusion of people living within 15 miles of the institution concerned from the benefit of the higher rate of grant. It still leaves the local authority, if I am right in my assumption, an absolute discretion in the case of anybody who lives more than 15 miles from the institution regardless of whether it is 15½ miles or 30 or 50 miles.

—They have to exercise discretion outside the fifteen mile limit. The kind of action we would require to take in relation to such people would be entirely unacceptable. We do not want to become involved in the administration of the scheme to too great a degree.

571. Chairman.—The Minister drew up a scheme which he clearly intended to work along certain lines. This line of action was applied by all local authorities except this particular one. Subsequently, it was found that they were legally within their rights, if you apply a purely narrow legal interpretation to what they did. This was a loophole which has now been closed. The amount of alleged overpayment was never established even though the action taken by the local authority in this case was clearly at variance with what the Minister had in mind in framing the scheme. Would it not have been better, to regulate this matter, if the Minister admitted that there was an overpayment—he has done it implicitly by closing the loophole—and say that the grant scheme was £x overpaid in this case and cannot be recovered for legal reasons?

—The only people who could establish that there was an overpayment are the Local Government auditors and we asked them to investigate it. They reported to us that, as far as they were concerned, everything was in order. We did not have any figure at any time or have any evidence from any person who had responsibility to establish whether there was an overpayment or not. We knew that everybody was being given a nonadjacent grant and we could not believe that was in accordance with the scheme. All we could do was to put a stop to it as quickly as we could.

572. Deputy Horgan.—What period elapsed between the time this first came to your attention and the time some effective action was taken?

—About 12 months. We were dealing with it in 1978 and we got the practice amended for 1978 and the scheme amended for 1979.

573. Chairman.—This Committee was informed that there was correspondence on this issue from, possibly the early seventies when it was discovered that the Council were applying the non-adjacent rate where it was patently obvious that they should have been applying the adjacent rate. Correspondence was being exchanged with the local authority through 1973, 1974 and 1975 and it came to a head in 1977?

—An amendment was brought in in 1971 or 1972 to clarify the issue. I cannot say why it was brought in at the time but it had nothing to do with this. I believe it applied to all counties at the time. Somebody got the idea that some clarification needed to be given on the intention of the Minister and, having given that clarification, it was apparently expected that everybody would interpret it as it was given. The information that came each year was not in a form from which you could establish prima facie that people were getting what they were not entitled to under the scheme. Eventually, it struck somebody—and it did not strike them within their official duties but as a kind of an inspiration—how could everybody be getting non-adjacent grants in Cork county?

Deputy Horgan.—It is a question of the spirit of the law and the letter of the law to some degree?

—Yes.

Chairman.—It is a question of money being spent as a result of this.

574. Deputy Horgan.—Has an estimate been made of the expenditure that arose out of the scheme that would not have occurred if it had been interpreted as the Department hoped and planned that it would be interpreted?

—No; as far as I can recollect we asked for that on several occasions but, obviously, we were not going to be given it. It would be an admission that there was such an overpayment.

575. Are the Department not aware of the names and addresses of all grantees?

—Except for people who would be on the maximum they would not be identifiable. There is an overlap in relation to the amount of grant between the adjacent and non-adjacent grants.

576. Chairman.—I should like to ask Mr. McGrath if the Department of Finance are happy with the outcome of this controversy?

Mr. McGrath.—I would not like to say whether we are happy or otherwise but I think that our position was made very clear by the Secretary of our Department. He was examined by the Committee on 19th April and I have nothing to add to that.

Chairman.—His advice was that the money was recoverable.

Mr. McGrath.—The final advice given by the Attorney General is that the Minister for Education acted within his rights as given to him by the Oireachtas in legislation.

Chairman.—The Attorney General also advised that the payments were recoverable.

Mr. McGrath.—That was the advice given to the Department of Education in the first instance. The final advice was based on different information that was available subsequently.

577. Deputy Horgan.—The Attorney General has not been asked to comment on the subsequent information. Is it the Department’s view that it would substantially alter the view as to the recoverability of the money?

—We did not ask because we did not consider it necessary in relation to decisions that we had to make. We saw no reason for having a further submission.

578. Chairman.—On whose advice was it established that these people acted legally and within the terms of the relevant legislation?

—It was an administrative decision clearly on the basis of what they told us they had done in relation to consulting their legal advisers and the actions they took on it. If we do not have a doubt we do not go to the Attorney General. We have to take a decision and it seemed that there was no case to be concerned about in relation to the legality of it.

579. Deputy Horgan.—Are the Department of Finance happy with that situation?

Mr. McGrath.—We have had to accept the situation as advised by the Attorney General.

580. Chairman.—But he has not been consulted on the final outcome on the interpretation of the Higher Education Act, that this local authority acted within its rights legally? Obviously he has not been asked to comment on that interpretation.

Mr. McGrath.—He was asked for any further comments that he might wish to make and that was the advice given.

581. Deputy Horgan.—The advice from the Attorney General was that he had no further advice to give?

Mr. McGrath.—No, but that the Minister for Education had acted within the rights given to him in legislation.

582. Chairman.—The Minister’s Minute on paragraph 23 of the Committee’s Report concerns the establishment of an internal audit system within the Department of Education. What is the present position?

—It is intended that the establishment of the internal audit system will be considered in connection with the establishment of a finance unit which is part of the restructuring of all Departments. The Department of the Public Service are working on the restructuring of our Department along with some others and it has not arrived at the stage yet where we are establishing the four units. As soon as they are established this particular unit will be considered as part of it.

583. When do you expect that position to come about?

—We had a meeting with the Department of the Public Service before last Christmas and they have gone back to do a thorough investigation of the situation. We would hope to hear from them in due course. I think it would probably have taken a year before they would have been in a position to put definite proposals to us. That would be a year from last Christmas.

584. Deputy Horgan.—Is it the intention that a broadly similar model would apply to the Department of Education as to other Departments or will the special needs of education be taken into account in designing whatever kind of unit is injected into it?

—As I understand it, the Department of the Public Service have a much more flexible approach than they had originally and the needs of each Department will have to be given special consideration. That would have been my own view all the time—that you could not stamp a particular model on every Department. There are separate features, particularly in the Department of Education, that have to be taken into account.

585. Would the Accounting Officer agree that this particular problem is a classic example of the dilemma which arises in relation to public administration in that there is an absolute need for reasonable controls over expenditure but, side by side with that, there is the danger that the more controls you apply to expenditure the more the control system costs, first of all, and secondly, the more it slows up the business of administration. In relation to the fact that the Department of Education are a major spending Department, is the Accounting Officer satisfied that any internal audit system which is applied in the Department will not add to delays in payments by the Department or will it be a post hoc exercise?

—This was intended to be a post hoc exercise. We certainly could not accept a system that delayed the issue of payment of teachers’ salaries. We would have to find some way over that.

586. The last sentence of the Minister’s Minute on that paragraph states that the arrangements for improved control of financial administration of comprehensive and community schools are continuing in operation. I have heard some reports that in relation to community schools the degree of stringency exercised by the Department has been somewhat relaxed in recent times, not in terms of overall accountability but in terms of freedom within established budgets and things like that.

—We are trying to approach a state where we could establish the approximate limit that would be appropriate to schools in general. Of course there will be exceptions between one school and another but within the general overall limit that would be applicable they should be given a very considerable degree of flexibility.

587. Was there any particular instance which gave rise to the apparent need for improved control of the national administration, for instance over community schools?

—I could not give you the details now but I know we had an audit query in relation to what appeared to be irregularities, not of a serious nature but, nevertheless, something to make sure there was an appropriate degree of public control.

588. Chairman.—The Finance Minute on paragraph 24 of the Committee’s Report refers to the charging of an unvouched sum against the Vote for Residential Homes and Special Schools. That position is now satisfactory?

—That was an isolated case.

589. The Finance Minute on paragraph 25 of the Committee’s Report refers to the National College of Physical Education, Limerick. What is the current position there in relation to rectifying the faults?

—The current position is very unsatisfactory and we have not made any progress in relation to effecting improvements that would be apparent. We have not actually placed a contract to do the repairs. The problem is related entirely to what our legal situation would be, so it is still under investigation and, until a decision is made that would clear the situation one way or another in relation to our legal liability or the possibility of our recovering certain money, we will not make progress with the improvement of the building. But we recognise the awful situation and we are doing our best to make progress.

590. There is mention of a claim in relation to the squash courts. Are you talking about financial compensation there? You cannot have a physical change in the actual squash courts at this stage?

—It is part of the trouble, but there is also the finish of the whole block there. Something went wrong at some stage. We will have to have legal advice in this case and we will have to act in accordance with it.

591. Deputy Horgan.—Is there any danger that the solvency or otherwise of the contractor might prevent the pursuit of remedies?

—I have no evidence on that, and I could not comment if I had.

592. Chairman.—The Minister’s Minute on paragraph 55 of the Committee’s previous Report refers to the registration of title to the sites of comprehensive and community schools. What is the position there in relation to the titles?

—The present position is that there is one case still where the sale has not been completed, but it is not serious because it is a matter between ourselves and the county council. There is a problem about a boundary as to whether we have an acre extra or an acre less. Subject to that, which it is hoped will be completed very shortly, we have closed all the sales. Of the fourteen that were outstanding the last time, five have since been registered. That leaves nine and everything is there but to get the Land Registry to register them, so we must keep the pressure on.

VOTE 30—OFFICE OF THE MINISTER FOR EDUCATION

Mr. Ó Laidhin further examined.

593. Chairman.—Paragraph 31 of the Report of the Comptroller and Auditor General reads:

“Payable Orders outstanding at 31 December 1978

In the case of the above Vote and Votes 31 to 35 the balances of payable orders outstanding as shown by the departmental records were not in agreement with the totals shown on the lists of outstanding orders furnished by the Paymaster General’s Office. As stated in paragraph 5 it is necessary in such circumstances to reconcile the two figures for each Vote, in order to establish the accuracy of the surplus to be surrendered as shown in the relevant Appropriation Account. Such reconciliations were not, however, carried out by the Department of Education and I was, therefore, unable to satisfy myself as to the accuracy of balances to be surrendered on these Votes.

The Accounting Officer informed me that the discrepancies, which go back for a number of years, are believed to arise mainly from failure to cancel orders in the Paymaster General’s Office, resulting in the cashing of out-of-date orders after fresh orders had issued and he stated that this position had been aggravated by the bank strikes of 1970 and 1976 when large numbers of out-of-date orders were cashed. The Accounting Officer added that efforts to reconcile the discrepancies are continuing but that it is difficult, at this stage, to visualise a complete reconciliation.”

Mr. Mac Gearailt.—This paragraph draws attention to discrepancies between the figures for outstanding payable orders for the Department of Education group of Votes as shown in the Department’s records and the corresponding figures as furnished by the Paymaster General’s office. The Committee will recall that this matter, which is dealt with generally in paragraph 5 of this report, was discussed with the Accounting Officer for the Vote for the Office of the Minister for Finance when he appeared before the Committee recently. Discrepancies which arose in the case of the Department of Justice group of Votes were considered by the Committee at their last meeting. The circumstances in which the discrepancies arose in the case of the Education group of Votes are outlined in the paragraph.

594. Chairman.—Have you consulted the Department of Finance in this instance?

—The position about the question of reconciliation of payable orders is very unsatisfactory. I was accountant some years back and at that particular stage we balanced every month, and there never was one shilling astray. Then a certain problem arose in connection with our moving into the technological age. We entered into computers. Of course, with the old system everything was manual. You had so many people involved in sending out the cheques, doing all the work on a manual system. You had a certain number of people to do the balancing for the rest of the month. When the computer came in we reduced the number of staff who were issuing the payments. But that also left us short in relation to doing the reconciliation statements. I cannot go back in detail in relation to the years that are past, but it would appear that the idea must have been accepted that it was not altogether necessary to make the same degree of reconciliation as used to be made, at least it was not possible. Probably, the idea was that the two places would become fully computerised so that you could do this work of reconciliation by the computers. I would be inclined to think that you cannot operate a system of computerisation in relation to the payments office and a manual system for this reconciliation. We have managed with particular effort in the last year to satisfy ourselves in relation to two of the smaller Votes, except for the fact that there was some error built in in the past. It has not been discovered and continues to recur, but obviously that means that in the last two years everything was reconciled. When we brought in that particular discrepancy it remained at that figure, but it has become quite impossible to reconcile the major Votes. We will have to have discussions with the Department of Finance and the Paymaster General’s Office and we will have to decide either that it is necessary to have this full reconciliation and find a way of doing it, and perhaps find it now in connection with the reconciliation between the computer system for both Departments—the Paymaster General has now got his new computer as well—or we are forced into a position of examining whether, in fact, it is essential to have this reconciliation at all. After all, we are satisfied that what we are doing is correct, and if the Paymaster General were equally satisfied, it is a question of checking one against the other. But it certainly cannot be done on a combination of computer and manual systems because the volume of the work is far too great and we just have not the staff any longer once we have so much of the work being done by computer. But it is a matter that we have to explore further with the Department of Finance and with the Paymaster General.

595. Deputy Horgan.—Could the Accounting Officer state what stage negotiations are at with the Paymaster General?

—We could not say they have started as we are examining our situation as to what we must do. We are trying to reconcile the position because we have a further query in connection with 1979. It was in this regard that it was really brought home to us that the situation is not something that we can remedy in the way we thought we could.

596. You are having negotiations with the Comptroller and Auditor General’s Office and Finance to get some mutually acceptable system put into operation?

—Yes.

597. Chairman.—Paragraph 32 of the Report of the Comptroller and Auditor General reads:

“Subhead G.12—Grant-in-Aid Fund for Youth and Sports Organisations.

Cuspóir, the National Sports Council, was established in March 1978 to act as adviser to the Minister of State at the Department of Education in relation to the implementation of the Government’s policy on “Sport for All” and to promote initiatives and innovative measures in regard to

(i) the development of sport and physical recreation as leisure pursuits and

(ii) the raising of standards of performance in competitive sport.

The expenses of the Council are met from the grant-in-aid fund. It was noted in the course of audit that an advertising contract had been placed by the Council without seeking competitive tenders and I sought the observations of the Accounting Officer. He informed me that the Council had decided on 19 May 1978 to hold a “Sport for All Day” on 1 October 1978 and that it had selected one advertising agency for this promotion since it would not have been possible to invite presentations from other firms in the time available. The Accounting Officer also stated that steps are now being taken to invite five firms to compete for the service.”

Mr. Mac Gearailt.—This paragraph refers to the failure on the part of the National Sports Council, which is financed out of Grant-in-Aid Funds, to seek competitive tenders for an advertising contract. The Accounting Officer’s observations are included in the paragraph.

598. Chairman.—I presume this matter has been regularised in relation to the seeking of tenders?

—On that particular occasion it was felt necessary to make an ad hoc arrangement because the time available was so short. In August 1979 there were discussions in relation to the matter, meetings were held and, following that, there was a recommendation made to the Minister of State about the conditions on which the agency would be employed and then there were invitations issued for tenders. The present agency is Wilson Hartnell Group Limited. It is intended that there be a review of the situation every two years or so, and that tenders would be invited.

599. Paragraph 33 of the Report of the Comptroller and Auditor General reads:

“Subhead G. 19—Grant-in-Aid Fund for Youth Employment

A temporary grant scheme for the relief of youth unemployment was introduced in 1977. The scheme provides for the payment of grants towards the cost of projects having a high labour content and which result immediately in the direct employment of youth. Employees must, as a rule, be not more than 23 years of age, be unemployed for at least four weeks prior to engagement on the project and be registered with the National Manpower Service. The scheme also provides that approved grants are issued in instalments in the light of evidence as to the progress of the work.

In the course of audit it was noted that a grant of £10,000 for a project involving the renovation of an old building for use as a youth club had been approved in June 1978 and that a sum of £3,000, the first instalment of the grant, had been paid on 10 August. It appears, however, that while the building was being stripped down a local authority architect reported that major structural faults existed. Following consideration of this report it was agreed in September that the local authority architect and the architect for the organisers of the project should draw up plans of a rescue nature and give costings of the scheme and that the local authority and the Department of Education should then consider what additional grant-in-aid assistance over and above the £10,000 already approved might be given. In October it was agreed that the building was unsafe and the project was not proceeded with. However, in September 1978 when it was already doubtful whether the project would be proceeded with, a second instalment of the grant, amounting to £6,000, was issued. Having regard to the condition attaching to the issue of grant instalments, I sought the observations of the Accounting Officer. He informed me that this payment of £6,000 was made because the project organisers were urgently in need of further resources at the time. He also informed me that a refund of £4,100 had later been received and that the Department was seeking to recover an additional sum of £1,485 from the organisers. He further stated that it was now proposed, following the demolition of the building, to build a new youth club at a cost of £20,000 for which a fresh application for assistance had been submitted to the Department.”

Mr. Mac Gearailt.—Paragraphs 33 and 34 deal with two projects for which grants were made out of the Grant-in-Aid Fund for Youth Employment.

Paragraph 33 is concerned with a project involving the renovation of an old building for which a grant of £10,000 was approved and an initial payment of £3,000 made in August 1978. A second instalment of £6,000 was paid in September 1978 although it was doubtful whether the project would be proceeded with because the building was considered unsafe.

The observations of the Accounting Officer are included in the paragraph.

600. Chairman.—The payment of instalments is made in the light of evidence as to the progress of the work; this was the usual format applied. In this case payment would seem to have been made without any visual evidence of any substantial progress, is that not true?

—A grant for £10,000 was sanctioned in 1978 in respect of work. After some work was done on the project Dublin Corporation and the work project organisers discovered that the building was unsuitable for conversion and required to be demolished. At that stage the Department had advanced 90 per cent of the £10,000 grant on the assumption that the work on the conversion of the old building was to continue. The work project organisers submitted evidence of the proper expenditure of all but £5,585 of the £9,000 advanced by the Department. A refund of £4,100 was received from the organisers with a promise that the remaining amount of £1,485 would be lodged with the Department as soon as the organisation was in a position to do so. This they expected to do once they got a grant from Dublin Corporation. There was a further grant to enable a new building to be completed. That new building has been completed. In respect of that building there is to be a grant from Dublin Corporation as well. When Dublin Corporation make the grant we will get the overpayment of £1,485 refunded to us.

601. Mr. Horgan.—The new building is the building referred to in the last sentence of paragraph 33 of the Comptroller and Auditor General’s Report?

—Yes.

602. So they have managed to make some savings or at least to qualify for an additional grant from the local authority?

—They got a further grant of £10,000. They completed the building so the situation seems to have been satisfactorily resolved in that we are guaranteed as much as we can be.

The general point I would like to make—and the Accounting Officer would probably agree—is that, in relation to the overall expenditure from this fund, a very low rate of problems arise?

—It is rather extraordinary that there is only this one and another referred to at this time—particularly when you take into account the nature of the scheme and the emphasis that had to be placed on providing employment. It was not a building we were looking for first. It was a question of giving employment and the building was secondary to that. But one did want to get value for the money put into creating employment. Nevertheless, one could not afford to wait until everything was sealed and signed before putting people to work.

The scheme has been a considerable success and deserves the compliments of the Committee.

603. Chairman.—Paragraph 34 of the Report of the Comptroller and Auditor General reads:

“It was also noted that an application for a grant of £2,000 under the scheme was made by a sports club towards the cost of erecting a boundary wall at its grounds. Following an inspection of the project and a revision of the club’s estimate of expenditure on wages a grant of £6,000 was approved and a first instalment of £1,800 was issued on 25 September 1978. An inspection on 27 October revealed that very little progress had been made and following a further inspection on 15 November it was reported that progress was still unsatisfactory and that the project was unlikely to be completed. On 13 November, however, a second instalment of the grant amounting to £3,600 had been issued, apparently without evidence as to the progress of the work. I therefore inquired why this payment had been made. The Accounting Officer informed me that the money was issued to the organisers to permit them to continue work on the project. Following a further inspection on 28 November the organisers were informed that the Department could not continue to provide assistance and a refund of a sum of £3,300 agreed with the organisers was sought. The Accounting Officer has informed me that this sum has been received by the Department.”

Mr. Mac Gearailt.—Paragraph 34 is concerned with a project for the building of a boundary wall at the grounds of a sports club. A grant of £6,000 from the Grant-in-Aid Fund was approved for this project and again a second instalment, in this case £3,600, was issued even though an inspection carried out by the Department had revealed that progress was unsatisfactory.

The observations of the Accounting Officer are included in the paragraph.

604. Chairman.—The same complaint could apply here?

—The same set of problems could apply. The emphasis was on trying not to create any difficulty in the way of the project proceeding. To that extent we were taking a certain amount of risk by allowing it to proceed at certain points before inspection took place. Once inspection took place there was an agreement reached as to how much was appropriate and the organisers would pay the balance.

605. Deputy Horgan.—There is a saving of about £8,500 under subhead B.2—Research Activities. Could the Accounting Officer give the Committee a rough idea of the main headings under which research activities are accounted for? The figure of £8,412 is a relatively small amount compared to the total of the grant. One could argue that it represented the salary of a full-time researcher for the year. Is there any particular reason it was not spent? I would imagine that the experience of the Department would be that there is always far more pressure for research funds than the Department can meet, so that that underspending appears somewhat unusual.

—The scheme has to be submitted, has to be approved and then it is really up to the organisation undertaking the project what speed they are going to proceed at. Obviously, we only make payments in relation to the degree of progress they do make. Therefore, while one may approve of the full allocation, the full amount is not paid unless satisfactory progress is recorded. There is a research subsection in the planning section of the Department where these are approved and then money is allocated to outside groups undertaking research. We also had problems about the allocation of money from the transition year fund. It was in a very indefinite stage at the time. There is a considerable degree of variation at times between what one actually approves that could be spent and the progress made.

606. Deputy O’Hanlon.—On subhead D.9—National and Secondary Schools —Grants towards Clerical Assistance— there was a saving of more than £500,000 on the provision of clerical assistance. I should like to know if there was any particular reason why there was a delay on the introduction of that scheme?

—There was a lot of difficulty. It was a new scheme and managerial bodies had problems in relation to getting the machinery started to employ these people. There was quite a lot of discussion in relation to the terms of the scheme as announced and there were demands made that it should be improved and that the regulations originally specified should be made more flexible. Eventually, there were concessions made in that respect. It was slow getting off the ground and people were not employed as early as they would have been otherwise.

607. What is the situation at present?

—The situation is that it seems to be working almost fully.

608. Deputy Horgan.—In relation to subhead D.5—Training Courses—Audio-Visual Aids—I note that the shortfall there is because the number of courses held during the year was less than expected? Is the reason that the number of courses was less than expected because there were some external factors preventing the holding of the course or because a decision not to hold the course was made for budgetary or other reasons?

—There was no deliberate reason.

I am referring to training courses in audiovisual-aids.

—There is a small amount involved.

It is a large proportion of the subhead.

—Some courses are organised and run by the Department but sufficient professional personnel to organise and run the courses were not available at the time. We have not got a big staff in relation to organising these courses and, speaking from memory, I believe that the person involved was ill at the time.

609. In relation to subhead G.9—Overseas Club—General Expenses—and subhead G.10—Irish Council of Overseas Students—General Expenses—the note tells us that these grants were not paid by the Department of Education in 1978. Two factors occur to me. First of all, they are both general expenses and for the same amount of money, £4,000. Is there any reason why they did not fall to be paid in this year?

—There was a difficulty about the hostel. It created problems in relation to who should be paid the grant. Eventually the Department of Foreign Affairs took over the whole system of dealing with these groups. Our problem that year was that there were two separate groups claiming possession of a building. We did not know whom to pay.

Those subheads have been transported to Foreign Affairs?

—Yes.

610. In relation to subhead F.2—Fittings, Materials, etc.—the Accounting Officer may recall that during the year in question there was something of a controversy about work carried out in the National Museum for a private individual. The amount involved was comparatively small, £36 or £37. The principle that was involved, which comes within our ambit, is the policy in relation to work that is done by the National Museum for private individuals at a cost to public funds. I also recall the answer the Minister for Education gave on that occasion was that it was a custom of the National Museum to do work of a certain kind for individuals who presented objects to the Museum. Will the Accounting Officer indicate whether this is a general rule and whether anybody who presents items to the museum is entitled to have work done for him by the Museum?

—In a sense the wheel had gone full circle. There was a time when the Museum regarded themselves and the Board of Visitors as having a great degree of control over their own affairs. It may be that over a period of time they felt that there was a lot of control being taken from them by the Department. Under the Devlin arrangements they would probably be given back more than they ever had. We have been trying to operate a system as flexibly as possible and the Director of the Museum orders his own affairs. We do not require a day-to-day detailed report if we can avoid doing so. It has been the practice that the Director, and his professional staff, deal with people in relation to matters of the kind the Deputy referred to. There are not any strict regulations laid down as to how they decide on an issue. If it is something they think is good value for the Museum and will forward the interest of the Museum they will make their arrangements with any individual who is in a position to facilitate them in that way provided the amounts are not great. In the normal way, we would not be aware of day-to-day matters of that kind. We are not anxious to interfere with the discretion of the Director, and his professional staff, in these matters.

611. I sympathise with the Accounting Officer in the need to allow professional people reasonable responsibility in the exercise of their functions. The case I am thinking of was one in which a private individual had work done for him in the Museum in relation to an object which he did not, in fact, own and which he did not present to the Museum. It was not in the possession of the Museum and was subsequently returned to the institution which owned it. It struck me as odd at the time that if, for example, I wanted the Museum to do certain work in relation to an object which was in a private collection somewhere in Dublin and, providing the individual officers in the Museum were prepared to do the work, there would be no objection to the spending of money on this activity.

—I would hope they would not do anything irresponsible, particularly if there was a considerable sum of money involved. Even in relation to small sums of money we expect them to exercise as fair a degree of control and responsibility as an administrative office.

612. In relation to Non-Voted funds. could you give the Committee some indication in relation to the only two funds which derive a substantial income from the Erasmus Smith Endowment and the Mary A. Hardiman Bequest? What criteria are used for deciding who is entitled to the use of these funds? What purpose is there for the funds? The Mary A. Hardiman Bequest is very substantial. It has an income of about £20,000 in the year.

—The Mary A. Hardiman Bequest has been used over the years to good effect in relation particularly to vocational education. The scheme was designed to assist the development of inspectors and officers of vocational education committees. That was widened somewhat subsequently. We would regard it as somewhat wider in application than to inspectors of technical instruction. It would embrace the promotion of knowledge of methods of work and allow of expenses being paid towards the cost of lectures by persons, whether from Ireland or other countries, who have special knowledge of such subjects taught in vocational schools. Each year the Department of Education places proposals for the utilisation of the incomes from the funds before the trustees and the Minister selects those who are to receive or give special instruction courses for that year. Vocational education committees are invited to submit for consideration proposals coming within the terms of the bequest. It has been used for the purpose of allowing inspectors to travel abroad, or CEOs, or principals of vocational schools. If the income is not fully absorbed in the year it is ploughed back into the fund.

613. Is it fair to say, in relation to the Department inspectors who manage to avail of this, that they are able to enlarge their experience and capacity for work in a way which would not be open to them otherwise within the normal funding arrangements of the Department?

—It certainly gives a degree of flexibility. It is very difficult to get an allocation of money for travelling abroad on liberal terms. This may be within our own control to some extent. The Erasmus Smith Endowment is a very tightly drawn scheme by law. It provides for the reconstruction, equipment or repair and maintenance of the Tipperary Abbey School which is a secondary school for boys, including in its curriculum a special course in agriculture which is nowadays very expensive. It also provides scholarships for poor boys residing within a radius of seven miles of one of the grammar schools in Drogheda, Galway and Tipperary and for boys residing in any of the districts set out in the schedule to the scheme in which the former Erasmus Smith estates were situated. The sum of £580 of the income was allocated by the scheme for payment as an annual subsidy to the Abbey School and that is still being paid. On the introduction of the free post-primary education scheme, no scholarship has been awarded under the scheme and expenditure under this heading has been phased out according as scholarships terminated. So there is now no expenditure under that heading. Surplus income is being invested and this, in turn, results in increased income. The question of revising the scheme was under consideration, in consultation whith the Chief State Solicitor’s Office following the introduction of the free primary scheme, but before any final scheme emerged it became apparent, because of the increase in financial commitment to educational involvement, that any new scholarships in relation to the scheme were certain to become redundant in a short period. A departmental committee was set up in December 1972 to consider the matter of a suitable scheme and it has been examining the possibility of having a new scheme drafted, whereby the total income of the Erasmus Smith Endowment could be made available to the Abbey school, the vocational school and also for the benefit of girls in second level education in the town. Agreement to plans for this proposal has been obtained from the Provincial of the Southern Province of the Irish Christian Brothers and the Tipperary South Riding Vocational Education Committee. The Ministers for Education and Agriculture have also approved the plans in principle. A draft of the provisions of the revised scheme to give effect to this proposal has been submitted to the Chief State Solicitor’s Office, for the advice of the Attorney-General on the matter.

VOTE 31—PRIMARY EDUCATION

Mr. L. Ó Laidhin further examined.

614. Chairman.—Paragraph 35 of the Report of the Comptroller and Auditor General reads:

“Youth Encounter Projects

These projects which were inaugurated in 1977, are based on special national schools for disturbed and maladjusted children conducted under the Rules and Regulations for National Schools and managed by Boards of Management. The projects have been established in four centres—two in Dublin and one each in Cork and Limerick and involve out-of-school programmes of a recreational, social and educational nature carried on in association with local youth organisations. In the year under review expenditure on the projects was charged to this Vote as follows:—

£32,000 to Subhead C. 1.—Salaries of Teachers and £53,200 to Subhead E.— Capital Grants for Premises, Furniture and Equipment. In addition expenditure of £16,200 on out-of-school activities was charged to the Grant-in-Aid Fund for Youth and Sports Organisations funded from Subhead G.12. of Vote 30.—Office of the Minister for Education.

In June 1979 I sought the observations of the Accounting Officer as to the adequacy of the vouching of the expenditure on these projects and I inquired whether arrangements had been made for the submission of accounts by the Boards of Management and for the inspection of the projects by officers of his Department. He has informed me that the Department was not satisfied that adequate vouching had been provided in respect of one project and that he had written to the Board of Management concerned. In the meantime a sum of £5,000 issued by way of imprest in respect of this project in December 1978 had been refunded to the Department.

The Accounting Officer also stated that the projects are visited regularly by the Department’s inspectors and had been visited by administrative officers of his Department in the current year. Funding of the projects in two centres is now being effected by the imprest method which requires that a certified statement of expenditure together with supporting documentation be submitted each month to the Department.

The Accounting Officer added that following consultation with the Department of Finance it had been decided that provision be made in future in a separate subhead of the Vote for Primary Education (Subhead C.8.) for all expenditure on these projects including both in-school and out-of-school activities.”

Mr. Mac Gearailt.—This paragraph deals with the arrangements made for the funding of four Youth Encounter Projects which were inaugurated in 1977 and based on special schools for disturbed and maladjusted children.

The paragraph also refers to the absence of adequate vouching in the case of expenditure on one project and to the refund to the Department of £5,000 which had been issued in respect of this project.

I understand that this project was closed in September 1979 and that funds were recently issued by the Department to clear the overdraft of the Board of Management.

615. Chairman.—Will the Accounting Officer comment on the Comptroller and Auditor General’s observations?

—This relates to the Youth Encounter projects, and the project in Cork in particular. The other schemes have worked successfully but the scheme in Cork has had to be closed. It is anticipated that a new project will be opened by the beginning of next year. In the meantime all the outstanding accounts’ problems involved have been solved. From my point of view there are no problems in that area. There is still the problem of ensuring that whatever project is drafted again will be more successful than the last.

616. Deputy Horgan.—The closure of the project in Cork was related to factors other than accounting factors?

—Yes.

617. On subhead A2—Loans and Grants to Training College Students—there is a fairly large shortfall. The explanation given is quite simply that the number of students who qualify for grants was less than expected. I have not got the previous years’ figures here but, given the size of the noneligibility, could it not have been predicted to some degree that, on the basis of the loans and grants scheme outlined, there would be a shortfall which could have been taken into account either by raising the limit or reducing the allocation? Would there not have been some indication from the trends in the previous years that the proportion of students eligible was declining?

—That is what you would expect. It is difficult to estimate. The problem is that this scheme is very much related to what is happening in the higher education grants scheme. There should have been a much closer co-ordination in relation to establishing what was the effect of the existing provisions of the higher education grants scheme, or how they would apply this particular year. At the moment I have not any option other than to allow for errors of estimation.

618. Chairman.—On subhead C3—Incidental Expenses—there is a saving of roughly one-third. What are the reasons for this underexpenditure?

—This subhead provides for seasonal expenses in connection with medical reports on teachers, maintenance grants for certain types of pupil, grants for temporary premises and miscellaneous expenses. The greatest variation is the erection of temporary premises where you have to make special arrangements in relation to a situation until a new building becomes available.

619. Deputy Horgan.—On subhead E— Building, Equipment and Furnishing of National Schools—I would like some information in relation to the building of national schools. As far as I am aware, the Department of Education pay the greater part of the capital cost of national schools but the exact percentage of the capital cost which they pay can vary from school to school. Is that the case?

—Yes.

620. Could the Accounting Officer give us some indication of the maximum and minimum grants in percentage terms?

—The theoretical minimum grant is twothirds. I do not know if anybody gets a grant as low as that now. I would say it would be approaching 75 to 80 per cent, generally. I would not like the Committee to try to make an assumption as to what the minimum local contribution is because it has to be negotiated in relation to the circumstances in each individual area. In a built-up disadvantaged area in the city it could probably be negotiated around 10 per cent in exceptional cases.

621. Would you be aware if there were any cases spectacularly less than 10 per cent?

—We would have to make a return to the Department of Finance. We used to have to give an average figure. We are controlled at the moment because we have to get the best value we can out of the allocation we get.

622. Are there any cases in which more than 95 per cent of capital costs will be borne?

—The all-Irish schools get 100 per cent. I presume we would make a special concession to special schools. I could not say offhand what the figures are at the moment.

623. The all-Irish schools are the only schools in which the site costs also are covered 100 per cent by the Department and in respect of no other school is any proportion of the site cost carried by the Department?

—That is so.

624. In relation to individual new national schools, is the percentage negotiated by the Department with the school authorities concerned a public figure? Is it available publicly?

—No, not for the individual schools. The figure agreed upon between the Department and the management board is regarded as confidential.

625. Could the Accounting Officer indicate whether this has always been so?

—Yes, it has been the strict practice.

Chairman.—I must draw attention to the undesirability of straying outside the Committee’s terms of reference. Questions must essentially be confined to financial administration.

626. Deputy Horgan.—Is it insisted on by the school authorities or on the Department’s initiative?

—I could not say. I would imagine that it would have been on the basis on which we conduct our negotiations generally with school management. They are on a confidential basis unless it is in accordance with published regulations.

627. Would the Accounting Officer agree that it is rather difficult to estimate, for example, private investment for education in the absence of figures like that?

—I would imagine that if it were required for the purpose of making an estimate, an overall global figure could be supplied, for example, in relation to expenditure on grants, how much was collected in toto by way of local contributions. That is policy but it would not conflict with the confidential nature of a contract between the Department and an individual school.

628. Would there be any apprehension on the part of the Accounting Officer that, if these figures were more readily available, there would be a cost implication in that individual school authorities might want to negotiate on the basis of the smallest of local contribution? I cannot quite detect any other reason for confidentiality.

—I would not imagine so because I am quite sure that while we keep it confidential, they do not keep it confidential between themselves.

629. Therefore, the reason I have suggested is not really an operative one?

—No. It is just that we have to maintain a degree of confidentiality in relation to the negotiations.

Chairman.—While I fully appreciate the Deputy’s endeavour to elicit information in relation to the expenditure of public funds, I would, however, direct his attention to the danger of straying into the area of Government policy, which, of course, is wide of our brief.

630. Deputy Horgan.—With regard to Appropriations-in-Aid, the note on item 4 states that “receipts from the sale of old school houses and from refunds of salaries and grants which are very difficult to estimate, were greater than anticipated.” Could the Accounting Officer indicate what procedures are followed in relation to the sale of old school houses? Can the Department and the taxpayer ultimately claim some recompense for public investment in the buildings concerned over a long period of years?

—In some cases. There would be some provision in the original lease for repayment in the event of the building not being used for a school subsequently and the figure stated in the deed, presumably, would be collected. If in the meantime the Minister had sanctioned grants towards the improvement of the school and so on he would probably claim that he should be recompensed to some extent out of the money he had expended. Again, it would become a matter for negotiation between the owners of the buildings, the manager and the Department.

631. Is it ultimately a matter purely for ministerial discretion in relation to matters which are not covered in the original lease?

—I would say so. We would not be going in most cases to a valuation office although we might if we wanted to. It is very hard to assess what that kind of property is worth. It is related purely to its local value. It would be a matter of seeing how much you put into it and what was a reasonable return.

632. I would accept that as a proviso. It is a situation that is not likely to arise in respect of most modern schools. They would be the old schools.

—Not likely to arise.

VOTE 32—SECONDARY EDUCATION

Mr. L. Ó Laidhin further examined.

633. Deputy Horgan.—On subhead G —Secondary Schools—Annual Repayment of Building Loans—I notice that there is a table on page 86 in relation to the issue of loans towards the building of secondary schools and repayment thereof. I note that in the year ended 31 December 1978 there was an issue of £18,361. This is a very small amount when one considers the scope of the scheme originally. Would it be accurate to say that this scheme is to some extent phasing itself out at the moment?

—This is a scheme for the actual payments of the building loan when we had the 70 per cent and the 30 per cent. The scheme was amended to give 80 per cent and 20 per cent. The school must now find the full 20 per cent. When we had the 70 and 30 per cent we had an arrangement that they could borrow from us and then repay it. Now they have to find it through their own resources.

Subhead G refers to a scheme which is phasing itself out?

—Yes.

634. The new scheme appears under subhead H.2—Secondary, Comprehensive and Community Schools—Building Grants and Capital Costs—£12½ million, is that right?

—Yes; the new scheme is under H.2.

635. What proportion roughly of the £12½ million falls under each of the three headings in the subhead? I do not see a table on the same lines as the statement of loans in the case of subhead G.

—It would be in the Estimates book for that year.

There is no need to include a special table in that case.

636. On subhead A.1—Capitation Grant (including Teachers’ Salaries Grant) and A.2—Supplemental Grants to Secondary Schools in lieu of Tuition Fees—the Accounting Officer stated during our discussion on the community schools that there might be a set-off in certain cases in which schools were adjudged by the Department to be in a profit or surplus situation. Have the Department any oversight of the financial liability of the institutions to which they pay sums under subheads A.1 and A.2, for example, in such a way that they might take special account of situations in which public moneys are actually going to institutions that are profitable rather than institutions running at a loss?

—We can get a statement in relation to what they tell us is their expenditure. We know the sanctioned number of teachers for a school and we know what we pay them by way of basic salary. We can make a fair estimate nowadays, particularly with our experience of heating and lighting costs in community schools. In general, it is not impossible to make some assessment of what the expenditure in secondary schools should be.

637. Is it the Department’s experience that at least a reasonable number of secondary schools have a financial surplus?

—We are in a negotiating situation at the moment in relation to grants. We always work on the basis that we are satisfied that the grants we pay are of a reasonable amount and maintain the standards that we expect from such schools.

638. On subhead A.1, could the Accounting Officer indicate why the confidentiality aspect apparently applies only to schools in relation to capitation grants whereas it does not apply in relation to some State schools under the teachers’ salary grants? I presume it is an administrative custom. When I asked questions in the Dáil about the amount paid to individual identified schools under the capitation grant subhead of the Vote, I was told it is not in accordance with practice to give this information. It seems odd that this one particular payment should be singled out for confidentiality when other ones in relation to payments for teachers’ salaries and so on are not.

—The total amount is there.

I am talking about payments to an identified institution.

—In general principle we do not disclose what would be payable to any individual school.

It has been my experience——

—The grants’ regulations will give the rate per pupil.

I have had that information in relation to individual schools but the matter was specifically in relation to a school that was threatened with closure. The Department seem to have no difficulty in getting information in relation to the teachers’ incremental salaries?

—We would not say what an individual school gets.

639. I would not have requested that information either, but in relation to a particular institution the Department makes available information about payments made by way of incremental salary, although they do not make the same information available in relation to payments made by way of capitation grant. The reason that surprises me is that certainly up to 1932 this was not just furnished in reply to Parliamentary Questions, but was actually published in the annual report of the Department of Education in respect of each individual secondary school at that time. I grant that the Department also used to list individually all the acquisitions in the National Museum at the time which made it a very bulky document which I would not look for here.

—I do not know all the changes that took place, but all the schools are affected in the same way. We used at one time publish examination results, and there were objections to identifying candidates. It may well be, although I could not say now, that there were representations from individual schools in relation to disclosing this information.

The point I am making is that, in relation to education in general and many other grants, we have very rigorous conditions in relation to the fact that the Comptroller and Auditor General has to audit the grants made and so on. It seems odd that, in relation to grants which are much larger than those we are discussing, we have more information. It need not necessarily be included and published as documentation but it should be available when sought. Perhaps we should discuss that when we come to draft our report.

Chairman.—Yes.

640. Deputy Horgan.—I note that two community schools were transferred to Limerick City and Cork City Vocational Education Committee. Are there any other financial implications of that decision other than the ones which are identified in the note on page 85?

—Originally, if we knew that they would become vocational schools we would have been charging them to the Local Loans Fund. Originally it was considered that once all the payments had gone through it would not make too much sense to be making transfers between one fund and another. It was agreed, as far as I recollect, that it would be sufficient to make a reference to the matter in the Appropriation Account. But strictly speaking, that should be a charge on the Local Loans Fund. Subsequently, authority for adjusting the expenditure relating to the two schools which were transferred was conveyed in the Department of Finance Minute. A payment was made from a suspense account and recouped from the vocational education committees by drawings from the Local Loans Fund. It was in the suspense account until the matter was cleared up but it was held against the schools that were being paid for out of the subhead in this vote. They should, strictly speaking, be a charge on the Local Loans Fund.

641. On subhead H.2—Secondary, Comprehensive and Community Schools —Building Grants and Capital Costs— could the Accounting Officer give the Committee some indication of what happens to meet the problem that has arisen or may arise in the future in relation to conflicting financial demands? For example, what criteria would be employed to decide whether or not a capital grant should be available to a secondary school authority which wanted to establish an education institution in an area which is already served by another educational institution?

—Our approach to this is entirely related to the local circumstances of the area. If additional accommodation is required we have to consult the various interests who might be involved and the effect that the establishment of another school would have on an existing school. Very often you have a fairly well established pattern of choices between different schools—that a certain percentage seem to decide on a certain particular course which will be mainly followed in one school rather than another. These are the factors that are decided well in advance of the decision to be made as to what kind of school will be provided and what size it will be. It is at a later stage that the allocation of money becomes an issue. The allocation of money, in general, has to follow the actual needs. If it is decided this particular place is a developing area and there are no schools at all available there they will have to get very high priorities and must be provided with education. If, on the other hand, it is a request about a replacement of services, while it will depend entirely on the condition of the building and the degree of priority, nevertheless, it would be a lower priority than an area where there is no school. We have to calculate, have a good deal of discussion with the various interests as to how many there will be, whether you will have 500 pupils in one school and 400 in another or 450 in each. It will be related to an assessment of what has been the pattern over the years and what it is likely to be in the future in relation to the development of the area.

642. Would the Accounting Officer agree that there is a point at which choice shades into competition and that there is an undue degree of competition between the schools? If they were all seeking and obtaining support from public funds it would be very disadvantageous to the taxpayer in the long run.

Chairman.—We are entering an area here which, basically, is a policy area concerning the decisions which determine educational facilities made available in any particular location. With all due respect to the Deputy, I suggest he should not pursue that line of questioning.

Deputy Horgan.—I was not proposing to ask any more questions. If the Accounting Officer would care to make an observation on the last one I would be satisfied.

Chairman.—The factors that lie behind the provision of schools, and the type of schools so provided in any particular area, fall into the domain of policy and, in fairness to the Accounting Officer, should not be pursued with him. There are other parliamentary devices which the Deputy can avail of to elicit this information.

Deputy Horgan.—The point I was trying to elucidate for the Committee who are trying to secure some type of control over public funds is that we do not fail to advert to situations where public funds may be provided by the education committee.

Chairman.—We should confine ourselves to administrative and financial considerations. The decision to allocate a school and the type of school is outside our terms of reference.

643. Deputy Horgan.—Would it be in order to ask the Accounting Officer if the grants which were made under subhead H.2, for example, did not involve any unnecessary duplication of educational provision?

—You can have the assurance that they certainly did not. We take fairly extreme precautions to ensure that there is a coordination of the services as to what is envisaged.

VOTE 33—VOCATIONAL EDUCATION

Mr. L. Ó Laidhin further examined.

644. Chairman.—Paragraph 36 of the Report of the Comptroller and Auditor General reads:

“Subhead J.3.—E.E.C. Social Fund—Recoupment of portion of costs of Training Programmes implemented by Vocational Eduction Committees

The European Social Fund provides community aid towards the cost of schemes of training, retraining and resettlement of workers. Certain training programmes carried out under the aegis of Vocational Education Committees and financed initially from this Vote are eligible for such aid. Sums recovered from the Social Fund are credited as appropriations in aid of the Vote. The latest date for the submission of claims for aid to the European Commission in respect of 1976 programmes was 30 September 1977 and the Department of Education accordingly requested Vocational Education Committees to forward their claims before 3 June 1977 in order that recoupment could be sought within the official time limit. It was noted in the course of audit that in the case of one Committee a claim amounting to £10,974 was not submitted to the Department until 10 October 1977 and that, as a result, the Department’s claim for recoupment, forwarded to the Commission in February 1978, was rejected. I accordingly sought the observations of the Accounting Officer on the matter. He informed me that when the main claim in respect of 1976 training operations was being transmitted by the Department of Labour to the Commission on 29 September 1977 it was indicated to the Commission by that Department that further 1976 claims were likely to be submitted at a later date. The Accounting Officer also stated that it is now understood from the Commission that the claim for £10,974 has been conceded and that it will be paid shortly.”

Mr. Mac Gearailt.—This paragraph outlines the procedures for the preparation and submission of claims to the European Commission for aid towards the cost of training programmes implemented by Vocational Education Committees.

The paragraph also mentions a particular claim amounting to £10,974 which was initially rejected by the Commission because of tardiness on the part of a Vocational Education Committee in submitting the necessary details for processing to the Department. I understood that this claim has since been met in full.

645. Chairman.—Could the Committee have a comment from the Accounting Officer on the delay in ths case?

—There were some misunderstandings between Dublin and Brussels, if you put it that way, but actually it was all sorted out and the money has come.

646. Deputy Horgan.—On subhead H—Payments under Section 51 (6) of the Vocational Education Act, 1930—could the Accounting Officer refresh my memory on what Section 51 (6) of the Act is. There is a record of a small surplus of expenditure there—about 10 per cent. The note says claims for refunds of loans paid during the year were greater than anticipated. What are the general purposes under which these payments were made available?

The VEC in normal cases gets its funds from the Local Loans Fund. In some cases it can get a grant from its parent local authority and then refunds of half of the annual loan charges on the capital money raised for this purpose have to be made over a period of years to the parent authoriy.

647. In relation to the Appropriations in Aid, how does the income from the Church Temporalities Fund arise?

—That was settled away back at a fixed sum.

648. Is it not tied to any particular form of expenditure or is it just a general one?

—It is for the general purpose of vocational education and technical instruction.

VOTE 34—RESIDENTIAL HOMES AND SPECIAL SCHOOLS

Mr. L. Ó Laidhin further examined.

649. Chairman.—Paragraph 37 of the Report of the Comptroller and Auditor General reads:

“Subhead E.—Building and Equipment Grants

It was noted in the course of audit that a contract in the sum of £324,962 for the erection of a training school was entered into in 1972 and that the Department of Education became aware of certain defects in the buildings in 1974 when the contract was virtually completed. As the contractor, who went into receivership in 1976, had refused to remedy the defects for which he was considered liable, the Department of Education, with the approval of the Department of Finance, made arrangements to have the remedial works carried out by another contractor.

It was also noted that when the contract was being awarded in 1972 the original contractor was required to provide, through an insurance company, a performance bond in the sum of £86,250. The bond required that the Department should give due notice to the insurance company within one month in the event of non-performance by the contractor. Because of failure on the part of the Department to give such notice within the time limit specified the insurance company was in a position to repudiate liability under the bond.

In the circumstances I sought the observations of the Accounting Officer. He has informed me that recent correspondence indicates that the insurance company’s repudiation of liability may be open to question and that there may be grounds for pursuing the matter further with them. He indicated that the cost of the works carried out by the original contractor was £532,848 of which £513,325 had been paid leaving a balance of £19,523 which would be offset against the cost of the remedial works. Expenditure on these works at 31 December amounted to £37,928.

The Accounting Officer also stated, however, that the Receiver was still an interested party and would probably contest any decision to retain the balance due to the original contractor.

He added that the final account for the remedial works was being examined.”

Mr. Mac Gearailt.—This paragraph refers to a contract for the erection of a training school. The original contractor, who is in receivership, refused to remedy defects in the buildings and the Department arranged to have remedial works carried out by another contractor and retained a balance of £19,523 due to the original contractor towards the costs of these remedial works. Although the original contractor had provided a performance bond sufficient to cover the cost of the remedial works, failure to notify the surety within the specified time has raised doubts about the Department’s right to recover under the bond. There also appears to be some doubt as to whether the Department are entitled to retain the moneys due to the original contractor since he is in receivership.

650. Chairman.—In that case the notice presumably was not given within the prescribed one-month period. What is the present position in relation to the bonds?

—The present position is that this case could go to court. We cannot enter into any discussion on it at the moment. We have, in fact, applied to the receiver, to see if there are funds there. That is the first step and after that where it goes may involve legal proceedings.

651. He may seek control of these actually?

—We have to see what we can get then, where it can come from, but we certainly could not talk about it.

652. Deputy Horgan.—On subhead D—Parental Money—Collection Expenses—what does this relate to? It seems an intangible amount to have in a subhead.

—It is not worth collecting but we have to do it under the law at the moment. The Act requires that it should be—on some occasions the justices impose an obligation on the parents to contribute—so we have to collect it. I suppose if there was amending legislation, it would probably not be provided for any longer.

653. Would the amount collected from the parents appear in the appropriations-inaid, the £1,400 odd?

—Yes, that would be coming in under the appropriations-in-aid and this is the collection expenses. You have to pay these on some percentage basis.

I realise the Department have a heavy administrative load at the moment: it is a pity that we cannot get rid of this.

—If there is new legislation under the Department of Health it will probably deal with that.

VOTE 35—HIGHER EDUCATION

Mr. L. Ó Laidhin further examined.

654. Deputy Horgan.—On appropriations-in-aid, in relation to the decrease in the number of students in Thomond College, given the need for physical education for students and graduates, is there any particular reason for the decrease in the number of students in the year concerned. Was there a shortfall of applicants or a shortfall in qualified applicants?

—The original estimated requirements for physical education teachers on the staffs of schools was far greater than the actual situation. I think there was a deliberate decision to reduce the total intake from 100 to considerably less.

655. This is because schools, in deciding to use up their future allocation, are giving physical education lower priority?

—Not a low priority, but they would not advance as quickly because in a new situation where there are additional posts being created you can have additional posts; otherwise you have to wait until vacancies occur to re-organise your staff.

656. There is no danger at any stage that you have under utilisation of the college?

—We now have the situation that we have an additional provision being made so that we can take account of the whole accommodation in relation to what we are going to have for the purpose of an expansion for woodwork, metal work and rural science.

The witness withdrew.

The Committee deliberated.

The Committee adjourned.

*see Appendix 13.

*see Appendix 13.