Committee Reports > List of Committees > Dáil > 1983 > Committee of Public Accounts > Interim and Final Report - Appropriation Accounts 1978 - 1979

APPENDIX 2

MINUTE OF THE MINISTER FOR FINANCE ON REPORT DATED 3 DECEMBER, 1980 OF THE COMMITTEE OF PUBLIC ACCOUNTS ON THE APROPRIATION ACCOUNTS, 1978

PART I—GENERAL OBSERVATIONS

Paragraphs 4, 18, 21, 26, 28, 29, 30, 32, 33, 35, 38, 39, 40, 42, 45, 46

These paragraphs do not appear to call for comment.

REPORT DATED 24 JUNE 1976

Paragraph 1—Delays in Collection of Monetary Compensatory Amounts (MCA’s)

The Minister is informed by the Department of Agriculture that the total amount of MCA charges now outstanding is some £604,000, of which cattle and beef account for £546,000 including £273,000 outstanding in respect of 9 judgments. The number of court cases now pending in regard to cattle and beef is 15, involving £168,000.

The UK Customs authorities have recently completed their examination of the “carousel” trade in pigs and barley and separate reports on each have been supplied to the Department of Agriculture and the Office of the Revenue Commissioners. The treatment of the cases involved will be determined by the Department of Agriculture in consultation with the Revenue Commissioners, the UK authorities and the European Commission.

REPORT DATED 21 APRIL 1977

Paragraph 2—Primary Education—Scheme of Adaptation and Extension for a National Teacher Training College

The Minister is informed by the Department of Education that a draft Deed of Charge, guaranteeing the exclusive use of the College premises for the training of national teachers or other approved educational purposes, is currently under discussion with the Chief State Solicitor from the point of view of completion of the legal formalities. The Committee will be informed when the matter has been finalised.

Paragraph 3—Secondary Education—Local Contributions towards the Capital Costs of Community Schools

The Department of Education has informed the Minister that every effort is being made to have the Deeds of Trust for the community schools completed as quickly as possible but the difficulties are being experienced in relation to schools not replacing existing secondary/vocational schools. The Irish Vocational Education Association has advised Vocational Education Committees not to sign any Deeds in these cases until clarification has been obtained on some points connected with the Deeds and on issues in relation to future schools to be provided. Discussions are still proceeding in these matters.

The Department has also indicated that, in the case of community schools established by the amalgamation of existing secondary schools, negotiations on the amount of the local contribution payable by religious authorities have not yet been concluded.

It is intended that the local contributions collected will be accounted for as an Approriation-in-Aid in the Secondary Education Vote.

With reference to the Committee’s recommendation that any agreed local contribution below 5% of the cost of building and equipping a community school should be separately set out in the Appropriation Account, the Department of Education has informed the Minister that it could not accept this proposal because of the strict confidentiality that has always been maintained by the Department concerning the exact amount of local contributions negotiated with individual persons or authorities in regard to school building generally. The Minister proposes to discuss this matter further with the Department of Education.

Paragraph 5—FEOGA Accounts

The Minister is informed that the Intervention Beef Accounts for 1976, 1977 and 1978 were forwarded by the Department of Agriculture to the EEC Commission in March, August and December 1980, respectively. The preparation of the Intervention Beef Accounts for 1979 is well advanced and it is hoped to send them to the Commission within the next few months. The 1979 accounts for sectors other than beef were forwarded to the Commission in November 1980.

REPORT DATED 15 JUNE 1978

Paragraph 6—Clearance of Cashed Payable Orders by the Paymaster General’s Office.

Primary Education—Overpayments of Teachers’ Salaries

The revised computerised system for the Paymaster General’s Office was introduced on a modified scale in November 1980. This has already resulted in an acceleration of the clearance of payable orders. While some further progress is expected under present circumstances the attainment of the two-day clearance target is subject to the installation of additional new equipment in newly acquired premises which are at present being prepared for occupation.

Paragraph 7—Secondary Education—Deductions from Salaries in respect of Social Welfare Benefits.

The Minister has been informed by the Department of Education that the co-operation of the Department of Social Welfare has been enlisted in relation to teachers who may have been paid maternity or sickness benefit while absent on full salary. All cases, where it has been established that benefit and full salary were paid, are being pursued; inquiries are still proceeding in some cases where it has not yet been established whether or not social welfare benefit was paid.

Paragraph 8—Fisheries

The Minister is informed that agreement was reached with Mayo County Council on 1 May 1980 on the funding of harbour works at Killala. With the consent of the Minister for Finance, the debt of £11,000 due by Mayo County Council to the Office of Public Works for work already carried out at Killala was waived and the Council agreed to contribute 25% of the cost of reinforcing the pier which is estimated at £180,000. The County Council also agreed to maintain the completed works. On 26 May 1980 the Office of Public Works was asked to begin work. The £11,000 debt has been paid from the allocation for harbour works in the Fisheries Vote. These arrangements were agreed to by the Department of Finance as an exceptional measure to resolve the dispute which had held up necessary reinforcement works at the harbour.

Paragraph 9—Local Government—Audit of Accounts

The Minister is advised that the vacancy situation in the Audit Section of the Department of the Environment has improved substantially since 1979. All the Trainee Auditor vacancies have now been filled. There are still a number of vacancies at Auditor level but a competition is currently in hands to fill these.

Notwithstanding the difficulty in recruiting suitable staff, good progress has been made in reducing audit arears. At 31 December, 1980, 46% of the audits were up to date and a further 22% were only one year in arrears compared with the position at end-December 1979 when 30% of the audits were up to date and a further 32% were one year in arrears.

Paragraph 10—Local Government—Overissues of Housing Subsidy

All claims for local authority housing subsidy in respect of the four financial periods from 1 April, 1973 to 31 December, 1976 have now been certified by the Local Government Auditors with the exception of the 1976 claims of Dublin and Mayo County Councils. Apart from Tullamore U.D.C., all over-issues on account established by reference to the certified claims have been fuly recovered.

In the case of Tullamore U.D.C., an over-issue of £3,543 has been established and this amount will be recovered from the May, 1981 housing subsidy payment.

In the case of Dublin and Mayo County Councils, the audit of the 1976 accounts is under way in each case and it is expected that certification of the subsidy claims will be completed in time to make any necessary adjustments in the May, 1981 subsidy payments.

Paragraph 11—Health Contributions

The Minister has been assured by the Department of Health that its attitude, in relation to the problems of improving the rates of collection of contributions and the obtaining of information, has not been complacent. The Department has pointed out that it has initiated a review of the existing collection system and in that regard a Working Party consisting principally of officers of the eight Health Boards has been established. Its main function is the improvement of procedures for collecting farmers’ health contributions. At this stage, as a result of the progress of the Working Party, seven of the eight Boards have standardised and computerised their collection procedures, and the eighth is expected to do so shortly: the effectiveness of these systems is subject to constant review. The Department has also pointed out that it has continuously urged health boards to take all possible steps to improve the rates of collection of contributions and in that regard has drawn the attention of the boards to the views expressed by the Committee.

The Minister has been informed by the Department that the detailed information asked for by the Commitee is being compiled and is expected to be forwarded shortly to the Committee.

REPORT DATED 26 APRIL 1979

Paragraph 12—Superanuation and Retired Allowances

As regards the drafting of the pension schemes for widows and children of certain public servants (other than Civil Servants), the Minister is informed that the Departments concerned have continued to make progress, with the assistance, as required, of the Department of the Public Service. One Scheme is almost ready and work on preparation of the others is well advanced.

As regards the other aspects mentioned (i.e. the purchase of service and consolidation) the scheme relating to purchase has been drafted but cannot be finalised until revised arrangements for the transfer of service for pension purposes, with which the purchase arrangements are closely linked, are completed. The consolidated scheme will be drafted when the other schemes have been completed.

Paragraph 13—Wealth Tax—Delay in Submitting Returns

The Minister has been informed by the Revenue Commissioners that every effort is being made to enforce delivery of outstanding returns. The number of such returns has been reduced from 2,030 at 31 December 1979 to 981 as at 31 December, 1980. The Committee will be kept informed of the progress being made to obtain the outstanding returns and to complete the formal asessment of tax in all cases.

Paragraph 14—Posts and Telegraphs—Cable Television Fees and Television Licence Defaulters

The Department of Posts and Telegraphs has informed the Minister that the information supplied by cable television operators has not revealed any major evasion in the payment of television licence fees by subscribers to cable systems. Approximately 4% of the subscribers whose names and addresses were supplied were found to be in possession of unlicensed sets. The information is nevertheless useful particularly in combating licence evasion in new housing developments.

Paragraph 15—Local Government—Housing Subsidy and Rent Arrears

The subsidisation of rent arrears arose mainly because of the method of payment of subsidy during the period 1 April 1973 to 31 December 1976. During this period claims for subsidy were made by local authorities on the basis of the deficits shown in their housing services accounts, so that failure to collect all due rents would have had the effect of increasing the subsidisable deficits shown on a housing account. This in fact occurred in one case only, namely, the local authority cited by the Committee. In that instance exceptional circumstances applied, in as much as the rent strike in the local authority area continued up to end October, 1976. This effectively prevented estimates being made of outstanding rent arears before 31 December, 1976. In consequence, the deficit on that local authority’s housing account was overstated—and therefore over subsidised—to the extent of £228,884. This amount has been fully recovered. Since January, 1977, a new system of subsidy payments was introduced, by virtue of which over-issues are obviated.

The Minister is assured that the over-issue in question does not represent a casual approach on the part of the Department in regard to the examination of local authority claims and housing claims in particular.

Paragraph 16—Office of the Minister for Education—Higher Education Grants

In order to assist the Committee, the Department of Education has prepared a detailed statement of the facts relating to the operation of the Higher Education Grants scheme by the local authority concerned. This, together with copies of relevant documents, is being forwarded to the Committee under separate cover.*

Paragraph 17—Secondary Education

The Minister has been informed by the Department of Education that it is proposed to take steps to set up the internal audit system and that application will be made without delay to the Department of the Public Service for the extra resources needed.

Paragraph 19—Higher Education

Regarding the defective external wall finish at the National College of Physical Education, Limerick, the Minister is informed by the Department of Education that the initial legal advice obtained, based on a technical report from the Institute of Industrial Research and Standards, was:

(i)that the defects are the responsibility of the nominated subcontractors who might in turn have a claim against the suppliers, should suggestions of changes in the composition of the materials be proven; and

(ii) that the Department’s contractual relationship lies with the main contractors only and that any claim to be made by the Department would lie against the main contractors, who in turn could seek an indemnity from the subcontractors against any such claim.

In subsequent correspondence in accordance with the legal advice, the main contractors, through their legal advisors, denied any liability and proposed separate technical advice in support of their contention. Protracted correspondence ensued and further legal advice was obtained. Discussions are proceeding and the matter is expected to be finalised shortly. The Committee will be advised of developments.

Paragraph 20—Public Works and Buildings

The Minister is advised that the problems of securing centralised accommodation for the Furniture Division is proving very difficult to solve, because of the size and type of space required. The Minister is aware of the importance of securing proper accommodation for the Furniture Division and every effort is being made to find the earliest possible solution to the problem.

The extra staff authorised for the furniture Division have been appointed, apart from one additional Clerical Assistant. The stock control and other procedures based on the recommendations of the Management Services Unit of the Department of the Public Service are in the process of being introduced.

Paragraph 22—Defence—Armoured Personnel Carriers

The Minister for Finance agrees that the funding of research and development projects should be provided for under a separate subhead whenever feasible. All Accounting Officers are being informed accordingly.

Paragraph 23—Lands—Farmers’ Retirement Scheme

The Minister for Finance considers that the financial commitments resulting from the operations of the Land Commissioners must be viewed against the following background:

(a) the relevant legislation gives independent status to the Commissioners;

(b) the relevant legislation requires that the price which may be paid for land in individual cases by the Land Commission (or on appeal to the Appeal Tribunal—a Judge of the High Court) be equal to the market value of the land;

(c) the legislation provides for the preparation of annual accounts of the Commission which are audited by the Comptroller and Auditor General and presented to the Dáil;

(d) the total moneys available to the Land Commissioners for land purchase comprise the following:

(i) sums included in the Vote for Lands which is submitted for the approval of Dáil Éireann;

(ii) Land Bonds created by the Minister for Finance under the Land Bond Act of 1934.

In the Minister’s view the above arrangements (based on statutes etc.) have operated satisfactorily.

Paragraph 24—Health—Rebates and Discounts applicable to General Medical Services Prescriptions

The report of the consultants engaged to examine the existing arrangements for the purchase of drugs and medicines for the health services, with particular reference to the rebates and discounts provided for under these arrangements and the making of recommendations thereon, has now been published.

Interested bodies will be asked by the Department of Health to comment on the suggestions contained in the report in order that proposals on which policy decisions might be based will be formulated with the fullest possible regard to all relevant considerations. The Department has indicated that copies of the report have been forwarded to the Committee.

Paragraph 25—Employment of full-time Pharmacists by Health Boards

The Minister is informed by the Department of Health that the employment of community pharmacists by health boards still continues to present problems in the matter of recruiting and retaining their services. In September, 1980, following intensive recruitment efforts, seven of the eight health boards had formal arrangements for community pharmacy supervision. Since then, however, two posts of pharmacist have become vacant. The Department of Health is continuing to keep the position under review and further efforts will be made in 1981 to build up the staffing complement to the level required.

Paragraph 27—Social Welfare—Children’s Allowance Orders

The Minister has been informed by the Department of Social Welfare that the application of a cash-type processing system to Children’s Allowance and Pensions Orders would be impracticable, because of the substantial increase in staff which would be necessary and the delays which would be inbuilt in the system. However, it is proposed to implement a number of improvements either immediately or on a gradual basis over the next three years in conjunction with computerisation.

The improvements proposed immediately are:

(1) the acquisition of high-security labels for use exclusively on Children’s Allowance and Pension books

(2) the commencement of a system for rendering unusable certain returned books

(3) the retention, given additional accommodation, of stocks of all unissued books and stocks of specially processed returned books, until after the completion of the Comptroller and Auditor General’s audit.

These improvements will contribute to a more secure system whereby the scope for misappropriation and the potential for subsequent malconversion will be reduced.

Further improvements are proposed on a phased basis during 1982 and 1983. These improvements are:

(1) computerised monitoring of all stocks of books and orders initially received, issued and returned, together with appropriate audit trails and management reporting

(2) elimination of the existing practice whereby stocks of books are held outside the main strong-room areas

(3) all books returned to the Department to be registered on computer as soon as they are received, an analysis to be made of all cases where the action taken has not been communicated back to the computer within a reasonable period

(4) the introduction of a streamlined system for the bulk renewal of books (with the aid of computers and ancillary equipment)

(5) the re-investment of part of the reduced workload savings in increased day-today supervision and a strengthened internal audit system.

It is considered that these changes will improve the overall level of security without disimproving service to the claimants. The detailed measures to implement the proposals are being formulated in the outline computer system design and are due to be programmed by the end of 1981. It is planned that these measures will apply to some 20% of claims by mid-1982. They will be extended, on a gradual basis, to the total 800,000 claims which will probably be covered by the end of 1983. The Department of Social Welfare intends to seek the approval of the Departments of Finance and the Public Service for these proposals and to clear the details with the Comptroller and Auditor General prior to implementation.

Paragraph 31—Labour—Grant-in-Aid to AnCO and Parliamentary Review of Accounts of Non-Trading State Bodies

In March 1980, a private members’ motion to establish a Joint Oireachtas Committee on Non-Commercial State-Sponsored Bodies was debated in Dáil Éirean. The motion was defeated but the Minister for the Public Service undertook to the House to have the question fully reviewed within a year. This review is at present under way and the Minister hopes to be in a position to report to the Dáil in the near future.

Paragraph 34—Office of the Revenue Commissioners—Collection of Interest on Arrears of PAYE Income Tax and Arrears of VAT

Regarding the example quoted by the Committee of a taxpayer liable for interest on overdue tax or ceasing to be liable for tax in subsequent years, the Minister has been advised by the Revenue Commissioners that the procedure is as follows—when the Commissioners defer collection of interest, it is made clear to the taxpayer that its collection will be resumed if he fails to meet future liabilities as they arise. Where a taxpayer has met future liabilities as they arose, before eventually ceasing to be liable for tax, the Commissioners have taken the view that the interest provisions have served the objective of securing timely payment and they have not in those circumstances resumed collection of the deferred interest.

Because of the Commissioners’ view that the interest provisions are a measure to secure timely payments and are not intended to produce additional revenue, they are of the opinion that non-collected interest per se need not be reported upon on the same basis as uncollected tax. The non-collection would not therefore be brought to the attention of Dáil Éireann.

The Commissioners’ practice in this area does not conflict with the position evidenced by a former Accounting Officer on the Committee’s examination of Appropriation Accounts for 1973/1974. The former Accounting Officer was commenting on the interest collection in the area of the assessed taxes, income tax and surtax (as distinct from the non-assessed PAYE and VAT) and the attitude expressed by him continues to be the Commissioners’ attitude towards interest collection in that area i.e. to pursue vigorously any interest on overdue tax.

The collection of interest in the case of assessed taxes is more readily effected than in the case of PAYE and VAT particularly because of the marked diference in the frequency with which liability arises, which is generally once or twice a year for the former, as compared with six times in the case of VAT and twelve times in the case of PAYE and PRSI.

The Revenue Commissioners have assured the Minister that they accept that, in any conflict of interpretation between the Commissioners and a taxpayer, the final decision lies with the Courts. However in applying and administering legislative provisions enacted by the Oireachtas, they consider that, in the first instance, the provisions should be applied in accordance with the will and intention of the legislature in enacting those provisions. The Commissioners maintain that it has been clear to them, from Ministerial statements and otherwise, that the severe interest provisions in relation to PAYE and VAT were intended as a deterrent to tardy payments and that this was essential because of the nature of the collection and the frequency of the recurring liability. The merits of pursuing the collection of interest on a more rigorous basis would have to be considered in the light of the number of taxpayers, the frequency of recurring liability, the optimum overall deployment of the Commissioners’ staffing resources and the need to protect the acceptability of the entire collection system among employers and traders who are the primary collectors of the taxes.

The Commissioners have informed the Minister that, in the light of the Committee’s comments on this matter, they have now initiated a review of the interest procedures with a view to establishing new guidelines. It is their intention, on completion of the review and the preparation of guidelines, to have discussions with the Department of Finance and the Comptroller and Auditor General, and, if it is considered desirable, to seek the advice of the Attorney General. The question of interest collection is being examined in the context of this review and the information requested will be conveyed at a later date.

Paragraph 36—Environment—£1,000 Housing Grants

The Regulations under the Housing (Miscellaneous Provisions) Act, 1979 mentioned in the Report were brought into operation on 26 September, 1980. Regulation 11(3) requires each applicant and spouse, save in exceptional circumstances, to furnish a certificate from the appropriate tax authority that they had not previously claimed income tax relief in respect of interest paid on money borrowed to purchase or build a house. The system of checks will be kept under review and the Committee will be informed of any further developments.

Paragraph 37—Social Welfare—Computerised Payments System

The Minister is advised by the Department of the Public Service that the functions of the Central Data Processing Services (CDPS) cover:

Assisting with policy formulation for EDP development within the Civil Service and related public service agencies;

Public Service aspects of national policy issues regarding overall computer development;

Co-ordination, determination and sanctioning of the computer hardware requirements of the Civil Service and certain related public service agencies;

Development of computer systems for Government Departments and certain related public service agencies;

Development of related management information systems;

Operation and development of the Public Service Computer Bureau.

A Review body, appointed with the approval of the Government, is examining the organisational strategy for the development and operation of computer systems in the Government Service. It is possible that this review will result in some changes in the current responsibilities of CDPS.

The CDPS can be regarded as a general purpose bureau for those Departments which have not installed their own computer. CDPS hardware facilities are also used by a number of State-sponsored organisations, Health Boards, Voluntary Hospitals and educational authorities. Some of these agencies have their own systems analysts and programmers. However, most organisations using CDPS hardware rely on CDPS personnel for the development and maintenance of systems. CDPS also provides systems and programming resources for applications which are operated on computers in the Department of Social Welfare. The Department of the Public Service states that CDPS has always been conscious of the need to reduce the possibilities of irregularity or fraud in computer systems. With this in mind, CDPS policy has been to locate all procedures relating to data input and the handling of computer output in user organisations. Most agencies using CDPS services have their own terminals. These enable them to submit data and produce results locally, without any transmission of documents or other computer media to the computer centre. CDPS does not normally print payable orders or cheques at the computer centre. The position is, therefore, that for CDPS-developed systems the computer specialist normally has no access to the output and the user personnel lack the expertise to alter programmes or to change the system technically.

The Minister is advised that, where CDPS is responsible for the development of systems, the system proposal prepared for the user agency will include suggestions on procedures to ensure the accuracy and completeness of the computer system. CDPS may also suggest security arrangements which are not directly related to computer processing e.g., the pre-numbering of all cheque stationery. CDPS also makes proposals on local organisational arrangements which will invariably suggest a separation of functions between the staff at terminal centres who are responsible for processing data and the Accounts Section staff who have responsibility for overall financial and systems control. It has been the practice in recent years, as computer systems became more widespread, for CDPS to consult the Comptroller and Auditor General’s Office and, where appropriate, the Department of Finance during the development of financial systems in Government Departments.

CDPS is not normally involved in systems designed by other Departments—even where these systems are operated on the CDPS computer. CDPS is, however, available to advise and assist, where possible, all Public Service users on operational and control difficulties.

Paragraph 41—Public Works and Buildings—Problems of Staffing and Accommodation

The recruitment of engineers to the Office of Public Works still presents problems. Every effort continues to be made but both civil and particularly electrical engineers remain difficult to attract and retain.

The inter-departmental group referred to by the Committee was satisfied that the shortage of engineers is due mainly to the lack of adequate places in the engineering schools. Measures designed to help increase the number of places in the shorter term have been adopted. Additional facilities are planned for the National Institutes of Higher Education in Dublin and Limerick and a new School of Engineering will be built for University College, Dublin, which will further increase the output of engineers on a permanent basis.

Paragraph 43—Secondary Education—Registration of Title to the Sites of Comprehensive and Community Schools

The Department of Education has asked the Land Registry to give priority to all registration cases involving the Minister for Education as owner of second-level school sites.

Paragraph 44—Miscellaneous Expenses—Payments to the Irish Trust Bank

With reference to the Committee’s request to be kept informed of progress regarding the enactment of legislation to validate the provision of funds by the Central Bank to the liquidator of Irish Trust Bank Limited, it is the Minister’s intention to include an appropriate provision in proposed legislation to amend the Currency and Central Bank Acts, 1927 to 1971. This provision is being prepared in his Department, in consultation with the Central Bank. The main purposes of the proposed legislation will be to strengthen banking supervision and provide for the protection of depositors in the event of a bank failure. Work on the draft legislation is being pursued as rapidly as possible but the Minister is not in a position at this stage to say when the text of the Bill is likely to be available.

PART II—PARTICULAR ACCOUNTS

Paragraphs 61, 65 and 73 do not appear to call for comment.

Paragraph 47: Office of the Attorney General

The Minister has been informed by the Accounting Officer concerned that the Attorney General’s Office monitors the issue of voted moneys to the Law Reform Commission. The Attorney General is aware of the difficulties for an Accounting Officer inherent in the lack of detailed control over expenditure by the Commission but he nevertheless considers that a grant-in-aid would not be a suitable method by which the Law Reform Commission should be funded in view of the functions and duties conferred on him by the Law Reform Commission Act, 1975.

Paragraph 48—Public Works and Buildings: New Headquarters of the Department of Defence

The Minister is advised that consulting architects for this project were commissioned by the Office of Public Works in 1973. Preliminary consultations with Dublin Corporation did not reveal a road-widening requirement affecting the proposed site. The road at the northern boundary of the site was not included in the 1971 Dublin City Development Plan or in the 1976 Review of the Plan.

In 1974 the Office of Public Works had contact with the Corporation regarding the possibility of acquiring an area measuring approximately one acre as an extension on the eastern side of the site. The Corporation was arranging at the time for the compulsory acquisition of lands which included the area required. The Office of Public Works understood that a site extension would be feasible as soon as the compulsory acquisition proceedings were completed. Steps were subsequently taken by the Corporation for compulsory acquisition. On 22 October, 1975 when purchase procedures had been finalised, the Office of Public Works made a formal application to the Corporation for the site extension they required. Subsequently the consultants completed a scheme for the building, which on 5 May, 1976 was submitted to the Corporation for planning agreement.

On 20 May, 1976 the Corporation wrote to the Office of Public Works indicating that they were not prepared to accede to the request for the site extension. The matter was pursued further by the Office of Public Works. A meeting was arranged with the Corporation at which the position was fully explored and it was made clear that the Office of Public Works could obtain only a portion of the extension they required.

On 16 June, 1976 the Corporation conveyed agreement to the building plans submitted but subject to a condition requiring the re-arrangement of the access to the satisfaction of the Roads Department. Their Consulting Architects advised the Office of Public Works that this was brought about by the Corporation’s new proposed road widening of Montpelier Gardens to 50 feet.

In the light of these developments, it was clear that a radical redesign of the scheme was necessary. On 8 October, 1976 the Consulting Architects were instructed to proceed with a revised scheme.

With regard to costings, the figure of £4.3m. was based on a cost plan dated May 1977. The estimate of £7.318m. is the up-dated cost at March 1980. The difference is accounted for by price increases in the interim of approximately £2.6m. and by £.4m. approximately which is due to modifications in the scheme which developed in the course of detailed planning and resulted in an overall increase in space of 159 sq. metres. Tenders have not yet been invited.

Paragraph 49—Public Works and Buildings: National College of Art and Design

The Minister is assured by the Accounting Officer that, in relation to the arrears of work referred to, no loss was incurred by the Exchequer arising from delays in completing tenancy agreements with Agencies which are not funded from Voted monies.

The Minister is advised that the Agreement in respect of the tenancy of the premises at Kildare Street occupied by the National College of Art and Design has not yet been completed.

In July, 1980 the Minister sanctioned revised terms in respect of the tenancy, effectively offering the premises rent-free but subject to rates and internal maintenance. The new draft Agreement was sent to the Board of the College in October 1980. The Board has not yet responded.

The Minister is further advised that the National College of Art and Design is being removed on a phased basis by the Higher Education Authority to other accommodation.

Paragraph 50—Public Works and Buildings—Payover of Deductions from Staff Salaries

The Minister is advised that all balances have since been cleared from the suspense accounts in respect of Income Tax and Pay Related Social Insurance deductions relating to the years 1973/1974 to 1976/1977.

The Organisation Unit of the Office of Public Works is assessing the staffing requirements of the Accounts Branch and as a prelude to the final findings has sought additional staff in selected areas. Allied to this measure, a proposal for the introduction of automatic data processing to deal with some of the work has been approved. It is planned to install this new equipment this year. The new equipment combined with an adequate staffing cadre will alleviate existing problems.

In the light of the Committee’s comments, the Minister is reminding Accounting Officers of the need for strict compliance at all times with the regulations regarding the prompt pay-over of tax and Social Insurance deductions.

Paragraph 51—Claims for EEC Grants

The Minister is informed that the grants in respect of the three fishery harbours referred to by the Committee have been paid by the European Commission. The delays in these cases were largely due to the fact that the financial statements and other information required by the EEC Commission in connection with the grant applications were more detailed than were required for the exercise of adequate financial control by the Department of Fisheries and Forestry and the Office of Public Works. In one case the delay was exacerbated by the fact that it was necessary to await the outcome of litigation before the final cost could be determined. The question of processing further grant applications in respect of fishery harbour improvement works does not arise since, pursuant to a decision of the EEC Council of Ministers, such works are no longer eligible for grant assistance from FEOGA.

The Department of Finance is providing a memorandum outlining the arrangements in existence to monitor the submission of claims for grants from the various Community funds. As regards the Committee’s request for information on whether any grants have been lost to the Exchequer because of the late submission of claims, the Minister’s information is that, with the possible exception of one case, no grants have been so lost.

The case referred to above concerns the submission by the Department of Labour of claims for payment in respect of the Social Fund. A Commission Rule stipulating that final claims against this Fund should be submitted within 18 months of completion of operations came into effect for the first time in 1979. The Commission decided that all claims in respect of pre-1978 operations would have to be lodged by 31 December, 1979. Due to an error in transmission the Commission notification of the deadline date 31 December, 1979, was not received in the Department of Labour. A number of claims were not submitted by this deadline date and the Commission has refused to pay them despite the fact that the programmes covered by the claims were duly carried out. Discussions at official and Ministerial level have been held with the Commission with a view to having the decision modified and the matter is at present being actively pursued with the Commissioner for Employment and Social Affairs. The Committee will be kept informed of developments.

The Minister is drawing the attention of Accounting Officers to the importance of affording a high priority to the submission of claims for grants from the various EEC funds.

Paragraph 52—Forestry—Provision of Assistance to Irish Board Mills Limited (In Receivership)

As requested by the Committee, the Minister is arranging that the position in regard to borrowing for Exchequer purposes be brought to the attention of Accounting Officers and others concerned.

The Minister accepts that the procedures adopted in order to channel temporary funds urgently to the Receiver at the Irish Board Mills Ltd. were open to the criticisms mentioned by the Committee. He would like to add, however, that there were serious and urgent difficulties to be dealt with which might be adduced in extenuation of the irregularity which, as the Committee noted, was an isolated occurrence.

The position at the Mills following on the commencement of the Receivership on 29 September 1978 was that, unless business were to cease and nearly 200 employees to be laid off, the Receiver had to be put in funds without delay. While the overriding requirements of seeking the authority of Dáil Éirann was adverted to, the taking of a Supplementary Estimate after the Dáil reconvened on 11 October 1978, following the summer recess, would not have met the urgency of the requirements. Since no ordinary course or standard procedure was available which could meet the needs of the situation, it was necessary that an instant and ad hoc solution be devised. The immediate source resorted to for funds was the State-owned Industrial Credit Company Ltd. (ICC). The ICC agreed to provide the short-term finance needed pending the submission to Dáil Éireann of a Supplementary Estimate for the Forestry Vote, the Department of Fisheries and Forestry being statutorily empowered to aid woodland industry.

Paragraph 53—Forestry—Recovery of Moneys Issued to Receiver

Of the sum of £550,000 advanced to the Receiver of Irish Board Mills Ltd., the sum of £298,240 was refunded to the Department of Fisheries and Forestry so that the final cost borne by the State is £251,760.

Paragraph 54—Forestry—Sales of Timber

The Minister accepts the Committee’s points that these cases should be brought to a conclusion as soon as possible and that any sum written off with his sanction should be noted in the Appropriation Accounts.

Paragraph 55—Industry, Commerce and Energy—Export Guarantees

Discussions are still in progress regarding the rescheduling arrangements which the Accounting Officer referred to. The Committee will be kept informed of progress made in this regard.

Paragraph 56—Industry, Commerce and Energy—Export Guarantees

As recommended by the Committee, full particulars of the case were brought to the attention of the Department of Finance on 30 January, 1981 and are being examined. The Department of Industry, Commerce and Tourism and the Committee will be informed of the outcome.

Paragraph 57—Industry, Commerce and Energy—Kilkenny Design Workshops Limited

The level of fees charged by Kilkenny Design Workshops Ltd. must to some extent be regulated by fees charged by design consultants in the private sector. Nevertheless, efforts have been made to increase fee income in recent years with the result that since 1978 the hourly rates for designers’ and technicians’ fees have gone up by 166% and 114% respectively. Efforts to maximise fee income will continue.

Paragraph 58—Reconciliation of Outstanding Payable Orders

While the Paymaster General’s Office does not at present effect a two-day clearance, this does not prevent a Department from effecting reconciliation with the Paymaster General’s balance. Other Departments besides the Departments of Justice and Education have done so successfully.

It is understood that a further attempt at reconciliation is being made by the Department of Education. The Committee will be informed of the outcome.

Paragraph 59 — Agriculture — Storage and Transport of Intervention Beef

The Minister is informed that the Department of Agriculture has decided in principle to introduce a system of tenders for the storage of intervention beef in Ireland in accordance with a formal contract, and preliminary arrangements for this are being made. Similar procedures are also being introduced in respect of transport.

The consultants employed by the Department have recently completed their study of the beef intervention system and their report is expected within a few weeks. Their recommendations will be borne in mind in settling the new storage and transport arrangements.

Paragraph 60 — VAT on Intervention Transactions

The Minister is informed that the Revenue Commissioners’ ruling on liability in respect of VAT has resulted in the Department of Agriculture paying VAT on all storage charges since October, 1979.

To prevent the reopening and reconciling of all accounts of the Department and meat factories for the period prior to that date, it has been decided by the Revenue Commissioners that the Department of Agriculture need not make any VAT payments for services provided before October, 1979. The Revenue Commissioners will examine any claims made by meat factories for VAT refunds relating to services provided up to October, 1979. Where VAT has been accounted for by a meat factory without compensation from the Department of Agriculture, the factory will be allowed credit for it.

This method is the most efficient way of settling the matter and there is no net gain or loss to the Exchequer.

Paragraph 62 — Office of the Revenue Commissioners — Write-off of Uncollected Taxes

The Revenue Commissioners have advised the Minister that there has been considerable progress during the period July, 1979 to December, 1980, in the clearance of cases of uncollectable arrears of turnover tax. It is anticipated that such cases still on hands will be dealt with by the end of March, 1981. Details of tax formally passed as irrecoverable will, where appropriate, be included in the schedules submitted to the Comptroller and Auditor General.

Paragraph 63 — Office of the Revenue Commissioners — VAT

The Minister has been advised by the Revenue Commissioners that the procedures introduced in January, 1979 for stricter control of first repayments were reviewed in January, 1980. By that time verification of the existence of trading in about 1,000 cases which were registered for VAT in or after November, 1978 had taken place on receipt of the first claim over £100 in each case. All were found to be trading. It was decided, therefore, to raise the £100 limit to £500 but with the condition that the Audit Branch of the Commissioners’ Office would carry out from time to time a sample check of cases where first claims had not exceeded £500.

There has been no change in the level of pre-repayment verification of claims in cases where traders registered for VAT prior to November, 1978. However, an examination of those who registered on or after January, 1977 and who had furnished VAT returns which showed claims for repayment only, was carried out early in 1979. It was found that in all cases examined, trading had commenced and claims were genuinely based. As regards those registered before January, 1977 it was taken that they would already have been covered by routine control at district level.

One case has come to light where VAT has been repaid on the basis of fraudulent claims. A number of persons were involved and, by making improper use of registration numbers, received repayments which totalled £51,845. One of these persons was subsequently sentenced to a three year prison term. It is likely that £5,600 which is held in bank and building society accounts will be recovered. Current procedures are designed to prevent a recurrence of this type of fraud to any sizeable extent. Since VAT is a consumer tax of very broad application, collected by some 77,000 registered traders (and the number of registrations has been increasing by 7,000-8,000 a year), any system for extending surveillance must be viewed in the context of current and projected staff resources and the need to make due refunds within a reasonable time. The staff numbers assigned to policing the value added tax have been gradually increased in recent years. The Commissioners point out that a balance has to be struck between the overall degree of surveillance of VAT returns and the degree of investigation of refund claims. In the circumstances, the Revenue Commissioners rely on the present system of random inspections of businesses by the VAT inspectorate and comparison with the trader’s accounts, when these become available, to counteract carelessness or inconsistencies or fraud among the large and varied body of businesses accounting for VAT. On the other hand, the potential improvement in control, which increased surveillance of low-value repayment claims might promise, would have to be achieved at the expense of a much slower operation of refund procedures in general and substantially increased staff costs.

Paragraph 64—Environment—Private Housing Grants

The Committee’s suggestion that all housing grant inspections should be carried out by appointment with the applicants has been fully considered. The Minister is informed that this procedure would reduce output on inspections, which would ultimately be less economic; under the existing arrangements the number of abortive inspections is not significant in relation to the overall volume of inspection work. Moreover, experience has shown that unannounced inspections are necessary to detect non-compliance with the occupancy condition for the £1,000 grant. In the case of the house improvement grants scheme, it is relevant to point out that virtually the entire scheme has been abolished, with effect from February 1980, which means that only a residual number of outstanding inspections remain to be carried out.

Paragraph 66—Posts and Telegraphs—Broadcasting Licence Fees

The Department of Posts and Telegraphs has informed the Minister that, with regard to the enforcement of the provisions in the Wireless Telegraphy Act, 1972, relating to television dealers, there has been some improvement in the situation as a result of special measures taken during 1980 to get television dealers to register, and registered dealers to furnish details of transactions in television sets. The Department considers, however, that inspections are necessary to secure the registration of television dealers and to establish that registered dealers are complying with the law. Additional staff are being recruited to carry out this inspection work. The Department intends to continue to exert pressure, including the institution of legal proceedings where appropriate, to secure the registration of television dealers and the regular return of details of transactions in television sets by them.

Paragraph 67—Social Welfare—Recovery of Arrears of Social Welfare Contributions

The Minister has been informed by the Department of Social Welfare that the statistics maintained up to 1978 regarding cases sent for legal action for non-payment of contributions were designed to show only the number of cases sent to the Chief State Solicitor and the number disposed of by his Office by decree, dismissal or withdrawal. Many cases are, however, otherwise disposed of—some employers pay the amount due on receipt of a civil bill while others make arrangements with the State Solicitor to clear the arrears by instalments. Of the 425 cases sent to the Chief State Solicitor in 1978, 188 have been dealt with in this fashion. Action in these cases was recorded and dealt with on the individual files and was not included as part of the statistics. In the circumstances, it is not possible to supply immediately the information sought by the Committee. In order to comply with their request it will be necessary to examine the individual files in which reports of completion have not yet been received. A similar examination will have to be carried out by the Chief State Solicitor and the local State Solicitors. Work in this area has already been put in hands and the result will be communicated to the Committee as soon as possible.

Regarding the amount of arrears of £4.9 million collected in 1978, it is pertinent to point out that this sum represents about 2% of the total contribution income collected in that year. The Department of Social Welfare is very conscious of the need to bring all payments of contributions up-to-date and, in this connection, an additional 21 staff for the Inspection Branch has been sanctioned for survey work.

Everything possible will be done with the assistance of the Revenue Commissioners, who are, since April, 1979, responsible for the collection of contributions, to reduce the extent of non-compliance and legal action will be taken where necessary.

Paragraph 68—Social Welfare—Overpayments of Social Assistance

The main reason for the increase in the balance of overpayments outstanding at endDecember 1978 is the fact that a number of cases of concealment of means on the Unemployment Assistance and Old Age (Non-Contributory) Pensions schemes were discovered in 1978 following increased activity by the Department’s investigating staff. On discovery in 1978, the rates then in payment were reduced or revoked from the date of the original award. Many of these overpayments were for very large amounts as they had accumulated over a period of years. For example, 91 overpayments of Unemployment Assistance varying from £1,000 to £4,000 each with a total value of £176,000 were discovered in 1978.

Regarding the Committee’s comment that the increase in the overpayments could indicate a rise in the level of overpayments being made, the Minister has been informed that the total number of overpayments of assistance recorded in 1978 was 5,600 as compared with 5,900 in 1977 and that the balance of overpayments not disposed of at 31 December 1979, (£1,314,776) was only 8% higher than the corresponding figure for 31 December 1978 (£1,215,524).

The Minister has been informed that every possible action has been and is being taken to recover the amounts outstanding.

Paragraph 69—Social Welfare—Collection of Health Contributions

The Minister has been informed by the Department of Social Welfare that when the “limited check” referred to by the Committee was being arranged it was considered that the sample taken should cover all groups of employers who made claims for refunds as, otherwise, it might have been regarded as unrepresentative. In view of the Committee’s comments on the manner of selection, the sample of 975 employees has been re-examined. This has shown that, if the 675 employees of the semi-State and larger firms are excluded, the remaining 300 employees of the “other employers” were refunded only 124 excess contributions, representing 0.8% of the contributions paid for these 300 employees.

The system under which claims for such refunds arose ceased in April, 1979 when health contributions became payable generally without regard to the level of the employee’s earnings. Accordingly, applications for refunds of this type will no longer arise in respect of health contributions levied after April, 1979. The total amount refunded in 1979 was £737,000. In 1980, however, as expected, the level of claims for refund fell considerably and the total amount paid out was only £78,370. It is expected that this trend downward will continue.

Paragraph 70—Garda Síochána—Clearance of Advances

It is understood from the Accounting Officer for the Garda Síochána Vote that there was a further substantial improvement in the reduction of uncleared advances made before 1 January, 1978. He estimates that, during 1980, the total of the outstanding uncleared advances was reduced to approximately £5,200. Action is continuing with a view to eliminating these balances.

The Accounting Officer has indicated that it is not possible to quantify the current arrears position in regard to advances made since 31 December, 1977, partly because the 1980 records have not yet been finalised but also because of a substantial increase in advances in the latter part of the year. The Garda Commissioner has recently issued an instruction directing that claims be made within a month of advances being issued.

Paragraph 71—Courts—Disposal of Bail Moneys

(a)Accumulated bail moneys in the Office of the Dublin District Court

The Accounting Officer for the Courts Vote has indicated that, of bail money lodgments made before 1 January, 1979, the total on hands in April, 1979 (when a check was made shortly after the question of accumulating bail money lodgments first came to notice) was approximately £25,100. This sum included money relating to cases which were then still before the Courts. All but approximately £6,650 of that money has since been disposed of in accordance with Court orders which have meanwhile been sought or (where there was no breach of the bond) by direct repayment. The remaining £6,650 relates to Circuit Court cases and the relevant Circuit Court Office is now dealing with the question of its disposal in conjunction with the Chief State Solicitor’s Office. As regards lodgements made during 1979, it is understood that the sums needing attention total approximately £5,000 and all relate to Circuit Court cases. These sums are being dealt with in the same manner as the above-mentioned £6,650. The Accounting Officer considers that lodgments made during 1980 are too recent to be relevant in the present context.

(b) Accumulated bail moneys in Provincial District Court Offices

The Accounting Officer has indicated that an inspection of these offices has revealed that there are arrears of approximately £2,300 in one District Court Office. Action is being taken at present to eliminate these arrears.

(c) Other Moneys

It is understood from the Accounting Officer that there are no other moneys in accounts under the control of the Courts which are not being disposed of on a regular basis.

Paragraph 72—Defence—Recovery from the United Nations of the Cost of PeaceKeeping Forces

The Minister has been informed by the Department of Defence and the Department of Foreign Affairs that agreement has now been reached with the United Nations Secretariat on an appropriate text to be included in an exchange of letters between the Irish Permanent Mission and the Secretariat. This exchange of letters is to confirm the admissibility by the Secretariat of claims relating to the use of army reservists to replace personnel serving with the United Nations in Cyprus. It is expected that the matter can be brought to a conclusion shortly. The Committee will be informed of the outcome.

As regards Irish participation in the UNIFIL operation, the Department of Defence has advised that no purpose would be served by asking the United Nations for regular payments on account pending submission of claims in respect of expenditure actually incurred. The UN has difficulties in financing the UNIFIL operation because of nonpayment of contributions to its cost by some member States of the United Nations. The essential problem is that the United Nations resources, therefore, only permit part-payment in respect of troop costs and claims are not required to be made for these.

The Permanent Mission to the United Nations, in conjunction with other troop contributing countries, is making continuing representations to the United Nations Secretariat for improved financing arrangements.

Paragraph 74—Residential Homes and Special Schools—Structural Defects in a Training School.

The Department of Education has recently informed the Minister that the remedial work at this Special School has been satisfactorily completed and the final account agreed. The work was carried out in two phases—the first phase at a cost of £11,789 and the second at a cost of £42,703. The additional costs over those estimated arose because

(i) as work proceeded, it became necessary to carry out some further work which could not have been foreseen;

(ii) a four week extension to the contract was found necessary and resulted in an upward adjustment of certain costs; and

(iii) some variations in the specified work were approved.

An outstanding balance of £19,523 remains under the original contract. The receiver has not lodged a claim against this money and it is proposed to offset it against the cost of the remedial work. The Receiver has confirmed that no other funds are available to the Minister for Education under the Receivership.

Concerning claims which might be made under the performance bond or against the consultants legal opinion has been obtained by the Department of Education from the Chief State Solicitor’s Office to the effect that:—

(i) as the buildings were in use for several years, a Court would hold that it was unreasonable to expect the Surety to remain liable indefinitely though, technically, the defects liability period was still in operation;

(ii) in any event, the insurance company could successfully repudiate liability on the grounds that due notice was not given within the stipulated time; and

(iii) the Minister for Education would have grounds for a claim against the consultants for negligence—in not serving notice under the bond or advising the Minister to serve such notice—but that it is not certain that such a claim would succeed.

The Chief State Solicitor’s Office accordingly advised that such proceedings should not be instituted. On the latter question, the consultants repudiate any liability and state that they took whatever action was appropriate for them. In the circumstances, the Minister for Education does not consider that he would be warranted in pursuing further any claims under the Bond or against the consultants.

As regards the question of whether Government Department generally insist on the provision of performance bonds in the case of all construction contracts, performance bonds are required, generally speaking, by the main Government Departments and Offices involved in construction works (the Department of Education, Health, Defence, Environment and Posts and Telegraphs and the Office of Public Works).

The Department of Finance has recently put in hand an examination of the question of whether bonds should continue to be used in respect of public construction contracts in view of the general practice whereby the State acts as its own insurer. The Committee will be informed of the outcome.

Paragraph 75 — General

The views of the Committee are being brought to the attention of Accounting Officers.

* These documents are not being published with the report.