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

FINAL REPORT

PART I—GENERAL OBSERVATIONS

MINUTE OF MINISTER FOR FINANCE DATED 5 MARCH 1981

REPORT DATED 24 JUNE 1976

Delays in Collection of Monetary Compensatory Amounts

1. The Committee notes the position as set out in the Minister’s Minute in regard to the collection of outstanding MCA charges and in regard to the “carousel” trade in pigs and barley.

When giving evidence before the Committee on the 1979 accounts, the Accounting Officer stated that legal action was proceeding in nearly all cases where MCA charges were outstanding but he explained that the position had been complicated by the taking of a High Court action against the Minister for Agriculture by a trader from whom MCA subsidy has been withheld. This action arose from the Department’s practice of withholding the MCA subsidy and not proceeding with the collection of the MCA charge in the cases in which suspicions had arisen in regard to exports. The subsidy withheld exceeded the charges in all cases so that if the exports were found to be in order the Department would be in a position of owing a net amount to the traders concerned. The High Court gave judgement against the Minister but in consultation with the EEC Commission consideration was being given to making an appeal to the Supreme Court and possibly an eventual appeal to the European Court of Justice. The Accounting Officer explained that if this matter was not pursued to the fullest possible extent there was the risk of the Exchequer having to bear the financial responsibility and this was something which the Department of Agriculture must try to avoid.

The Committee agrees that all possible steps should be taken to avoid a charge falling on the Exchequer and it wishes to be kept informed of developments in this matter.

REPORT DATED 21 APRIL 1977

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

2. The Committee notes that the draft deed of charge guaranteeing the exclusive use of the College premises for the training of teachers or other approved educational purposes is still under discussion with the Chief State Solicitor. It finds it difficult to understand how these discussions could be so prolonged and it urges that they be completed without further delay. It wishes to be informed when this has been done.

Secondary Education—Local Contributions towards Capital Costs of Community Schools

3. The Committee notes that the Department of Education has indicated that every effort is being made to have the deeds of trust for the community schools completed as quickly as possible but that difficulties are being experienced in relation to schools not replacing existing secondary/vocational schools because 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 further schools to be provided. The Committee also notes that, in the case of community schools established by the amalgamation of existing secondary schools, negotiations on the amount of the local contributions payable by religious authorities have not yet been concluded.

When the Accounting Officer appeared before the Committee in connection with the 1979 Accounts, he explained that the deeds of trust had, at that stage, been signed by all the trustees in respect of ten schools and that local contributions would be paid one year after signature of the deeds. Agreement in principle in relation to all schools has also been reached but problems had arisen in a couple of cases on the delineation of the sites and difficulties had continued in determining the amount of local contribution due in cases where existing schools were amalgamated.

The Committee is disappointed at the slow rate of progress in this whole matter and it can only hope that before it next reports the Department of Education will have successfully negotiated the remaining obstacles and that all the deeds will have been signed by all the parties concerned.

The Committee notes that the local contributions collected will be accounted for as appropriations-in-aid in the Secondary Education Vote. It also notes that the Department of Education has indicated that, because of the strict confidentiality which it has always maintained regarding the exact amount of local contributions towards school building generally, it could not accept the Committee’s recommendation that any agreed local contribution below 5 per cent of the cost of building and equipping a community school should be separately set out in the Appropriation Account but that the Minister for Finance proposes to discuss this matter further with that Department. The Committee wishes to be informed of the outcome of these discussions.

FEOGA Accounts

4. The Committee is pleased to note the improvement which has taken place in the preparation and transmission of the FEOGA accounts to the European Commission.

REPORT DATED 15 JUNE 1978

Clearance of Cashed Payable Orders by the Paymaster General’s Office

5. The Committee notes that the revised computerised system for the Paymaster General’s Office which was introduced on a modified scale in November 1980 has already resulted in an acceleration of the clearance of payable orders but that the attainment of the two day clearance target is subject to the installation of additional new equipment in newly acquired premises. This was being done in June 1981 and the Committee wishes to be informed when the two day clearance target has been achieved.

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

6. The Committee notes the efforts being made to establish the extent to which teachers may have been paid maternity or sickness benefit while absent on full salary and to recover amounts incorrectly paid.

It wishes to be kept informed of developments.

Fisheries

7. The Committee notes the special arrangements which have now been agreed by the Department of Finance in regard to the funding of harbour works at Killala under which the debt of £11,000 due by Mayo County Council to the Office of Public Works for work already carried out has been waived and the Council has agreed to contribute 25 per cent of the cost of reinforcing the pier, estimated at £180,000, and to maintain the completed works. When this matter was originally brought to the notice of the Committee dealing with the 1975 Appropriation Accounts, it was stated that the expenditure already incurred when the work was suspended was in excess of £140,000 and the Committee must express its concern that a local authority by reneging on its obligations and prolonging discussions over a number of years has succeeded in gaining a significant financial benefit at the expense of the Exchequer.

The Committee trusts that the improvement works at this harbour which have now been suspended for a number of years will be resumed without further delay and it hopes that the fears which it expressed in its 1975 Report that the work already done, if left uncompleted, could be rendered useless will not be realised. It also expects that the County Council will, without further equivocation, honour its latest undertakings.

Environment—Audit of Accounts

8. The Committee notes that the vacancy situation in the Audit Section of the Department of the Environment has improved substantially since 1979 and that good progress has been made in reducing audit arrears. It was concerned that, at 31 December 1980, 32 per cent of the audits were still more than a year in arrears but the Accounting Officer during his evidence in connection with the 1979 Accounts informed the Committee that by 15 May 1981 this had been reduced to 18 per cent. It trusts that continued efforts will be made to achieve further improvements.

Environment—Overissues of Housing Subsidy

9. The Committee is pleased to learn that all established overissues of housing subsidy have now been recovered. It expects that if overpayments are found to have been made in the two cases — Mayo and Dublin Co. Councils — where the certification of claims was delayed, these will be recovered immediately.

Health Contributions

10. The Committee is gratified to learn that the attitude of the Department of Health in relation to the problems of improving the rates of collection of contributions and obtaining information from the Health Boards has not been a complacent one and it notes the efforts which have been made by the Department to improve the procedures for collecting farmers’ Health contributions.

The Committee has considered the detailed information supplied to it in connection with the collection of contributions from 1972 to 1979. It notes that the total demands issued by the Health Boards in this period as adjusted to take account of the correction of their registers came to £6.8 million of which £1.2 million has not been collected. The Committee would like to be informed of the efforts being made to clear these not insignificant arrears and to identify amounts which are not likely to be collected and will require to be written off. It presumes that any sums so written off will be noted in the Appropriation Account.

It also notes that, as a result of progress made by the Working Party in examining the overall systems relating to the collection of health contributions, seven of the Health Boards computerised their collection systems and the eighth was expected to do so shortly and that the effectiveness of these systems is subject to constant review. It trusts that this will lead to a significant improvement in the collection rates.

REPORT DATED 26 APRIL 1979

Superannuation and Retired Allowances

11. The Committee notes that, in regard to the drafting of the pension Schemes for widows and children of certain public servants (other than Civil Servants), the Departments concerned have continued to make progress with the assistance of the Department of the Public Service. The Accounting Officer for that Department, when giving evidence on the 1979 accounts, told the Committee that his Department had been pressing these Departments viz. Defence, Justice and Education to bring their schemes to finality as quickly as possible. The Garda scheme had been completed and was awaiting signature, a draft scheme for national teachers had been prepared and commented on by his Department and some progress had been made on the Army scheme.

The Committee also notes that the scheme relating to the purchase of service cannot be finalised until revised arrangements for the transfer of service for pension purposes are completed and that a consolidated scheme will be drafted when the other schemes have been completed.

The Committee hopes that progress will continue to be made to have all outstanding matters relating to superannuation schemes disposed of.

12. The Committee is pleased to learn that every effort is being made by the Revenue Commissioners to enforce delivery of wealth tax returns and that the number of such returns outstanding at 31 December 1980 has been reduced to 981. It will await the further information promised on the progress being made to obtain the remaining returns and to complete the formal assessment of tax in all cases.

Posts and Telegraphs—Cable Television Fees and Television Licence Defaulters

13. The Committee notes 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 in that only 4 per cent, approximately, of the subscribers whose names and addresses were supplied were found to be in possession of unlicensed sets. It recalls however that the evidence given by the Accounting Officer in connection with the 1976 accounts suggested that the level of default was fairly substantial and could be as high as 14 or 15 per cent of the total revenue from licence fees.

Furthermore, when the Accounting Officer gave evidence in connection with the 1979 accounts, he agreed that there could be a significant level of evasion and that despite all the efforts made by the Department they were not satisfied with the level of detection. While he did not feel in a position to quantify the loss in financial terms he did not entirely disagree with the estimate of £4 million in the annual Report of RTE for 1979 to which the Committee drew his attention.

The Committee is therefore at a loss to understand how the level of evasion which came to light from the information furnished by cable television operators could be so low because the Committee would feel that the level of evasion would, if anything, be likely to be higher in the more densely populated areas served by such operators.

It would therefore welcome further comment on this matter. In paragraph 66 of its Report dated 3 December 1980, which is referred to later in the Minute of the Minister for Finance, the Committee raised the question of the enforcement of the provisions of the Wireless Telegraphy Act 1972 which require information on sales or rentals of TV sets to be provided to the Department as a further means of detecting the evasion of payment of licence fees. The Committee is pleased to note that there has been some improvement in regard to the enforcement of these provisions and that additional staff are being recruited to carry out the inspection work which the Department of Posts and Telegraphs considers necessary to secure the registration of these dealers and to establish that registered dealers are complying with the law. The Committee also notes that the Department will, in appropriate cases, institute legal proceedings against defaulters.

Questioned regarding the assertion that sufficient effort is not being put into the collection of licence fees and the suggestion by RTE that it could collect them more efficiently, the Accounting Officer when being examined in connection with the 1979 accounts stated that the Minister for Posts and Telegraphs recognised the force of the basic argument that RTE is the party most interested in this revenue and therefore have the best motivation to collect it. A Scheme had been submitted by it for the taking over of the collection of the licence fees and was being examined but a number of problems would have to be considered such as staff resistance to change and the anxiety of the new Postal Board to take over this function. Only about 15/20 fulltime staff and 60/70 part-time staff were engaged on this work which had to be done at night but it was a matter for consideration whether staff could be recruited specifically for this work on the basis of having evening rather than day-time work.

It is obvious to the Committee that, while opinions as to the extent of evasion may differ, there is little doubt but that the problem is a serious one. Its concern therefore is that the most effective method of detecting evasion and ensuring the collection of all licence fees be adopted quickly. It would accept that some staffing and other problems may arise but it could not condone a situation where a serious effort is not made to solve these problems and potential revenue is being lost because of a disagreement as to which organisation is capable of achieving the best results. It regards a decision on this as fundamental to the whole issue and it therefore urges that it be taken without further delay.

Environment—Housing Subsidy and Rent Arrears

14. The Committee welcomes the assurance that the Department of the Environment does not have a casual approach to the examination of local authority claims and in particular to housing subsidy claims. It also notes that since January 1977 a new system of subsidy payments was introduced which obviates the danger of overissues of housing subsidy being made because of the existence of rent arrears. It trusts that this system will prove to be effective.

Office of the Minister for Education—Higher Education Grants

15. The Committee notes from the statement of facts prepared by the Department of Education on the operation of the Higher Education Grants Scheme by the local authority concerned that the only additional information which appears to have come into its possession subsequent to the original submission of the case to the Attorney General in 1976 is contained in two letters dated 23 November 1977 from the local authority to the Department. This statement of facts gives no information regarding the resolutions which were stated by the Accounting Officer to have been passed by the local authority and about which the Committee sought specific information in its previous Report. The Committee must therefore conclude that the Department of Education has no information regarding the formal passing of such resolutions and it sees the whole question at issue as hinging on the contents of these two letters. According to the Department these letters contained clear information on the basis of which it was decided, without resubmitting the matter to the Attorney General, that no excess payments had been made and that no payments fell to be recovered from the local authority. One of these letters relates to the local authority’s decision to amend its scheme from 1977 and therefore does not appear to the Committee to be relevant to the period with which it is concerned. The other letter amounts to a formal declaration by the local authority that it was satisfied that, taking all circumstances into account including the distances involved, the transport services that were available and the lecture times at the college, it would be unreasonable to expect any of the students to whom the higher rate of grant had been paid to travel daily between his home and the college. On the basis of this declaration the Minister for Education considered it appropriate to deem the awards made by the local authority to be in accordance with the provisions of the grants scheme and to decide that excess payments had not been made by the local authority. Although no reference has been made to it in the statement of facts prepared by the Department of Education, the Committee notes that in March 1980 the Attorney General advised the Department of Finance that this decision by the Minister for Education was made within his jurisdiction and is made final by the terms of Section 7 of the Local Authorities (Higher Education Grants) Act, 1968.

In the light of this legal opinion the Committee sees no point in continuing the debate on the two aspects of the matter which were of concern to it, i.e. the recovery of grants originally regarded as having been wrongly paid and the effect of the Minister’s decision on the accountability of the Accounting Officer, because if the Minister’s jurisdiction to reverse the original decision regarding recovery is legally sustainable the other question does not arise.

The Committee, however, feels obliged to state its concern at what has been done in this case because it sees the action taken as a device to regularise retrospectively a position which had originally been held to be irregular. The Committee is forced to this conclusion because no written evidence has been produced regarding the passing of any special resolutions in the years prior to 1977 and the only documentation produced by the local authority to support the contention that it had formally made a conscious, responsible and well founded decision at the time the grants were paid is a declaration made by it long after it had been challenged regarding the validity of its actions. The Committee therefore deprecates what it sees as the adoption of any easy way out by recourse to a ploy to enable the local authority to retain moneys which should not have been paid to it in the first place.

Finally, the Committee feels obliged to emphasise its opinion that one of the lessons to be learned from this case is that where a scheme financed by State Funds is administered by any outside body on what amounts to an agency basis the details of the scheme should be fully and clearly defined by the department concerned and the interpretation of its provisions, particularly those having financial implications, should not, as was done in this case, be left to the subjective judgement of the agency body. It wishes that these views be brought to the notice of all Accounting Officers.

Secondary Education

16. The Committee is pleased to note that the Department of Education proposes to take steps to set up an internal audit system.

Higher Education

17. The Committee notes from the Minute of the Minister for Finance and from information given by the Accounting Officer when he came before the Committee in connection with the 1979 Accounts that the legal position in regard to liability for remedying defects in the construction of the National College of Physical Education, Limerick is still being examined. The Committee will await information on the outcome.

Public Works and Buildings

18. The Committee notes the efforts being made to overcome the problems of accommodation and staffing in the furniture division of the Office of Public Works and that 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. The Committee trusts that every effort will be made to press ahead with seeking a solution to this long outstanding problem and it wishes to be kept informed of progress in this matter.

Defence—Armoured Personnel Carriers

19. The Committee welcomes the information that the Minister for Finance agrees with its view that if research and development projects are being funded from voted moneys the necessary provision should be made under a separate subhead and that all Accounting Officers are being informed accordingly.

Lands—Farmers’ Retirement Scheme

20. The Committee notes the factors which in the opinion of the Minister for Finance must be taken into account when considering the question of the financial commitments arising from the operations of the Land Commissioners but it still feels that there is a certain hiatus in public accountability particularly in regard to the sums mentioned at (d) (i) of the Minister’s minute i.e. the moneys provided for land purchase through the Vote for Lands. These moneys are paid from the Vote into a grant-in-aid fund and are accounted for solely through that fund which is appended to the Appropriation Account signed by the Accounting Officer. The Land Commissioners have no responsibility for this account whereas they have a responsibility for the accounts referred to at (c) of the Minister’s minute. The Accounting Officer on the other hand while being ostensibly accountable for the voted moneys used for the purchase of land does not in fact have full control over the expenditure of these moneys and the Committee wonders whether instead of being accounted for through a grant-in-aid fund they should be accounted for through the annual accounts of the Land Commission.

Health—Rebates and Discounts applicable to General Medical Service Prescriptions

21. The Committee is grateful for the copies of 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. It notes that this report has now been published and that interested bodies are being 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 Committee trusts that the submission and consideration of such comments will not be too long delayed and it would like to know when the Department of Health expects to be in a position to make some concrete proposals based on the recommendations made in the report. It also notes from the evidence given by the Accounting Officer when he was being examined in connection with the 1979 accounts that the report deals with other aspects of the purchase of drugs and medicines for the health services and suggests changes in relation to purchasing for hospitals and the prescribing of drugs and medicines under the General Medical Service. The Committee would be interested to hear in due course to what extent the Department intends to implement such recommendations in the Report as were made with the intention of achieving savings in the cost of the Health Services.

Employment of Full-time Pharmacists by Health Boards

22. The Committee is disappointed to learn that the employment of community pharmacists by Health Boards still continues to present problems in the matter of recruiting and retaining their services. It notes that the Department of Health is continuing to keep the position under review and that further efforts are being made to build up the staffing complement to the level required. It wishes to be kept informed of developments.

Social Welfare—Children’s Allowances Orders

23. The Committee notes that the Minister for Finance has been informed by the Department of Social Welfare that the application of a cash type processing system to children’s allowance and pension 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. It is pleased, however, to note the improvements which are being introduced immediately or on a gradual basis over the next three years in order to improve security in this area. When the Accounting Officer was being examined in connection with the 1979 accounts, he told the Committee that the Department was already using special labels on children’s allowance books and high security labels were on order for all books including children’s allowances. He explained that orders which do not have these labels affixed should not be cashed by Post Offices in future and that the Department was also about to acquire a machine to render returned books unusable. A feasibility computerisation study of the issue of children’s allowances books and pension books had also been done and, as a result, it was hoped by 1982 or 1983 to record book stocks by computer in an absolutely foolproof way. Book renewals and issues should also be speeded up. The Accounting Officer hoped that these measures would give a degree of security satisfactory to the Committee.

The Committee accepts that it may not be possible to have a control system which would be as rigid in all its aspects as a cash handling system but, because of the relatively high face value of children’s allowance and pension orders and the apparent ease with which they could, up to now at any rate, be negotiated, it does take the view that the system of control under which they are printed, delivered, stored, issued, returned, encashed and accounted for should be effective in eliminating, insofar as it is reasonably possible to do so, the possibility of an irregularity occurring at any stage. It notes that the improvements to be introduced immediately are expected to contribute to a more secure system whereby the scope for misappropriation and the potential for subsequent malconversion will be reduced and that the improvements to be introduced on a phased basis during 1982 and 1983 will further improve the overall level of security without disimproving service to the claimants. The Committee also notes that the Department of Social Welfare intends to seek the approval of the Department of Finance and the Public Service for these proposals and to clear the details with the Comptroller and Auditor General prior to implementation. The Committee assumes that should the implementation of the measures proposed by the Department not result in an acceptable level of control being put into operation the Comptroller and Auditor General will, no doubt, report again to the Committee on this matter.

REPORT DATED 29 NOVEMBER 1979

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

24. The Committee notes that the Minister hopes to be in a position to report to Dáil Éireann in the near future regarding the establishment of a Joint Oireachtas Committee on Non-Commercial StateSponsored Bodies.

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

25. The Committee is concerned, though not surprised, to learn that in the example which is quoted interest on overdue tax would not be collected and it appears therefore that, contrary to what the Committee was originally told, the non-collection of interest can in certain circumstances imply remission rather than deferment.

There are two questions which now concern the Committee:

(1) Whether the Care and Managment provisions allow the Revenue Commissioners to adopt a policy of not pursuing the statutory interest charge on overdue PAYE and VAT where

(a)the taxpayer had arranged to pay the overdue tax, was meeting current tax liabilities in due time and was likely to continue to do so, or

(b)the financial circumstances of the taxpayer were such that insistence on collecting outstanding interest in respect of past defaults was likely to undermine the viability of the business.

(2) Whether and in what manner the amount of interest levied on overdue PAYE and VAT but not collected should be brought to the attention of Dáil Éireann.

In regard to the first question it seems to the Committee that the provisions relating to interest as expressed in the legislation are as binding as the statutory provisions relating to the tax itself; whether they should be as binding is another question. If this is so the Committee’s view must be that the Revenue Commissioners should in the first instance make all reasonable efforts to collect the amounts due and that, as in the case of tax, the question of remission under their care and management powers would only arise in cases where, because of the particular circumstances, they are unable to collect the amounts due.

The Committee recognises the difficulties for the Revenue Commissioners of implementing the legislation in this way and it appreciates the force of the arguments which the Accounting Officer, when he appeared before the Committee in connection with the 1979 Appropriation Accounts, put forward in support of the practice which was being followed by the Revenue Commissioners until it was questioned by the Committee. The Committee has also considered the Memorandum and other documents subsequently submitted by the Accounting Officer in elaboration of these arguments. This Memorandum has helped the Committee to understand more fully the viewpoint of the Revenue Commissioners which led them to adopt what might be regarded as a reasonable compromise solution to the difficulty in which they found themselves. The Committee however, has some doubts as to whether the question of the viability of a business is relevant to the administration of the tax code and, as such, a matter of concern to the Revenue Commissioners. If the Revenue Commissioners are to make subjective judgments in this matter and thus be selective in deciding what firms should be given the concession of not having to pay interest on overdue tax because of financial difficulties they are, in effect, arrogating to themselves the right to decide that the State should give financial assistance to the firms concerned. There are a number of State Agencies operating under the aegis of the Department of Industry and Energy and the Department of Finance whose function it is to provide financial assistance in circumstances where it is considered wise, as a matter of policy, to do so and the Committee would feel that it is to them, and not to the Revenue Commissioners, that firms which cannot meet their financial obligations should look for such assistance.

The Memorandum suggests that guidelines should be set down which would govern the administration of the interest provisions and that such guidelines should have regard to a number of considerations. The Committee would wholeheartedly agree that, if there is a legally sustainable case that the Care and Management Provisions give the Revenue Commissioners discretion in the matter of collecting interest, then some such guideline should be adopted but it seems to the Committee that before deciding on any guidelines the fundamental question of whether there is such a legally sustainable case must first be decided on. The Committee regards this as a complex legal question on which it does not see that it can or should attempt to adjudicate other than to express the reservation already stated above. It therefore considers that the proper course of action is to have the Revenue Commissioners seek the opinion of the Attorney General without any further delay. The Committee notes that the Minute of the Minister for Finance indicated that it was intended to seek such advice but only after discussions with the Comptroller and Auditor General and the Minister for Finance. The Committee does not however see any justification for deferring the seeking of the advice even to that extent.

In regard to the second question mentioned at the outset, i.e. bringing to the attention of Dáil Éireann the amount of interest not collected, the Committee considers that, while it may not, as stated in the Minute of the Minister for Finance, be appropriate to report on the same basis as in the case of uncollected tax, it cannot concede that, because interest payments are not intended to produce additional revenue, failure to collect them should not be reported to Dáil Éireann at all.

The Committee considers that failure to collect any statutory charge, for whatever reason, amounts to a write-off of public funds which should be reported to Dáil Éireann and it feels therefore that a procedure for doing so should be devised.

Environment—£1,000 Housing Grants

26. The Committee notes that the Regulations under the Housing (Miscellaneous Provisions) Act, 1979 brought into operation on 26 September 1980 require each grant 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 Committee trusts that this procedure will be of help in establishing first time ownership. It also notes that the system of checks will be kept under review and that it will be informed of any further developments.

Social Welfare—Computerised Payments System

27. The Committee notes the present scope of the functions of the Central Data Processing Services as set out in the Minister’s Minute and that, arising out of the examination by a review body appointed with the approval of the Government to examine the organisational strategy for the development and operation of computer systems in the Government service, it is possible that some changes will be made in the current responsibilities of CDPS. The Committee also notes that where CDPS is responsible for the development of systems it sees itself as having only an advisory role on control matters. The Committee is of the opinion, however, that in such cases CDPS must at least share the responsibility for ensuring that adequate procedures for control and security are incorporated in the system before it becomes operational. The Committee will be particularly interested in any recommendations which the review body may make on this aspect of the matter.

Public Works and Buildings—Problems of Staffing and Accommodation

28. The Committee is concerned to note that the recruitment of engineers to the Office of Public Works still presents problems. It trusts that the efforts being made to overcome this problem, which is stated to be due mainly to the lack of adequate places in the engineering schools, will prove successful.

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

29. The Committee notes that 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. It trusts that this will clear up the remaining cases awaiting registration of title.

Miscellaneous Expenses—Payments to the Irish Trust Bank

30. The Committee notes that in order to validate the provision of funds by the Central Bank to the liquidator of Irish Trust Bank Ltd. it is the Minister’s intention to include an appropriate provision in proposed legislation to amend the Currency and Central Bank Acts, 1927-1971, which is being prepared in the Department of Finance in consultation with the Central Bank. The Committee would like to be kept informed of progress in this matter.

REPORT DATED 3 DECEMBER 1980

Office of the Attorney General

31. The Committee notes that the Attorney General, in view of the functions and duties conferred on him by the Law Reform Commission Act, 1975, is of the opinion that financing of the Commission by way of grant-in-aid would not be the most appropriate method. In evidence the Accounting Officer said that he would be pleased to have the Commission funded by way of grant-in-aid as it was difficult for him in the circumstances to be accountable for this grant.

While the Committee can understand the arguments put forward by the Attorney General it would like to point out that there are many cases of statutory bodies which are funded by grant-in-aid being subject to very strict statutory controls exercised by the sponsoring Departments in regard to numbers employed, salaries paid etc. It suggests therefore that the method of financing the Commission could be reconsidered. However, if the Attorney General’s opinion remains unchanged the Accounting Office will have to ensure that henceforth the proper annual charge is made to the Vote in respect of the Commission’s expenses.

Public Works and Buildings—New Headquarters of the Department of Defence

32. The Committee notes the information contained in the Minister’s Minute detailing the sequence of events which led up to the revision of plans for a new headquarters for the Department of Defence and the payment of fees amounting to £49,500 for the preparation of plans which were not used. In particular it notes the apparently incorrect assumption made by the Office of Public Works that it would be able to acquire from Dublin Corporation a site extension on the eastern side of the site and the delay in adverting to the plans of Dublin Corporation to widen the road providing access to the new building.

It is not clear to the Committee on what grounds the Office of Public Works made the assumption that a site extension would be provided. More importantly, however, the Committee is not clear as to why failure to get the site extension was a crucial factor in the decision to redesign the scheme. According to the information given in the Minute of the Minister for Finance, the Corporation, on 16 June 1976, approved a set of plans which had been submitted on 5 May 1976. When giving that approval the Corporation had already, on 20 May 1976, refused to grant a site extension and it seems logical to assume therefore that it must have regarded the proposed building as suitable for the unextended site. The only condition attached to the granting of that approval was that, because of road widening plans, the access be rearranged. The attachment of such a condition must on the face of it imply that it was capable of being complied with and, if this is so, the Committee would like to know why the Corporation’s agreement of 16 June was not acted on. If it could not be acted on the Committee can only conclude that the Corporation in granting the approval on 16 June overlooked its own earlier refusal to grant the extension sought.

Furthermore, the Committee does not understand why the importance of the Corporation’s road widening proposal in relation to the project was apparently not realised until the middle of 1976. It notes the contents of a letter addressed to the Department of the Environment by the Deputy City Manager following publication of the Committee’s 1978 Report. It appears from that letter that the road in question was the property of the Department of Defence itself and, arising out of an offer made by that Department in 1970 to dedicate portion of the road to the Corporation, continuous discussions had taken place between the Corporation, the Department of Defence and the Office of Public Works in the course of which the matter of widening the road had been referred to.

The Committee would therefore welcome some further clarification of these two aspects of the matter.

In regard to the cost of the project the Committee notes that tenders have not yet been invited and it will therefore await the information which is sought regarding the tender price and fees payable on the basis of that price.

Public Works and Buildings

33. The Committee welcomes the assurance by the Accounting Officer that, despite the build-up of arrears in the property division of the Office of Public Works, no losses have been incurred by the Exchequer arising from delays in completing tenancy agreements with agencies not funded from voted moneys. In the case of the tenancy referred to by the Committee, viz. that of the National College of Art and Design in respect of its premises in Kildare Street, it notes that in July 1980 the Minister sanctioned revised tenancy terms effectively offering the premises rent free subject to rates and internal maintenance but that a new draft agreement sent to the Board of the College in October 1980 had not been completed by March 1981. The Committee also notes that the college is being transferred to other accommodation on a phased basis by the Higher Education Authority and it hopes that the legal agreements in respect of the Kildare Street premises and any alternative premises provided by the Office of Public Works will be completed without further delay.

Public Works and Buildings—Payover of Deductions from Staff Salaries

34. The Committee is pleased to learn that all balances of income tax and pay-related social insurance deductions relating to the years 1973/4 to 1976/7 have now been cleared and that the proposed introduction of automatic data processing and an improvement in staffing levels which has been sought for the Accounts Branch is expected to alleviate the problems which led to the failure to pay over deductions promptly. It notes that the Minister for Finance is reminding Accounting Officers of the need for strict compliance with the regulations regarding prompt pay-over of tax and social insurance deductions.

Claims for EEC Moneys

35. The Committee notes that the grants for the three fishery harbours to which it referred in its Report have been paid by the EEC and that the delay in submitting claims in these cases was due to the fact that the financial statements and other information required by the EEC were more detailed than would normally be required by the Department of Fisheries and Forestry and the Office of Public Works under their own financial control procedures.

If such lack of information caused delays of from two to five years in the submissions of claims the Committee must indeed view it as a serious deficiency in the financial controls and records of the Department of Fisheries and Forestry and of the Office of Public Works. This view is strengthened by the fact that the assurance which it sought in this regard in its previous Report has not been given. While, as stated in the Minute of the Minister for Finance, the question of processing further grant applications for fishery harbour improvement works may no longer arise, the Committee is concerned lest deficiencies in financial records which militate against the prompt submission of claims for EEC grants may also exist throughout other departments. It will therefore await with interest the Memorandum to be submitted by the Department of Finance outlining the arrangements in existence to monitor the submission of claims for grants from the various Community funds.

The Committee is perturbed to note that there is a possibility of a grant from the European Social Fund being lost because of delay in submitting a claim. When being examined in connection with the 1979 accounts the Accounting Officer of the Vote for Labour informed the Committee that one of five other Member States which had claims disallowed for the same reason had taken legal proceedings against the EEC Commission and that Ireland had an opportunity of joining in these proceedings and this option was being considered. This Committee will await information on developments.

Forestry—Provision of Assistance to Irish Board Mills Limited (in Receivership)

36. The Committee notes that the Minister is to bring to the attention of Accounting Officers and others concerned the position in regard to borrowing for Exchequer purposes and that he accepts that the procedures adopted in order to channel temporary funds to the Receiver at Irish Board Mills Ltd. were open to the criticisms made by the Committee. While the Committee recognises that there may have been serious and urgent difficulties to be dealt with in this case it could not accept that recourse to an irregular procedure in order to overcome such difficulties is justified in any circumstances. It is glad to learn therefore that this was an isolated occurrence which will not be repeated.

The Committee also notes that out of the sum of £550,000 advanced to the Receiver, £298,240 was refunded, making the final cost borne by the State £251,760.

Industry, Commerce and Energy—Export Guarantees

37. The Committee will await information on the outcome of the discussions regarding the rescheduling of amounts due to the Department by two Government Ministeries in Sudan. It will also await the decision of the Department of Finance regarding the retention by the Insurance Company of the sum of £25,289 for the servicing costs of machinery exported under export credit guarantee arrangements.

Industry, Commerce and Energy—Kilkenny Design Workshops

38. The Committee accepts that the level of fees charged by Kilkenny Design Workshops Limited must, to some extent, be regulated by fees charged by design consultants in the private sector. It notes the increases which have taken place since 1978 and it is glad to learn that efforts to maximise fee income will continue.

Office of the Minister for Education—Reconciliation of outstanding payable orders

39. The Committee notes that further efforts are being made by the Department of Education to reconcile its records of payable orders outstanding with the returns from the Paymaster General’s Office. When the Committee heard evidence in connection with the 1979 Account it was informed by the Comptroller and Auditor General that the Department of Finance had approved in principle a proposal that the figures for 1979 be reconciled on a month by month basis to a constant difference which would be accepted as due to pre-1979 factors. As this difference would not be reconcilable without a large expenditure of staff resources the approval of the Department of Finance would be sought to make an appropriate adjustment in the books of the Department of Education and any amounts written off as a result would be brought to the notice of Dáil Éireann.

The Committee expects that this matter will be resolved without any further delay and it wishes to be informed when this has been done.

Agriculture—Storage and Transport of Intervention Beef

40. The Committee is pleased to note that it has been decided in principle to introduce a system of tenders and formal contracts for the storage and transport of intervention beef in Ireland and that the recommendations made by the consultants employed by the Department of Agriculture to study the beef intervention system will be borne in mind when settling the new storage and transport arrangements.

Office of the Revenue Commissioners—VAT on Intervention Transactions

41. The Committee notes 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.

On the understanding that there is no net gain or loss to the Exchequer the Committee accepts the arrangements made regarding VAT payments relating to services provided before that date.

Office of the Revenue Commissioners—Write-off of uncollected taxes

42. The Committee notes that considerable progress was made between July 1979 and December 1980 in the clearance of cases of uncollectable arrears of turnover tax and that the remaining cases were expected to be dealt with by the end of March 1981 when details of tax formally passed as irrecoverable would be furnished to the Comptroller and Auditor General. The Committee is glad to learn that this matter is being finally disposed of.

Office of the Revenue Commissioners—VAT

43. The Committee notes that the procedures introduced in January 1979 for the stricter control of first repayments of VAT were reviewed in January 1980 and that, by then, existence of trading had been verified in about 1,000 cases registered for VAT from November 1978 where first repayment claims exceeded £100. It also notes that, since the claimants were found to be trading in all cases examined, it was decided to raise the £100 limit to £500 subject to sample checks by the Commissioners’ Audit Branch of cases below that limit. The Committee would like to know what proportion of total registrations in the period November 1978 to January 1980 where the first repayment claim exceeded £100 is represented by the 1,000 cases checked.

The Committee is still somewhat concerned to note that, while those who registered between January 1977 and November 1978 and who have had repayment claims only, have been established as being genuine traders, there has been no change whatsoever in the level of pre-repayment verification of claims where traders registered for VAT prior to January 1977. The Committee’s understanding of the position is therefore that all repayment claims from such traders which do not exceed £2,500 per taxable period — representing £15,000 per annum — are still being paid without any prior verification that the claimant is a bona fide trader. The Committee is not clear as to the significance of the statement that “it was taken that these cases would have been covered by routine control at district level”. In the first place it would like to know the nature of this control and in the second place it wonders why it was not established with certainty whether such control was exercised.

The Committee’s concern is added to by the knowledge that one case has come to light where VAT totalling £51,845 has been repaid on the basis of fraudulent claims. It would like to know when “registration” took place in this case and also the period covered by the fraudulent claims.

The Committee appreciates that VAT is now collected by some 77,000 registered traders—increasing by 7,000-8,000 each year—and that 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, so that a balance has to be struck between the overall degree of surveillance of VAT returns and the degree of investigation of repayment claims. It is pleased to note that the staff members assigned to policing VAT has been gradually increased in recent years and, while it recognises that the Revenue Commissioners must rely on a system of random inspection of businesses by the VAT Inspectorate and comparison of VAT returns with traders accounts to counteract carelessness, inconsistencies or fraud, it trusts that the level of such checks will not be allowed to diminish and that the system of control will be kept under active review to ensure its effectiveness in regard to all aspects of the VAT system.

Environment—Private Housing Grants

44. The Committee accepts the arguments put forward for continuing the existing inspection arrangements under the Private Housing Grants scheme.

Social Welfare—Recovery of Arrears of Social Welfare Contributions

45. The Committee notes that because the records maintained by the Department of Social Welfare up to 1978 did not indicate how many of the cases referred to the Chief State Solicitor for recovery of arrears of contributions had been disposed of otherwise than by Court action, it is not yet possible to provide the information which the Committee sought regarding the number of cases on hands awaiting legal action. It also notes, however, the additional information now furnished that, at the date of the Minister’s minute, 5 March 1981, 188 cases relating to 1978 had been dealt with in this way in addition to the 53 cases disposed of through the Courts. This would leave 184 of the 425 cases referred to the Chief State Solicitor in that year still outstanding after a lapse of more than 2 years and the Committee is concerned that if this was the pattern in the years prior to 1978 the accumulation of arrears must be considerable at this stage. It therefore welcomes the information that an examination is being undertaken to ascertain the total number of cases not disposed of and it will await the results of this examination with interest.

It also welcomes the information that, with the assistance of the Revenue Commissioners who are responsible since April 1979 for the collection of contributions, all possible steps will be taken to reduce the extent of non compliance and that legal action will be taken where necessary.

Social Welfare—Overpayment of Social Assistance

46. The Committee notes that the increase in the balance of overpayments outstanding at the end of 1978 arose from the discovery of a number of cases of concealment of means on the Unemployment Assistance and Old Age Pensions schemes following increased activity by the Department’s investigating staff and that many of these overpayments were for very large amounts, having accumulated over a number of years. The Committee commends the efforts to detect deliberate abuses of the Social Welfare system and it notes that every possible action is taken to recover amounts outstanding.

Regarding its concern that the increase in the value of overpayments outstanding at 31 December 1978 could reflect an increase in the incidence of overpayments being made, the Committee notes that the total number of overpayments recorded in 1978 was in fact 5,600 compared with 5,900 in 1977 and that, the value of overpayments outstanding at 31 December 1979 (£1,314,000) was only 8 per cent higher than the amount outstanding at 31 December 1978 (£1,215,524).

Social Welfare—Collection of Health Contributions

47. The Committee notes the arguments put forward by the Department of Social Welfare to justify the method used to carry out the test check of claims for repayment of health contributions and that such claims, the level of which has been decreasing, will not arise in respect of health contributions levied after April 1979.

Garda Síochána—Clearance of Advances

48. The Committee is pleased to learn that the amount of pre-1978 advances remaining uncleared has been considerably reduced and welcomes the additional information given by the Accounting Officer, when he was before the Committee in connection with the 1979 Accounts, that the balance uncleared was then (14 May 1981) down to £1,000. The Committee trusts that it will be possible to clear the remaining balances but, in the event of this not being so, presumes that any residual amounts uncleared will have to be written off with the approval of the Department of Finance and charged to the Vote.

It is concerned to note that it has not been possible to quantify the position regarding uncleared advances issued since 1 January 1978. While it notes that the Garda Commissioner has issued an instruction directing that claims be made within a month of advances being issued, compliance with this instruction can obviously only have an impact in relation to the more recent advances. Even if it is fully complied with in relation to current advances there is still the problem of clearing the advances issued in the years 1978, 1979 and 1980. The Committee wishes to know whether all claims relating to the advances issued in those years have now been received and that the delay is therefore one of processing only, or whether there has been, as in earlier years, failure to submit claims. It wishes to be kept informed of progress to clear all balances up to date.

Courts—Disposal of Bail Moneys

49. The Committee notes that in the Dublin District Court Office the amount of bail moneys lodged prior to 1 January 1979 and still to be cleared has been reduced from £20,100 to £6,650 and that this amount, together with a further £5,000 lodged in 1979, which related to Circuit Court cases, was being dealt with by the relevant Circuit Court Office in conjunction with the Chief State Solicitor’s Office.

It also notes that arrears of £2,300 approximately had come to light in one provincial District Court Office and that action was also being taken to dispose of this amount.

The Committee welcomes the assurance that there are no other moneys in accounts under the control of the Courts which are not being disposed of on a regular basis.

Defence—Recovery from the United Nations of the cost of Peace-Keeping Forces

50. The Committee notes that agreement has been reached with the United Nations Secretariat on the admissability by the Secretariat of claims relating to the use of army reservists to replace personnel who were serving with the United Nations in Cyprus and that this agreement is to be concluded by an exchange of letters between the Irish Permanent Mission to the United Nations and the UN Secretariat. The Committee trusts that this matter will now be brought to a conclusion.

Of greater concern to the Committee is the amount outstanding in respect of the other, and far larger, category of expenditure on the provision of troops, mainly to serve in Lebanon, which was quoted in the Committee’s last Report as being £4.8 million and may now be considerably greater. It is surprised to note that the Department of Defence, apparently without putting the suggestion to the UN, has taken the view that no purpose would be served by asking the UN for regular payments on account. The Committee appreciates that the UN may have difficulty in financing the UNIFIL operation but it nevertheless requests that its reaction to the suggestion of payments on account be sought.

The Committee is concerned to note the statement in the Minute of the Minister for Finance that “the essential problem is that the UN resources therefore only permit part payment in respect of troop costs”. It would welcome clarification as to whether this means that the amount being claimed from the UN is less than the full cost of providing the peace-keeping forces and if so by how much. It would also like to know if this was the basis on which the troops were provided.

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

51. The Committee notes that the remedial works at the school in question have now been satisfactorily completed at a cost of £54,492, towards which the Department is retaining £19,523 due to the original contractor.

It also notes the advice given by the Chief State Solicitor as a result of which it was decided not to institute proceedings against the insurance company for recovery under the terms of the performance bond or against the consultants for negligence in not serving notice under the bond or advising the Minister to serve such notice.

While the Committee accepts the legal advice given, it must express its concern that a sum of approximately £35,000 which could apparently have been recovered in this case has been lost. The loss is clearly due to the failure to act promptly, but whether the failure was that of the Department or the consultants or both is a matter on which there are conflicting views which there is now little point in trying to resolve. What the Committee is concerned with is why there should have been such failure at all. If such failure had not occurred the necessity to take legal action would not have had to be considered as the insurance company would, presumably, have honoured its commitment.

The Committee can only conclude that there was some serious lack of communication between the Department and the consultants or serious misunderstanding as to the extent of their respective responsibilities. If this is so it would welcome an assurance that steps have been taken to ensure that there will not be a repetition of what happened in this case and indeed that other departments which require contractors to provide performance bonds are made aware of the dangers highlighted by it.

The Committee notes that the main Government Departments and Offices involved in construction work require performance bonds but that, in view of the general practice whereby the State acts as its own insurer, the Department of Finance has recently put in hands an examination of the question of whether bonds should continue to be used in respect of public construction contracts.

The Committee would have thought the ease or otherwise with which a prospective contractor could supply a bond could be a good indication of whether he was capable of completing a particular project. However it looks forward with interest to the outcome of the examination of this matter by the Department of Finance.

General

52. The Committee notes that the Minister is bringing to the attention of all Accounting Officers its views on the making available of information in relation to grants to private institutions.

PART II—PARTICULAR ACCOUNTS DEFENCE

Rental of New Computer Equipment

53. The Comptroller and Auditor General referred in his Report to the installation of new computer equipment in the Department of Defence in July 1978 at an annual rental of £37,000 approximately plus VAT, to replace older equipment which had been used in conjunction with the computer facilities of the Central Data Processing Services for the payment of Army pay and pensions. It was envisaged that the new equipment would also enable the Department of Defence to computerise other work and process data then being processed by CDPS but, after it had been installed in July 1978, difficulties arose in using it as intended and it became necessary to retain the old equipment for some months. From December 1978 the new equipment had operated satisfactorily as a computer terminal but had not been used to enable additional work to be computerised nor to take over from CDPS the processing of data.

The Accounting Officer had informed the Comptroller and Auditor General that no additional costs were involved as the rental of the old equipment in respect of the retention period from July to December 1978 had been fully recovered. He stated that the additional tasks to be performed by the new equipment related to soldiers’ pay, officers’ pay and pensions but of these only one — bank reconciliation of pensions — had been transferred to the new computer by July 1980. The Accounting Officer told the Comptroller and Auditor General that it was hoped to commence the transfer of the pension issues and officers’ pay system to the new computer early in 1981 but that loss of experienced staff and staff deficiencies in the computer section had upset the projected transfer of work to the new computer.

The Accounting Officer in evidence told the Committee that the Department was gradually introducing now the work which had been intended for the new computer. He explained that they were unable to surrender the old equipment simultaneously with the arrival of the new one because the new computer had a failure in its printing mechanism and, without printing, the computer was useless. The Department received credit of £11,100 in respect of the loss of the printer facility in the new computer and the entire cost of the overlapping period of rental with the old equipment.

The Accounting Officer also explained that two rather unfortunate developments occurred which could not have been anticipated when it was decided to make the transfer of equipment. One was an unprecedented drop in the availability of expertise due to loss of staff and the second was the introduction in 1979 of the Payment of Wages Act, Section 5 of which permitted the Minister for Labour to make an order determining that as from a given date all recipients of wages were entitled to a payslip. The Department of Defence, which makes 12,000 soldiers pay payments per week, none of which are identical, had to request the Minister for Labour not to make the order of commencement to give the Department a chance to be ready. The Accounting Officer informed the Committee that the new soldier’s pay system was operating on the new computer since November 1980 and the Minister for Labour had brought the enabling order under Section 5 of the Payment of Wages Act 1979 into effect in January 1981. He added that these two factors — the loss of staff and the change over to which the Department had to apply all available staff —slowed up the full availability of the new computer. The Accounting Officer stated that from now on they would be in a position to discharge all the requirements which they had in mind when they originally changed over.

The Committee is concerned at the delay in the transfer of the additional tasks to the new computer. It hopes that the difficulties referred to by the Accounting Officer had now been overcome and that the new computer equipment is performing the additional function originally envisaged for it. The Committee wishes to be kept informed of progress in this matter.

VALUATION AND ORDNANCE SURVEY

Appropriations in Aid—Contributions by Rating Authorities

54. The Accounting Officer informed the Committee in evidence that fixed annual contributions amounting to a total of £6,295 are paid by rating authorities under an Act of 1874 in respect of the expenses incurred in the annual revision of valuations. He explained that when these fees were fixed they were intended to represent half the cost of the annual revision of valuations and he felt that a realistic figure based on present costs would be £400,000 to £500,000.

It is, in the Committee’s view, ludicrous that fees fixed over 100 years ago have never been revised and it is at a loss to understand how this was allowed to happen. It must insist therefore that an assessment be made of the appropriate fees which would be chargeable by reference to present costs and that action to revise the fees accordingly be taken immediately.

It also wonders whether a similar situation exists in any other department whereby statutory fees, instead of being periodically updated, are still fixed at long outdated levels. If so, it urges that immediate action be taken to bring them into line with present money values.

SOCIAL WELFARE

55. The Comptroller and Auditor General referred in his Report to the postal strike which took place in 1979 and which led to delay by the Department of Posts and Telegraphs in furnishing to the Department of Social Welfare the usual monthly accounts in respect of social assistance and social insurance benefits paid through that Department. Because of this delay it was necessary to include estimated charges for certain subheads in the 1979 Appropriation Account for Social Welfare. The Committee notes that the total of such estimated charges amounting to some £276 million subsequently proved to be overstated by £7 million, approximately, and that this amount was surrendered to the Exchequer in 1980 and 1981.

The Committee accepts that, in the particular circumstances, the Department of Social Welfare had no reasonable alternative to the course adopted and, while the overestimate of £7 million is large in itself, it is, perhaps, tolerable in relation to the overall expenditure. Nevertheless, the charging of estimated expenditure to an Appropriation Account for the reasons given in this case is unique as far as this Committee is aware and runs counter to the whole concept of accounting to Parliament on the basis of the expenditure actually incurred in the year. The Committee wishes to emphasise therefore that any tendency to regard such emergency action as a precedent for future occasions would be totally wrong and would be strongly resisted by it.

Encashment of Pension Orders by the Society of St. Vincent de Paul

56. The Committee discussed the arrangements made to overcome the difficulties caused by the postal strike which made it impossible for persons in receipt of Social Welfare payments to cash their pensions and allowance orders in the normal way at post offices. Under these arrangements the Society of St. Vincent de Paul cashed the orders at its branches and was provided with funds to do so by the Department of Social Welfare through the Department of Posts and Telegraphs. The Committee wishes to express its appreciation of the role of the Society of St. Vincent de Paul in contributing their services at short notice to meet an emergency situation.

The Comptroller and Auditor General had stated in his Report that, by July 1980, he had not had an opportunity of examining the accounting and control arrangements relating to these payments. In evidence the Accounting Officer informed the Committee that the arrangements made with the Society envisaged that vouchers to support payments made would be returned via local sub-postmasters to the Department of Posts and Telegraphs to be examined in the same way as vouchers submitted by post offices under normal operating circumstances. While difficulties were experienced by the Society in operating the scheme he did not expect any great inaccuracies to occur. The Committee would like to be informed of the outcome of this operation as soon as a final account comes to hand and has been examined.

HEALTH

Grant payments made on behalf of Health Boards to Voluntary Hospitals and Joint Board Hospitals.

57. Voluntary Hospitals and Joint Board Hospitals are required to furnish monthly reports giving financial and statistical information to the Department of Health. This information is used by the Department in calculating the level of monthly grant payments and in reviewing the approved allocations of funds for hospital services.

This monthly reporting system is part of an ongoing monitoring programme designed to encourage the hospital authorities to review their expenditure against budget and to ensure that they are budget conscious and the Committee was therefore concerned to learn that a number of hospitals had failed to furnish these reports in 1979. Staff shortages and pressure of other work as well as the difficulty of compiling some of the information sought by the Department had been pleaded by some hospital authorities to explain their failure to comply with these requirements and these were being considered by the Department with a view to revision of the existing monthly financial and statistical returns.

The Accounting Officer in evidence stated that it was accepted by the Department that these monthly reports are a very important part of the control system but that they are, however, only part of that system and that regular visits are also made to the hospitals by departmental staff to check their financial situation. He emphasised that the danger of overpayments was guarded against because the amount paid each year represents about 85 per cent of the estimated cost in that year with the balance payable in subsequent years when actual costs have been determined.

The expenditure on these grants, £125 million in 1979, constitutes a significant proportion of the cost of the Health Services where savings of even a small proportion of the total would amount to a considerable sum. The Committee therefore cannot accept that there should be anything less than strict adherence to the requirements of budgetary control in this area. If it is agreed that the hospitals have genuine difficulty in complying with the requirements of the present system then the Department and the hospitals should consult with one another to devise a system which can be fully and effectively implemented. It notes that consideration is being given to this aspect and it would welcome further information on the progress being made.

LABOUR

Employment Maintenance Scheme

58. The Comptroller and Auditor General drew attention to payments totalling £1.97 million paid to employers under this scheme in December 1979 which did not represent liabilities matured in the year, as the claims for the period in question i.e. to 27 November 1979 had either not been received in the Department or, if received, had not then been subjected to the normal departmental examination. In the cases in which no claims had been received the Comptroller and Auditor General was concerned to know how the amounts paid were calculated and whether all claims had been received subsequently. The Accounting Office had explained that the flow of claims under the scheme had been disrupted by a delay by the EEC Commission in approving a new scheme and by the postal strike and that some employers were unexpectedly slow in submitting claims. It was accordingly decided to make interim payments on the basis of 90 per cent of the face value of claims received or where a claim had not been received, 90 per cent of the amount of the previous claim. 300 such interim payments were made totalling £2,296,616 and, in all but one case, actual entitlements were subsequently established and appropriate adjustments made.

In evidence the Accounting Officer stated that the scheme was established to aid recession-hit industries in the textiles, footwear and clothing areas and the payments in question were made following pressure from firms who might have had to lay off workers if they did not get this subvention. Also, there was a substantial amount of money still available in the Vote towards the end of the year and there was a risk that not very much money would be provided in the following year and that the scheme itself would be terminated by the EEC authorities. The Accounting Officer admitted that he was aware of the accountancy implications of what had been done but that the alternative would have been to risk the disemployment of workers in the industries concerned.

While the Committee understands the Department’s motives in issuing these payments it does not accept its attempted justification of its actions because it cannot condone under any circumstances the charge to a year of account of amounts not duly processed for payment in that year. In this case the Department of Labour went even further by making payments in cases where claims had not even been received. This is a fundamental principle of Government Accounting and failure to adhere to it can only operate to lessen the control of parliament over the provision of public moneys. Accordingly the Committee must record its strong disapproval of the action taken in this case which involved the improper issue of quite a considerable sum and it trusts that it does not indicate a lowering of standards generally or an attitude that the principles of Government Accounting are not paramount at all times and that their disregard can be justified on the grounds of expediency.

AGRICULTURE

Irregular Overtime Payments

59. The Committee’s attention was drawn to irregularities in the payment of overtime to two officers of the Department of Agriculture. It was informed that the two officers had been suspended and that the matter was still under investigation by the Gardaí. Pending completion of the Garda investigations a sum of £14,665 paid in overtime to the two officers was charged to a suspense account, but the Accounting Officer indicated in evidence that the net amount of the irregular overpayments in this case might prove to be of the order of £4,000.

The Committee is concerned that the internal control procedures in operation within the Department of Agriculture failed to detect this irregularity at an early stage and would be glad to have an assurance that the operation of such procedures has been examined with a view to ensuring that there is no recurrence. The Committee is also concerned to note the extent of the overtime payments to these two officers and is surprised that this fact alone did not, apparently, arouse any suspicion. It deprecates in the strongest terms any instance of public servants being involved in the misappropriation of public funds and it wishes to be informed of the outcome of the investigations as soon as the information is available.

Unauthorised Cattle Movements in Herds restricted under the Bovine Tuberculosis and Brucellosis Eradication Schemes

60. As part of the procedures designed to reduce the incidence of Bovine Tuberculosis and Brucellosis the movement of cattle into or out of herds suspected of including infected animals is statutorily prohibited save as exceptionally authorised by the Department of Agriculture. Periodic veterinary tests are carried out on all herds in order to determine whether any infected animals are present and, during such tests, all animals are listed by their identification numbers, such lists being retained at the District Veterinary Offices of the Department of Agriculture. If, on testing, there is evidence to suggest the possibility of infection being present in a herd, another test must be carried out within a short interval.

The Comptroller and Auditor General had noticed that the records relating to successive tests in some herds suspected of being infected showed discrepancies in the numbers and identities of the animals tested. This indicated that unauthorised movement of animals was likely to have taken place between tests but the Department of Agriculture had not, apparently, adverted to this because it had not compared the records for successive tests in the cases examined by the Comptroller and Auditor General.

The Accounting Officer had informed the Comptroller and Auditor General that, while certain procedures were laid down for checking and reconciling numbers and identities in suspect herds and it was established practice to examine test reports for discrepancies which might indicate unauthorised cattle movements, it would be impossible to check all test reports without substantially increasing staff numbers. In counties with high incidence of disease in particular, the checking job would be very onerous. He had undertaken however to have every effort made to pay greater attention to this matter, subject to staff availability.

In evidence before the Committee the Accounting Officer stated that there were 19,000 restricted herds in the country and that, according as this number declined, it would be possible to give more attention to the remaining herds. He explained that it was the policy both of his Department and the Garda authorities to prosecute in cases of unauthorised movements which do come to notice and that generally the Department does receive good co-operation from the farming community.

The Committee is concerned lest the Department of Agriculture may be adopting an attitude that, because the task would be an onerous one, a satisfactory level of checking in counties with a high incidence of disease cannot be achieved and that it is only when there has been a reduction in the number of restricted herds, stated by the Accounting Officer to be about 19,000, that it will be possible to give more attention to the remaining herds. The Committee would have thought that it is in the counties which have the highest incidence of disease that the more intensive and rigid checking should be concentrated and that, unless this is done, the reduction in the number of restricted herds will not be achieved or, at best, will progress at a slower rate than would otherwise be the case.

The Committee is aware that disturbing evidence of a significant increase in the level of bovine tuberculosis has come to light in recent years, meaning, in effect, that a considerable amount of public money has been spent without the objectives for which it was provided being fully attained. While it appreciated the Accounting Officer’s staffing difficulties, it cannot but express serious concern that the very large investment of State funds in the eradication schemes should be further put at risk because of reinfection of cleared herds through unauthorised movement of cattle. In the Committee’s view this would be inexcusable but it would hardly be any more excusable if this abuse, which must be one of the main causes of the increase in the incidence of bovine tuberculosis, was inadvertently facilitated through failure by the Department of Agriculture to use information readily available to it to bring to light cases of unauthorised movement of cattle and to apply the full rigour of the law to those responsible.

OFFICE OF THE MINISTER FOR EDUCATION

Publication in Irish

61. The Comptroller and Auditor General drew attention to the expenditure incurred by the Department of Education on the production by the computer-setting process of an Irish-English dictionary. The contract with the printing company in the sum of £77,000 provided for the production of 30,000 copies of the dictionary, 50,000 copies of an abridged version and four copies of a reference retrieval printout. Delivery of the main dictionary was to take place in June 1974 but in fact did not commence until July 1978. During the rather protracted course of this contract the number of copies of the dictionary originally provided for was increased from 30,000 to 50,000 at a negotiated price of £32,435 and a number of other extra costs were also incurred, including £40,000 for wage increases relating only to the original 30,000 copies contracted for, £30,000 for author’s corrections and £47,300 for computer charges. The cost of the abridged version of the dictionary was expected to reach £153,000 bringing the total cost of the work to almost £400,000.

The delay in completing the contract appeared to be due to technical problems associated with the computer-setting process and the Accounting Officer had informed the Comptroller and Auditor General that this process had been selected in the light of the particular advantages which the new technology made possible.

He also stated that the final costs had been fully examined by specialists in the Stationary Office and that his Department accepted that the costs were fair and reasonable bearing in mind that the contract price related to a 1,000 page dictionary whereas the published work contains 1,321 pages.

The Committee is concerned that the difficulties experienced and the time taken to complete the work in this case have obviously led to increased costs to the State. In regard to specific items included in the final cost, it is particularly concerned that over £47,000 was paid in respect of extra computer charges, as it would have expected this item to have been fully catered for in the original contract price since the contract provided for printing by a computer process. Other than to point out that these charges were examined by the Stationery Office in consultation with computer specialists from the Central Data Processing Services, the Accounting Officer was unable to explain to the Committee why they should have arisen but in a note furnished subsequently he provided the Committee with details supplied to him by the Stationery Office which indicated that the extra cost of £47,000 represented an agreed claim by the contractors for £56,000 in respect of increases in computer costs, systems and programming work, typographical runs, printouts, and proof reading costs less a figure of £9,000 which was regarded as the computer cost element in the original tender. The gross claim for £56,000 was examined by Stationery Office technical officers assisted by CDPS who considered that the computer processing work was relatively complex, that the need for complete accuracy justified the number of runs undertaken, and that development costs were reasonable because of the lack of suitable processing software at that time. In regard to author’s corrections the Accounting Officer told the Committee that in work of this nature allowance has to be made for further revisions that become apparent as the work is being checked out, but the Committee would welcome more information on how such an item could cost an extra £30,000 or approximately 13 per cent of the final cost of the main dictionary. Finally, it notes that, while the number of copies to be printed was increased from 30,000 to 50,000 in the course of the contract, sales up to May 1980 numbered 21,000 and it would like to be informed if the extra 20,000 copies ordered proved to be necessary.

There are a number of more general comments which the Committee would like to make on this contract. The Accounting Officer told the Comptroller and Auditor General that the delay in completing this contract was largely due to technical problems associated with the computer setting process. The Committee wonders therefore whether the Department of Education undertook this venture without first examining critically the feasibility of having the work carried out by this novel process. The Committee is not suggesting that advantage should not be taken of technological developments, especially if they are a means of reducing costs, but it wonders whether the Department of Education had any previous experience of this process and, if not, whether it had looked for any evidence that it had been tried and proven beforehand. The Committee would like specific information on this because, if the process had not been tried and proven the Committee would find it difficult, in the light of the time over-run of four years, to avoid the conclusion that the work undertaken for the Department was, to some extent at least, availed of by the contractor as an experimental project in the development and perfection of the process. The Committee is strenghtened in this view by the explanation given for the increase in computer charges referred to above. If this was the case the Committee would feel that there should have been some scope for price negotiation on the basis that the Department might have a claim to ownership of the software developed in the course of this project. It wishes to be informed whether this aspect was considered or even adverted to by the Department of Education.

This venture cost the Department of Education approximately five times the original contract sum. The Committee accepts that because of such things as variations and extras some additional costs are a fairly normal feature of major contracts, though it would expect that all possible effort should be made to keep such additional costs to a minimum. It cannot, however, regard as in any way acceptable the extent of the additional costs incurred in this case and it has little doubt but that if the actual cost of £400,000 had been forseen at the outset the project would have been seen in a different light and might well not have been undertaken at all.

This case highlights a matter which is of serious concern to the Committee, as it has been to many Committees in the past, viz., that projects are undertaken on the basis of estimates which, being of fairly modest proportions, appear to justify the undertaking but which, in the event, prove to be grossly inaccurate at a stage when it is too late to reverse the decision and there is little option left but to complete the project irrespective of cost. The Committee must therefore urge once again that genuine efforts be made in all cases to have realistic costings prepared before making decisions to commit public funds for any purpose.

GARDA SÍOCHÁNA

62. Expenditure on Garda pay and allowances including overtime, amounted to almost £70 million in 1979. The pay system is computerised and the Comptroller and Auditor General drew the Committee’s attention to a number of deficiencies in the system. Some of these deficiencies had resulted in overpayments being made and others were such as to constitute a danger that if overpayments were made either fraudulently or accidentally they would remain undetected.

The Accounting Officer explained to the Committee that computerisation of the Garda payroll had taken place in 1973 and that certain checks which were nowadays regarded as normal features of a computerised accounting system were not thought necessary at that time. Some of the deficiencies had been corrected and arrangements were being made to implement additional checks which would eliminate others.

Having regard to the size of the Garda payroll and the number of sources from which information used to calculate some of the amounts payable has to be collected, the Committee considers that every effort should be made to have a system which is as secure as possible. It appreciates that cost considerations must be borne in mind when deciding on the level of security to be provided but since this system is now almost ten years in operation it feels that the time may be opportune to have a comprehensive review of its operations carried out, in order to determine whether further improvements in efficiency and security can be achieved.

ENVIRONMENT

Duplicate Payment of Private Housing Grants

63. A limited test examination of private housing grant payments by the Comptroller and Auditor General disclosed that ten duplicate payments had been returned by the payees and that this was the first indication the Department of the Environment had that it had made duplicate payments. It transpired that some of the duplicate payments were made because of the setting up of two sets of records in the Department when the original records were mislaid and in other cases two grant applications were made for the same house. Departmental checks which should have prevented duplicate payments being made in such circumstances were either not observed or did not prove effective. The Department was aware of six other duplicate payments which had been made in similar circumstances.

The Accounting Officer had stated that an abnormal arrears position had developed because of insufficient staff to deal with the increase in the number of housing grant applications since 1977, difficulties in filling authorised professional posts and the backlog which had built up in the latter half of 1979 following the ending of the postal strike. The result had been that some aspects of the procedures and controls had to be short circuited in the interest of providing the public with an acceptable level of service in the processing of applications, the arranging of inspections and the payment of grants. The Accounting Officer stated that a survey whose recommendations were being implemented had been carried out by the Organisation Unit of the Department with the assistance of the Department of the Public Service on all aspects of the processing of housing grant applications and that the procedures governing the payment of grants had been very throughly revised so that the Department was now satisfied that duplicate payments should not arise.

While the Committee appreciates that the Department may have had difficulty in dealing with the volume of applications for housing grants following the postal strike, it must point out that the control which seems to have broken down in this case would be regarded as one of the most fundamental in any system of internal control i.e. that there should be only one record for each person claiming a grant. It must therefore express its serious concern at what happened in this case. The Accounting Officer has referred to the amount overpaid in the sixteen cases of which the Department is aware and pointed out that the amount is trivial in the context of the total grant payments. The Committee must reject this argument as irrelevant because, bearing in mind the circumstances of the case and the manner in which the overpayments came to light, a question might legitimately be asked as to how many overpayments may have been made of which the Department is not and never will become aware.

The Committee welcomes the Accounting Officer’s assurance that the procedures governing the payment of grants have been revised. It trusts that these will prove effective and it must insist that they be strictly adhered to in the future.

OFFICE OF THE COMPTROLLER AND AUDITOR GENERAL

64. When the Accounting Officer for this vote was being examined by the Committee it took the opportunity to inquire into the staffing position of this Office, being mindful of the present embargoes on staff recruitment in the Public Service and of the fact that previous Committees in 1977 and 1978 had expressed concern over the impact of staff shortages on the work of this Office, which has a vital role in the maintenance of proper Parliamentary control over State revenue and expenditure.

The Accounting Officer informed the Committee that, while his Office had, since 1980, an approved establishment of 101 officers which was the minimum considered necessary to discharge its responsibilities, the operation of the embargoes on staff recruitment had led to 7 vacancies, one of which was at middle management level, remaining unfilled. He stated that this situation might well mean that problems would arise in meeting deadlines in relation to the 1982 cycle of audits of the accounts of Semi-State Bodies, the accounts of departmental funds and the Appropriation Accounts of the Departments, and that consideration might, accordingly, have to be given to reducing the number of audits or curtailing the scope of audit work carried out with the possibility of reference to the position having to be made in the Comptroller and Auditor General’s Reports on the relevant accounts.

The Department of Finance representative suggested that the Comptroller and Auditor General might be able to make do with a lower level of staff if he were to advise some of the Semi-State Bodies which are not obliged to have their accounts audited by him, to engage commercial auditors, but the Comptroller and Auditor General pointed out that, in the type of case referred to, where there was no statutory requirement for audit by him, his appointment as auditor was a matter for the body itself with the concurrence of the Minister for Finance and the sponsoring Minister as appropriate, and that his function was to carry out audits assigned to him. If the Minister for Finance felt that some audits ought not to be carried out by the Comptroller and Auditor General then it was for the Minister to suggest where changes might be made.

The Committee understands that an auditor is obliged to exercise due care and attention and to adhere to accepted standards in the carrying out of an audit and that the consequences of failing to do so by, for example, not undertaking a sufficiently extensive examination to satisfy himself in regard to the internal controls and accounting procedures operated by the body subject to his audit, can be extremely serious for him. It is therefore most concerned at the dilemma in which the Comptroller and Auditor General finds himself, having on the one hand the obligation to carry out audits assigned to his Office by statute or by ministerial decision and on the other hand being forced into a situation where inadequate staff resources may cause him to entertain doubts whether particular audits have been carried out to a standard which would enable him to give a clear report on the accounts.

The Committee accepts and it would feel that the Departments of Finance and the Public Service should also accept that it is for the Comptroller and Auditor General and for him alone to determine the level and intensity of the checks to be applied and the nature of the examination to be carried out in the course of any audit for which he is responsible. The solution suggested for easing the situation, by passing audits to commercial concerns, does not commend itself as the cost of such audits would in most cases merely be transferred to another head of public expenditure.

While the Committee accepts that the embargoes on staff recruitment have become necessary because of financial constraints and has no wish to interfere with the policy decision enshrined therein, it nevertheless, is firmly of the opinion that, having regard to the role of the Comptroller and Auditor General as watchdog over public moneys and as an indispensable aid in the Committee’s own review of Departments’ financial affairs, any undue strain imposed on the functioning of the Office of the Comptroller and Auditor General by staff curtailment must be counter productive. Accordingly, it feels that the staffing problems of the Comptroller and Auditor General’s Office should receive special attention.

OFFICE OF THE REVENUE COMMISSIONERS

65. An excise duty at the rate of 2 per cent was imposed on a specified range of agricultural products in 1979. The Committee was told by the Comptroller and Auditor General that he had been informed that, while £15 million, approximately, had been collected up to 31 May 1980, it was not possible to determine the amount of duty still outstanding as many of those liable for the duty had defaulted in payment and some had refused officers of Customs and Excise access to their records and had not applied for licences as required under the Orders imposing the duty. The Revenue Commissioners instituted proceedings against defaulters but subsequently interests representing the dairying and meat trades took High Court action for a declaration that the duty was incompatible with the EEC Treaty and sought an injunction to restrain collection. The High Court referred certain matters to the European Court of Justice which gave its ruling in March 1981, but some points arising out of that ruling remain to be determined by the High Court and, in the meantime, some 40 prosecutions instituted against defaulters stand adjourned.

As the matter is sub-judice at present, the Committee will withhold comment but it requests that, if the High Court rules that collection of the duty is enforceable, it will be kept informed of the progress made to collect the amount which accumulated up to 31 December 1979 when the duty was abolished.

Collection and Payover of Taxes

66. The Committee was concerned to note from the Report of the Comptroller and Auditor General that the lack of postal facilities during the postal strike in 1979 prevented the transmission to the Collector General of tax receipts paid to local inspectors in thirteen tax districts and that, consequently, such receipts, which aggregated to a considerable sum during the course of the strike, had to be banked locally pending a return to normal postal services. When banked locally the moneys were held in current bank accounts yielding no interest and large amounts were allowed to accumulate for varying periods in these accounts; the Comptroller and Auditor General drew attention to one case where £17 million lay in such an account for fourteen days. It was not until June 1979, the month in which the postal strike ended, that deposit accounts were opened in eleven of the thirteen districts concerned. Furthermore, when sums totalling £35.5 million were transferred from the deposit accounts to the Collector General in the period 27 June to 2 July 1979 delay ensued in lodging the money to the Revenue Commissioners account (£21.5 million being lodged on 13 July and the rest in lesser amounts from 12 July to 3 August).

It appears that current accounts were utilised at the outset of the strike on the assumption that the strike would not last long and with the intention that staff delivering salary cheques from head office could at the same time receive cheques drawn on the current accounts in respect of tax collected, but as the strike continued pressure was brought to bear by the postal workers to stop this practice and, consequently, the balances in the current accounts started to grow. The delay in lodging moneys received by the Collector General in June/July 1979 after the strike terminated was due to the fact that such moneys represented thousands of individual transactions which had to be sorted, balanced and receipted before lodgement was possible.

The Accounting Officer in evidence accepted that the arrangements made were not to the best advantage of the State; in the short period for which deposit accounts were operated a total of £189,000 had been earned in interest and it is obvious that had they been used to the fullest extent possible a considerably greater sum would have been earned. The Accounting Officer assured the Committee that if the same situation were to arise in the future consideration would be given to making prompt lodgements on deposit.

While the Committee appreciates the problems arising in the unusual circumstances of the postal strike it considers as rather naive and, to a degree, showing a lack of imagination the explanation given for the opening of current accounts rather than deposit accounts by the District Tax Inspectors i.e. that the use of current accounts was standard within the revenue accounting system. The Committee would suggest that an abnormal situation such as a postal strike would prompt someone, either locally or at headquarters, to take abnormal measures to counteract its effects; indeed it would go further and question why the use of current accounts should be standard procedure at all.

However it welcomes the assurance given by the Accounting Officer that, in the event of a similar situation arising in the future, greater attention would be given to maximising the yield on moneys which, through unforeseen circumstances, may be temporarily delayed in reaching their normal destination. The amounts of money which flow through the State’s tax collecting agencies are so big that the amounts of interest which can be earned, even for the shortest period, are considerable and this case therefore serves to highlight a matter which would always be of serious concern to the Committee i.e. that in all cases where, in any Department, there has to be a temporary suspension of the normal cash handling procedures, the best alternative methods to ensure that the State does not suffer any avoidable loss should be adopted as quickly as possible.

POSTS AND TELEGRAPHS

Engineering Stores and Equipment

67. The Committee took note of a practice brought to light in the Comptroller and Auditor General’s Report under which a delegated limit of £500 on the placing of engineering contracts by local District Engineers of the Department of Posts and Telegraphs was being circumvented in two districts by the placing of a sequence of orders under this limit where, in fact, the aggregate cost of work carried out on eleven projects ranged from £10,000 to £36,000 and the work should accordingly have been submitted to the Central Engineering Contracts Section for the placing of contracts. The Accounting Officer was able to assure the Comptroller and Auditor General that the orders placed locally related to duct laying and pole erection urgently required, that competitive tenders were sought in respect of each order placed and that the amounts paid were considered fair and reasonable. He also informed the Comptroller and Auditor General that District Engineers were being reminded of the necessity for strict adherence to the limits of their delegated authority and directed to consult headquarters if any case arose where the urgency of a particular work made it necessary to exceed the delegated limit.

In evidence the Accounting Officer assured the Committee that there was no malpractice involved and that the local engineers’ action was taken in the interests of the service. He stated that the problem had since been overcome by placing running contracts for specified periods, against which local engineers can place orders as required.

The Committee is prepared to accept that in this particular case no loss to State funds arose and that action has been taken to bring the situation back under control. It is concerned, however, that legitimate and essential controls over local spending on engineering works should have been so openly flouted by some of the Department’s officers and apparently without the knowledge of headquarters staff until the matter was raised by the Comptroller and Auditor General. It wishes to stress that the fixing of limits to the expenditure which may be incurred locally on behalf of the Department by staff acting under delegated authority forms an essential part of the chain of control over public expenditure and should neither be taken lightly nor circumvented in any way. It would like to be assured, that both in this Department and in other Departments where similar delegation is considered necessary, steps are taken to monitor and review its operation and to prevent abuses.

PUBLIC WORKS AND BUILDINGS

Holycross Abbey

68. The Committee was informed that, of the total expenditure of almost £500,000 on the restoration of Holycross Abbey, £297,000 was to be recovered from the Ecclesiastical Authorities and the remainder was to be met by the Office of Public Works as being the amount which would have been expended on the preservation of the structure as a National Monument. Of the amount to be recovered approximately £100,000 was still outstanding in November 1982 when the Accounting Officer appeared before the Committee and he stated that it is intended that this be paid over a period of five years, the term of lease being granted to the Archdiocese by the Commissioners and this will be provided for in the leasing agreement. The Accounting Officer told the Committee that the execution of the agreement was temporarily held up because legal opinion had to be sought on some aspects but efforts were being made to finalise the matter.

The Committee urges that these efforts should continue and it wishes to be kept informed of developments.

GENERAL

Cost of providing accommodation for Government Departments

Qns 643-655 698-710

69. Expenditure on the provision of accommodation for Government Departments and Offices is borne mainly on two Votes viz. Public Works and Buildings and Posts and Telegraphs. The Office of Public Works caters for the accommodation needs of all Departments and Offices other than the Department of Posts and Telegraphs which arranges the provision of its own accommodation.

The Comptroller and Auditor General in his Report drew attention to what seemed to be excessive delays between the dates of leasing of premises for use by Government Departments and the dates of eventual occupation of those premises by departmental staff following fitting out and furnishing.

One of the cases referred to by the Comptroller and Auditor General involved accommodation leased with effect from 1 October 1978 by the Department of Posts and Telegraphs at an annual rent of £277,000 plus service charges and insurance. By April 1980 only a small proportion of the area leased had been occupied and some of the fitting out work was still not completed. The premises did not, in fact, become fully occupied until September 1981. From the commencement of the lease to the end of 1981 i.e. for three months occupancy, total outgoings on rent, services and insurance amounted to about £1.3 million.

The Comptroller and Auditor General also reported that 21 properties leased by the Office of Public Works with effect from various dates from February 1978 onwards were still unoccupied at 31 December 1979, at which date the outgoings on them had accumulated to £1.2 million and that the leasing of six other properties which were occupied for the first time during 1979 had commenced on various dates from December 1976, with outgoings during the period when they were unoccupied amounting to £190,000.

In reply to the Comptroller and Auditor General’s queries and in evidence before the Committee both the Accounting Officer for the Posts and Telegraphs Vote and the Accounting Officer for the Public Works and Buildings Vote gave detailed explanations for the delays in occupying accommodation after the leases had been entered into. A cause of delay common to both Departments was the time taken to decide on the precise staff section to be accommodated so that requirements regarding fitting out, partitioning and the provision of facilities could be determined. A number of other factors such as the need to negotiate with staff on the terms on which they would agree to move to new locations, delays by contractors and labour disputes were also cited as reasons for delays. The Accounting Officer for the Public Works and Buildings Vote in fact listed nine separate steps which might have to be gone through between the acquisition and the occupation of premises and he particularly referred to the problems which can arise from urgent, and therefore unanticipated, demands for accommodation which often arise out of specific Government decisions, to excessive workloads and inadequate staff and to the difficulites caused by Departments changing their precise accommodation requirements after these have been initially requisitioned.

Both Accounting Officers agreed however that the delays were longer than they should have been. In the case of the Department of Posts and Telegraphs the Accounting Officer told the Committee that in normal circumstances the Department would have expected the building in question to be occupied in about a year but he pointed out that it was not easy to plan ahead in the situation in which the Department found itself at the time. Staff was being increased in anticipation of the telephone development programme and when the building came on the market it was decided that the Department would have use for it but it had not been fully determined at that time what staff would go into the building and in fact the original plans had to be changed when it was decided to put in certain groups of staff which had not at first been intended for the building.

Questioned as to the extent of forward planning which had been undertaken in connection with the occupation of the building, particularly with regard to the appointment of the architects to design the internal layout, the Accounting Officer informed the Committee that the architects were appointed in June 1979. He stated that the Department of Posts and Telegraphs does not have its own architectural staff and that it must work through the Office of Public Works for the purpose of getting competitive tenders for fitting out its premises.

In the case of the Office of Public Works the Accounting Officer explained that when they are negotiating for a building the date from which rent had to be paid was to an extent determined by market conditions. Over the past number of years they had been operating in a seller’s market and developers were not prepared to allow time for fitting out buildings before commencement of the lease. The Office of Public Works tried, however, to plan requirements whenever possible by engaging architects to design the lay out by using detailed specifications of the building while it was still in course of construction but there was a danger that by entering into a commitment at too early a stage a developer might take advantage of the situation by not adhering to the required quality standards of construction.

The Committee has carefully considered all the evidence presented to it in this matter and, while appreciating that there may be difficulties such as those outlined by both Accounting Officers, it must express in the strongest possible terms its condemnation of the extent to which public moneys have been used to pay rent for empty buildings. It could accept that there would be some delay in occupying new buildings but it would venture to suggest that the delays which have occurred in the case of the Department of Posts and Telegraphs and the Office of Public Works are inordinate by any standards. They are, in the Committee’s view, significantly longer than in the private sector; this was not denied by the Accounting Officer for Posts and Telegraphs. As far as the Office of Public Works is concerned the position in this regard may be somewhat different because unlike the situation in the private sector it is dealing with a number of “client” Departments and must try to weigh the priorities of their various demands but the Committee does not accept this as fully justifying the delays which have occurred in its case.

There is a serious problem to be faced for which every effort must be made to find a satisfactory solution. The cost to the State of rent paid on unoccupied buildings is in the Committee’s view nugatory expenditure of the worst kind which it sees as continuing to be incurred unless positive steps are taken. The Office of Public Works is involved and will presumably continue to be involved on an ongoing basis in the leasing of office accommodation. Even with what the Accounting Officer regarded as an improvement in the situation in November 1982, it has 50/60,000 square feet awaiting occupation which at the then price of £8 per square foot quoted by him is costing the State up to £½ million per annum. While the Department of Posts and Telegraphs may not be continually in the market for accommodation, it is so engaged at present. It transpires that, in another building mentioned by the Accounting Officer in the course of his evidence, 100,000 square feet has been leased at an annual rent of £753,000 from January 1982 but that only 20,000 square feet was expected to be fitted out by March 1983 and occupied shortly thereafter and that the entire area will not be fully occupied until the end of 1983 by which time rent of £1½ million will have been paid. The Committee is strongly of the opinion that, altogether, excessive delays are occurring in occupying premises for which the State is paying heavy and continuing charges for rent and services and that this waste of public money could be avoided or greatly reduced by proper forward planning of accommodation needs and by adequate preparation for and prompt execution of fitting out and furnishing requirements; it cannot understand, for instance, why it should take until June 1979 to appoint architects to design the layout of a building leased from October 1978. It also feels that there may be room for more meaningful negotiation with property developers to ensure as far as possible that accommodation which it is intended to rent conforms as closely as possible to the clients’ requirements before a leasehold is entered into and a liability for rent and services incurred.

This problem is one to which all Departments are contributing and the Committee therefore feels that they must all be involved in seeking a solution to it. It suggests therefore that an Interdepartmental Committee be set up under the auspices of the Department of Finance to examine the underlying causes and to suggest means whereby a solution may be found. It will welcome any observations on this suggestion.

There are two other aspects of this matter which concern the Committee. The Accounting Officer for the Department of Posts and Telegraphs told the Committee that one of the problems associated with the delay in moving staff into the building in question related to the payment of disturbance money. He explained that this was paid to about 500 heads of staff on the scale agreed with the staff unions, which is £100 for removal up to one mile and £100 per mile thereafter, and he estimated the total cost in the case at £100,000.

The Committee is aware that the practice of paying disturbance money has become fairly widespread in recent years and it accepts that, as stated by the Accounting Officer, the Department of Posts and Telegraphs did not give the lead in this. However, the Committee feels bound to express its concern that Departments find themselves in the position of having to pay such allowances, particularly as is often the case where staff are being moved to more modern, better equipped and more centrally located accommodation and it regards the payment of such allowances out of public moneys as an unfair imposition on the taxpayers.

The Accounting Office for Public Works and Buildings was questioned as to the effect on the efficient functioning of Departments of having their administrative divisions located in a number of different buildings, often a considerable distance apart. The Committee would see such a situation as giving rise to increased costs under a number of headings and to inefficiencies and delays in the Departments throughput of work. The Accounting Officer told the Committee that Departments are conscious of this aspect and that it is the policy of the Commissioners of Public Works to try to centralise all units of a Department in the one building whenever feasible and at the same time to allow a little room for possible expansion or new services.

The Committee would suggest that if its recommendation to set up an Interdepartmental Committee is adopted such a Committee might also be able to suggest some means whereby this aspect of the problem of providing staff accommodation could be overcome.

DENIS FOLEY,

Chairman.

17 November 1983.