Committee Reports > List of Committees > Dáil > 1985 > Committee on Public Expenditure > Report - Rental and Leasing of Public Sector Accommodation

MEMBERS OF THE COMMITTEE ON PUBLIC EXPENDITURE

REPORT

Rental and Leasing of Public Sector Accommodation

1. In November, 1984 the Committee on Public Expenditure laid a report before the Dáil (Pl. 2779) entitled “Office of Public Works:

(1) Project procedures used in the acquisition and fit out of premises.

(2) Rental and lease terms in the period 1981 - 1983”.

In summary, the Committee’s report indicated that, while project controls needed to be improved considerably, the rental and lease terms obtained by the Office of Public Works were generally satisfactory during the period under review.

2. Appendix 1 to the OPW report: (OPW statement on renting of office blocks) indicated that £887,000 per annum was the annual rental of current unoccupied space. Of 26 projects examined, the Committee considered that in 24 cases the overall project period was excessive and the period for rent paid to occupation was grossly in excess of what would be accepted or sustained in the private sector (over two years in 12 cases).

3. Since the above-mentioned report was produced it has come to the Committee’s notice that, in some cases, leases have been signed on behalf of client Departments/ Agencies and rental paid in respect of the new premises while the lease for the existing occupied building had not been disposed of or conclusive arrangements made so to dispose. The Committee expressed concern at this practice which is an unnecessary and avoidable charge on public expenditure and they were not satisfied with the argument which has been advanced by the client.

The acceptance of such a policy indicates that there may be a view held by Departments and Agencies that there is no particular reason or incentive for disposing of the existing accommodation as quickly as possible, on the basis that no individual will be held personally accountable for such double payments.

4. Appendix A attached lists the office blocks leased entirely or partly by the Commissioners of Public Works. It excludes accommodation leased by the non-Commercial State-sponsored Bodies falling within the Committee’s terms of reference. (Similar details are being sought from those bodies). The table shows the annual cost of each office block for the year ended 31 December, 1984. The inclusion of that table is to illustrate the magnitude of rentals and the cost in terms of public expenditure in the Civil Service sector. The two examples of State-sponsored Bodies that the Committee enquired into on this subject showed that in one case between October 1981 and October 1984 £866,545 was paid in respect of an empty office block. In the second, rent became payable from November 1984, though the existing buildings (costing £764,000 a year in rent) were not expected to be sold before June, 1985. The annual rental of the new accommodation is of the order of £1.2 million per annum - transfer of staff is expected to be completed by April, 1985.

Recommendations

5. The Committee recommend the following:

(1) In each case involving new or additional accommodation a study should be undertaken as to the most cost-effective decision - whether to rent, purchase or build.

(2) No lease should be signed unless a contract has been signed to dispose of the existing accommodation.

(3) There should be no exception to (1) or (2) above unless the prior approval of the Minister for Finance has been obtained.

(4) In no case should a Department/Office or State-sponsored Body be paying rent for more than one office or group of offices in respect of which it has a lease agreement unless the prior approval of the Minister for Finance has been obtained.

It should be noted that the Committee will make enquiries at six-monthly intervals, including, if necessary, the tabling of Parliamentary Questions in Dáil Éireann to elicit the up-to-date position on action taken on this report.

Michael Keating T.D.

Chairman

2nd May, 1985.