Committee Reports > List of Committees > Dáil > 1985 > Committee on Public Expenditure > Report - Review of Exchequer Costs of Travel and Subsistence

REPORT

Introduction

1. In July, 1984, the Committee decided that the procedures governing travel and subsistence in the Public Service be examined to see whether any advantage might accrue from the possible reduction of Exchequer travel costs through bulk purchase, advance booking, etc..

2. Evidence was heard by the Committee on 10 July, 1984, from Mr. D. Robertson and Miss F. McKenna, Lep Travel Ltd., on behalf of the travel trade and also from Mr. J. Shortall, Department of Agriculture, Mr. P. Molloy, Department of Finance and Mr. P. O’Donoghoe, Department of the Public Service.

3. Arising from the queries raised by the Committee during the meetings further details were sought

(i)from Lep Travel as to how a proposed travel scheme might operate (Appendix III).

(ii)from the Department of Finance and the Public Service on the proposals put forward by Lep Travel Ltd. (Appendix V).

A written submission from Aer Lingus (Appendix VI) was placed before the Committee on 26 February, 1985.

Objectives

The objectives of this report were defined as follows:-

To examine the procedures within the Public Service which are used to control the overall cost of travel and subsistence at home and abroad; to compare these with the alternative systems demonstrated by the proposing representatives of the Travel Trade and where appropriate, suggest what improvements might be made.

5. Procedures in Operation to Control Public Sector Travel and Subsistence

5.1Expenditure from the Exchequer on travel and subsistence for the Civil Service, Gardai and the Defence Forces during 1984 was of the order of £35m. broken down roughly in the following proportions:

5.2Travel and subsistence rates for the Civil Service are fixed by the Minister for the Public Service in accordance with arrangements provided for under the Scheme of Conciliation and Arbitration for the Civil Service. Staff engaged in travel are regularly reminded of the need to minimise travel and to achieve maximum economies in costs.

5.3Budgets are allocated to the work areas where domestic/foreign travel arises at the start of each year. Foreign travel must be approved at a high level, generally by an Assistant Secretary, and in the case of domestic travel approval at Assistant Principal/ Principal level or equivalent is practically universal.

5.4Expenditure on travel and subsistence is generally monitored on a monthly basis by Departments/Offices either in Personnel or Finance/Accounts Sections. Cross checking is fairly common and variations are examined critically. In some areas where travel is determined by demand or eligibility for services the scope for economies and control is inhibited. Specific measures to secure economies are illustrated in Appendix II [To guard against abuse claims are checked thoroughly prior to payment and frequent spot checks are carried out without notice].

6. Proposal by Lep Travel Ltd

6.1Although the proposals in this section were presented by Lep Travel’s representatives it was made clear that in doing so (a) they were speaking on behalf of all travel agents and (b) the benefits of the open tender system being proposed might not necessarily accrue to their firm.

6.2In outlining the proposal Lep Travel stated that governmental expenditure on travel is a very major consideration in financial terms not only in Ireland but throughout the world. In recent years the Governments of the United Kingdom, United States of America and Australia have examined the cost of travel to various Departments. The Cabinet Office in the United Kingdom has directed all Government Departments to see that they are getting value for money. Lep Travel are at present making representations to five Ministries in the U.K. and, also, the Palace of Westminster, in which there is a travel agency operating.

6.3Lep Travel would be prepared to locate their own staff within a Department and provide a percentage rebate to the Department in respect of expenses involving air travel, rail tickets, hired cars and hotel charges on the basis of competitive tender.

The majority of travel agents in Ireland would be in a position to offer a better and more cost effective service than the Government is already receiving because the system in use has been in operation for years with very little conducive reason to change it.

6.4The Lep Travel representatives pointed out that it would be in the travel agent’s best interest to ensure the best deal for their clients. They would do so by constructive use of the air tariffs using specialist personnel and computer linked systems. The travel agent would also be under pressure to provide value for money, which in their opinion does not pertain to Aer Lingus in servicing the Public Service as a client.

They contend that there is no pressure on Aer Lingus to provide anything other than the top rate. For them Government traffic is there for the taking without the bother of competition.

6.5In the course of their evidence the Lep Travel representatives claimed that if the Minister for Finance were prepared to waive a preference towards one particular airline, very substantial savings could be made through booking other airlines at rates which are freely available, regardless of what might be said publicly.

6.6Lep Travel contended that Aer Lingus operate a pool arrangement with a number of other airlines. Revenue is shared on a percentage formula so that the benefit generated by an individual travelling is shared by others. On the Dublin-London route it is 49%-51% between British Airways and Aer Lingus.

6.7In addition to the competitive service which a Lep or any other travel agency would provide Departments would also benefit from normal commercial credit of between 30 and 40 days. The settlement of the percentage could be based on a monthly, quarterly, half-yearly or annual basis as required by the Department.

7. Public Service Travel on Aer Lingus

7.1Aer Lingus stated in a written submission (Appendix VI) that it provides a comprehensive travel service to all Government Departments through its Business Travel Desk which ensures a complete reservations service available 364 days a year. This service offers Government Departments the facility to book carriers to almost any destination.

The Business Travel Desk can be relied on to offer the full range of legally available fares to any prospective Public Service traveller.

A ticket delivery service is available but most tickets are collected by messenger or sent by post.

7.2All services provided are paid for through Aer Lingus, normally by Credit Travel order invoiced the following month and allowing 30 days credit from date of invoice. A 10% rebate is allowed on journeys or portions thereof which use Aer Lingus services. The discount is part of Government approved tariffs.

In addition the staff of the Department of Foreign Affairs resident abroad and their families are allowed a discount of up to 40% of the full or excursion fare for all personal travel home to Ireland.

7.3Aer Lingus retains all revenue received in respect of their own passengers except for a token maximum 1% payment made to British Airways in respect of a flight timings arrangement. Aer Lingus carries 65% of the passengers on Dublin/London and retains a corresponding share of the revenue. The maximum transfer is 2% on routes to France and Switzerland on many routes there is no transfer arrangement in operation. (This contradicts the contention made by Lep Travel in paragraph 6.6).

8. The Committee’s Findings

8.1The Committee’s primary concern was whether the value for money is being obtained from travel and subsistence expenditure in the Public Service and whether the criteria applied ensure that abuse does not occur.

8.2It was recognised that the rates applying to domestic travel and subsistence and to the major portion of subsistence for officials travelling abroad on official business are negotiated and agreed upon under the Civil Service Conciliation and Arbitration Scheme between the various staff representative bodies and the Department of the Public Service.

8.3The control exercised by the Department of Finance applies to estimates only. Thereafter, it is a matter for each individual Department to save where possible and ensure that travel is necessary. The Department of the Public Service otherwise requires Departments to control travel expenditure by way of circular letter No. 11.82 (see Appendix II).

The Accounting Officer for each Department is responsible for checking on the money voted.

8.4In Departments such as Environment and Social Welfare money might be saved on travel and subsistence and a more efficient system provided for the public if the system were operated at a local level.

8.5Departments are not encouraged to seek competitive prices because of the general encouragement to use the national airline where possible (Appendix V, par. 2). The vast bulk of travel takes place on routes serviced by Aer Lingus. Where travel to locations not served by Aer Lingus is necessary the package is normally booked through Aer Lingus at no discount to Exchequer funds. The cost of Government travel on other airlines in 1983 was £1.05m. Generally it is only at the initiative of organisers of a particular conference or meeting that package deals are arranged.

8.6The services provided by Aer Lingus to individual Government Departments are equivalent to, if not better, than those which travel agents in general can afford. However, the Committee is not convinced that the loose arrangement whereby each individual Department makes its own travel arrangements is in the best interests of providing value for money.

8.7Special Irish Mission rates are negotiated with certain hotels in Brussels. The Department of Foreign Affairs, through its missions abroad, negotiates special hotel rates at other locations.

9. Recommendations

9.1Competitive prices for travel and accommodation are not sought at present. The Committee recommends that competitive prices should be sought in all cases where State travel, accommodation and related costs are involved. The present systems in operation are not based on getting the keenest prices in the market-place and are clearly not the most cost-effective available. Early action should be taken therefore to ensure maximum savings to the Exchequer. It was admitted to the Committee that Departments never “shop around” or even ask for discounts where such a request might be appropriate.

9.2The Committee is of the opinion that the State would gain better value for money, to the advantage to the taxpayer, by setting up a centralised booking office within the aegis of one Department, for public service travel and accommodation, thus ending the existing system whereby over thirty customer Departments/Offices handle their own travel arrangements. This recommendation should be examined by the Minister for Finance in consultation with the Minister for the Public Service.

Some of the advantages would be as follows:

(a)A centralised office using modern technology could assimilate data for control and estimate purposes.

(b)Such data could be used to negotiate and promote savings.

(c)One outlet booking in bulk and using data available to it could avail of cheaper fares than Departments/Offices operating on an individual basis.

(d)Booking hotel accommodation abroad and paying on an accounts basis would promote cash flow savings.

(e)Such an approach could avail of agency discount for travel on public transport within the State and pay on an account basis.

9.3A centralised booking office should be self-financing in that savings generated by improving cashflow and gaining discounts and agency commission would not spread to customer Departments. That is not to say that individual Departments would experience an increase in their outflow on travel over and above the present costs. A bulk purchasing office would generate savings to Departments in a number of ways especially by use of proper planning to avail of such cheaper fares as may be available. Travel by Civil Servants on E.E.C. business is recouped from E.E.C. funds.

9.4Travel on other business to meetings abroad is generally foreseeable and where package deals are not available better use should be made of the expertise and knowledge in a central office to negotiate the best value for money.

9.5To provide a greater degree of control and lessen the likelihood of abuse the cost of travel and subsistence should be apportioned to each section manager and based on individual forecasts at the beginning of the year - under the present system it is shown in bulk as a separate subhead in each Department’s estimate. Individual section and Office managers would be encouraged to exercise a greater degree of vigilance and responsibility as a result.

9.6There appears to be no real awareness of the need to manage trips and travelling obligations generally, to ensure maximum cost-effectiveness. The Committee saw no evidence that suggested the existence of cost-consciousness in relation to the manner in which travelling arrangements for civil servants are organised and recommends, accordingly, that the Minister for Finance, in consultation with the Minister for the Public Service, should examine existing control arrangements with a view to ensuring that travel and related arrangements are managed effectively in individual Departments/ Offices.

10. General

The Committee recognises the role of the Scheme of Conciliation and Arbitration for the Civil Service in negotiating and settling rates for travel and subsistence. The motor mileage rates are intended to recoup travelling officers the proportion of expenditure which arises from driving their private cars on official business and subsistence allowances are intended to cover out of pocket expenses which arise due to officers being away from home on official business. Arrangements to reduce the cost to the Exchequer in respect of foreign and domestic travel on scheduled services and the improvement in cash flow by co-ordinating accommodation arrangements for officials abroad on official business is not seen as contrary to the negotiated arrangements for travelling officials under the scheme of Conciliation and Arbitration.

Acknowledgements

The Committee wishes to acknowledge the assistance it received from Mr. D. Robertson and Ms. F. McKenna, Lep Travel Ltd., Mr. P. Molloy Department of Finance, Mr. P. O’Donoghue, Department of the Public Service and Mr. J. Shorthall, Department of Agriculture.

Mr. Michael Keating T. D.

Chairman

5th November, 1985.