Committee Reports > List of Committees > Dáil > 1985 > Committee on Public Expenditure > Report - Review of a Proposal to Introduce a Charge Card System for Civil Servants Travelling on Official Business

REPORT

1. Introduction

1.1In July, 1984, the Committee decided to investigate the possibility that the Exchequer might benefit from the introduction of charge card facilities for Civil Servants travelling on business.

1.2On 24th July, the Committee heard evidence from Mr. B. Murphy, Diners Club International, who also made a written submission to the Committee (Appendix 1)

1.3The views of the Minister for Finance were sought as to the feasibility and possible cost benefit to the Exchequer of the introduction of a charge card system (Appendices II and III).

2. Objectives

2.1The objectives of this report are to examine the procedures used within the Public Service in the payment of charges for travel and subsistence, to compare them with the alternative system demonstrated by Diners Club International and consider whether better value for money could be obtained.

3. Proposal by Diners Club International

3.1In recent years there has been a steady in the use of credit/charge cards. The growth has occurred principally for security reasons and secondly, convenience. There are four large charge card companies which operate world wide networks. In the case of Diners Club International their card is accepted in over 50,000 outlets in 163 countries. Accounts return from the point of use via a computer system which feeds the United Kingdom, Ireland and the rest of Europe.

There are personal and corporate cards. Corporate cards normally apply to large companies whose personnel use them for business purposes only and get their bills at company rates. The needs of Government closely approximate to those of many of Diners Club’s large corporate clients in Ireland.

3.2Diners Club claim that the use of charge cards can improve the Government’s cash flow. The advantage of the card is that payment is deferred for about 60 days afterwards. Whereas at present the cost of travel and expenses comes out of the State’s cash flow immediately,

3.3According to Diners Club the advantages of use of charge cards include the following:

(a)employee productivity and morale would be improved

(b)travel would become more convenient and secure

(c)the Government’s buying power with the travel service and other suppliers would be enhanced because expenditure could be readily monitored and reported.

3.4Diners Club fees for charge cards are subject to negotiation, depending on the number of cards and the volume turnover. If business were of sufficient magnitude the fees (excluding Government tax) could be quite nominal. In fact there is no charge levied for their use by U.S. public sector employees.

4. Views of the Department of Finance

4.1Travel and subsistence arrangements 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. Gross expenditure in 1984 was £21.5m for travel and £14.5m for subsistence.

4.2Payment to travelling officers is generally made either

(a)by paying an imprest prior to travelling and making a financial adjustment on the basis of the officer’s subsequent claim in respect of expenses incurred.

(b)on the basis of claims submitted in arrears.

On rare occasions hotel vouchers are supplied in advance, mainly in respect of stay in Aer Lingus hotels in London through the Aer Lingus booking scheme.

4.3Foreign air travel is normally booked through Aer Lingus on terms which are as favourable as those available from charge card companies (Appendix III Para. 4).

4.4The cost of accommodation abroad is estimated at about £900,000 in 1984. The saving of an average credit period of six weeks would be about £15,000 per annum (Appendix III Para. 5).

4.5Travel and subsistence expenses in Ireland are made up of fares on public transport, mileage allowances and per diem subsistence. The total amounts shown in the estimates include costs relating to officers being transferred, removal expenses etc.

Charge cards or a particular card may not be acceptable in all areas even at petrol stations, purchase at which by regular travelling officers would amount to about £4.5 million per annum generating a saving of £75,000 per annum on the basis of a six week credit period.

4.6According to the Department of Finance, the source of the foregoing calculations, a saving of less than £100,000 would be generated by the use of charge cards assuming that officials who travel regularly have them in their possession. A number of factors inhibit and reduce the prospective savings, as follows:

(a)Officials do not always claim promptly and there is a working time lapse between claim and payment. While this is difficult to quantify, nevertheless it does constitute an easement to the Exchequer.

(b)Delays by officials in submitting receipts could result in consequential interest charges.

(c)The cost of any fee charged and tax would be borne by the State.

(d)A dual system of accounting would be required at a cost which might exceed cash flow savings. (The pay and overhead cost of one additional clerical officer are estimated at £11,000).

5. Recommendation

5.1In the light of the evidence submitted the Committee recommends that a pilot scheme be introduced in an appropriate Department for a limited time on condition that there is no net increased cost to the Exchequer. In view of the possible benefits arising from the credit facility and more specific accountability of the charge card system, the Committee recommends that the Minister for Finance should take action on this Report as appropriate with a view to the early introduction of the proposed scheme.

6. Acknowledgements

The Committee would like to express thanks to Mr. Brian Murphy, Diners Club International, for his assistance in outlining the workings of the charge card system.

Michael Keating, T.D.,

Chairman.

11th October, 1985.