Committee Reports > List of Committees > Dáil > 1990 > Committee of Public Accounts > Final Report - Appropriation Accounts 1988

AN COISTE UM CHUNTAIS POIBLÍ

(Committee of Public Accounts)

Déardaoin, 3 Bealtaine, 1990

Thursday, 3 May, 1990

The Committee met at 11 a.m.

Members Present:

DEPUTY G. MITCHELL in the chair

Mr. P. L. McDonnell (An tArd Reachtaire Cuntas agus Ciste) called and examined.

VOTE 9 — OFFICE OF THE REVENUE COMMISSIONERS.

Mr. P. F. Curran called and examined.

Chairman.—The Committee of Public Accounts of Dáil Éireann is resuming its examination of Mr. P. F. Curran, Chairman of the Revenue Commissioners in his capacity as Accounting Officer for that Vote on the 1988 audited accounts and we are resuming on paragraph 26. I am calling the Comptroller and Auditor General. Paragraph 26 of the Report of the Comptroller and Auditor General reads:

Repayment of Taxes

Repayments of Income Tax (including PAYE) overpaid are authorised by Inspectors of Taxes. The repayment instructions which lead to the appropriate repayments being made by the Collector General are normally entered into the computer system through terminals at the authorising tax district but, in certain circumstances, manually prepared authorisations are sent from the districts to the Collector General’s Office for preparation and issue of repayment cheques.

In the course of an audit of repayments made in 1988 it was noted that, arising from taxpayers queries, the Collector General’s Office had commenced inquiries into duplicate repayments and had compiled lists of repayments made erroneously. The errors arose mainly through duplicate cheques being issued and in other instances, through repayments being made to wrong taxpayers, excess repayments being made and repayments being made to taxpayers who had underpaid tax for the years in question. It also appeared that the majority of the repayments which issued in error did not come to light as a result of internal control procedures but by the return of the cheques to the Inspector of Taxes or to the Collector General’s Office by the recipients.

I inquired as to the circumstances in which the erroneous repayments had been made and whether all excess payments had been recovered. I also sought the Accounting Officer’s observations on the adequacy of internal control procedures over the authorisation and issue of repayment cheques and whether it was proposed to carry out a full review of the repayment records to ascertain the extent of erroneously issued cheques.

Mr. McDonnell.—As you will see, paragraph 26 deals with the erroneous repayment of tax which only came to light when some of the cheques were returned uncashed to the Revenue Commissioners by the recipients. This prompted a test examination by my officers which disclosed a few further incidents of error. The Revenue listing and the ones turned up by my staff came to a total of 159 cases which we thought to have been wrongly issued, but the Accounting Officer has since informed me that it was established that, of those 159 cases, in fact no errors had arisen in 21, that duplicate issues had taken place in 97 cases and that the remaining 41 cases also issued erroneously but for other reasons, such as wrong computation or issue to the wrong taxpayer. Of the 97 duplicates, he said that this arose through the inadequate recording of the original repayment but that all but two of them had been recovered and one of those was not cashed and was out of date and the other was issued to an unemployed taxpayer. That was just noted for recovery if and when employment resumed. In regard to the 41 cases which were issued in error, he said that all of these have been returned but one and that is now out of date. The real point here is the adequacy of the internal control procedures over the authorisation and the issue of repayment cheques. The Accounting Officer told me that in fact the procedures which are in place are felt to be adequate, but it was really a question of the application of those procedures, and weaknesses in the application of the procedures which had been identified had been corrected in the districts. Computer programmes had been enhanced to improve the processing of repayment cases.

I wish to make one final point. The numbers I have been referring to, that is the 159 cases, that represented cases which have been identified by the return of the cheques by the taxpayers and a few other cases randomly identified by my staff. You will see there at the end of the paragraph that I asked the obvious question: whether a full examination of the records would be undertaken to establish if this was the full extent of the erroneous repayment. The Accounting Officer told me at the beginning of March that they had examined the full file and the cases which surfaced were being listed for action, but I do not really know how many cases did actually surface when the full examination was carried out.

Chairman.—You are welcome, Mr. Curran. Perháps you could tell the Committee precisely how many cases did finally surface as the Comptroller and Auditor General mentions and will you put a value on these for the Committee?

Mr. Curran.—I do not have a value and we do not have a final figure for the number of duplicate cheques which may have surfaced in this subsequent examination which we have carried out. But in terms of order of magnitude, in the PAYE employee area there seems to have been around 200 duplicates issued. In the assessed taxes area we do not have a firm figure but the probable order of magnitude would be something around 130 duplicates. These are the subject of ongoing detailed examination to find out why it happened and to ensure that procedures in the future are tightened up so that it does not happen again. Perhaps I should say as a background to this that these duplicate cheques issued following the introduction of a new computerised system for issuing refunds. This was done in an attempt to speed up the whole process. Obviously, in speeding it up we evidently stumbled here and there and there are some errors in the new system. It is like beating the bugs out of any new system; we have to catch up on it. We are conscious of this problem. We are investigating and, as the Comptroller and Auditor General has mentioned, instructions have been issued to the staff to tighten up on procedures to make sure this does not go on.

Chairman.—Obviously, it would be of interest to this Committee to know the monetary value of the excessive refund. Was it £500,000, £1 million or £2 million pounds?

Mr. Curran.—Oh, no. Very small amounts of money would be involved in this.

Chairman.—A total of £50,000 or something of that nature?

Mr. Curran.—I have no actual figure but certainly no large figure has emerged. On the numbers identified in the Auditor’s report there was no loss. There was one case of £30 where the taxpayer is unemployed and the file has been noted for recovery. Out of the 97 duplicated cheques, that is the order of magnitude. There was just one for about £30 where we have had to postpone recovery. That is in the cases listed in the Auditor’s report. I do not have fine detail yet in the cases which we have identified from our own examination because our own examination is ongoing.

Deputy Ahern.—I was just wondering with regard to the excess payments, the Comptroller said he inquired as to the circumstances in which they had been made and whether all the excess payments had been recovered.

Mr. Curran.—The answer is yes. They have all been recovered with the exception of this one duplicated cheque which is for £30. The taxpayer is unemployed, so we have noted it for future action.

Deputy Taylor.—Could I ask Mr. Curran whether he is satisfied now that this is under control and that his inquiries on the matter are being completed so far as 1988 is concerned or are the inquiries for 1988 still ongoing?

Mr. Curran.—What we have done is this. We have carried out a further internal investigation of our own, as I mentioned. The result of this internal investigation, which is additional to the cases which the Auditor has mentioned, suggests that there were about 200 duplicates issued in the PAYE area and of the order of 130 in the assessed taxes area. We are continuing now, having identified these, to investigate them, to recover and in particular to make sure that the instructions are adhered to so that these sort of mistakes do not happen in the future.

Deputy Taylor.—Are you satisfied that the internal control procedures that you have for this position are now adequate?

Mr. Curran.—Yes, we think the procedures are adequate. The weakness was that there was a human error in applying the procedures and we have issued further instructions to the staff to clarify the actions to be taken to avoid this sort of difficulty.

Deputy Taylor.—Have you carried out or do you intend to carry out a full review of the repayment record?

Mr. Curran.—That is what we have done.

Deputy Taylor.—A full review?

Mr. Curran.—Yes.

Deputy Taylor.—Has that been completed now?

Mr. Curran.—It is as a result of this full review that these figures which I am talking about have been thrown up.

Chairman.—Before I call Deputy Flood, I think the Comptroller and Auditor General has a schedule of some of those payments and perhaps he may like to give us some examples of the repayments.

Mr. McDonnell.—I have a list here described “List of duplicate computer cheques issued — PAYE and income tax”. Just looking down through it — I know that subsequent investigation proves that some cases were not erroneous; some were. Looking at this list, for instance, one sees: £2,286 cheque issued in error; £6,952 repayment already made to taxpayer; £6,246, two cheques for each refund in error. Some of them are, as the Accounting Officer said, quite small. There was a £30 duplicate cheque issued in error. According to that list there is a fair range prima facie looking at that, in the value. I do not, Chairman, have a total figure for the number of cases that we talked about initially.

Deputy Flood.—Was it because the recipient of the duplicate payment returned the cheques that these cases came to light?

Mr. Curran.—In general, that is how they came to light.

Deputy Flood.—Were the vast majority of them returned?

Mr. Curran.—They were.

Deputy Flood.—The range of duplicate payments, about which we have just heard from the Comptroller and Auditor General, are for very substantial amounts. Was there no system in place that would throw up a query on any of these?

Mr. Curran.—In relation to big batches, certainly it would have shown up. Two of the large batches of duplicate cheques were issued because the system actually repeated them. The logging of the progress of those repayments was not satisfactory but the fact that the whole batches had been put through twice would almost certainly have shown up in our subsequent records. The fact is that the issuing of the cheques came to notice before our internal checks showed that the batches had been repeated. In the other cases where the individual cheques were issued, this was human error, and we have instructed the staff to emphasise the need to follow the instructions more closely.

Deputy Flood.—So some of the duplicates were actually made out manually?

Mr. Curran.—The authorisation for the repayment would be made out manually and then there would be input to the computer from a terminal. The problem was that the fact that this had already been done was not noted on the papers before the officer who was inputing the repayment.

Deputy Flood.—Has any general check been carried out now to ensure that there are no other hidden cases?

Mr. Curran.—Yes. What we have done is taken the whole range of repayments for a period of about 18 months and we have run all the records through against certain criteria which would suggest a suspicion, that perhaps this could possibly be a duplicate? As a result of this complete review of all the records we have come up with the figures I mentioned already, 200 in the PAYE area and possibly 130 in the assessed taxes areas, cases where there seems to have been duplication. That is as a result of a complete review of all the records.

Deputy Flood.—The final point I want to make, Chairman, is that it would have been helpful if we had the sort of figure that you yourself asked for, that is the total amount involved here. That is something that we should have available to us.

Mr. Curran.—We can certainly send that on to the Committee.

Chairman.—Yes, We will note this paragraph for now but would you send on to the Committee a total list and the total value?

Mr. Curran.—Yes, a list of numbers and the value. That is in relation to these other duplicates which we seem to have identified.

Chairman. Yes, the total number of duplicates. We will note this for now. Paragraph 27 of the Report of the Comptroller and Auditor General reads:

Interest on tax repayments.

The Income Tax Act, 1967, as amended, provides that interest at rates prescribed by the Minister for Finance and calculated up to the date of repayment be paid without demand on tax overpaid. The current rate of interest applicable to tax repayments is 1 per cent per month or part thereof. The interest paid to the taxpayer is not taxable.

Payments to taxpayers on foot of interest on overpaid tax amounted to £8.7 million in the year ended 5 April 1989 and I noted a number of substantial repayments in individual cases for tax years from 1972/73 onwards. In view of the cost in terms of interest arising from delay in finalising tax cases such as those noted, I inquired as to the reasons for the delay and sought information on the procedures in operation to ensure that such delays are kept to a minimum.

The Accounting Officer informed me that, under the previous system of collecting income tax from the self employed, estimated assessments were raised by the Inspector of Taxes in advance of receipt of the taxpayer’s accounts for the relevant period. In view of the statutory interest penalties, taxpayers, in conjunction with appealing the assessment, very often erred on the side of caution in making payments or, in some cases, paid the full amount of the estimated assessment in the knowledge that when the final liability was determined it would be less than the original assessment and interest would be payable on the amount eventually found to have been overpaid. The Accounting Officer explained that the settlement of appeals was often a lengthy process due to delays in the furnishing of taxpayers’ accounts and due to lengthy arguments on points of principle arising on the accounts which sometimes had to be referred to the Courts; in such cases an interim repayment of tax overpaid and not in dispute would be made.

The Accounting Officer emphasised that all cases involving repayment were given the highest priority in tax districts and were kept under constant review. He considered that the cases noted by me illustrated the various circumstances which give rise to delays in determining claims for repayment and he assured me that in all these cases, once the amount repayable was determined, the repayment was processed without further delay.

The Accounting Officer also noted that, under the Self Assessment system introduced in 1988, any overpayment of preliminary tax would be repaid with interest at 1 per cent per month, provided the interest involved was in excess of £10. He felt that this, in conjunction with tax liabilities being determined more rapidly under Self Assessment, would result in a significant reduction in the level of interest payable by the Revenue Commissioners on overpayments.

Mr. McDonnell.—As the Committee will be aware, I have often drawn to the Committee’s attention matters relating to delays in remittance of tax by taxpayers but here I am talking about something which might be seen, so to speak, as the other side of the coin: the pre-payment of tax, pending the establishment of the actual liability, which of course attracts interest and the interest itself is tax free. The cost can be significant in interest terms but you must bear in mind that the Exchequer has the use of the money in the meantime.

I suppose there is also the possibility that this system could be used as a short-term tax free investment depending on whether the interest rates would be favourable. It might be seen to be attractive to pre-pay tax, but you will see at the end of the paragraph, Chairman, that the Accounting Officer has assured me that although the finalisation of liability could take a long time there was no unnecessary delay in processing repayments once the amount repayable was determined and, of course, the self-assessment arrangements now would also have an impact on the level of interest which might arise.

Chairman.—It is a fact, Mr. Curran, that interest paid on late payments of tax are not tax deductable for schedule D taxpayers, cases 1 and 2, or any other business or late paying taxpayers. Is that correct?

Mr. Curran.—That is correct.

Chairman.—So, as a quid pro quo, where people over-pay their tax and get a refund, the interest paid to them is not taxable?

Mr. Curran.—That is correct.

Chairman.—So if you send me an assessment for income tax which is grossly in excess of what is due and I, in the knowledge that it is such, decide to pay it, you would have to refund to me, once we finally agreed on figures, the excess with 12 per cent interest which will be tax free?

Mr. Curran.—It is 12 per cent, which would be 1 per cent a month.

Chairman.—Which would be tax free?

Mr. Curran.—That is right.

Chairman.—Have you any idea how much is paid out in a year by the Revenue Commissioners in interest on refunds?

Mr. Curran.—It is in the order of £8.7 million in year 1988-89.

Chairman.—Yes.

Mr. Curran.—As I mentioned in the reply to the audit query, we think that that figure will be far less in the future under the new self-assessment system.

Chairman.—There will be a great reduction?

Mr. Curran.—There will be a very big reduction because any repayments which may become due will be made much more rapidly.

Chairman.—Of course, £8.7 million in the hands of a standard rate taxpayer will be worth something of the order of £12.5 million, or something of that kind, as far as they are concerned.

Mr. Curran.—Obviously that would be spread around a number of people.

Chairman.—It is a substantial amount of money. So the self-assessment should greatly reduce the over-payment?

Chairman.—Yes, because under the self-assessment system we will finalise liability at a much earlier date and we will know exactly then, when we compare that with the amount of money, how much to refund, at a much earlier date and of course staff have been told to, and they do, give priority to repayments.

Chairman.—Interest of £8.7 million, would that mean that tax was over-paid to the tune of £80 million or £90 million? Would that not be reasonable? That is about 12 per cent of the over-paid tax or of that order?

Mr. Curran.—It would depend on the amount of time for which it was outstanding.

Chairman.—Would it still be 1 per cent per month?

Mr. Curran.—Yes. It would be a very substantial amount.

Chairman.—So people could be overpaying their tax to the tune of £90 million a year and a lot of them would do that knowingly because they would get it back with interest which would be tax free?

Mr. Curran.—Yes. I have to emphasise, Chairman, that that was a feature which was possible under the former system of assessment. It was open to people to do that under the old system of appeals, appeals which could drag on indefinitely, and there could be delays for that reason but that will not apply under the new system, so the problem will not be entirely eliminated but will be very much reduced.

Chairman.—Of course in the case of a taxpayer there could be a few years interest involved for that taxpayer.

Mr. Curran.—Possibly.

Deputy Ahern.—After the liability has been agreed and we take it that there is a refund, is there any period that it normally takes before the refund is made?

Mr. Curran.—The people who would be agreeing the liability would be the inspectors and they are told to authorise repayment right away once the liability is settled. I do not have any information on what “rightaway” means. It should be a matter of a month or so, I would imagine.

Deputy Ahern.—It should be within a month or so?

Mr. Curran.—I would expect in the normal way that there should not be any further queries or difficulty. Once the liability is settled the refund should issue forthwith.

Deputy Ahern.—It is operating, as far as you are aware, according to the principles?

Mr. Curran.—It is a new system and in various areas the staff have to get used to the new system. Whereas under the older system they might have been tempted to ask supplementary questions and so on, we have instructed them perfectly clearly now that that old system is finished and there should be no reason for any delay in issuing refunds.

Deputy Taylor.—How long has this 1 per cent a month been the regime? When was that introduced or when was it last changed?

Mr. Curran.—A number of years ago.

Deputy Taylor.—It was probably introduced at a time when interest rates were very considerably higher than they are now. Would that be so?

Mr. Curran.—I understand that rate has been there since the nineteen sixties.

Deputy Taylor.—Since 1960. Unchanged since 1960?

Mr. Curran.—The rate has changed. The idea of the interest charge has been there since 1962.

Deputy Taylor.—I am not talking about that. I am talking about the actual amount of 1 per cent a month. Has that not been there unchanged for a very long time and does it not date back to a time when interest rates were very considerably higher than they are now?

Mr. Curran.—The rate in this area used to be 15 per cent and it was reduced to 12 percent a few years ago. I do not know the exact date.

Deputy Taylor.—Is it not true to say that 1 per cent per month is not 12 per cent per year but that it is higher than 12 per cent a year? Accountancy people would know that better than I would. It could be 16 per cent, 18 per cent or 20 per cent a year if it was annualised. Is that not right?

Mr. Curran.—It is 1 per cent per month and then it is a matter of arithmetic to work out how much that would be per year.

Deputy Taylor.—But it is certainly higher than 12 per cent?

Mr. Curran.—It is simple interest; it is not compound interest.

Deputy Taylor.—Even so. It is 1 per cent a month or part of a month, so if it went over a few days you would still get the 1 per cent. It seems to me that it is long overdue that that rate of interest, apart from anything else, should be reviewed. It is unnecessarily costing the Exchequer money without representing a bonus position. I can understand and support the position that a person who has overpaid their tax should have a reasonable and appropriate recompense for the overpayment, but I do not see any necessity for paying that taxpayer in interest well over the odds of the going rate of interest applicable at any particular time. What was the rationale of thinking that the interest would not be taxable? Every kind of interest payment that I can think of except this one is taxable in the ordinary way. Is there any reason that this interest payment should be exempt from any kind of tax?

Mr. Curran.—I have no particular information on that except that it is looked upon as a refund of tax.

Deputy Taylor.—It is not a refund of tax overpaid because the tax overpaid is refunded. This is interest on the tax overpaid. It is clearly an interest payment and in the normal course all interest is taxable. Would it not be the position that, if a person was on the top rate of tax, it would represent a very substantial unwarranted bonus for that person because they would be saving interest at 53 per cent or 56 per cent or whatever the top rate happened to be?

Mr. Curran.—I do not know whether there is any particular philosophy behind it. It seems to be a practical matter. The alternative would be to try to adjust the rate of interest continuously in accordance with market conditions, which would be difficult.

Deputy Taylor.—I think you are right. That is precisely what should be done. I know it is a policy matter, but it should be done. Will it not still be open, even under the self-assessment position, for a taxpayer who is going to lodge the estimated amount, to lodge whatever amount he wants to lodge and if that turns out to be an overpayment he will come in for the interest payment?

Mr. Curran.—The main thing in relation to the new system is that in paying preliminary tax the taypayer could, of course, pay more than the thinks he would be liable for, but in our view under the new system the liability will be finalised very quickly so that the over-payment should be identified very quickly and repaid without delay.

Deputy Taylor.—Will your office be taking the initiative to make these repayments?

Mr. Curran.—Yes.

Deputy Taylor.—You will not be waiting for requests to come in from the taxayer?

Mr. Curran.—No, because the essence of the new system is that liability is to be determined finally as quickly as possible and that once that is done any repayments due are to be authorised and issued forthwith.

Deputy Taylor.—It is an appreciable sum, £8.7 million, to have paid out in interest on which the State gets no tax return. We are not talking about small money. That is an appreciable sum of money?

Mr. Curran.—The only thing is that, as the Comptroller and Auditor General mentioned, we must bear in mind that the State has had the use of the money in the meantime so that it may not represent a net charge on the State.

Deputy Taylor.—I realise that the total amount of it is not lost. That is true. Nonetheless, the State could raise that amount of money far cheaper by other means and would get at least some tax return on the money if it raised it through the market or by National Loans or whatever. It seems that there is an ongoing net loss and there seems to be little basis for it.

Chairman.—To come back to the question I asked originally and Deputy Taylor touched on there, it is a fact that interest paid on overdue tax is not deductable — in other words, if I as a trading company paid you out of my bank account and I had interest to pay on the bank account that would be allowed as a trading expense in the normal course of events. But if I pay late tax to you and do not borrow from the bank but pay the interest to you, then in that case the interest is not deductable against tax, is that right?

Mr. Curran.—That is correct. It is the penalty interest.

Chairman.—Is this not a quid pro quo for that, the fact that you do not tax interest on refunds is because you do not allow tax on overpayments?

Mr. Curran.—There is a certain balance there. The only problem is that you are dealing with different people.

Chairman.—The theory is that there is a balance there?

Mr. Curran.—Yes.

Chairman.—I asked you about what £8.7 million grossed up would be. Would it be possible, for instance, for somebody to over-pay their tax by £1,000, not to be repaid that for five years and in that case to receive a repayment of £1,600 tax free? I think there is one case of that involved in the £8.7 million.

Mr. Curran.—That could possibly happen under the old system where things did tend to drag on for years. The whole idea of the new system is that they will not drag on for years. This liability will be settled as quickly as possible.

Chairman.—Do you suspect that tax planners deliberately advise their clients to deliberately over-pay their tax in order to benefit from this?

Mr. Curran.—I think the old system certainly lent itself to that. Whether it was done or not, I could not say, but it certainly lent itself to that sort of abuse.

Deputy Flood.—How does the interest of 1 per cent for overpaid tax compare with the interest on late payments?

Mr. Curran.—We charge 15 per cent for late payments.

Deputy Flood.—How does it compare then?

Mr. Curran—I do not quite understand the Deputy’s question.

Deputy Flood.—What are the two total rates then, on an annual basis?

Mr. Curran.—The 1 per cent per month is what we allow on repayments and 15 per cent that is 1.25 per cent, per month, is what we charge for overdue tax.

Chairman.—Perhaps you would have a look at this whole area again — the area of late payment of tax, interest on it and interest on refunds of tax, to establish more clearly the philosophy behind the system, to make sure it is fair and reasonable and that the State is not paying an undue penalty. We can note this paragraph.

VOTE 9 — OFFICE OF THE REVENUE COMMISSIONERS.

Mr. P.F. Curran further examined.

Chairman.—Perhaps as a preliminary, Mr. Curran, I could ask you how the taxpayer’s charter is working out?

Mr. Curran.—I think it has been very well received. On my occasional journeys around the provinces, and in Dublin, to the various tax offices, I note that the charter is displayed very prominently on the walls in the public areas. Of course there are also leaflets available. My general impression is that there is a general appreciation amongst the public and tax practitioners. There is a general appreciation that there is a new attitude in the Revenue. Whether there is a new image or not, I do not know, but I hope there is.

Chairman.—I think the charter was a very good thing to produce. As you know, the Committee of Public Accounts were, among others, pressing for this and you gave due recognition to that fact when you announced your decision. One of the problems that remains is that taxpayers have to queue at cubicles. Indeed, I had the experience myself when I went in with a residential property tax file. It is very embarrasing, when you might be known, to have people sitting maybe two feet away from you and wondering what is your business and what is your delay It is also very embarrassing for any taxpayer.

Should we not work towards the objective of getting away from the sliding hatch and having somewhere where people could go in, sit down, and ask for advice rather than simply going in to make their returns? I get a lot of people — in fact I had one this morning — who get their tax free allowance and they do not understand it. They do not understand why, for instance, their pension is deducted from their tax free allowances. They think the residual allowance is their total allowance. In general — not just to go in to complain and fill out forms — taxpayers should be able to go in and get advice. In any event, should you not really be setting as an objective the removal of the sliding hatch and ensuring as part of the charter that there is privacy for taxpayers visiting the office of the inspector of taxes?

Mr. Curran.—Yes, we would agree with that. In fact we made a start in that direction a year or two ago with, as it was then, our new central inquiry office in Mount Street, which deals with a number of Dublin districts. The system there is that there is space back from the counter with chairs and people take tickets from a machine. When their turn comes, they go up to the counter where they are dealt with by an officer with a VDU and a terminal and all their queries can be dealt with there. What we would like to have would be a central inquiry office for the entire Dublin area. In recent years we have been exploring various possibilities with this in mind, of course, there are obvious financial constraints in the area of paying for accommodation. Nevertheless, we have this as an objective and in the provincial offices, as occasion presents itself, we do what we can to improve the situation. I know all our staff are very conscious of the fact that taxpayers do not want to discuss their affairs in front of other people and they do the best they can to meet this. In general, we accept the point that this is an objective we should move towards.

Chairman.—While I accept there have been a lot of improvements I think that is one particular matter which is not being tackled aggressively enough. It might, perhaps, cause taxpayers to come forward and be more amenable to meeting their responsibilities if they felt that the reception they would get would be less than nerve-wracking. I do not think Revenue understands the fear the ordinary taxpayer has of the tax system. Perhaps at some stage you might arrange a visit for members of the Committee to a typical office of the inspector of taxes just to see how the system actually does work?

Mr. Curran.—I would be happy to do that.

Deputy Taylor.—What steps are the Revenue Commissioners taking to ensure the confidentiality of tax returns by taxpayers and to ensure that they are only seen by the proper and appropriate officials of the Revenue Commissioners and by nobody else?

Mr. Curran.—Well, the first thing is that everybody entering the Revenue Service is specially indoctrinated in this idea that the dealings of members of the public with the Revenue Commissioners are completely confidential and that information given to the Revenue Commissioners for Revenue purposes is not to be revealed to anybody else. This is the first step when they are recruited. This applies right across the Revenue Service, not only income tax but customs, excise, capital taxes, etc. There is a very strong tradition running through the whole Revenue Service of respecting this confidentiality. Inside the Revenue Service there is obviously a restriction on people who can have access to different sorts of records. For example, in regard to taxpayers’ records in the computer, there are special cards and code words which staff require to access tax records. The general run of staff would not be authorised or, indeed, would not be able to access all the Revenue records. They would not be able to access the records relevant to their own area. Apart from the obvious, simple expedient of locking up files at night, these are our general approaches to confidentiality.

Deputy Taylor.—I am sure you can assure the Committee that the Revenue Commissioners operate completely free of any political involvement with individual taxpayers’ positions?

Mr. Curran.—Yes, I am happy to give that assurance again, as I have done on other occasions.

Deputy Taylor.—Could I ask you about the item dealing with law charges, fees and rewards? Are external solicitors used by the Revenue Commissioners to any appreciable extent?

Mr. Curran.—Yes, we do use external solicitors in certain areas to a certain extent in addition to our own Revenue Solicitor’s office.

Deputy Taylor.—Is that really essential?

Mr. Curran.—We found in the past that it was essential because the sheer volume of small cases arising was such as to completely overwhelm our own office. We found that the only obvious thing to do was to engage external solicitors to handle some of the work for us.

Deputy Taylor.—Would it not be more cost effective and satisfactory to increase the staff in the Revenue Solicitor’s office to deal with these things having regard to the fact that the base of the system and the experience would be there in the Revenue Solicitor’s office and that it would be more cost effective to increase the staff rather than take on external solicitors or was any cost estimate or assessment on that issue carried out or considered?

Mr. Curran.—Not really. First of all, on the basis of, if you like. background and experience, knowing the ropes and so on, it is only fair that I would have to say that the external solicitors are thoroughly satisfactory and well versed in that whole area. It is not a matter of great constitutional issues; it is very largely District Court routine work. I do not think there is any great point there. On the question of the economics of it and whether it could be done more economically by hiring staff, that really is a theoretical question because the fact is that over the years there has not been the remotest possibility of getting the staff which might be required to run this internally. Theoretically, of course, it could be run internally from our office but the practical situation on the ground is that the staff are not there and are not likely to be there. The other thing about it is that I am not sure on what basis we could compare the internal efficiencies of our own office and the external solicitor’s office. There are perhaps different ways of operating; I am not sure. But the fact is that over the years we have found that dealing with the external solicitors has been very satisfactory.

Deputy Taylor.—I am sure they find it very satisfactory, too. I see that they are getting about £2 million a year and they must find that very satisfactory as well. Could I just clarify this point? On subhead A.1 — Salaries, Wages and Allowances — £84.5 million. That figure includes the salaries and so on of the Revenue Solicitor and his office staff.

Mr. Curran.—That is correct?

Deputy Taylor.—Subhead F — Law Charges, Fees and Rewards — approximately £2 million. Those are the fees payable to the external solicitors?

Mr. Curran.—The amount paid to external solicitors and sheriffs was £1,572,000 in the year to December 1988.

Deputy Taylor.—Which subhead is that?

Mr. Curran.—Subhead F.

Deputy Taylor.—It says here in my copy that the figure granted was £1.9 million and the expenditure was over £2 million?

Mr. Curran.—That is the total for the subhead, but the subhead covers more than fees paid to external solicitors. I will just go through it. For example, there is a small item there for liquidation expenses. There is £300,000 odd for the Revenue Solicitor’s expenses, including fees for legal documents, service of summons, counsels fees. Then there is seizure awards to Customs Staff, which is over £155,000, and other awards. The total expenditure under that subhead was £2,000,086. Of that the fees to external solicitors was just over £1.5 million.

Deputy Ahern.—I note under subhead A.1 that the expenditure was down approximately 4 per cent. Any particular reason for that in the salaries, wages and allowances section?

Mr. Curran.—The main thing was non-filling of vacancies. Money had been provided in the Estimate for a certain level of staffing but in fact we never achieved that level during the year. Vacancies account for that.

Deputy Ahern.—Was that because of the embargo?

Mr. Curran.—Yes.

Deputy Ahern.—Do Customs officials get personal rewards?

Mr. Curran.—Yes.

Deputy McGahon.—Under subhead G — Compensation and Losses — obviously when seizures are made on occasions you are wrong and compensation is paid. There are two items here: compensation of £23,000 and £82,000 was paid in respect of eight legal actions. How is compensation defined or what is the criteria for compensation?

Mr. Curran.—In general in an overall way you can say it is what the courts tell us we have to pay.

Deputy McGahon.—It is determined by the court?

Mr. Curran.—Or by counsel.

Deputy McGahon.—Recently a very large public apology appeared in the national newspapers in relation to the seizure of a motor vehicle of a Dundalk firm. I understand very significant damages were paid. How would that have been determined and what cost would it have been to the taxpayer?

Mr. Curran.—The way that was determined was by negotiation between our legal advisers and their legal advisers. As always happens in these cases, when you are in the hands of legal advisers they say: “All right, you can go to court if you wish, but you may end up much worse off”. In this situation our advice is that you should do a, b, c, d. In this case, by the way, I have to emphasise that we admitted freely that we had made a mistake in that one case. We had no difficulty apologising. The question was just to make it right.

Deputy McGahon.—Are you at liberty to disclose how much was paid by way of compensation in that case?

Mr. Curran.—I do not think I have it here. We decided to settle the case with a public apology and payment of costs and damages. It would have come to a few thousand pounds. I would say that the cost and damages between them come to about £10,000.

Deputy McGahon.—I accept and understand that mistakes will occur, but in this particular case this company were totally innocent. It was a humiliating experience for them. What went wrong? Can you assure the Committee that all steps will be taken to ensure that that type of thing does not happen again? I understand the situation is that you cannot always be right. In this case, apparently, the company concerned furnished to the arresting officer documents that should have been accepted?

Mr. Curran.—The background to it was that this occurred during a major operation against oil smuggling in the course of which we seized 13 oil tankers — one of them, unfortunately, we seized in error. As regards documentation, we sampled the oil in these tankers. In the case of this particular tanker a mistake was made in relation to the apparent content of the tank, a mistake was made as to the physical characteristics of the oil. We rely on that more than the documentation. In this case a mistake was made and we had to right it.

Deputy McGahon.—I accept your explanation. Rumours had been floating around in my town that damages in the region of £1 million were paid. So that is not true?

Mr. Curran.—Certainly not.

Chairman.—That concludes the examination of your office, Mr. Curran, for this morning. The Clerk of the Committee will be in touch with you in regard to arranging a visit to one of the tax offices.

Mr. Curran.—That is fine.

The witness withdrew.

VOTE 13 — OFFICE OF THE ATTORNEY GENERAL.

Mr. Mathew Russell called and examined.

Chairman.—The Committee of public Accounts are continuing their examination of Mr. Russell, Senior Legal Assistant at the Office of the Attorney General, in his capacity as Accounting Officer for that Department on the Vote for the audited accounts for year ended 31 December 1988. There are no paragraphs so we will go directly into vote. You are very welcome, Mr. Russell.

Last year you stated that with the exception of salaries, all other subheads required Supplementary Estimates because the nature of the work in your office made accurate estimates of requirements in any given year impossible. However, I note that under subhead A. — Salaries, Wages and Allowances — there was an excess of £103,791 in this particular year and that there was also considerable overexpenditure under other headings. Could you tell the Committee why the salaries, wages and allowance subhead was in excess by this amount?

Mr. Russell.—A number of posts were not filled during the year and consequently the salaries were not expended on those officers. In regard to the other items——

Chairman.—The expenditure was more than the grant.

Mr. Russell.—I am sorry, a number of vacancies were filled which had not been anticipated.

Chairman.—Right. How many employees do you have working in the Office of the Attorney General?

Mr. Russell.—In the Attorney General’s Office there are ten barristers with the Attorney General and a back-up staff of approximately 20, with the ten barristers.

Chairman.—And the Chief State Solicitor’s Office?

Mr. Russell.—At the time in question, 1988, there were approximately 28 solicitors and a back-up staff of semi-professional officers and clerical officers. The total for the whole office would be about 120.

Chairman.—What is the relationship of the Chief State Solicitor to the Attorney General?

Mr. Russell.—The Chief State Solicitor is an officer of the Attorney General and so too are all his staff. It is, if you wish, part of the Attorney General’s Office in the same sense that the parliamentary draftsman’s office and the statute law reform and consolidation office are all part of the Attorney General’s Office. In the Chief State Solicitor’s Office there are solicitors and law clerks. In the Attorney General’s Office there are barristers.

The function of both offices is to service all the legal needs of the State. The Chief State Solicitor’s Office would mostly deal with litigation, the day-to-day conduct of litigation taken against the State, which accounts for the majority of it, and also such litigation as the State itself takes against other persons. That would include criminal business in which the Chief State Solicitor’s Office acts for the Director of Public Prosecutions and civil business, which, of course, the Chief State Solicitor’s Office conducts. It also does an amount of advisory work. The Attorney General’s Office superintends the conduct of the litigation and advises the Government and all their Departments and Ministers.

Chairman.—The Attorney General here advises the Government. I think the Attorney General in Britain advises Parliament and therefore must be a member of Parliament. Is that a fair distinction between the two?

Mr. Russell.—The Attorney General here can be a Member of Parliament but need not be. He may not be a member of the Government because the Constitution says so. The purpose of that is, of course, so that he may give independent advice to the Government, that he is not bound by the doctrine of collective responsibility and therefore he is free to give legal advice to the Government of the time which they might not relish.

Chairman.—The point I am coming to is that he does not advise Parliament?

Mr. Russell.—No, he does not because of the separation of powers. It is covered in the Constitution. It would be constitutionally improper for the Attorney General to advise the Oireachtas because he is adviser to the Executive.

Chairman.—And the Chief State Solicitor?

Mr. Russell.—Yes, also as an officer of the Attorney General.

Chairman.—The reason I ask is that I was of the same opinion because when the Committee of Public Accounts sought legal opinion on the question of witnesses and matters related to that, as part of a special review, we had to get independent senior counsel to advise. But yet in the case of the Committee on Procedure and Privileges of the Seanad I noted that the Chief State Solicitor did give advice.

Mr. Russell.—No, I do not think that is quite so. I think what happened was that the Clerk of the Committee asked the Chief State Solicitor to suggest names of counsel who could advise the Committee, or who would be appropriate or suitable to advise the Committee. These names were supplied. The Committee then chose their counsel and counsel then proceeded to advise the Committee. The Chief State Solicitor instructed counsel for that purpose. This expression is sometimes misunderstood. It does not mean that he tells counsel what to do in this or in any case where a solicitor instructs counsel. Counsel offers an independent opinion when asked to do so. In this case great care was taken naturally as it always is in such instances. Counsel advised the Committee. He did not advise the Chief State Solicitor nor did the Chief State Solicitor advise the Committee. The alternative course of action would have been that the Chief State Solicitor could have said to the Committee “I am not going to answer your request for counsel. I will not give you any names. Go away and find your own solicitor and find your own counsel”. That attitude could have been adopted but it was thought that that would have been an unhelpful one because since counsel’s opinion was what was being sought the solicitor, whether he were the Chief State Solicitor or a solicitor in private practice, would have merely been a conduit pipe conveying the request from the Committee to the barrister and conveying the barrister’s opinion back to the Committee. He would have been a conduit pipe, but a rather expensive one.

Chairman.—Presumably the same applies to the Committee on Procedure and Privileges in the Dáil, that you would not make available advice to the CPP there?

Mr. Russell.—That we would not advise the Committee?

Chairman.—Yes.

Mr. Russell.—Yes, that would be the appropriate response. Just as it would be wrong to advise or to offer advice to the Dáil or the Seanad or to their several committees.

Chairman.—It seems extraordinary, despite the suggested separation of powers, that there is not available to the Dáil, Seanad and their committees some form of legal advice which is given by State officers, particularly since the Attorney General advise in all matters related to the State other than Parliament.

Mr. Russell.—Well, Parliament is either independent or it is not. The Constitution says it is independent. That being so, it is believed that it would be inappropriate and wrong for the same lawyer to advise the Executive on the one hand and Parliament on the other. I doubt if Parliament would always relish that. It is very important that an independent institution should have independent advice available to it. Normally, that is what the independent institution prefers.

Chairman.—On subhead G. — Law Reform Commission (Grant-in-Aid) — are you satisfied that the accounting system and organisational arrangements of the grantee are adequate to ensure the proper administration of this grant-in-aid?

Mr. Russell.—I believe so.

Chairman.—In other words, the resources are there?

Mr. Russell.—Of course, the Law Reform Commission would, I am sure, maintain that they do not receive enough money to do the work which they would like to do. I am sure they would make that case. But there must be a limit to the amount of State money spent on anything and the view has been taken that the amount of money which is made available to the Law Reform Commission is adequate for the functions which it performs.

Deputy Taylor.—Would the Chief State Solicitor’s Office be prepared to act as solicitors on behalf of this Committee if the occasion arose for the purpose of instructing counsel to get an opinion on any legal matter which this Committee would need?

Mr. Russell.—I certainly think that this Committee would be treated in the same manner as any other organ of the Oireachtas. I suppose one considers the feasibility of the particular machinery envisaged. If there were extensive legal activities involved it would cast a burden of work on the Chief State Solicitor but that would depend obviously on the volume of the work. In principle, if the authorities who make these decisions made such a decision, I do not see a constitutional difficulty about the Chief State Solicitor acting as a conduit pipe. If it comes to litigation there are obviously different considerations, but I understand the Deputy not to be referring to litigation and merely to be referring to the obtaining of opinion.

Deputy Taylor.—Would you agree that the solicitor’s profession in their capacity of taking instructions from a client and briefing counsel, sending papers to counsel and getting opinions for their clients might take some exception at being regarded merely as a conduit pipe and they would regard their function, even in the role of obtaining counsel’s opinion, as having some greater role than that, involving making inquiries, preparing material, putting a particular point of view of the client to the counsel and so on and that their role could not, in fairness, be reduced to that of a conduit pipe?

Mr. Russell.—Certainly, in the vast majority of cases that is absolutely so. The expression I used was used in reference solely to the present case, owing to the urgency of the matter, legal advice had to be obtained at a moment’s notice — I think we were talking in terms of hours on the occasion in question. On that occasion the only function the Chief State Solicitor had to discharge was to obtain counsel physically, so to speak, and let him loose on the Committee as it were. In that regard he was occupying a much more humble role than the solicitor in private practice in the majority of cases.

Deputy Taylor.—The Vote for your Office was something over £6 million for the year ending 31 December 1988. Which Minister, if any, is answerable in the Dáil for this Vote to whom a Member of the House could direct question and so on? For example, the previous group here — the Revenue Commissioners and the Minister for Finance — would be involved there, and each Accounting Officer has a Minister who is answerable in the Dáil. Which Minister would be answerable for this Vote to Members of Dáil Éireann.

Mr. Russell.—The Minister for Finance present the Vote annually.

Deputy Taylor.—Any questions that would arise would be directed to him?

Mr. Russell.—On the financial side, certainly.

Deputy Taylor.—The Taoiseach seems to take questions dealing with the Law Reform Commission.

Mr. Russell.—Yes, that is because under the Law Reform Commission Act the Taoiseach and the Government are mentioned in the Act as having specific functions, as indeed the Attorney General is.

Deputy Taylor.—Is there adequate staff in the Chief State Solicitor’s Office to enable it to carry out its responsibilities and functions in a proper and efficient manner?

Mr.Russell.—I have to say no to that. Steps are being taken to improve the situation. There has been an improvement as a result of these steps having been taken. Further steps are envisaged and when those steps are taken, which I hope will be completed shortly, the situation will be very much improved. I should explain, of course, that, in addition to the non-filling of vacancies, a very potent factor in this is the vast increase in the amount of work coming into the Chief State Solicitor’s Office. Litigation in particular — and among litigation the traditional review phenomenon, to name but one — has shown a vast increase. Everybody is litigating nowadays.

Deputy Taylor.—I want to talk to you about that in a moment, but before I do, I want to ask you how many unfilled vacancies are there in the Chief State Solicitor’s Office?

Mr. Russell.—We aim to have and have sanction to have a total of 43 solicitors and 42 semi-professional officers. The present position is that in recent months we obtained six additional solicitors.

Deputy Taylor.—Which would bring you up to what?

Mr. Russell.—And three additional law clerks.

Deputy Taylor.—When they are in place what will that bring you up to?

Mr. Russell.—That will give us in the order of 34. If I am wrong in this statistic I will send a note to the Committee, but in the order of 34 solicitors.

Deputy Taylor.—Yes, and semi-professional staff?

Mr. Russell.—At the moment we have 32. It is envisaged that we will have, and we have received sanction for, 42. In the year under review, 1988, the figure for solicitors was less. It was in order of 28 or 29.

Deputy Taylor.—Is not this very substantial lack in your staff resulting in regular, persistent and ongoing delays in prosecutions on the criminal side, in the preparation of books of evidence, preparing of criminal cases for trial and so on?

Mr. Russell.—Certainly, a problem arose in the Chief State Solicitor’s Office by reason of that very fact. Steps were taken, of course, to deal with it, one of the steps being that barristers were retained to prosecute in the District Court and in the Circuit Court on appeal from the District Court in circumstances where normally solicitors would have discharged this function. Some of that was necessitated by the non-availability of solicitors at all and some of it was occasioned by the re-assignment of solicitors to other work, in particular the preparation of the books of evidence. This was identified as something that should not be allowed to continue.

Deputy Taylor.—Would retaining the barristers to do that work instead of the more desirable method of having solicitors employed in the Chief State Solicitor’s Office cost the State a great deal more money?

Mr. Russell.—Yes, I think it is fair to say that.

Deputy Taylor.—Why should the taxpayer have to bear this burden and what are you, as Accounting Officer, doing about that?

Mr. Russell.—I think the taxpayer should not have to bear any burden which can be avoided, certainly. The Attorney General and I have made representations in regard to this matter, drawing the attention of the Minister for Finance to the undesirability of this situation and sought remedial action. Steps are being taken and, indeed, have been taken to remedy the situation.

Deputy Taylor.—Am I right in saying that the steps you have taken, looking at it from the most optimistic view point, will, when implemented, bring you up to a position where you will still have a shortfall of about 25 per cent of the staff you need to enable you to effect the maximum efficiencies in expenditure in your Department?

Mr. Russell.—I am not quite sure how the Deputy arrives at that calculation. As I believe the position to be that when recruitment has been completed we will have 43 solicitors and 42 technical staff. We believe that those numbers will enable us to provide a much improved and, indeed, an adequate legal service.

Deputy Taylor.—I have seen many reports in the papers and heard of many cases where judges on a regular on-going basis have commented actively on the fact that there were shortcomings in the Office of the Chief State Solicitor in the preparation of criminal cases for trial. I have heard that many cases were struck out by judges and justices because the necessary preparatory work by the Chief State Solicitor’s Office had not been done on time, even though cases had been adjourned on many occasions from time to time. Could you comment on that?

Mr. Russell.—Well, the preparation of a case for trial, and I am speaking here, of course, of the more serious cases where a book of evidence has to be prepared — I am not speaking of those cases, far greater in number, where no book of evidence is required and where, as I understand the position, the Courts have not complained about delays in the Chief State Solicitor’s Office or elsewhere — it is undoubtedly the case that by reason of the factors I have mentioned cases have been struck out. Fewer of them, it is true to say, are being struck out now because of the recent recruitment of solicitors; but a number of cases — I cannot put a figure on them — undoubtedly were struck out because the book of evidence was not ready. It is, of course, in order to put the matter into perspective, important to realise that as soon as the book of evidence is ready the case is reinstated and the prosecution continues. Generally speaking, the person concerned will have been on bail in any event, because of course in the preparation of the books of evidence priority is always given by the Chief State Solicitor’s staff to cases where the accused is in custody. I am not aware of any case where a person in custody had to be released because of the non-production of the book of evidence.

Deputy Taylor.—How long approximately is it taking now from the time a person is returned for trial to the Circuit Criminal Court to the time the actual case comes for trial?

Mr. Russell.—I am afraid I do not know he answer to that.

Deputy Taylor.—Is it not more than a year?

Mr. Russell.—I would not have thought so at all, but since I cannot offer a figure I cannot put it beyond that. This is something the Office of the Director of Public Prosecutions would be more familiar with.

Deputy Taylor.—Could I turn now to the matter you touched on, the increasing litigation that the State is being faced with in the area of judicial review? Can you give us any kind of figures or statistics on this as to what is going on? It seems to me that this is getting totally out of hand. Can you give us any estimate at all of what all this now is building up to from a costs point of view where the State is concerned — damages, legal costs, legal expenses? It seems to me there is a remarkable escalation of this brand of litigation which must now be costing the State millions of pounds and going to cost it ever-escalating amounts if this trend continues. Could you give us some breakdown on that? What is going on here? What has brought this about? How many such cases are there going on at a particular time, and so on? What are the implications of all this for the taxpayer?

Mr. Russell.—It means a lot of money for the taxpayer, certainly.

Deputy Taylor.—Millions, perhaps?

Mr. Russell.—I would not have thought that, because the total figures for our Estimate, which cover every type of litigation the State is involved in, do not approach those figures. For example, in the year under review the total amount that was paid to counsel was just over £1 million.

Deputy Taylor.—Has the position escalated year on year since then?

Mr. Russell.—That figure of £1 million, of course, covers every type of litigation in which the Attorney General is involved. I can give you figures, if you will be good enough to bear with me for one moment, which will confirm the growth of the judicial review phenomenon.

Chairman.—Perhaps while Mr. Russell is looking that up, would the Department of Finance tell the Committee if all of these legal costs that the DPP’s Office, the Attorney General’s Office and various other offices through the Department of Justice, incur, are kept under review, are they are monitored? Do you look at these with a view to ensuring that we receive value for money and that the whole legal process is gone through in such a way that the State’s costs are minimised?

Mr. N. McSweeney (Department of Finance).—We would keep the matter generally under review in the context of reviewing public expenditure as a whole. Any costs that could be seen to be reduced by policy measures would be a matter we could look at and keep under review.

Chairman.—At the level of expenditure that there is, it might be more cost effective to have a public prosecutor’s office or some other form of service available to the State. Perhaps you could look at the whole question of the expenditure and ensure that it is kept under more active review?

Mr. McSweeney.—Yes, it would be kept under review and those ideas have been considered. You will appreciate that any decision of that type would have policy ramifications as well.

Chairman.—As far as there is waste in public expenditure ramifications and lack of value for money, Mr. McSweeney, would you look at the question again and perhaps you would let the Committee have your views when you have had a chance to consider it?

Mr. McSweeney.—Certainly.

Mr. Russell.—In regard to judicial review, in the year 1986 there were a total of 743 judicial review cases in which the State was the recipient of the judicial review. In 1987, that rose to 905; in 1988, that rose to 1,045; and in 1989 it rose to 1,137. That last mentioned figure shows an increase of 53 per cent over the 1986 figure. When judicial review is granted against the State, of course the State has to defend it; it cannot allow the matter to go by default. These cases take a great deal of time and in particular a great burden is thrown on the law officers by reason of the very short time limit given by the court very frequently when it directs a return to be made to the ex parte order of judicial review. There seems to be a disproportion of the amount of time which the moving party has to serve his documents on the State. He usually has 21 days to serve his documents, which he will already have prepared in any event, while the State may have seven days to discover what the facts of the case are, to swear replying affidavits and so on. That is an impossible burden and a good deal of public money is spent, unfortunately, on making applications to the court, which are invariably granted, to extend the time which the State has to make its case. That is an unfortunate fact about judicial review.

Deputy Taylor.—I sympathise with the difficulties of the State’s legal people meeting these claims and dealing with them, but what we are concerned about here is the burden on the taxpayers and the implications of it. What are the implications of all of this quite frightening escalation in the volume of these cases? What are the implications financially so far as the taxpayer is concerned? Can you give us some indication on that?

Mr. Russell.—The member of the public — and it naturally is a member of the public in the vast majority of these cases — who has made the application would, of course, say: “I have been done wrong by the State and I am entitled to redress, otherwise I would not have got my order of judicial review”. Someone has to pay for that.

Deputy Taylor.—The question of who has to pay is another matter, but for the moment it is the taxpayers in general who are carrying the can. We are talking here, when we refer to those figures, about quite substantial amounts of money, between using up the resources of the Attorney General’s Office and the Chief State Solicitors office? We are retaining independent barristers, possibly paying damages to people as well who would be successful. Does that not all add up to quite big money with those numbers of cases you are talking about, where that degree of escalation is involved?

Mr. Russell.—That is so, Of course, some of the judicial review cases would have been there under their earlier title, Stateside orders, certiorari, mandamus etc. But, undoubtedly, the creation or the renaming and extension of the system into judicial review has, we believe, increased numerically very much the number of cases.

Deputy Taylor.—Is the Attorney General’s Office doing anything about trying to side-track or examining the position under which many of these claims could be defused at a very early stage with a view to trying to ensure in relation to Government Departments and other authorities involved here, who are alleged to be infringing and being brought to court for doing so, so that the procedures are so organised that many of these cases could be avoided at an early stage and so avoid a very heavy burden being placed on the taxpayer and these enormous legal bills, which are clearly going to run into millions of pounds year after year and getting bigger all the time? Is the Attorney General’s Office doing anything about that aspect of the matter?

Mr. Russell.—There are some forms of litigation to which the State is a party which undoubtedly would allow of the introduction of better methods of handling; but not so much, it so happens, in the judicial review field as in High Court actions generally. There, if he had more staff, we could, we think, settle High Court actions sooner rather than later. It is true to say that we are not entirely free agents there because many a plaintiff and many a plaintiff’s solicitor and barrister will not settle no matter what they are offered until the day of the court. They feel they will get more money if they wait until five minutes to 11 o’clock on the day of the hearing. You cannot force the plaintiff to take the money you offer him, particularly if he gets legal advice from his lawyers that he should not. However, there are cases where we believe that we could settle the case earlier if we could obtain, for example, information from relevant Departments concerning the accident — because it normally is an accident that has happened — if we could extract that from them. The only way to do that is to pursue them and badger them. That takes time and we do not have the staff for that. I believe there is room for improvement in that area. By contrast, in the judicial review area I am not so sure that there is much we can do, because the judicial review case comes on after the mistake has been made and I am not sure how our office can guard against that.

Deputy Taylor.—I do not want to prolong this unduly, Chairman, but just to say that it must be clear to you and to the C and AG that we are sitting on a potential timebomb on this one. It is going to get completely out of hand. This thing is running away. How we can tackle it? Whether the C and AG can have a look at this or whatever to assess the implications of what is involved here, I do not know. Maybe we can consider it at some later stage. I do not wish to hold up the meeting any further. I think we have gone over our time.

Mr. McDonnell.—I would not like to add anything at this stage. I recognise the validity of what Deputy Taylor is saying but I would not care to comment at this stage.

Chairman.—We can complete the examination there and note the Vote. Thank you,

Mr. Russell.—As always, you have been very helpful and forthcoming.

Mr. Russell.—Thank you.

The witness withdrew.

The Committee adjourned.