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, 17 Bealtaine, 1990

Thursday, 17 May, 1990

The Committee met at 11 a.m.

DEPUTY G. MITCHELL in the chair

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

VOTE 18 — OFFICE OF THE OMBUDSMAN.

Mr. W. P. Fagan called and examined.

Chairman.—On Vote 18 of the audited accounts for the 31 December 1988 there are no paragraphs so we will go straight into the Vote. You are welcome, Mr. Fagan, again apologies for the delay in starting. With regard to the Vote, Mr. Fagan, could you tell the Committee what the present level of staffing in your office is?

Mr. Fagan.—The present level of staffing in the office is 33 staff at the moment; we are two short of our full complement of 35. We are down at the moment one executive officer and one clerical assistant by virtue of the fact that the Civil Service Commission have no panels available for us. We hope to have those two posts filled later in the year.

Chairman.—Could you tell the Committee the number of complaints which were received in 1988 and how that compares with 1989.

Mr. Fagan.—The number of valid complaints received in 1988 was about 2,800, with invalids it would be slightly over 3,000. The 1989 figures, which hopefully will be published next week, are about of the same order, about 2,700.

Chairman.—Would you tell the Committee, Mr. Fagan, what level of arrears there were in each of those years 1988 and 1989, what the current position is and what the normal period of delay is in having a matter examined by the Ombudsman?

Mr. Fagan.—The level of arrears has been brought down from about 2,100 at the end of 1988 to around 1,500 at the end of 1989 by virtue of the additional staff we received during the year. I would make the point at this juncture that it took us until the middle of the year to fill all the posts at investigator and senior investigator level. These are our most important posts as regards getting rid of cases. At the moment I would say that the average length of time that a case takes is still of the order of about three to four months but we would have a certain volume of the more difficult type of case that would take longer; cases that require a formal type of investigation can take longer than a year. At the moment on the arrears front generally we are making good progress. I would not be happy until we could bring the arrears down to something less than a thousand, let us say no more than we have received in the last quarter of a year. I cannot see us achieving that by the end of this year but maybe by the end of 1991 we might be in that position, all things being equal, that is, if our complaints and our staffing are maintained at the same level.

Chairman.—I notice that for the years 1985, 1986 and 1987 complaints were greater than 5,000?

Mr. Fagan.—That is right.

Chairman.—So there has been a reduction, a 20 per cent reduction, or something of that order, in the number of complaints?

Mr. Fagan.—It has come down from between 4,000 and 5,000 to around the 3,000 level over the last two years. I cannot put any particular reason for that on a longer term basis. The Ombudsman, certainly after the original cuts, attributed this to public faith in the office having been damaged by the staff being taken from the office, because people felt they would not have their complaints dealt with in a reasonable period of time. That was one of the reasons complaints dropped off, but it has now levelled out at the 3,000 level. I would be only speculating if I were to give a reason for this.

Chairman.—Could there be two other reasons — could it be that the initial novelty of referring things to the Ombudsman’s office has worn off and No. 2, that people are less and less aware of the Ombudsman’s Office? Sometimes they come to TDs looking for the ambulance man’s office and the omnibus office — are people aware of the Ombudsman’s Office.

Mr. Fagan.—They are indeed. However, I think there might be a point in what you say — the initial novelty may well indeed have worn off. It could well be too that possibly public Departments have got their act together. This may well be a sign of the good work that we have already done over the last five to six years. On your point about the publicity, we have undertaken regional visits last year. We have started on this again. This is not just to go out and get complaints. This is also to publicise the existence of the Ombudsman’s Office. Last year we went to Athlone, Galway and Cork. When we go there we put advertisements on the local radio and in local newspapers. Members of the staff sometimes do interviews on radio. I did one in Cork. Recently, we have started again on a new round. We have been in Waterford and Wexford, we have been in Sligo, we are going to Tralee in a couple of week’s time and in the autumn we hope to go to Castlebar, Limerick and the Cavan-Loutharea. Also this week we have a stand at the Active Age Week exhibition down in Arnotts. This is being organised by Dublin Corporation and many of the other major public bodies like the Department of Social Welfare and Revenue are attending. It is an information type exhibition mainly aimed at elderly people, but in fact it is attended by members of the public who happen to wander in and so far it has been quite successful. There is quite a degree of interest, but we were getting the same problems that you get in that Ombudsman is an awfully big word — and the question is “What does he do?” We have our own staff on the stand. We have information leaflets and we are doing our best to get the message across what the Ombudsman is about.

Chairman.—Perhaps at some stage you might arrange a visit for the Committee to the office, Mr. Fagan, so that we can just see how you operate?

Mr. Fagan.—Certainly, I would have to talk to the Ombudsman about that, but I will be in touch with the Secretariat about it.

Chairman.—With regard to the complaints finalised in 1988, I notice from a chart here that 7 per cent was accounted for by health boards, 9 per cent local authorities, 3 per cent An Post, 36 per cent Civil Service and 45 per cent Telecom Éireann. Specifically on Telecom Éirean, since this is a constant one which arises, in what percentage of those 45 per cent of your complaints would you find in favour of the applicant?

Mr. Fagan.—Usually around the 25 per cent mark. In 1988 in was 22 per cent in 1987 it was 25 per cent. In or around 20 to 25 per cent.

Chairman.—One in four people applying to you would have their telephone bills reduced?

Mr. Fagan.—In some respects.

Chairman.—Do you charge Telecom Éireann for the services? Should you not really be thinking in terms of them paying you a fee since they continue to be very high on the list of offenders?

Mr. Fagan.—This is a question that has been posed before. I do not think it would be right for the office to be in some way dependent financially on Telecom. The independence of the office is a very valuable thing and I think this is ensured by the fact that it is funded only by the Oireachtas. That is a view I have.

Deputy McGahon.—In relation to this office, which was created with much controversy, it has suffered a see-saw situation, which I think accounts for the dramatic drop in people presenting cases to you. Reading the report I see that something in the order of 23 per cent of cases are found to be valid. It is quite a high proportion of people who are aggrieved by the public system. May I ask you initally what type of reaction you get from the various bodies? Do you get co-operation, do you encounter hostility and is that type of situation improving due to your efforts? The second question I would like to ask is in relation to An Bord Telecom. It is virtually inaccessible to politicians and that is why your office is vital — 45 per cent of queries deal with An Bord Telecom. You also say that 25 per cent of them have been found to be valid. Can you tell us then, because it is impossible to get information from them, what is the problem with An Bord Telecom in relation to people’s telephone bills? What is the underlying cause for concern? People, on inquiries about a check of their telephone account, get a stonewall reaction from them. They have looked at it; it is allright. What have you found is the real reason for concern in An Bord Telecom? What is the problem, in other words?

Mr. Fagan.—Right, I take your first question, which is a general question about the reaction we get from public bodies generally. By and large it is good, because public servants by nature are great respecters of the law and the Ombudsman Act. The problems that arise are usually on an isolated basis. There are two types I would identify. One is where you would take to task an individual officer, where it is his own personal decision or a decision of a member of his staff and, as a superior, he wants to stand over that particular decision. Those personalised cases are usually ones involving the exercise of discretion. Nobody likes to be told that his decision is an unfair one. Nobody likes to be told that “that decision is contrary to fair and sound administration”, to quote an extract from the Ombudsman Act. It can rankle deeply to be told that. The Ombudsman understands this fully. He is human, too. He understands the sort of human reaction that comes from a member of an organisation who finds that, in front of all his colleagues, his decision has been criticised. There are certain safeguards in the Ombudsman Act. For example, before the Ombudsman makes a criticism to the head of the organisation, the individual himself must be given natural justice — this principle of audi alteram portem, as the lawyers call it, that he be allowed comment on it.

The second area where there are some difficulties, I have referred to before in previous evidence I gave to the Committee. It is where bodies outside the Government Departments, which are more independent of Government, like a local authority or health board, have strong feelings of “these lads from Dublin coming down telling us how to do our job”. That is again a natural thing. There has never been any one before coming down to examine the way they do their work. They are the explanations why, but it is a question of progressively working your way through the different complaints and different organisations. We are finding an increasing appreciation of our work. Sometimes after you have had the biggest row with an organisation and you have shook hands and the thing has been settled, the problems then wind down and you then understand each other. That is your first question.

Deputy McGahon.—You do it with discretion?

Mr. Fagan.—With discretion, tact and diplomacy. The second area of questioning there was in relation to An Bord Telecom. What is wrong? I do not wish to be too critical of An Bord Telecom. There are probably a number of things that are giving rise to the problems in relation to telephone bills. The first one is lack of information. An Bord Telecom are doing something about that with their gradual introduction of itemised billing throughout the whole country. People simply got their telephone bill, but the bill was not broken down for them so they did not know, and still do not know, what is involved in that bill. There is also the question of when they made the calls and how long they were on the phone. That is the first thing that gives rise to problems within Telecom Éireann.

The second thing that gives rise to problems is customer relations. Telecom would claim that they have given a great deal of emphasis to the whole area of customer relations. That is that if a person comes in with a complaint he is dealt with in a certain fashion. The person at the other end listens to what he has to say. If he says “I did not make those telephone calls listed in the bill” he finds that there is somebody not simply replying and saying that the meter is never wrong. “You must have made those telephone calls”, he is told.

In conjunction with the itemised billing they are introducing a new element of customer relations whereby you can ring up on the phone. In some cases, the girl, who has a screen in front of her can, I believe, mitigate part of your bill if you make a complaint. The third area I would touch on in relation to Telecom is the whole area of what is called a code of practice. They have this in the UK. British Telecom use this. It is something that Telecom should possibly address and I believe they are probably working towards having something like this. I do not know whether any of you got recently something in your ESB bill. In my last ESB bill I got what was in effect a customer code of practice. They guarantee service of a particular kind. They guarantee a particular response to complaints. They guarantee a particular type of response time. If Telecom address this and have it set out so that people would know how to make a complaint to Telecom and how Telecom would respond to it, it would go a long way towards addressing this particular problem.

Deputy McGahon.—Thank you. I would just like to say that the Office of the Ombudsman has certainly justified its existence. There was a major problem here and many people were ripped off over the years. It is a major cause of concern. Their PR system did not work at all, because you got an absolute stonewall response from Telecom Éireann. I see they have made £80 million this year, but God knows how much of that was due to accruing money over the years from people who got not response at all from them. So, I applaud you.

Deputy Cullimore.—In 1988 you received 3,164 complaints. The total cost of the Ombudsman’s Office is £561,000 and, at a rough calculation, that is costing £182 per query. Would you regard that as an excessive cost per query? Also, I would like to refer to the number of queries that you receive. Take my own constituency, Wexford. You received 80 queries. As a backbench TD, I would regard that as a very small number of queries from my constituency. It would be a very small percentage of the number that I would receive.

Mr. Fagan.—I will take your two points. The actual cost per complaint is something that derives from the system — in other words, we have no control over the number of complaints we receive. I do not believe that the Office throws around money in any fashion. Our major cost item is that of staff. I do not believe that the Office is overstaffed. In 1988, the year to which you refer, our arrears actually went up — in other words, we did not have sufficient staff to deal with the complaints that we received in that year. We were actually falling further behind during 1988. Apart from that, we spent very little money; and, as Accounting Officer, I can assure you that we exercise very tight control on all other items, such as travel and subsistence. We exercise all the tight financial control mechanisms that are available.

I take the second part of your question about County Wexford. If you look at the map on page 108 of the report, if you look at any of the counties, you will realise readily that the number of complaints is very small. That is if you would compare it to the number of constituents you would have approaching TD’s Senators or other public representatives in the various counties. What I would say to you there is that the type of problem that people go to their TD with is not necessarily always the type of problem that is appropriate for the Ombudsman to deal with. The Ombudsman is, in effect, a court of last appeal. You must have exercised all of the other mechanisms that are available to you. For instance, in social welfare you must have gone through the social welfare appeals mechanism. Also the Ombudsman is dealing with administrative actions—in other words, there must be some form of maladministration. The Irish public have shown an element of sophistication. We find when we go on our regional visits — we were in Wexford a few weeks ago — that the people coming in to us now are bringing us in complaints which by and large are appropriate to the Ombudsman. The people who are aware of the Ombudsman are aware of what his function is, that it has to do with certain forms of maladministration and that he is a court of last appeal. I would not see a lot of the people who are approaching TDs as fitting into that category. That is the reason why the numbers are quite small as compared to the numbers you would have at your clinics.

Deputy Cullimore.—Are we getting value for money, given the low volume of queries that you are receiving in comparison to the number of staff and the allocation of £561,000? I would see £182 as very expensive. Is there not an onus on you to increase the volume of work you are dealing with?

Mr. Fagan: We are attempting to publicise the Office as much as possible because it would concern us if anybody out there was not aware of the existence of the Ombudsman’s Office and was a person to whom we could be of some assistance. We certainly would be very concerned about that. We are doing everything within our power to do that. I outlined earlier measures we are taking.

In relation to the cost per case, this is an important point. The Ombudsman is concerned with, as I mentioned earlier, maladministration. I think that the value is not just the value to the individuals — in other words, you can argue that a TD simply wrote a letter and the person got what he was looking for. But the Ombudsman is involved with the way the thing is administered. There is an effect here on the administration which is a good effect. In other words, there is this public watchdog and his effect is seen not alone in relation to the individual cases themselves but also in dealing with the cases in the manner in which the Ombudsman deals with them. You will find in the various annual reports of the Ombudsman specific cases outlined, and you will see the sort of principles of good administration which are laid down by the Ombudsman and you will see that the effect in many of those cases would extend way beyond the individual case. In fact, for the 80 people in Wexford who complained, 200 or 300 people might have been helped by this.

The other thing I would mention is that in our annual report for 1989, which will be released in the next week or two, you will find at the beginning of that report an outline of developments in regard to general issues which the Ombudsman has raised over the past six years. You will see that in a lot of cases this has led to changes in the law and changes in practice and procedure in Government Departments. These are set out in the annual report of the Ombudsman for 1989, which should be with you in the next couple of weeks. You will see in that where the value for money is.

Deputy Flood.—First of all, can I ask you to explain why the Ombudsman himself is not present? This is an unique situation and a unique office. The Ombudsman himself has been a very public figure. It would have been an opportunity for us to hear directly from him.

Chairman.—The reason for it is that the Minister for Finance appoints an Accounting Officer statutarily for every Vote. That is why when a Secretary of a Government Department appears he is not actually appearing as Secretary of the Department, he is appearing as Accounting Officer. In the case of the Ombudsman’s Office, the Minister for Finance has appointed the Director of the Office as the Accounting Officer. The Accounting Officer has a statutory duty to appear.

Deputy Flood.—I appreciate that, but you will understand that most of our contributions this morning have not related specifically to finance but in fact have related to the actual practical operation of the Office. It is something we could look at in selected areas, like the very sensitive Office we are now discussing. It might cause major headaches for certain Government Departments but that is what we are all about here — to make sure that we get this sort of information; and in a practical way this is an Office in which we might be able to look at going further than specifically the Accounting Officer.

The second point I would like to make is that Mr. Fagan indicated in answer to Deputy Cullimore that TDs might simply write a letter and get the matter sorted out. I want to assure him that all of us here know that it requires great deal of effort sometimes and on most occasions——

Mr. Fagan. I am aware of that.

Deputy Flood.—I would not like it to go out that we simply write a letter and leave the matter at that. In the 1988 report, on page 4, the last paragraph refers to the fact that the political commitment to the concept of ensuring that the least well-off and most vulnerable sections of our society would be protected. Is there any attempt within the Office to establish information as to the social background of complainants across the whole range of complaints that we have outlined here in the report?

Mr. Fagan.—No, we do not inquire from people what their social background is. It would be possible if we had staff to spare and, secondly, if somebody could take our complainants and try to read in from the general information contained in their complaints what their social status is. That would be an enormous job because we have at this stage well over somewhere between 20,000 and 30,000 complaints since 1984. By and large the information people provide themselves is regarded as confidential to the Ombudsman. It would be interesting to see what the backgrounds of the various people are. Just from observation, because I am involved in dealing with cases, I would say that it depends on the area of complaint. Obviously, complaints from the social welfare area would come from people of particular social status. Complaints about telephone bills generally tend to come from people from a different social status — for very obvious reasons: people from different income background would have telephones whereas people from another income background would need assistance with social welfare. It would vary enormously in the different areas of complaint. I am just speaking in observation.

Deputy Flood.—The reason I raised the question is that we have to be conscious of the fact that the Office of the Ombudsman could in fact become, in my opinion, something like a rich man’s charter for dealing with State organisations. It is my experience that where people come to me in my clinics it is mostly those who I would describe as being in the better-off income bracket who then say, “Well, we will take the matter up now with the Office of the Ombudsman”. It is for that reason that the sort of information I suggested ought to be available with regard to the background. It should be collated by the Office just to ensure that the fundamental tenet of the Office is adhered to with regard to the protection of the less well-off. It is for that reason that that sort of information I speak about ought to be available and the Office ought to look at that to make sure that we are in fact keeping in touch with the less well-off and being of assistance to the less well-off. It would not be fair to say that a social welfare applicant is necessarily from a particular background.

Mr. Fagan.—I am generalising.

Deputy Flood.—The other question I wanted to raise — other speakers have also referred to the matter — is the question of fees to some of the semi-State organisations, such as Telecom Éireann, An Post and so on. That is something that ought to be looked at, particularly where a case is upheld. That is something we should have addressed in a future report from the Ombudsman. Where a case is upheld, obviously that is different from those that are not. Another question I want to ask is: where the Ombudsman comes to a decision and a particular case is upheld, does the Ombudsman take any further interest in that case to see to it that the complainant has in fact received adequate redress?

Mr. Fagan.—Yes, but we would not always write to the complainant informing him of the outcome. We have on occasions asked people to notify us, for instance, if there are arrears of a payment, to let us know if the arrears have been paid. Also, in the Department of Social Welfare area there is now a system whereby compensation — that is, an amount for the fall in the value of money — is payable. If somebody is waiting five years for the payment, the Department of Social Welfare pay a top-up amount. This is something that the Ombudsman’s Office was directly responsible for bringing about in a case which was publicised in our report for 1986. We would check to see if that was paid afterwards, before we close the file finally.

Deputy McGahon.—Have you had any complaints about TDs?

Mr. Fagan.—People do complain about their TDs from time to time, but there is nothing we can do about it.

Deputy Flood.—With regard to the staffing arrangements, you say you are basically two fewer than your complement. In the first couple of years of the Office there was obviously a very substantial number of complaints. You say that has tapered off?

Mr. Fagan.—Yes.

Deputy Flood.—Would it be fair to say that, if the number of complaints has now tapered off quite substantially, there should be a tapering off in staff?

Mr. Fagan.—In fact, the proportions should work just about right. When we had about 5,000 complaints we usually had between 40 and 45 staff. We now have 33 serving staff and about 3,000 complaints. They are in proportion. There are several posts which are irreducible. We must have a certain number of typists and receptionists and messengers and my post is indivisible etc. The investigating staff are now in proportion to the number of complaints that we had before.

Deputy Flood.—The final point I want to make is with regard to what I would call frivolous complaints, do you keep any figures on those?

Mr. Fagan.—In fact, we have a category called “Invalid Complaints” but they are not necessarily frivolous complaints. They could be serious complaints about the ESB or some other body like that, but we do not have one for what you would call actual frivolous complaints. They are quite a small percentage, I can assure you.

Deputy Flood.—Finally, do you have form a specific organisation or members of the public repeated contact on a range of different complaints? Are there professional complainants who just keep coming on?

Mr. Fagan.—There are regulars all right, but again they would be well less than 1 per cent of the overall number of complainants. There are some people who raise a new aspect of the same complaint every year. We always have to be sure that this aspect they have turned up this time does not have some validity. From time to time there might be somebody who is felt to be a pain in the neck and eventually some evidence emerges.

Deputy Flood.—Do you tell them that?

Mr. Fagan.—No, we are very diplomatic.

Chairman.—Could I ask you very briefly, Mr. Fagan, do you have any value on the amount of money refunded by Telecom Éireann as a result of your involvement?

Mr. Fagan.—I do not have a figure. One could be produced all right. Telecom may have a figure.

Chairman.—May I make a suggestion. I think we should note this particular Vote. We have completed this examination. Could I suggest that we resume immediately with Communications after the Division, but we might consider excusing the DPP’s office, the third Accounting Officer in today, and recall him on another day. We will hardly get through all three today. Is that agreed? We will resume immediately after the Division, we will note the Vote for now and the Committee will adjourn for a few moments to allow Deputies to vote and we will resume with Communications.

The witness withdrew.

VOTE 37 — COMMUNICATIONS

Mr. B. McDonagh called and examined.

Chairman.—We can resume now with the examination of Mr. Bernard McDonagh, Secretary of the Department of Communications, in his capacity as Accounting Officer for that Department on the audited accounts for 1988. You are welcome, Mr. McDonagh. I apologise for the delay; but, unfortunately, we have Committee Stage of the Finance Bill this morning so we are being interrupted by votes in the Dáil.

Paragraph 54 of the report of the Comptroller and Auditor General reads:

Subhead H.—Appropriations in Aid

Reference was made in paragraph 51 of the 1976 Report to the granting of licences under the Wireless Telegraphy (Wired Broadcasting Relay Licence) Regulations, 1974, as amended, in respect of the provision of cable television service in defined areas and to the failure to collect licence fees prescribed under the regulations. The regulations provide for the payment by a licensee to the Minister for Communications, on the last day of each quarter, of a fee equal to 15% (5% with effect from April 1988) of the gross revenue, excluding installation charges and VAT, paid to the licensee in that quarter in respect of the relay service provided and a licensee is required to furnish annually an audited statement of such gross revenue received. The regulations also provide for inspection by the Department of licensees’ records.

In the course of audit it was noted that substantial arrears of fees were outstanding and that a number of licensees had not furnished up to date audited statements — the Department estimated some £1m as being due at 31 December 1988. I inquired as to the steps being taken to ensure that the audited statements and fees were received by the due dates and when it was expected to have the arrears collected. I also inquired as to the number of departmental inspections of licensees’ records carried out since 1985 in order to establish the amounts due.

The Accounting Officer explained that there had always been a difficulty in collecting cable licence fees from some licensees. Over the years legal action had been initiated against thirteen licensees for the recovery of licence fees owed and for the provision of audited statements, but legal action had been cumbersome and largely ineffective. In a number of instances, as the legal process was approaching finality, offers of arrangements to pay were made which the Department were legally advised to accept. However, in some instances licensees subsequently defaulted on the arrangements and the process had to start again.

The arrears problem was at its worst during the period 1986/87 when, because of the existence of illegal broadcasting systems receivable in cable areas and the high level of the licence fee, all except three companies effectively boycotted the Department as regards payment of fees.

Legal action had been initiated by licensees seeking to declare the licence fee null and void and seeking compensation for loss of revenue as a result of the activities of illegal operators. This matter was resolved in late 1987/early 1988, but by then the licensees partaking in the boycott had built up substantial arrears of fees and the Department had no option but to agree to instalment payments or effectively bankrupt most of the companies.

The level of arrears at September 1989 was estimated at £770,000 of which £415,000, approximately, was owed by one company which was refusing to pay fees and had initiated a High Court action against the Department seeking damages for loss of business due to the existence of illegal rebroadcasters. However, it was expected that the balance owed by other licensees would be cleared in the near future on the basis of agreements already completed or through court action.

The Accounting Officer stated that the Minister has power to suspend or revoke licences where breaches of the Regulations occur, but that, in the Department’s view, use of this power would do little to hasten the payment of fees or the production of information. While recent years had been extremely difficult with regard to the collection of licence fees, the Department was confident that the underlying problems could be resolved and that in general the arrears problem would be eliminated in the foreseeable future. The Accounting Officer also informed me that no Departmental inspection of licensees’ records had been carried out due to lack of suitably qualified staff.

Mr. McDonnell.—There is just this one paragraph. What I am talking about here in paragraph 54 are the difficulties encountered by the Department in trying to collect the cable television licence fees and this led to the build up of a fairly large amount of arrears. They are cable television fees, not licence fees payable by the public. The paragraph recites the difficulties which the Department had in implementing this legislation. You will see towards the end of the paragraph that the Accounting Officer had assured me that the Department was confident that the problems could be resolved and that the arrears’ situation would be improved or indeed eliminated. I understand that there has been some improvement in the situation. I do not know if the Department have been able to get around to inspecting the licensee’s records, or indeed how it views the need to implement that specific part of the legislation.

Chairman.—What is the current situation, Mr. McDonagh?

Mr. McDonagh.—Thank you, Mr. Chairman. The current situation is that since the end of 1988, when £873,000 was outstanding, roughly £320,000 has now been paid, leaving about £550,000 outstanding. Agreements to pay have been reached with most of the companies concerned. These agreements will run over a number of years. We expect to get most, if not all, of the outstanding moneys. There are some companies, regrettably, which have not made agreements with us and those we are pursuing. In one particular case at the moment the Chief State Solicitor has issued notice of intention to proceed, so we are pursuing the legal road with companies which are not prepared to reach agreements with us on payments of arrears.

Chairman.—Can I just run through this briefly, Mr. McDonagh? These cable television service companies were required to pay you 15 per cent of gross revenue and that would reduce to 5 per cent in April 1988. In fact, a number of them did not pay that amount of money. Some complained that pirate radio operators were interfering with the profitability of their business and they used that as an excuse. At the end of December 1988 you estimated that there was about £1 million outstanding to your Department. In September 1989 you estimated £770,000 was still outstanding at that stage, of which £415,000 related to one particular company. Of what you estimate to be outstanding now, the £550,000 is this one particular company accounting for a substantial part of that still?

Mr. McDonagh.—Yes, one company is responsible for a substantial part — roughly £345,090 is owed by one particular company. A number of companies, including that particular company, initiated legal action on the basis that they considered that their businesses had been affected by the action of unlicensed broadcasters.

Chairman.—What stage is that legal action at?

Mr. McDonagh.—That legal action has been withdrawn. The arrangement which has been reached with the company for payment involves withdrawal of that legal action. Indeed, we have operated on legal advice in reaching settlements here.

Chairman.—In the past when you operated on legal advice, when it got to the stage where proceedings were withdrawn from the courts, companies then went back on the agreement, is that correct?

Mr. McDonagh.—That has happened.

Chairman.—Are you satisfied on this occasion you will not have to have recourse to the courts, that these companies will in fact pay?

Mr. McDonagh.—I am satisfied in most of the cases where we have reached agreement that companies will pay. There are a number of cases where the companies have not reached agreements and in January 1989 the Chief State Solicitor was instructed to take a test case against one license who has consistently been a poor payer. Legal action has commenced and we hope to get it to court as quickly as possible. Our experience in that particular case will determine exactly how we proceed in the other cases.

Chairman.—In connection with this one particular company that owes £345,000, when do they intend paying this?

Mr. McDonagh.—They have paid some of it already. In 1988 they owed £512,000. That figure has now been reduced to £345,000 and it is proposed to eliminate it over three years.

Chairman.—Do you have any other recourse to punishment for non-payment of duty by these companies? For instance, are they licensed by your Department? Is it not possible to withdraw a licence from these people.

Mr. McDonagh.—Yes, it is possible to withdraw a licence, but that then would leave the situation where they would also be unlicensed purveyors of television programmes. It would add to the problem of unlicensed broadcasting organisations and would not necessarily produce any reduction in the sums outstanding. There is also the fact that if we pursue action further and send in receivers there could and would likely be a loss of service to the basic customer. Again, that would obviously pose problems.

Chairman.—Let us move away from the arrears of payment of licence fees, which is only problem No. 1 and let us look at problem No. 2 and problem No. 3. Problem No. 2: audited statements of gross revenue had not been furnished to your Department. Have they now been furnished?

Mr. McDonagh.—Some have been furnished, some still have not been furnished. In general, the companies where substantial arrears exist and arrangements have not been made for payment are relatively small companies throughout the country. I can read a list giving the date of the last audit received from companies in arrears with-levy payments. One is dated October 1985, others December 1987, September 1984, June 1979, December 1989, December 1989, June 1988, September 1989, December 1986, December 1989. December 1989, December 1979. December 1984, March 1985, January 1990 and January 1988. That is the range.

Chairman.—That is a very sorry story.

Mr. McDonagh.—It is a very sorry story. Both of the worst cases here are relatively very small organisations in rural towns. We have tried and failed to make contact over a long period. We are aware that others are also for other reasons trying to make contact with them. As matters stand there is very little substantial property that we could proceed against in these cases.

Chairman.—Let me put it to you this way. Your share of the fees are based on 5 per cent of gross revenue and, prior to 1988, 15 per cent of gross revenue. Some of the accounts which you have not received pre-date 1988. How do you know what is outstanding to you if you have not received audited accounts? Could it not be that your Department is due a lot more money than you know of based on these figures which have not been submitted?

Mr. McDonagh.—It certainly could be. It could also be in some of these cases that we are owed little or nothing because some of the operators have not been successful. You are not looking in these cases at successful companies that are making a nice living out of the cable business. In general, with the smaller operators you are dealing with the companies which have, to say the least of it, a relatively marginal business.

Chairman.—It is gross revenue that is supposed to pay you the percentage?

Mr. McDonagh.—That is right. The percentage is on gross revenue less installation charges and VAT.

Chairman.—What you have here is just an estimate. It could be higher or lower?

Mr. McDonagh.—Yes, what we have there are estimates. We operate with the audited accounts and we revise the amounts due when we get the audited accounts.

Chairman.—You informed the Comptroller and Auditor General that no departmental inspections of licensees’ records have been carried out due to a lack of suitably qualified staff. In other words, your Department have not carried out inspections of licensees records. What in your opinion is suitably qualified staff?

Mr. McDonagh.—We have no travelling inspectors. In 1981 two travelling officers were recruited, one post was lost when the TV licence work was transferred to An Post, the other post was lost when the remaining incumbent left on promotion and was not replaced due to the embargo. We have no staff in the Department to whom this work can be deputed.

Chairman.—Are you talking about accountants or technically qualified people?

Mr. McDonagh.—We are talking about people who would have some accounting qualification, who would be able to go in and examine the figures. We do not have an accountant in the Department. We do not have any people with accounting qualifications.

Chairman.—I do not know what the state of the industry is. The state of accounting leaves an enormous amount to be desired. It is totally unacceptable and tatty and tardy and it has to be tidied up, even if we are to find that there is money there which cannot be recovered. We should at least have up-to-date figures which are submitted and we should know what is due and they should be fully processed in the normal way. This whole thing is very unacceptable.

Mr. McDonagh.—I agree. I am in a position where I do not have appropriately qualified staff to do it.

Deputy Flood.—Were there any licences suspended or revoked over the last number of years and, if so, for what reason?

Mr. McDonagh.—As far as I can see, and subject to correction, there were no licences suspended or revoked. As we set out earlier, use of the power to revoke would do little to hasten the payment of fees or the production of information. Such action would remove the operators’ obligation to pay fees on current activities and would possibly bankrupt the company, or else it would result in a loss of service through cable to the subscribers in the area. It would also strengthen the position of illegal operators. For those reasons no licences were revoked.

Deputy Flood.—How many companies are there in the country presently providing cable television?

Mr. McDonagh.—There are 43 licensees: there are ten in arrears.

Deputy Flood.—You referred earlier to the fact that some of these would be quite small rural based, small town based suppliers. What would you consider to be a major cable television supplier?

Mr. McDonagh.—Obviously, the biggest is in the Dublin area. That is not in arrears. The next biggest is in the Cork area and they are in arrears. They are in arrears by £345,000.

Deputy Flood.—Is that over a number of years?

Mr. McDonagh.—That goes back primarily to the action taken by a group of cable operators to withhold fees in support of an argument that they had about the illegal operators.

Deputy Flood.—Is any action presently being taken to recover those amounts?

Mr. McDonagh.—There is. An agreement has been reached with them. They have already paid £150,000 and the balance will be paid over three years.

Deputy Flood.—Have they been adhering to the agreement? What about the other major operators?

Mr. McDonagh.—They are adhering to the agreement. The next in line would be Limerick and a similar situation obtains. They have an arrangement to pay and have been continuing that arrangement.

Deputy Flood.—What are the arrears?

Mr. McDonagh.—The arrears in Limerick are now £51,000.

Deputy Flood.—There is an arrangement and payments are being made?

Mr. McDonagh.—Yes.

Deputy Flood.—What about the rest of the cities like Galway?

Mr. McDonagh.—No, there is no problem in Galway. I can give you the other ones. There is another operator in the Dublin area who owes £35,000. No agreement is in place and legal action is being taken.

Deputy Flood.—In the Dublin area, how many suppliers of cable television are there?

Mr. McDonagh.—At the moment I think there are four or five. Obviously, Cablelink is the major supplier, but there are some other ones.

Deputy Flood.—With regard to these suppliers obtaining the appropriate licences to provide TV, are there any conditions built in there to compel them to make service available in a particular area in which they are operating? Have they a free hand to make a decision themselves as to whether they will or will not provide service in a particular area?

Mr. McDonagh.—Basically, they are supposed to provide the service in the area for which they have a licence. I do not have the conditions with me but I can send them to you. If a customer feels that there is an unwarranted refusal to supply there is appeal to the Minister and the Minister takes that up with the cable operator.

Deputy Flood.—I want to elaborate on that. What right has a resident in a particular area where a supplier of cable TV has a licence and where the cable supplier is obviously not making any real effort to make the service available? This happens particularly in residential areas where small numbers of new houses are built.

Mr. McDonagh.—The position is that the licensee has an exclusive right to provide cable television service within the area covered by his licence and he may not unreasonably refuse to provide service to any person in that area.

Deputy Flood.—How is the word “unreasonably” determined? Who determines that? Is it the Minister?

Mr. McDonagh.—At the end of the day the cable operator is the first person, but there is an appeal to the Minister and the Minister would take up that matter with the cable operator. I might add that that problem will be alleviated in the relatively near future, because the arrival of MMDS will enable people who are refused service by a cable operator to have an alternative service from MMDS.

Deputy Flood.—Finally, can you explain to me what regulations are at present enforced to control TV service suppliers as to what they may transmit on cable television? As you know, there is increasing concern about the availability of a wide range of international channels, some of them specialising in less than savoury broadcasting. What, can you tell us, are the controls in position for cable TV suppliers? The same type of suppliers who in some cases are refusing to pay the statutory fees to the Government, how are we expected to control what they broadcast?

Mr. McDonagh.—The basic regulations in being at the moment are the cable regulations, and under the cable regulations there are obligations in relation to proper programming. Again, the Minister is the final authority. If he is unhappy and if cases are brought to his attention of improper programming, then a range of action is possible. Indeed, if one were to look at the ordinary law, if there were cases of improper programming, whether it is indecent or otherwise, action is possible under the common law. The position is about to change. The position is changing and, as you may be aware, there is an EC draft directive on trans-frontier broadcasting which is going to be, effectively, the regulatory bible for broadcasting in Europe.

The primary objective of the directive is to promote a free flow of programmes across frontiers, that an external TV service, which complies with the directive, cannot be refused the right of reception or transmission on cable or MMDS for reasons which fall within the scope of the directive. It lays down controls in relation to advertising, sponsorship and programme responsibilities. The responsibilities include decency. I can send you a draft copy of the directive, which has not yet been adopted.

Deputy Flood.—What about the content of a proscribed political nature?

Mr. McDonagh.—Section 31 applies to brodcasting organisations in this country. It applies to RTE and it applies to the commercial broadcasters. The foreign television channels are regulated under the rules which apply in their own countries — in other words, the BBC, for example, is regulated by the legislation in the UK. Under the rules here that will continue to be the case. If BBC is received off air here, or indeed carried on MMDS or cable, it will be carried on the basis of what is transmitted in the UK. That is the current situation and that will not change.

Deputy Flood.—The final question I would like to ask relates to the issue you raised yourself, the end of the paragraph relating to the inspection of licensees’ records. Is there a facility for your office to call for the audited accounts of these various companies? Do you have those accounts presented to you and would that not be a way of dealing with this particular problem?

Mr. McDonagh.—We do have the audited accounts presented to us. The dates I have given you, for example, are the dates for which we have the most recent audited accounts. We operate on the audited accounts when we get them and we are reasonably happy with the way in which the audited accounts are presented. The difficulty is that some operators do not present accounts at all. In fact, it is not clear that some of the smaller operators actually produce accounts. We are perfectly happy with the audited accounts we get from the vast majority of the cable operators.

Deputy Flood.—I would like to support the Chairman in saying that the accounting procedure with regard to licence fees due leaves a lot to de desired. If the State is not getting the precise returns to which it is entitled to because of this fact, it would be an investment in staff well worth making.

Deputy McGahon.—I have three questions. Is it not a fact that in relation to arrears you are on very thin legal grounds in the collection of them when illegal operators were allowed to operate for so long? Why should people pay when a blind eye was turned to illegal operators? Secondly, are there any companies outside the State holding licences here? In relation to indecent late night showing, who is going to monitor that? We have not got a Mary Whitehouse in this country. Who is going to monitor, if you are short of staff? What will happen in that case? Will it be yet more legislation and no watchdogs or no follow-up?

Mr. McDonagh.—Chairman, as regards legal grounds, I am not a legal man. This is certainly not a court of law and I would be the last person to express an opinion on the legal grounds.

Deputy McGahon.—Have you not been advised that you are on thin grounds? Is that not the rationale behind your willingness to accommodate these people?

Mr. McDonagh.—At any time legal actions can be introduced. I do not feel that I can give the legal opinion.

Deputy McGahon.—So we have to suspect it?

Mr. McDonagh.—As I see it. Obviously, people will have different opinions about the strength or otherwise of any case. I certainly am not in a position to go into the legal arguments on these cases. That should be left for a court of law, if it were to arise.

As regards companies outside the State holding licences, there is at least one company which has participation from investors outside the State. In fact, there are a number of these companies.

Deputy McGahon.—Are they among the people who are in arrears?

Mr. McDonagh.—One of them is and another is certainly not. One company with participation from outside the State has been buying up licences recently and in that process, before licences change hands, we ensure that all arrears are cleared. In that particular case it means that the backlog of arrears is immediately dealt with. In one of the other major companies there is quite a substantial shareholding from a company outside the State, but that is one of the companies with a large amount of arrears on which agreement has now been reached for payment.

Deputy McGahon.—My third question?

Mr. McDonagh.—Monitoring. I would have thought that in moral issues in this country we are not short of monitors. I have no doubt that any infringements in this area will be quickly brought to your attention, the Chairman’s attention and my attention.

Deputy McGahon.—Will it be acted upon?

Mr. McDonagh.—Appropriate action will be taken.

Deputy McGahon.—We bring in more legislation than any country in Europe but we do not implement it — due to lack of staff in the public service, no doubt.

Chairman.—Mr. McDonagh, I do not know what we can do with this particular paragraph. What we might consider doing is adjourning further consideration of this matter for some months to allow you to prepare a report for the Committee setting out what the current position is, what steps are being taken to deal with defaulters in chasing arrears and what steps are being taken to ensure that there is not any recurrence of this problem. The Committee are sympathetic to your position. You are in a certain difficulty and we want to give you every support we can in pursuing this matter. I do not think the Committee could have any sympathy for the companies concerned who have not met their legal obligations, having been given exclusive licences in competition and having excluded other people from getting those licences.

With the agreement of the Committee, I propose to adjourn further examination of you at this time, Mr. McDonagh. Perhaps we will recall you in about three months time. In advance of being recalled, you might set out a report for the Committee on the current position — what steps have been taken to deal with defaulters and what steps have been taken to try to prevent the recurrence of the problem. Nobody is pointing the finger at you or your Department. I have a certain sympathy for you in this matter. The culprits are the companies and they have to be brought to heel. The Public Accounts Committee would want to see that and would want to see matters tied up there. With the agreement of the Committee, therefore, I propose to adjourn further examination until about three months or thereabouts and the Clerk of the Committee will be in touch with your office in the meantime. There will be no meeting of the Public Accounts Committee next Thursday.

The witness withdrew.

The Committee adjourned.