Committee Reports::Report No. 05 - Economic Impact of Decentralisation::22 June, 2005::Report

Tithe an Oireachtais

An Comhchoiste um Fhiontraíocht agus Mionghnóthaí

An Cúigiú Tuarascáil

Tionchar Eacnamaíoch an Díláraithe

Meitheamh 2005

Houses of the Oireachtas

Joint Committee on Enterprise and Small Business

Fifth Report

Economic Impact of Decentralisation

June 2005

Chairman’s Foreword

The Joint Committee on Enterprise and Small Business agreed, as part of its Work Programme, to examine the economic impact of previous programmes of Decentralisation.

The Joint Committee appointed Senator John Hanafin, as rapporteur, to undertake the examination and to present a report for consideration. The report entitled ‘Economic Impact of Decentralisation’ was considered by the Joint Committee and adopted at its meeting on 15th June 2005.

The Joint Committee wishes to thank Senator Hanafin for the excellent work he has carried out in the preparation of the report.

Donie Cassidy, T.D.,


22nd June, 2005.


Prepared for the Enterprise & Small Business Committee

By Senator John Hanafin

May 2005


In December 2003 The Irish government announced its plans for a major decentralisation of government departments and agencies. Previous decentralisation programmes had successfully dealt with the part transfer of personnel and offices to locations outside Dublin but this new programme would take this a step further and move whole departments including the ministers responsible for these departments and locate them throughout the country at carefully chosen sites.

The decentralisation initiative is another step in the continued development of the Civil and Public Service and is considered very much in line with overall government purpose and strategy as evinced by the Delivering Better Government (DBG) and Strategic Management Initiative (SMI) programmes.

The government sees decentralisation as an effective and efficient means of bringing about change within the concept and actual process of governing Ireland but it is not change for change sake. The government sees many benefits associated with this initiative, all appear to revolve around a central issue, that is ‘quality of life’ (McCreevy 2004). The government envisions some of the major benefits that will be brought about by decentralisation as being a less stressful working life for Civil and Public servants, a more accessible and responsive service, greater promotional prospects and major economic and social benefits.

Decentralisation is a difficult process especially for large, traditional and diversified organisations. Much planning and organising is required in order to make government strategy a reality without the loss of efficiency and it was with this in mind that the Decentralisation Implementation Committee was formed. The committees aim is to examine and advise on the many issues surrounding decentralisation. Much has been written regarding this latest initiative and the programme has its critics as well as its champions but the governments position has not altered - decentralisation is important, and will be pursued.

A history of previous decentralisation Programmes in Ireland and Europe

The Seanad Eireann debates from the 9th of November 1955, indicated the length of time this matter has exercised the attention of the Oireachtas. Mr Crowley an Independent Senator noted “While all Parties are genuinely concerned with the drift of so many of our young people from rural centres to the emigrant ship, to unskilled work in our towns and cities and even in towns and cities beyond our own, it seems extraordinary that at the same time we are presented here on the very steps of Leinster House with the spectacle of our capital city bursting at the seams. It is estimated that already almost 600,000 people, over one-fifth of the entire population are now residing within a five-mile radius or at most a ten-mile radius of O Connell Bridge. Probably 90 per cent of all manufacturing industries are all situated within the same area.” The debate continued with a request for decentralising some Government Departments and offices.

Decentralisation in Regional Policy in the United Kingdom has its origins in 1934 when the Government, in response to the decline in basic industries like coal, steel, and shipbuilding designated South Wales, West Cumberland, the North East and West Central Scotland as special areas for Government assistance. There was a new designation of areas and an expansion of regional aid after 1945 and such policies reached their peak in the mid 1970s when no less than 50% of the workforce lived in areas, which qualified for regional assistance.

There are recent examples of decentralisation in the UK. The current plans of the British Government include plans to decentralise to smaller and mid-size towns. These towns similarly to those towns named in decentralisation plans in the Republic were set to benefit from a move of at least 20,000 Whitehall jobs out of London and the southeast. One of the interesting options suggested by Mr Michael Lyons who was charged with a Treasury commissioned review of potential public sector relocation was: moving jobs to India. The view is an interesting perspective on decentralisation. The prospects of this happening is remote Peter Gershon head of the office of Government Commerce and in charge of the review of Whitehall efficiency, said in December that he was against moving jobs offshore. Even Michael Lyons who proposed the possibility recognised “it is difficult to move people to Bolton, never mind Bangalore. “Michael an academic and a former chief executive of Birmingham city council was commissioned by Gordon Brown to identify jobs to relocate out of London.

The British chancellor wanted Whitehall staff to move to save costs and to bolster regional economies. About 245,000 of the 700,000 staff of government departments, regulators and agencies are based in London and the South-East. The interesting aspect of the proposals was the recognition of the need to offer incentives as well as disincentives to employees. The proposal also recognised that managerial and scientific jobs could be moved to more established cities such as Manchester or Leeds, while clerical were more likely to go the north - east.

A strict definition of decentralisation includes a mention of territory. According to Brian Smith; “Decentralisation involves the delegation of power to lower levels in a territorial hierarchy, whether the hierarchy is one of governments within a state or offices within a large organisation.” The last few years has seen decentralisation as a means of managing the public sector. There is little agreement over what decentralisation is. The question is whether it is a process or condition and what in entails. Some stress the improvement of accountability arising from the territorial decentralisation of services. Others stress the benefits to be gained in management culture and especially in staff motivation when decentralisation puts control of budgets and other key decisions at the lowest possible level in any organisation. According to the Oxford English Dictionary, to “decentralise” means to “undo the centralisation of” or “confer local government on”. The dictionary suggests that decentralisation is a process by which organisations, whether corporations or governments, move power from the centre to sub-units.

In Ireland the reality of decentralisation means the decision-making is in Dublin and whereas administrative functions may move to the regions and decentralised, power is not. In the strict definition of decentralisation because the organisational core keeps control of the process by using political, financial, and informational controls to contain tightly what the sub-units can and cannot do what we have in the majority of cases is administration being decentralised not power.

The hierarchy of the department or organisation may not change in relocation. While relocation is strongly desired in many parts of Ireland and there are lobby groups in up to 160 Provincial locations there are limits to the number of departments or functions that could or should be decentralised. In reality Fingal County Council can not decentralise to Leitrim. The Department office of Cabinet members similarly in practice cannot decentralise, as the Constitution requires that the Irish Parliament must sit in Dublin.

The Dutch model of the 1970s broadly mirrors our own current situation. Currently in Ireland we have two European Union regions i.e. the Southern and Eastern region with 126% of the average E.U. GNP and Borders Midland and West with 86% of average EU GNP. In the Netherlands the major concentration of population and employment was in the West of the country centred on The Hague. In the early 1970s the Government pursued a policy of relocating parts of the civil service to other parts of the country. The intention was to relieve the depressed economic situation in the south and north-eastern parts of the Netherlands. The south had been badly hit by the closure of coalmines and economic growth was generally depressed in the Northeast.

The parallels of progress mirror our own but delayed for different reasons. In 1972 the Dutch government began to disperse 16,000 government jobs to five designated towns, but parliamentary and administrative opposition slowed down the programme. By 1990, 5,500 jobs had been re-located in the South and 6,700 in the Northeast. The decentralisation went largely on schedule with the Government policy of reducing the numbers of Civil Servants and suitable institutional locations delaying the timescale for rollout. The policy may have assisted the employment deficit. Currently there are no further plans to further decentralise public employment. The regional differences in unemployment levels, which were the main motivating factor behind the relocation, are no longer as significant as before. This situation was aided by EU policy and development plans allied by in some part decentralisation.

The UK model for decentralisation is not necessarily a good case point for the Irish case. In the UK Regional Policy is the precursor for decentralisation. Central government is interested not so much in the physical entity of the ‘Regions”, but in the economic prospects of those who live there. In much of Europe (including Ireland) where regional problems are traditionally agricultural rather than industrial-there is a more tangible connection between land and population. In the UK model the policy towards the declining industrial centres of Glasgow, Merseyside and the North East government policy has been almost exclusively about job creation rather than land preservation. It concentrated on subsidising and nationalising existing industrial assets rather than identifying the patterns of entrepreneurship and wealth creation, which originally attracted those regions populations.

On completion of the last programme of decentralisation. 47 percent of the entire Civil Service, some 14,000 were located outside Dublin. While decentralisation cannot account for all the Civil Service presence outside Dublin, it has played a major part and has contributed significantly to a greater geographical spread of Government services.

The programme involved 4000 civil servants relocated to 20 provincial centres in nineteen counties. These locations were selected by the Government having regard to its desire to promote regional development, economic growth and a more even spread of public service jobs around the country. Relocation was on a voluntary basis for individual civil servants.

Benefits of previous decentralisation programmes

The positive effects of decentralisation including the economic benefits to host locations, a better use of existing infrastructure and the reduction of congestion in Dublin, outweighed any initial additional cost. All regions of the country benefited from decentralisation and the new decentralisation policy mirrored the original. It is obvious that the addition of new jobs to an area whether through decentralisation or otherwise, gives a positive economic boost to such an area. New jobs result in increased economic growth and better use of existing, and often underused local infrastructure.

Decentralisation in the past was seen to ease the ever-increasing rise in house prices in Dublin. It also reduced congestion in the Capital. There were savings to the taxpayer, in that cost of office accommodation in provincial centres was generally cheaper throughout the country.

Selection criteria and considerations for decentralisation programmes

Some of the criteria previously used in selecting centres for decentralisation would have included:

The development needs of various centres under consideration

The availability of suitable sites or office buildings

Transport links

The capacity of the local infrastructure, principally water, sewerage and telecommunications

The population of the centre, in comparison with the number of jobs being allocated

The proximity of third-level schools

Availability of housing and schools

These criteria featured in the new programme and account was taken of developments in the national spatial strategy as well as other initiates such as the National Development Plan.

Considerable experience has been built up in the Civil Service about how to organise decentralisation. Given the success of earlier rounds, there is far less fear of possible disruption, loss of control, and so on. If properly planned, decentralisation can be a success for the Departments involved and for their staffs:

Government departments/Offices previously decentralised:






Agriculture, Food and Rural Development



Revenue Commissioners



Central Statistics Office



Social & Family Affairs






Office of Public Works Enterprise, Trade And Employment



Justice, Equality and Law Reform



Agriculture & Food



Revenue Commissioners



Social & Family Affairs



Revenue Commissioners Social & Family Affairs



Environment, Heritage & Local Government


Agriculture, Food & Rural Development Communications, Marine and Natural Resources



Education & Science



Health & Children



Social & Family Affairs



Revenue Commissioners



Justice, Equality & Law Reform Social & Family Affairs



Education & Science



Agriculture & Food Environment Heritage & Local Government Communications, Marine & Natural Resources Revenue Commissioners

On 23rd of September 1993 P.L.McDonnell (Controller and Auditor General) issued his Decentralisation report to that date. It was a post event report on 1,700 civil servants decentralised to over 10 centres with 3700 more from Dublin to 19 Provincial centres. The main findings were:

Buildings constructed to accommodate decentralised staff were completed within cost and time budgets

The construction costs of the buildings compare favourably with the cost of offices provided in the past under contract by OPW.

The chosen financing method of providing buildings was, on average,2% more expensive than the cost of Exchequer borrowing for Public Capital Programme purposes.

Taking the financial package as a whole and setting the savings on construction costs against the more expensive financing method, the accommodation had been provided near or below the cost of directly managed OPW space.

The area of office space released to date in Dublin by virtue of decentralisation was 66% of the office space provided in the provincial centres.

This release of space represented 88% of space formerly occupied but, after further space earmarked for surrender had been relinquished, OPW expected to achieve the release of all space formerly occupied by transferring sections.

Any saving on the release of the more expensive Dublin space had to be weighed against the cost of the additional amount of space which had to be provided at each local centre. The space provided represented 133% of the space occupied in Dublin by transferring sections.

At the locations where decentralisation had been implemented, 92% of the staff targeted for transfer were now in place.

The Departments involved in the decentralisation programme reported no long-term impairment of operational efficiency although they had experienced some loss of flexibility in personnel management.

The Government had decided that private developers should construct the offices to which staff were to be transferred under lease purchase arrangements. The practical implementation of this decision had to date, resulted in the State meeting the cost of the provision of the offices on a deferred payment basis. Ownership of the offices rests with the State from the date of completion of the work.

The stated primary objective of the decentralisation programme was the promotion of regional development through a more even spread of public sector jobs throughout the country. The review examined how the implementation of the programme was planned and executed, the financial out-turn, the impact of the programme on the operational efficiency of the Departments concerned and whether arrangements had been made to assess its effect on the social and economic development of the regions.

The Audit objectives of the Controller and Audit General was to examine the following aspects of the programme:

1.Cost and financial benefits of the programme and in particular:

-the cost of accommodation and other costs

-the economy of implementation, including the economy of the financing method

-whether equivalent savings of Dublin office space were achieved.

2.Whether the programme was properly managed and in particular:

-whether the accommodation was provided to an appropriate standard and schedule

-the staffing implications of decentralisation

-Whether the job relocation targets for each centre were reached.

3.The measurement of impact of the programme and in particular:

-whether and how its impact on regional development was measured and assessed

-its impact on the operations and administrative efficiency of Departments.

Management of the programme

The Office of Public Works role with regard to the programme was to procure the necessary accommodation in the various centres with a view to having the decisions made by Government implemented as speedily and as economically as possible.

Sites on which the buildings were constructed were either already in the possession of the stator were provided at no net cost to the State. An exception in this respect was Cavan where an outlay of £51,712IRP (approximately €65661) was incurred on the acquisition of a site. Once a Government decision was made to transfer staff of a Department to a provincial location, it was a matter for that Department to select the sections to make up the specified numbers, to select the officers to staff those sections and to provide the OPW with the details of the grades and numbers transferred and the extent of accommodation required.

The relevant Departments identified staff selection as a key issue. Staff were asked to transfer on a voluntary basis but no removal expenses were paid. Where sufficient numbers were not forthcoming in a Department, volunteers were sought from the general civil service for transfer to the decentralised Department. If this was not sufficient staff were obtained as a result of civil service promotion competitions and, occasionally, by open recruitment through the Civil Service Commission. Importantly staff reported that the information technology and communications systems installed for the programme adequately supported their activities and functions and that their exposure to systems failure is minimised by appropriate back-up arrangements.

Staffing implications of the programme:

Staff transfers were voluntary but since many of the staff of the sections selected for transfer did not opt for transfer, staff unfamiliar with the work of the sections had to be re-deployed from other areas or recruited locally. Re-deployed staff represented from 90% to 100% of the total staff of the sections transferred with 49% to 94% being re-deployed from outside the decentralising Department. This resulted in a need for extensive training. The provision of adequate staffing for decentralised sections of Departments involved transfers, promotions and recruitment, which contributed to temporary increases in the number of staff serving in some Departments.

In general these arise because exact synchronisation is seldom possible in practice. Surplus staff was generally absorbed into normal staffing establishments through appointment to vacancies that would otherwise have been filled by recruitment or promotion. Most importantly in all cases bar one the costs were met by the Departments existing resources. The Department of Finance indicated that the Revenue Commissioners transfer of the Collector Generals Office to Limerick was the exception. In that case, a structured overlap, with an exceptional once-off addition to their budget was allowed in order to reduce the considerable risk to revenue collection while staff was being trained to take over the decentralised work.

By June 1993, all Departments had lost decentralised staff through a combination of transfers to other decentralised offices and transfers back to Dublin, sometimes on promotion. Staff turnover was a significant operational problem for the Department of Social Welfare at Sligo where turnover in excess of 50% had taken place. At other locations the percentage of staff transferred initially and which had subsequently moved on again varied from 3% of the Revenue Commissioners staff at Nenagh to 25% of the Department of Defence at Galway.

Government decisions set out the number of staff to be transferred to each decentralised location. Variations between the actual numbers transferred and the targets set out were:



Projected Staff No’s


Initial No’s Transfer

Total at June 1st 1993




July 1989




Social Welfare


November 1989






March 1990






February 1990






August 1990




Social Welfare


March 1991






September 1991






March 1992






June 1992










*At 1 June 1993, at those locations where decentralisation was complete, the actual number of staff transferred was l,567, or 92% of the target of 1,710.

Regional Development

The report noted, “Regional development is a stated primary objective of the decentralisation programme”. In this context, regional development envisaged the removal of, or at least reduction in, regional inequalities in living standards and opportunities. The creation of employment opportunities in the regions had been identified as an important factor in achieving this objective. The audit found that no consideration appeared to be given to putting in place a process of evaluating, after a predetermined interval, the impact of the programme in terms of the contribution it had made to regional development.

An obvious effect of the programme had been the influx of 1,700 workers to provincial centres with the consequent requirements for housing, education, health care and other facilities. When all the transfers envisaged in the decentralisation programme were complete for this trance approximately 3,700 staff would be transferred out of Dublin. The breakdown of civil service posts located in Dublin and in provincial centres was estimated at:

While other factors apart from the programme influence the location of State services in the provinces it is clear that the decentralisation programme had already achieved a marked rebalancing of civil service posts between Dublin and the Provinces.

The annual staff payroll of decentralised offices

In 1991 Irish Pounds



Gross Payroll





Social Welfare












Social Welfare
















21m (approximately €27m)

*Refers to the first phase of 154 staff; by the completion of the programme this number will increase to 550 staff

Effects on operational efficiency and management

When most of a Departments staff and sections are located centrally, staff transfers, re-organisations and communications between sections are facilitated. Relocating blocks of work and staff far from central offices carries an associated risk of loss of some flexibility in operational efficiency and increases the potential for additional costs e.g. travel expenses and communications. Careful selection of the sections to be relocated, clearly defined reporting structures and the efficient use of information technology and communications were believed sufficient to minimise the problems.

The Revenue Commissioners and the Department of Defence informed the report that by ensuring the areas selected for decentralisation were capable of operating as self contained units there had been no loss of flexibility.

The Department of Social Welfare informed the report that there had been some loss of flexibility as regards staff deployment between branches but this had been offset by the opportunity to reorganise the decentralised offices along functional lines. Greater efficiency and economies of scale accrued by bringing various schemes and staff together but high staff turnover tended to be a counterbalancing factor.

The Departments of Education and Justice reported that there had been significant loss of flexibility in the control of staff resources arising from lack of mobility between Dublin and decentralised offices. At these departments and the Department of Defence, the programme had not resulted in any significant organisational restructuring. The Department of Education informed the report that this had caused problems in that senior management now had reduced access to decentralised line sections and back-up. Arising from this and the impending decentralisation to Tullamore, the Department informed the report that the organisation structures would have to be critically examined with a view to ensuring satisfactory operational efficiency.

Impact on Provision of Services

Given the fact that significant numbers of personnel had to be redeployed to get the decentralised sections up and running it was recognised that the quality and level of output would be disrupted to some extent. This was the experienced by the Department of Social Welfare, who reported that a high rate of staff turnover at Sligo since the transfer exacerbated disruption and that there was an initial increase in claim processing errors. In response, the Department introduced a comprehensive internal control system at Sligo. Performance indicators operated by the Department for Sligo indicate that, after an initial lowering of performance following decentralisation, the position has now improved considerably to the extent that performance is now significantly higher than before decentralisation. Since 1988, several new schemes and extensive administrative developments have been introduced at Sligo and the overall volume of new claims received increased by 35%, which exceeds the rate of staff increase.

The Department of Social Welfare also stated that there had been improvements in quality of the service and levels of output in Letterkenny. Since decentralisation, staffing levels had remained constant while there has been an increase in claim load of 15%.

The Revenue Commissioners reported, that to date, the programme had gone smoothly; revenue collection had been protected during the entire operation and the training and review of operations undertaken in conjunction with decentralisation was generating new productivity.

The Department of Education has examined the possible effects of the transfer to Athlone on the operations and efficiency of the Department. They have identified geographic relocation, as a problem as the major region in terms of numbers dealt with by the Department is the East coast region.

The quality and level of output of sections of the Department of Justice transferred to Killarney was adversely affected temporarily due mainly to high staff turnover within a relatively short time. Work was prioritised and significant levels of overtime was undertaken. However, arrears of work, which arose during this period, have now been reduced to manageable proportions.

According to the Department of Agriculture, Food and Forestry if the first two years since the transfer to Cavan are discounted, the quality of service and levels of output have not diminished. Since decentralisation there has been an increase in the workload at the Cavan office while staff numbers there have declined.

Cost of Programme/ Finance

At the commencement of the programme in 1987 the Government decided that capital expenditure should be financed on a lease / purchase basis. In practice this decision has been implemented by entering into arrangements under which the State meets the cost of providing the offices on a deferred payments basis with ownership of the offices resting with the State from the date of completion of the work. OPW has received legal advice that the obligations entered into under the contracts do not constitute borrowing.

The approach adopted involves the developer providing OPW with a package arranged with a financial institution, whereby OPW makes annual payments for the properties over a period of 20 years. In practice developers have assigned the benefit of the contracts to the relevant financial institution to which payments are made from the OPW Vote comprising, in the main, capital, interest based on 12 month money market rates and an agreed margin. (DIBOR twelve-month rates were used in all contracts with the exception of one denominated in ECUs where ECU twelve-month rates were used).

Payments commence after the properties are built — normally about a year and a half after the contract is signed. The first annual payment is written into the contract and consists entirely of capital. The amount of each annual payment is determined 12 months in advance by reference to the interest rates ruling at that time.

In so far as the financing of public capital projects is concerned, this financing method is unique to the programme. An attractive feature of the method chosen is that immediate Exchequer borrowing for the full capital cost of the properties is avoided and the payments are spread over a 20-year period.

Cost of accommodation

By June 1993, contracts to the value of almost £36m for the construction of 12 office buildings had been entered into as shown;


Number of Contracts Placed



















£35.9m (approx. €45.6)

While the buildings provided under these contracts were primarily designed to accommodate staff transferred from Dublin, the opportunity was also taken to accommodate locally based civil servants at some of the locations with consequential savings on rented accommodation. An estimated 16% of the total space provided was allocated to these staff. By the end of 1993, annual payments to developers amounted to £4.3m (€5.5m).

Comparison of building costs of decentralised offices with OPW office building costs.

A Department of Finance study in 1989 compared OPW office building costs with the costs tendered by developers selected to provide accommodation at Sligo, Killarney, Letterkenny and Ballina. While the results are indicative rather that definitive due to differences in specifications, site conditions etc., the study found that the cost per square meter of the developer build decentralised offices was less in all cases than the cost of comparable OPW built offices; OPW built offices were found to be from 10% to 45% more expensive.

The results of the study and the experience of providing the decentralised offices by way of the developer approach contributed to the decision by the Department of Finance and OPW in 1992 to introduce guidelines on maximum costs per square metre for the provision of various categories of building by the State and are seen as a significant spin off development directed towards improving financial and budgetary control over building projects.

Cost / benefit of decentralised office buildings

According to the OPW the overall benchmark criterion against which the total cost of each project was assessed was that of comparable rents.

When OPW was reviewing tenders from developers for construction of local offices, it compared the cost of the accommodation being offered by them with the cost of equivalent office accommodation rented by OPW in Dublin and with the cost of existing office accommodation in the locality. In all cases the accepted enterer’s price per square foot of office space was cheaper that comparable Dublin rent, while in most cases it was more expensive than the average rent of local accommodation (see below). OPW has reported that existing local accommodation was generally of a significantly lower standard.

Comparison of decentralised office cost per square foot with other office space:


Accepted Enterer’s price per Square foot*

Comparable Dublin Rent

Average Local Rent

























*For the purpose of calculating the developer’s price per square foot, annual payments to developers are treated as rent and the figure is calculated by dividing the first annual payment by the floor area.

In contrast to rented properties, the State owns the decentralised offices and annual payments for them cease after 20 years.

While rented properties are subject to rent reviews, which over the years will tend to increase the rent, annual payments for decentralised offices are by way of annuity with the major variable being the interest content based on money market rates which can fluctuate down as well as up.

Costs to Departments

Apart from the annual cost to the OPW of meeting payments, due under the agreements the programme has resulted in extra costs for the Departments concerned in respect of furniture, fittings and equipment, file removal, training, incidental and staffing costs. In addition, Departments pay for any changes to specifications agreed between OPW and developers, which they require during construction.

Costs accrued to May 1993

Up to May 1993, Departments had spent an estimated £6.7m (€8.5m) on furniture, fittings, equipment and file removal. Training, travelling and subsistence and incidental costs were of the order of £0.3m(€0.38m). While precise figures were not available in the case of all Departments for the cost of overlapping staff during the initial training of staff recruited for the transfer or pending the redeployment of staff they replaced, it would appear to have constituted a considerable element. It has been estimated at £3.6m(€4.6m) at the Office of Social Welfare and £0.5m (€0.63m) at the Department of Education.

Recurring costs

Certain recurring costs will arise from decentralisation.

a.The Department of Social Welfare estimates that the ongoing additional administration costs in respect of decentralisation to Sligo and Letterkenny amount to £200,000(€254,000) per annum.

b.The Revenue Commissioners estimate that the ongoing additional administration costs in respect of decentralisation to Ennis, Nenagh and the first phase of Limerick amount to £90,000 (€114,000) per annum.

In addition, annual staff-training costs attributable to the programme are estimated at £200,000 (€254,000) by the Revenue Commissioners. These costs will continue until the decentralisation of the Collector General’s Office has been completed.

Conclusions of Report.

The method used to fund the construction of the decentralised offices was innovative for the State. It had the attraction of providing assets for the State without the capital cost adding to the National Debt.

If the deferred payments are regarded as analogous to rent they compare favourably with rents for Dublin office space and are only slightly above the average rents for office space in the provincial locations. Added benefits are that the State owns the properties, annual payments cease after 20 years, increases due to rent reviews are avoided and the local space provided is generally of a higher standard than space at local centres.

A 1989 study, which compared the costs of offices built by OPW under contract with the costs of offices built by developers in the same areas, established that the OPW built offices were more expensive by between 10% and 45%. Partly as a result of this study, guidelines on maximum costs per square metre for public building projects were introduced in 1992.

Developers completed the buildings and handed them over to OPW within the fixed price and agreed timeframe.

Practically all the relocated staff came from outside the divisions being decentralised and in many cases from outside the Departments concerned. This led to significant heavy costs, particularly in the area of training. This had an initial negative effect on the quality and level of output and this problem was compounded by high staff turnovers at some locations -especially at the Department of Social Welfare offices in Sligo which has experienced a turnover rate in excess of 50% since decentralisation.

The Government specified the numbers of civil servants to be decentralised. By June 1993, a total of 1,567 staff had been relocated to the provincial centres where the decentralisation process was fully implemented, viz. 92% of the target of 1,710.

The space provided at provincial centres represented 133% of the space formerly occupied by transferring sections.

It is recognised that for a variety of reasons e.g. moving from inadequate accommodation or shortfalls in numbers of staff transferring, office space released in Dublin as a result of decentralisation should not necessarily equate to the new space provided. To date, the actual amount of space released in Dublin by virtue of decentralisation represents 66% of the space provided in the provincial centres and 88% of the space formerly occupied by the relocated staff.

Since the use of office space vacated as a result of decentralisation is not separately identified by OPW, it is difficult to measure the impact of the programme on State held office accommodation in Dublin. However, it is clear that part of OPW’s extensive disposal of unused office space between 1989 and 1992 is attributable to decentralisation. One instance was noted of rented accommodation in Dublin lying idle while rent was being paid because of an unexpired lease; while in three other cases the surrender of accommodation was delayed due to refurbishment or to facilitate internal reorganisation.

Promotion of regional development and the reduction or elimination of regional imbalances was stated to be a primary objective of the decentralisation programme.

Although decentralisation initially posed operational difficulties for management, the Departments involved report that by choosing sections, which could operate independently, and with the assistance of modern communications and technology there was no long-term impairment of operational efficiency. However, there has been some loss of flexibility in the area of personnel management and there is the continuing administrative overhead cost of operating from the decentralised offices.