Mr. Seamus McCarthy:

Thank you, Chairman. The European Globalisation Adjustment Fund, which is generally referred to as the EGF, was established by the European Union to assist workers made redundant as a result of the impact of globalisation trends, or arising from the economic crisis. Programmes funded by the EGF aim to facilitate the early reintegration of workers into alternative employment and to promote entrepreneurship.

In Ireland, EGF programmes were established to assist workers affected by the Dell, Waterford Crystal, SR Technics and TalkTalk closures. A further programme was established aimed at assisting three categories of workers in the construction industry. The budgeted cost of the five programmes was €99 million, and they were planned to meet the needs of a total of around 14,000 workers.

The EGF funded 65% of the budgeted cost of the early programmes, reducing to 50% of the budgeted cost for TalkTalk employees. EGF funds are provided in advance by the EU, based on the estimated programme cost. Where the outturn cost is less than budgeted, a refund must be made to the EU.

Supports available for those who participated in the programmes included training programmes provided by FÁS, local authorities, vocational education committees and private colleges; assistance in undertaking third level education courses; and county enterprise board assistance for small business start ups. Income support during retraining or re-education was also be eligible for funding.

Each of the programmes has a maximum of two years’ duration from the date of application for EGF funding. At the time of finalising my report, the programmes for Dell, Waterford Crystal and SR Technics workers had finished and outturn data were available. The programmes did not attract the expected number of workers and those who participated took up less costly measures than originally envisaged. As a result, the final cost of the three completed programmes was €17 million, or 45% less than estimated, and €11 million was due to be refunded to the EU.

Early engagement with affected workers is a key factor in maximising participation in the programmes. Overall participation in the three completed company-based programmes was 87% of eligible workers, with participation lowest for the SR Technics programme at 76%. This may have been due to the fact that there was no central co-ordination unit for that programme. There was also a longer period of waiting for EU approval of the proposed programme.

The Department’s application for funding for the construction programme was submitted in June 2010, which meant it could include support measures for workers in that sector until June 2012. Final EU approval for the programme was received in November 2011.

It was only at that stage, about six months prior to the programme's completion, that eligible construction workers were contacted and became aware of the opportunities. The Accounting Officer will be able to inform the committee on the final programme uptake relative to target. The expenditure outturn on the construction programme was approximately €35 million, which was €20 million or 37% less than estimated. As a result, a refund of €13 million was due to the EU. The chapter found that the Department did not regularly monitor participation or expenditure and was dependent on the support providers for such information. This prevented the Department from identifying the low uptake of support at an early stage. That would have allowed more scope for steps to be taken to improve participation.

Determining the outcomes for the targeted workforce is critical in evaluating the effectiveness of programmes and in shaping future programmes. In particular, it is important to establish how many workers were re-employed and to assess what the outcome might have been in the absence of the programme. The response of participants to the Departments' surveys on outcomes was low and there was little canvassing of non-participants to establish the reason they had not availed of the opportunities available to them. As a result, it is not clear that any of the reviews of the three complete programmes gives reliable overall indicators of the outcomes for the targeted workforce.

In the interests of better targeting of any further programmes, the report recommended the use of person-by-person data to monitor participation and help identify whether there is a need to re-direct the focus of measures, the introduction and monitoring of implementation plans for participants and more comprehensive assessment of outcomes for both participants and non-participants.

The National Training Fund was established in 2000 as a ring-fenced fund to support the training of those in employment and those who wish to take up employment. It also is used to provide funding of research into existing and future skills requirements of the economy. The context for the fund's establishment was a shortage at the time of skilled labour in certain key economic sectors. The fund is resourced primarily by a levy on employers of 0.7% of reckonable earnings of certain categories of employees. In July 2011, the levy was reduced to 0.35% for employees earning less than €356 per week. The income of the fund from the levy proceeds in 2011 was €316 million, which was a marginal increase on 2010 levy income. European Social Fund, ESF, receipts into the fund tend to be less consistent from year to year. In 2011, some €80 million was received, including €24 million in refunds relating to ESF programme activity from 2000 to 2006. No ESF funding was received in 2010.

The resources in the fund are applied under two main programme areas. Approximately three quarters are spent on programmes of training for those seeking employment. Most of the remaining expenditure is on training and upskilling of those currently in employment. FÁS is funded under both headings. It received a total of €286 million from the fund in 2011. The other main beneficiary of the fund in 2011 was Skillnets Limited, which received a total of €14.5 million. This is a company established mainly to provide financial support for training of employees of established businesses. My office reported in 2010 on the utilisation by Skillnets of its funding and on weaknesses in the control of its spending. I should also point out that the audit of the 2012 accounts for the National Training Fund is ongoing at present.

The audit of the 2012 financial statements of FÁS has been completed and they also are before the committee today. The primary function of FÁS is to provide a range of training programmes and supports to both unemployed and employed people. The agency's activities in 2012 were mainly funded from the Vote of the Department of Education and Skills and the National Training Fund. Total expenditure by FÁS in 2012 was €442 million, compared with €943 million in 2011. The transfer on 1 January 2012 of the employment services and community programmes functions from FÁS to the Department of Social Protection accounts for most of the decrease in expenditure year on year. A clear audit opinion was issued in respect of the 2012 financial statements. However, my audit report drew attention to an impairment charge in 2012 of €4.1 million in respect of a vacated training centre, as well as asset write-offs in 2012 of €1.2 million with regard to two vacated leasehold properties. I also drew attention to an investigation of a jobs initiative scheme being carried out by FÁS. Potential irregular expenditure with regard to this investigation is estimated at up to €150,000.