Mr. Robert Watt:

It is a pleasure to be here. I thank the Chairman and wish him all the best in his new role. There are some familiar faces on the new committee, but some new ones also. I wish members all the best with their work.

I thank the Chairman and other members of the committee for giving me the opportunity to make this opening statement. I am pleased to appear before the committee to discuss these issues. I will give a brief synopsis of the findings of the report and its context and will then set out the response of our Department.

The Department of Public Expenditure and Reform very much welcomes the report of the Comptroller and Auditor General. It is timely and informs the ongoing development of policy in the Department and for the public service more widely. The Department regards seriously compliance with procedures governing payments. This report found that there was broad compliance with procedures in most cases, which is a welcome finding for us.

The report raises a number of issues which we have taken on board and to which we are responding. The Comptroller and Auditor General has outlined some of the responses we have undertaken since the report was published. The report proposes a good practice framework for public sector bodies making discretionary severance payments. This framework is a particularly useful input, which we support and intend to advance.

The report points out that confidentiality clauses, which were widely used, should acknowledge statutory override of confidentiality terms and should not interfere with employees' rights or prevent an employer from fulfilling his or her accountability obligations. We have referred specifically to this matter in recent guidance and we expect to deal with this further in a circular to be issued in the near future.

The report recognises that severance arrangements play an important role in recruiting and, when necessary, exiting people from the public service. Candidates are aware that circumstances can change and that they may not be able to remain in their post as long as had been hoped or intended initially. Against that background, the availability of a severance arrangement is likely to be viewed as an important element of their overall remuneration package.

The public service also needs to provide for severance arrangements to address key risks, for example, where the employment relationship has broken down or where a new and fresh approach needs to be introduced. The public service needs to have the tools to manage all these situations.

There is also a need to provide for early retirement or severance to deal with situations where individuals wish to exit the public service rather than be redeployed or where there is a need to be able to deal with the consequences, for example, of an economic downturn. These situations are dealt with currently through the collective agreement with the Irish Congress of Trade Unions on voluntary severance terms within the public service.

We should be clear about the relative position of severance payments in the overall context of public service pay and pensions policy. In the period under examination, when the total cash value of public service pensions amounted to €8.8 billion, the cash value of severance payments reported on was less than €7 million. On expenditure, for which I am accountable, under Vote 12 - Superannuation and Retired Allowances, expenditure in the period was €1.4 billion while the cash value of severance payments was €1.149 million.

There have been a number of changes in severance arrangements in recent years which are set out in the brief we supplied to the committee. Recently, text has been included in the revised code of practice for State bodies requiring disclosure of the aggregate value of severance payments and agreements in excess of €10,000. The text also calls on State bodies not to enter into confidentiality agreements which preclude them from disclosing details of settlements other than in exceptional circumstances and on foot of legal advice. The Department is currently considering what further elaboration on the existing guidance on severance may be necessary.

I welcome the report and look forward to discussing it with the committee.