Mr. Seamus McCarthy:

The appropriation account for the Vote for prisons recorded gross expenditure of €331 million in 2015. Payment of salaries, wages and allowances totalled €235 million, which represents almost 71% of the total expenditure in 2015. The Prison Service spent just over €47 million on buildings and €26.5 million on prison services, including expenditure on food and cleaning materials etc. The main capital development project being undertaken by the Irish Prison Service in 2015 was construction of a new prison in Cork at a total estimated cost of approximately €45 million. This new medium security prison for adult males has an operational capacity for 275 prisoners and is the committal prison for counties Cork, Kerry and Waterford. The relocation of prisoners from the old Cork prison commenced in early 2016. The Accounting Officer will be able to brief the committee on the proposed future use of the old Cork prison.

A Supplementary Estimate of €6.3 million was voted for the Prison Service in 2015. At the end of the year, the unused surplus for surrender was €1.26 million. The account received a clear audit opinion. However, in my certificate, I draw attention to the Accounting Officer's statement on internal financial control, in which he discloses the level of non-compliance by the Prison Service with national procurement rules in respect of goods and services procured in 2015.

The report for consideration by the committee this morning relates to an examination by my office of the annualised hours system which operates in the Prison Service. This system replaced overtime in the Prison Service from late 2005. Historically, overtime levels were very high in the Prison Service. Overtime costs peaked at €59 million per year in 2002 and 2003. Under the new annualised hours system, prison officers contract to work a fixed number of additional hours annually to a maximum of 360 hours per year over standard rostered hours. When the Prison Service was planning to introduce the system, it was projected that it would result in significant financial savings. I wanted to examine what had been achieved in that regard.

Following the introduction of the annualised hours system, the average number of hours worked by prison officers over and above their basic work week was halved.

The new cap on the number of additional hours that a prison officer may work ended the practice of some individuals working extremely high numbers of hours. There is now a more even distribution of earnings from additional hours.

Prison officers are paid for contracted additional hours at a rate of 1.8 times the basic hourly rate. A related pensionable allowance of 8% of basic pay is paid to each prison officer regardless of the number of additional hours he or she contracts to work. This includes approximately 7% of officers who do not contract to work any additional hours. My examination found that the average overall earnings of prison officers have not changed significantly in cash terms since the introduction of the new system. Prison officers are paid for all of their contracted additional hours but may not be called on to work the full number of hours. Additional hours not worked are called write-off hours. While the average level of write-off hours across the Prison Service in 2014 was 15%, there was significant variation across the 14 prison institutions. Open centres had the highest number of such write-off hours.

The Irish Prison Service has a low ratio of prisoners to prison officers relative to prison services in other states. This suggests that some efficiency gains may be possible. The joint task reviews that were carried out under the 2010-14 and 2013-16 public service agreements resulted in changes to staffing configurations. No in-depth review of the tasks carried out in prisons and the resources required for those tasks has been carried out since 2001. In particular, there was no formal process for the identification of potential efficiencies which may have arisen from prison infrastructure expenditure, which came to a total of €223 million between 2001 and 2014.

The Prison Service anticipated that the introduction of the annualised hours system would result in a reduction of approximately one third in the amount of sick leave taken by prison officers relative to 2001 levels. Sick leave levels increased significantly between 2001 and 2005. The incidence of sick leave fell significantly after the introduction of the annualised system, but the reduction achieved to date has not been to the level anticipated by the Prison Service.

The Prison Service estimated that the annualised hours system would produce savings of €31 million a year. This was not achieved. The examination estimated that the average annual net salary saving as a result of the introduction of the annualised hours system is approximately €5.5 million a year. Furthermore, the savings achieved to the end of 2014 were offset by substantial lump sum payments, totalling €41 million, to serving prison officers when the new system was introduced. As a result, the estimated net Exchequer saving over the period 2006 to 2014 was approximately €8 million.