Joe McHugh (Donegal, Fine Gael) | Oireachtas source

Gabhaim buíochas don choiste fá choinne an cuireadh anseo inniu. I thank the select committee for giving me the opportunity to attend to assist in its consideration of the Supplementary Estimate which has been requested for my Department. The requirement is for an additional amount of nearly €182 million which comprises two major elements. On the expenditure side, there is provision for €147 million in additional expenditure to meet superannuation costs. There is also a contingency provision in the order of €35 million for European Social Fund receipts. I will oultine briefly the reasons for both elements of the Supplementary Estimate.

The committee will be aware that my Department has sought Supplementary Estimates to meet superannuation costs a number of times in recent years. They resulted from the gap between the allocation made to meet pension costs and actual expenditure to meet ongoing pension costs and pension gratuity payments. This issue has also affected other parts of the public sector. There has been an upward trend in the overall number of pensioners in the education sector. In 2014 pensioner numbers in the sector were estimated as being in the order of 42,500. Next year, we expect the figure to be closer to 49,000. As the committee is aware, it can be difficult to predict with absolute certainty the number of retirements in any particular year. This is primarily because teachers account for the vast majority of retirements in the education sector, but only a very small percentage of teachers retire on compulsory age grounds. The specific number of teachers who will retire in any given year will vary, but the trend has been broadly constant for a number a years.

I will outline the position in 2018. The amount we were allocated in budget 2018 would have provided for pension gratuities and pension costs for some 773 retirees in schools and 76 retirees in the institute of technology sector. The Supplementary Estimate will provide for the cost of an additional 1,319 retirements in the school sector, bringing the overall number to 2,092, and 143 in the institute of technology sector, bringing the overall number to 219. The Supplementary Estimate will provide for ongoing pension costs, where there is also an under-provision. I am pleased to say that, following significant engagement between my Department and the Department of Public Expenditure and Reform, €147 million in additional funding is to be provided in 2019 to meet superannuation costs in the education sector. This figure has been calculated with reference to actuarial forecasts and will mitigate the need for a Supplementary Estimate to meet pension costs in 2019.

The second major element of the Supplementary Estimate is a contingency provision for European Social Fund receipts. My Department's original Estimate for 2018 included a conservative forecast that some €34.7 million would be received in receipts related to a European Social Fund claim due to be paid in 2018. The Department made this claim to the relevant European authorities in November and our expectation is that it will result in receipts of €109 million which will be brought to account by the Department of Education and Skills by the end of the year. When dealing with amounts of this scale, it is obviously necessary to take a highly prudent approach. Given that at the time the Supplementary Estimate was being considered by the Government, we had not yet received this funding in the Department's accounts, it was considered appropriate to provide for a contingency in the unlikely event that the money was not received until next year. I want to make it clear that it is purely a technical exercise related to the timing of claims and recoupments and necessary to avoid any risk of an excess Vote. My Department is confident that we will receive the €109 million in this year of account and that it will be remitted to the Exchequer. In the highly unlikely event that we do not receive the funds until next year, it is important to stress that it is merely a timing issue and that there will be no loss of funds to the State.

I again thank the committee for its consideration of the Supplementary Estimate. I am happy to take questions.