Ms Rosemary Keogh:

I thank the Chairman and the joint committee for giving me the opportunity to present on behalf of the Not For Profit Association and the tens of thousands of people for whom we provide services.

The report of the independent review group, rightly, recognises that Ireland owes a debt of gratitude to the voluntary sector which was the first to provide hospital and social care services at a time when the State did not. As outlined by my colleagues, the current crisis in the sector calls into question the value the State places on the sector and, more importantly, how it prioritises the rights of the people who depend on the services the sector provides. The sector has grown to provide two thirds of all services for people with disabilities on behalf of the State and the continued delivery of those services is now dependent on the financial sustainability of voluntary organisations.

The Not for Profit Association represents the largest independent, national, not for profit organisations engaged in the provision of essential social care services on behalf of the State. Collectively, the seven member organisations manage an annual service delivery budget of more than €200 million on behalf of the State. We employ 7,000 people in delivering services to more than 30,000 adults and children in every part of the country.

Notwithstanding the distinctions between section 38 and section 39 funded organisations as set out in the Health Act 2004, we provide direct services on behalf of the HSE under the mandate of the service arrangement process. The services we provide are essential, not ancillary, and annually include 1.8 million personal assistant hours, 150,000 days of service in our centres throughout the country, 40,000 respite care nights, 125,000 clinical interventions, as well as a wide range of other person-centred services, including training, education, employment and independent living. What will happen to these services if the organisations can no longer provide them? Their continued delivery is under immediate threat. Our member organisations are struggling to remain financially viable, some to the point of existential crisis, following years of cumulative deficits that have eroded financial reserves. The deficits have arisen owing to austerity cuts that have never been restored, additional costs of compliance and regulation, ageing infrastructure and general inflationary cost increases as the economy continues to grow, but there has been no equivalent increase in State funding for the services provided.

In 2018 Not for Profit Association member organisations reported a combined deficit of €8.3 million which was directly attributable to the shortfall between the cost of delivering services on behalf of the HSE and the funding allocated by the HSE for these services. For ten years our member organisations have subsidised the cost of providing services on behalf of the HSE from their own independently generated income and related reserves. Those reserves are depleted and continued delivery of services is under immediate threat. Should the organisations have to cease providing services, the HSE will be required to resource and reinstate the services at full cost to and with no scope for savings for the Exchequer.

The issue of deficits for our member organisations is compounded by the HSE's ongoing insistence that deficits not be recorded in the annual service arrangements process. They are, therefore, not provided for in funding allocations and, presumably, not included by the Department of Health for consideration in future year budgets and strategic service planning. It is further compounded where service providers do record the deficits in service arrangements, thereby reflecting the true cost of delivering services. The HSE then threatens the withholding of 20% of the already inadequate funding, further compromising service delivery. This practice completely disregards and undermines the organisations' obligations in statutory corporate governance requirements, as companies limited by guarantee, to ensure the accuracy of information contained in legally binding contracts.

The State's regard for the sector is evident in its recent handling of the pay restoration process for section 39 employees. Having had funding cut to ensure our employees took the same austerity cuts as public sector staff under financial emergency measures in the public interest legislation, they were left out of the original public sector pay restoration process that began in 2016. Late last year the HSE agreed to a process of partial pay restoration for employees in just 38 out of more than 2,000 section 39 organisations, which will see these staff only return to 2008 rates of pay by October 2021. Recent communications from the HSE state there will be no funding for the pension element of pay restoration when historically service funding from the HSE always covered the pension element of service related pay. Our member organisations which are already operating with significant deficits arising from underfunding by the HSE cannot fund the pension costs arising from pay restoration. This is likely to lead to further industrial action which, in turn, will have a detrimental impact on service delivery and the lives of those depending on it.

The recent communication also states there is no expectation or requirement for section 39 employees to be aligned with health service salary scales. This seems to be a contradiction in the service arrangement process in which there is a requirement to have regard to public sector pay scales and the decades long practice of funding section 39 employees' pay at public sector pay rates. There is now a two-tier system of pay for social care workers, with those in the voluntary sector lagging behind their public sector peers in doing exactly the same work. In an economy with full employment this has created huge challenges in staff recruitment and retention, with a knock-on impact on service delivery already evident in our member organisations.

The publication of the independent review group's report should serve as a defining moment in preserving the positive impacts of the voluntary sector and its recommendations should be the anchor that will underpin a new relationship between the State and the sector. Failure to urgently implement the recommendations made in the report will result in many voluntary organisations being forced to terminate services. The biggest losers in this scenario will be the tens of thousands of people throughout the country who rely on the organisations for these essential services. The Government was able to find €3 billion to connect people virtually through the national broadband plan. What is it prepared to do, before it is too late, to connect tens of thousands of vulnerable people who are dependent on the services provided by voluntary organisations for their communities and society?