Mr. Seamus McCarthy:

The 2021 appropriation account for Vote 42, Rural and Community Development, records gross expenditure of €344.4 million. The bulk of the expenditure was distributed across two programme headings, with a broadly similar amount spent under each. A total of €169.2 million was spent on the rural development and regional affairs programme, through which the Department funds investments and projects aimed at renewing towns and villages with populations of fewer than 10,000. Within the programme, there was an underspend of €41 million on rural regeneration and development fund capital projects attributed to delays arising from Covid-related restrictions in the first half of the year. This underspend was applied, in part, to fund additional spending on rural supports and Leader groups. A total of €171 million was spent on the community development programme in 2021, to facilitate community development in both urban and rural areas. Across this programme, expenditure was generally in line with the estimate provision.

Programme C is used to provide funding to the Charities Regulatory Authority, which received grant funding of just over €4 million in 2021. Appropriations-in-aid of the Vote amounted to €81.6 million in 2021. Some €68 million of this was received from the EU, which was significantly up on the level of funding anticipated in the Estimate. In addition, €12 million was received from the Dormant Accounts Fund. The surplus at year end was €58.3 million. The Department received sanction to carry over €16.9 million in unspent capital allocations to 2022. The balance of €41.5 million was surrendered to the Exchequer.

I issued a clear audit opinion in relation to the appropriation account. However, I drew attention to two matters disclosed by the Accounting Officer in the statement on internal financial control. First, the Accounting Officer discloses that there was a non-compliant procurement in the form of an extension of the contract for the provision of air services to the Aran Islands, at a cost in 2021 of €910,000, excluding VAT. The contract was replaced in mid-2022 following a competitive procurement process. Second, as part of routine checking of grant payments to local authorities in 2020, the Department’s internal audit unit identified irregularities in relation to a number of projects the Department had funded under the outdoor recreation infrastructure scheme. The audit identified that no work, or only part of the agreed work, had been done when Mayo County Council claimed the grants. It was a clear condition for drawdown of the funding that the agreed capital works be completed in full. The auditors also identified expenses incurred for other projects that had been incorrectly charged to some of the outdoor recreation projects. In November 2021, the Department terminated the grant funding agreements for four projects and reduced its funding commitment for another project. The Department asked Mayo County Council to return €1.09 million previously claimed and imposed a recoupment sanction of €161,000 in respect of other projects. It also referred the internal audit findings to the Local Government Audit Service and the National Oversight and Audit Commission. The statement on internal financial control also outlines the changes the Department has made to strengthen the controls it operates in relation to grant schemes.

A significant part of the expenditure under the Vote for rural and community development is channelled by the Department to, or through, local authorities. In 2021, such transfers amounted to almost €193 million. This comprised €56.3 million for the LEADER programme regeneration and community enhancement schemes; €40.2 million for the social inclusion and community activation programme; €38.3 million for rural regeneration projects; €26.2 million for other services such as library services; €22.4 million for the improvement of regional and local roads; and €9.5 million for temporary Covid-19 supports in 2021. The Department is therefore reliant to a significant degree on the systems of oversight of local authority spending for assurance on how Vote 42 funds have been applied.