Mr. Robert Watt:

I thank the committee for the invitation to appear before it. I thank the officials from my Department, whom I have introduced, for their hard and detailed work on the review and for providing the committee with all the information it required for this meeting and in relation to its further discussions in regard to other sectors. A large volume of information on allowances has been provided which it is hoped will be of help to the committee. We are also available to provide further information if members of the committee feel that is useful.

Last week, I briefed the committee on the overall aims of the review of public service allowances and the next steps proposed in each sector. Today, I will speak about allowances which are common to two or more Departments within the Civil Service. Members will be aware that the allowances review conducted by the Department is the first comprehensive public service-wide attempt to address outdated allowance-based pay structures across the public service, many of which date back to the 1920s and have built up progressively over the years to address many different issues at particular times. The review to date is the first step of an ongoing process. It is also only one element of a sustained programme of cost reduction and productivity increases across the public service.

Members will be aware from previous discussions that the Minister, Deputy Howlin, and Government have set out a plan to reduce the overall cost of the public sector by 20% between 2008 and 2015, through a variety of different measures. My purpose here is to speak on the review as it relates to the very small number of Civil Service allowances common to two or more Departments. The committee has been provided with information in respect of those allowances, the cost of which to the system is €4.7 million, with most being paid to the lowest paid grades in the Civil Service. I will comment further on these allowances later. I have also been requested by the committee to discuss allowances paid to Members and parties of the Oireachtas and I am happy to do so.

It is important to point out that the term "allowances" covers a wide variety of payment types, namely, reimbursement of expenses, payments for qualifications held and allowances which were introduced in recognition of particular duties being undertaken. In the context of the review, it was evident that many allowances were used or retained as a supplement to basic salary for particular groups. This is particularly relevant in the context of those allowances pertaining to the Civil Service. While they may have been introduced for a valid purpose, in particular to resolve a dispute in the era of pay relativities, they continue to be paid despite that justification for them no longer holds.

It is our view that allowances should only be payable in circumstances that meet the criteria set out for the review. Those criteria are that they should reflect the arduous nature of unsocial hours, including the need to remain on call at weekends and other times, clearly associated with the duties of posts, they should ensure work of additional value is actually received by an employer, or they should cover an actual cost accruing to the employee derived from their employment. These are the important criteria set out as the basis for this review.

The common Civil Service allowances are those in payment on the same basis in two or more Departments across the Civil Service. These allowances form only a small part of the overall Civil Service pay bill.

Based on the data submitted to the Department for 2011, they cost an estimated €4.7 million. This represents 0.35% of the overall pay bill for the Civil Service, which for 2011 was €1.34 billion. This is a very small quantum of money in percentage terms, probably smaller than any other sector the committee will have the opportunity to review.

Allowances do not normally form a part of the pay of civil servants, who generally receive basic salaries only. No duty-based allowance is payable to senior management such as Secretaries General or assistant secretaries. One group of allowances was paid to management grades, primarily principal and assistant principal officers, and higher executive officers, for attendance at overseas meetings. These were the chairpersons' and delegates' allowances, which made up 17% of the overall cost of allowances in the Civil Service in 2011 and amounted to €800,000. This cost was expected to increase during the course of the forthcoming EU Presidency in 2013. The Government decided to abolish this allowance for current incumbents and new beneficiaries following the review, and this decision has been notified to Departments. Of the €4.7 million costs in 2011, €800,000 was for this allowance, which has been abolished. The 0.35% share of the pay bill will be lower for 2013 when the decision is rolled out throughout the system.

The largest number of the common civil service allowances, 14 of the 20, are paid to service officers, who are a group of low paid civil servants. The wages of service officers vary from €398.74 a week to a maximum of €495.55 a week. Like the pay in some other sectors, over many decades their basic pay rates have been supplemented by allowances. The allowances are payable for specific additional tasks. The review concluded that a medium-term review and restructuring of the pay arrangements for these grades is merited.

The review also found that the retention of a part of the allowances paid to Ministers' private secretaries after they completed their duties was no longer merited. Private secretaries to Ministers could retain 50% of the allowance after they ceased being private secretaries. New individuals taking up these posts will not be able to retain this allowance after they leave.

Other than these, the review found the remaining small number of the common civil service allowances in payment are justified, as one might expect given the small number that fall within the category. They provide value to the employer, apply to a small number of personnel and are mostly paid to staff at the lower end of the salary scale. The Department will engage with staff interests through the various representative councils with a view to securing their early agreement to the changing or elimination of certain allowances we have identified. I am happy to discuss these common allowances for the Civil Service with the committee and answer any questions from members.

In this session the committee intends to examine the allowances paid to Members and parties in the Oireachtas. While the Minister for Public Expenditure and Reform is the regulatory authority with regard to the Oireachtas allowances regime, the amounts paid under this regime to Members of the Oireachtas are administered and paid for by the Houses of the Oireachtas Commission. The Accounting Officer, Mr. Coughlan, is present to speak to the payment of these allowances. The only allowance paid directly by the Department to Members or parties is the party leaders' allowance and the Minister has indicated his intention to review this. For the committee's information, this cost €7.92 million in 2011. We are happy to assist the committee in its work this afternoon and in subsequent reviews of various sectors and I ask the Chairman to let us know if we can provide any further information or assistance.