Oireachtas Joint and Select Committees
Thursday, 28 February 2013
Public Accounts Committee
2011 Annual Report of the Comptroller and Auditor General and Appropriation Accounts
Chapter 6 - Financial Commitments under Public Private Partnerships
Chapter 18 - Salary Overpayments to Teachers
Vote 26 - Department of Education and Skills
10:10 am
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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We will be discussing the 2011 appropriation accounts and annual report of the Comptroller and Auditor General, chapter 6, financial commitments under public private partnerships; chapter 18, salary overpayments to teachers, and Vote 26 - Department of Education and Skills. Before we begin I remind members, witnesses and those in the Public Gallery that all mobile phones must be switched off because they interfere with the transmission of the meeting. I advise witnesses that they are protected by absolute privilege in respect of the evidence they give to the committee. However, if they are directed by the committee to cease giving evidence on a particular matter and continue to do so, they are entitled thereafter only to a qualified privilege in respect of their evidence. They are further directed that only evidence connected with the subject matter of these proceedings is to be given and are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against a Member of either House, any person outside the House or an official either by name or in such a way as to make him or her identifiable. Members are reminded of the provision within Standing Order 163 that the committee shall also refrain from inquiring into the merits of a policy or policies of the Government or a Minister of the Government, or the merits of the objectives of such policies. I welcome Mr. Seán Ó Foghlú, Secretary General of the Department of Education and Skills, and ask him to introduce his officials.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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I ask the witnesses from the Department of Public Expenditure and Reform to introduce themselves.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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The witnesses are all very welcome. I now ask the Comptroller and Auditor General to introduce the accounts.
Mr. Seamus McCarthy:
The appropriation account for Vote 26 for the Department of Education and Skills recorded a gross expenditure of €8.87 billion in 2011. Salaries and pensions accounted for more than three quarters of current expenditure, with approximately 95,000 whole-time equivalent staff in the sector. Capital services expenditure amounted to almost €590 million. The school transport service is funded from Vote 26 and payments amounted to €171 million in 2011. A sum of €152 million was paid to Bus Éireann which, under a long-standing arrangement, manages the provision of most school transport, using a combination of services contracted in from private bus operators and vehicles in its own fleet. The remaining €19 million was spent on direct school transport grants and school bus escort payments.
Chapter 6 deals with the Exchequer's overall financial commitments arising from public private partnerships, PPPs. Members will recall that various aspects of this chapter have been considered by the committee in previous meetings. Total expenditure to the end of 2011 on five education PPP projects was €255 million and the outstanding commitment with regard to those projects was just under €1 billion. The five projects comprise three groups or bundles of schools, the National Maritime College and the Cork School of Music, both of which are part of the Cork Institute of Technology. The chapter recommends publication of the value for money appraisals carried out before PPPs are contracted for to assist in improving public understanding of the factors influencing the achievement of value in public investment projects. The chapter also recommends, in the context of roads projects, that post-implementation evaluations of projects should be carried out so that lessons learned can be applied in development of later projects. This applies equally to other types of PPP projects, including those in the education sector. Ideally, projects to be evaluated should have been in operation for a sufficient period to allow them to have bedded down. As some of the education projects have been operational for a number of years at this stage, post-implementation evaluations would now be timely. I am not aware that any have been completed to date.
Four other education PPP projects are currently being developed and are at various stages of progress. These involve a further three bundles of schools dispersed across the State and the Dublin Institute of Technology campus in Grangegorman, designed to bring together the various schools and colleges of the institute on a single site. In 2011 the Department cancelled three bundles of third level education PPP projects that had been in planning for a number of years. The National Development Finance Agency had procured and provided technical, legal, financial, insurance and other services for those projects at a cost of almost €4.4 million, excluding VAT. The Department provided capital funding of €5.7 million to the colleges to prepare clean, serviced sites for the PPP companies. Some of the colleges incurred additional costs from their own resources. For example, the Institute of Technology, Tallaght incurred substantial additional PPP project related costs from accumulated reserves. The extent to which these sunk costs have potential future value has not been determined.
Chapter 18 deals with salary overpayments to teachers. As part of the 2011 budget, the Government applied a 10% reduction in the pay rates for new entrants to the public service on or after 1 January 2011. In addition, all new appointees to teaching and many retired teachers returning to teach were to commence at the first point of the relevant pay scales. The terms of the budget decision also applied to non-teaching staff employed in schools. It took the Department over seven months from budget day to prepare and issue a circular containing the revised pay scales and a further two months to implement the required changes to its payroll systems. When the report was being completed, the Department estimated that it had overpaid approximately €1.18 million to some 4,700 new entrants in 2011. I understand the Department has since revised up this estimate and now calculates that the overpayment amount was €1.745 million, paid to just under 5,000 employees. By September 2012, one year after implementation of the pay rate changes, the Department had not yet contacted the overpaid individuals or put in place repayment arrangements. The Department expected the repayment arrangements for the post-primary and non-teaching staff to be completed shortly and to commence with the primary sector in November 2012. I understand that, to date, around 29% of the estimated amount overpaid has been recovered. The Accounting Officer will be able to provide further information about payment recovery and whether recovery of the full amount overpaid is expected to be achieved.
The scale of the challenge in managing large public sector payroll systems was brought out clearly during the series of committee meetings last October and November that examined allowances in public sector bodies. I fully accept that time is required to implement budget and other changes in public sector pay. Nevertheless, I concluded that it would have been more efficient had the Department regarded all staff added to the payroll in 2011 as new entrants and applied the pay reductions earlier. Subsequently, pay rates could have been adjusted for eligible employees as evidence was supplied of relevant previous employment in the public service. This is likely to have been a more efficient approach because employees would have had a financial incentive to provide relevant information promptly. The operational lessons from this case may be of value in the context of the currently proposed pay reductions, the implementation of which presents a very significant challenge to all public sector payroll managers.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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I thank Mr. Mc Carthy and call on Mr. Ó Foghlú to make his opening statement.
Mr. Seán Ó Foghlú:
I thank the Chairman for the opportunity to make this statement concerning the examination of the 2011 appropriation accounts for Vote 26. As requested, I have forwarded some advance briefing to the committee and will keep my opening statement short. The briefing note provided outlines the structure of the Vote for my Department and gives details regarding the main components of expenditure, together with information regarding expenditure on the Vote in 2011 and provisional outturn for 2012. While the Comptroller and Auditor General's report for 2011 contains three chapters relating to the education Vote, I understand that only two of those chapters are scheduled for discussion today, namely, chapter 6 relating to financial commitments under public private partnership and chapter 18 relating to salary overpayments to teachers.
On the issue of PPPs, the challenging fiscal environment has meant that some very difficult choices over the last number of years have had to be made with regard to education expenditure. In our case, the current emerging demographic challenges for the school sector have also been highly influential in informing those choices. This is the context in which the decision not to proceed with a number of third level education PPP projects was made. The challenges I have outlined have made it inevitable that such capital resources as are available to the Department must be prioritised for the delivery of school places. This is the conclusion to which the Government came in November 2011 in deciding on the capital envelope to be made to the Department for 2012 to 2016. Effectively, the education capital budget included provision for the extensive demographic growth and was only able to commit to seeing through capital commitments in other areas. This is the context for the decision with respect to third level PPP projects.
We would have preferred to be in the position to advance with these projects but the Government’s overall capital allocation was being reduced and we had no other option. While much of the investment that was made in those projects has been retained through infrastructural works, including road networks and services which will facilitate future development, we do recognise that there are significant consultancy costs which were undertaken and which are not of future value. In November 2011, we announced that the Grangegorman PPP project was being delayed, but arising from further investment being available under the Government’s stimulus programme announced in July, that it is now proceeding. In addition, the schools PPP projects are continuing apace.
On the salary overpayments, in budget 2011 provision was made that a 10% reduction would apply to the pay of new appointees to the public service and that all new appointees to entry grades would start at the first point of the relevant pay scale with effect from the 1 January 2011. This arrangement also applied to retired staff returning to work in a substitute or temporary capacity. Due to both the complexity of our payrolls and the pay arrangements for teachers generally it took some months for the Department to determine the terms and conditions relevant to new teacher appointees and to make the necessary changes to our payroll systems for the changes to take effect.
Implementation of the revised arrangements required the development of sophisticated and comprehensive IT programmes to deal with the complexity of the various working patterns and categories of teachers, particularly part-time and substitute teachers, throughout the sector. This requires adequate lead-in time to allow for clarification of the issues involved, the preparation of specifications for the development of IT programmes and the full testing of these programmes without impacting on the normal payroll runs or the integrity and accuracy of the payroll systems generally which cater for 95,300 payees being paid on a fortnightly basis. The absence of this adequate lead-in time will inevitably lead to some element of overpayments being incurred depending on the complexity of the change to be implemented.
The difficulties faced by the Department in implementing the new arrangements provided in budget 2011 resulted in overpayments to a number of teachers. The total value of the overpayments that arose has now been calculated at €1.745 million which represents 0.038% of the total 2013 payroll budget. A total of €508,482 has been recovered up to and including 14 February 2013, leaving a balance of €1.236 million outstanding. The overpayments continue to be recovered on an ongoing basis by fortnightly deductions from the pay and pensions of the individuals concerned. It remains the policy of the Department that all overpayments will be recovered in full in the shortest possible timeframe. Together with officials from the Department, I will be happy to deal with any issues arising from the Vote.
10:20 am
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Can we publish the statement?
Gerald Nash (Louth, Labour)
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I welcome the witnesses to this morning's meeting. First, I wish to deal with salary overpayments to teachers described by Mr. Ó Foghlú. As part of budget 2011 a reduction of 10% was applied to the pay of new entrants. I appreciate and understand the difficulties encountered by the Department. A teacher appointed in 2010 would be in receipt of a gross salary of just over €33,000 plus more than €6,000 in allowances, and a teacher appointed in 2011 would be in receipt of approximately €28,000 gross, plus approximately €5,500 in allowances. I understand that the higher rates continued to be paid until August 2011. Is it the case that the Department did not have a system in place to deal adequately with the change introduced in the previous budget?
Gerald Nash (Louth, Labour)
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Could Mr. Ó Foghlú describe how the system works and how it compares with the systems operated by other Departments and agencies?
Mr. Seán Ó Foghlú:
First, it is important in describing the system to indicate the extent to which it is not similar to other Departments and agencies. We have the biggest payroll in the State. We have approximately 95,000 people paid on the payroll - post-primary teachers in secondary, community and comprehensive schools, primary teachers, non-teaching staff in those schools, retired teachers and non-teaching staff. We have more than 2.4 million transactions per annum.
One of the particular complexities of the nature of our payroll system is that we deal with payments to part-time and substitute teachers. That means that in any two week period we have 10,000 teachers coming off and on to the payroll. We have a wide range of finishers and starters in any two week period, which is relatively unique in the context of the public sector. The payroll service relates to all of those schools. We are not technically the employer but we operate a payroll service.
We have an online claim system which deals with all of the substitute claims, which is a particularly complex element. There are not only a single set of pay arrangements in place. Different arrangements are in place for teachers depending on whether they are casually employed, non-casually employed or permanently employed. Each category has different rates of pay and also each of them works up service towards incremental credit in a different way. We have a complicated system in that sense. With the changes being introduced in the budget from December 2010, starting in 2011, rather than the payroll itself, we had to look first at the issues surrounding whether someone was a new starter. There were various complexities in that regard. We had to consult in detail with the Department of Public Expenditure and Reform and we had to issue a circular to the sector so that the change could be explained.
Gerald Nash (Louth, Labour)
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It is correct that the circular was only issued several months after the original decision to reduce pay at that level was agreed?
Gerald Nash (Louth, Labour)
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Yes, several months later. Why was there a delay?
Gerald Nash (Louth, Labour)
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Did the Department not receive a circular of notification from the Department of Finance or the Department of Public Expenditure and Reform immediately after the budget? The Department had adequate time to prepare. Why did it take several months to circulate the notification to those affected?
Gerald Nash (Louth, Labour)
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Is that because many teachers who retired under previous retirement and redundancy schemes had reapplied to engage in work, in many cases in the schools from which they had retired?
Mr. Seán Ó Foghlú:
Retired teachers were part of the difficulty but there were a number of other categories of teacher who might have been working, for example, in a VEC, who were coming across. If someone worked in public sector employment elsewhere prior to the time they started teaching-----
Gerald Nash (Louth, Labour)
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Was there not sharing of information in that respect between Departments and agencies? For example, if a teacher had worked in a VEC, did the Department did not have an adequate record of their income, their incremental pay scale or anything of that nature? Did the Department not have sufficient information?
Mr. Seán Ó Foghlú:
We do not have information in the Department on the details of who is employed in a VEC. If someone enters our payroll, we have to check whether he or she has been employed. That is in the context of 10,000 new entrants onto and exits from our payroll every couple of weeks. We required clarification on a range of areas. It was not just a case of getting the information. We required clarification on what the arrangements would be for those to whom the change applied. It took us six months from the time the decision was made until the circular was concluded to work through the various clarifications with the Department of Public Expenditure and Reform. We had to be careful that we did not take action which would be inconsistent with what other public sector organisations were doing. Given the complexities of our sector, it took us longer than any other sector. We were working with the Department of Public Expenditure and Reform in concluding the circular.
Gerald Nash (Louth, Labour)
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The Comptroller and Auditor General’s report originally indicated that the overpayments amounted to €1.18 million. The current value of the overpayments appears to be €1.745 million. Is it the case that just over €500,000 has been recovered?
10:30 am
Gerald Nash (Louth, Labour)
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How does the Department engage with the individual teaching staff nationwide who have been overpaid? Does the Department require their consent to have this money returned?
Mr. Seán Ó Foghlú:
Once we were able to identify everyone who was overpaid, we contacted them and informed them that we would be reducing any future payments by a certain amount. The amount we typically use in getting repayments is €20 per fortnight. However, we also offered to facilitate anyone who wished to repay in full what was paid, and a number of people took up that offer. We advance to meet the payments, whether from people who are teaching or who have retired. We are advancing to make those reductions. Moreover, as we are considering increasing the amounts to be paid back from retired teachers and are in consultation with the retired teachers associations in that regard.
Gerald Nash (Louth, Labour)
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Clearly, in light of what the Secretary General is telling us this morning and in light of the Comptroller and Auditor General's report, there may be a major challenge in the context of any second Croke Park agreement. Yesterday, I listened with interest to an interview with a leading industrial relations journalist who described the Croke Park agreement as probably being the most elaborate industrial relations agreement in the history of the State. These words also could be attributed to Kieran Mulvey of the Labour Relations Commission, LRC. It is a hugely complex set of arrangements to be considered by trade union members. If the Department experienced difficulties regarding what was, generally speaking, quite a small adjustment, and if the Croke Park extension agreement is adopted and agreed by the trade unions, can one have confidence that the Department will be able to deal with the complexities that inevitably will arise in respect of staff members who will experience a step back in terms of increments or those who will now have 15 month increment periods, as well as all the different propositions under the second Croke Park agreement? Is the Secretary General confident this can be dealt with? It will be a monumental task.
Mr. Seán Ó Foghlú:
It might be useful to take members through some of the changes we have been obliged to put in place with the economic downturn over the past five years. We have been obliged to deal with the universal social charge and the pensions related deduction. While we have been able to deal with these successfully, they have added to the burden regarding payroll. A lot of external elements, if one likes, are being imposed on us - I do not mean this in an awkward sense - which we are required to implement arising from central changes. We are working through a number of other changes at present such as the Public Service Pensions (Single Scheme and Other Provisions) Act 2012 and the enactment of section 30 in respect of the need for teachers to be registered. We also are working through the taxation of illness benefits and a number of other areas. We also were able to deal with the changes from February 2012 with an easier change to the system because of the nature of the payment. The major difficulty in 2011 had been that we were obliged to recategorise staff with new entrants and so on. That really was the biggest difficulty, which we had not faced previously.
Obviously, like the committee members themselves, we are learning of the outcome in payroll terms. Although the Department obviously has had an input in policy terms to the discussions, in payroll terms we will consult the Department of Public Expenditure and Reform to ascertain what will be the overall approach. While there will be challenges, elements of it also will be made more simple, for example, with regard to supervision and substitution. If the arrangements regarding supervision and substitution come through as contained in the LRC proposal, some elements of complexity in our payroll system will decrease. Furthermore, if the elements in the agreement on substitution in schools come through, there will be a reduced number of claims for external substitution. While there will be elements we will be able to address, I would not wish to underestimate the complexities regarding, for example, the various calculations that must be made and we will have to work to put in place systems. The putative starting date obviously is 1 July and we are looking at that now.
Gerald Nash (Louth, Labour)
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On the issues the Department has encountered previously on the overpayments and the requirements to adapt or modify the payroll system, how much did it cost the Department to adapt and modify the system?
Mr. Michael Keogh:
No, we had no external consultant input into the changes we were obliged to make. We have our own internal IT unit, part of which supports the payroll system, and the changes that had to be made to the payroll system were carried out and developed by our in-house IT people. Consequently, there were no additional costs, if that clarifies the issue.
Gerald Nash (Louth, Labour)
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The rate of return, if I can put it like that, from individual teachers is €20 every fortnight. Is that correct?
Gerald Nash (Louth, Labour)
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When does the Department expect that the entire sum will be returned?
Mr. Seán Ó Foghlú:
We already have advanced and are pleased to have received the €500,000 already. We expect the bulk of it will be returned within the next year or so but there may be some individuals for whom longer repayments will be needed. This is one reason we are considering the possibility of seeking to increase the payments for some retired teachers.
Gerald Nash (Louth, Labour)
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Is the Department happy to take personal circumstances into account and extend repayment periods?
Gerald Nash (Louth, Labour)
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Clearly, while the Department of Education and Skills funds salaries through the VEC, it appears as though it has no direct oversight of the payment of those salaries. Can the Secretary General explain to me the complexities in this regard? Are there difficulties in recovering overpayments made to VEC staff as opposed to staff in other second level sectors?
Mr. Seán Ó Foghlú:
We do not operate the payroll for the VEC sector, for which there are 33 individual payrolls. As everyone is aware, the VECs are being rationalised and amalgamated and we will have 16 education and training boards, which probably will be established before the summer. At present, with their 33 systems, obviously it is their responsibility to make payments. Given that the VEC centrally is the central employer there, they would be more likely to have been able to use their own teachers for substitution allocations and consequently the nature of their substitution payments would not have given rise to the same difficulties and the issues for new entrants would not have arisen with the same difficulties. We have been consulting the Irish Vocational Education Association, IVEA, regarding the VECs and we understand that some VECs have got over any initial difficulties, while we are waiting to hear from other VECs. However, there is not the same scale of an issue with the VECs as there is with us. In addition, to give an idea of the scale of the VECs, VEC pay constitutes a further 56% when added on to the pay within our second level sector. It is just about one third of the sector in terms of overall pay.
Gerald Nash (Louth, Labour)
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I will now move on to the issue of Student Universal Support Ireland, SUSI. As everyone is aware, SUSI was launched by the Minister for Education and Skills last year and was designed to centralise grant application processes for new entrants to third level and it is the intention to expand that to existing third level students next year. It would be fair to say that for many Members, the people they represent, and for many other people, the experience with SUSI over the past few months has been an unmitigated nightmare. I can understand entirely the reason the Minister and the Department would try to rationalise the approach to the applications process. I entirely understand it and obviously one hopes that efficiencies can be garnered therefrom. However, from the point of view of public interaction or understanding the process, it has been very difficult for those who are engaging with SUSI to get adequate answers. Moreover, there have been issues regarding missing paperwork, speaking to a human being, material getting lost, delays and so on. It has been extremely difficult. Interestingly, while approximately 27,000 students have successfully received grants at this point, approximately 7,300 have had their fees paid. I refer to the 4,246 decisions in respect of appeals.
Half of the cases have been appealed successfully. That is a high rate. Can Mr. Ó Foghlú explain why that is the case? Are there administrative issues where decisions made, when revisited, are overturned easily? The quite high rate of successful appeals sends out an interesting message about the system and how it is working. Could the Secretary General comment on that?
10:40 am
Mr. Seán Ó Foghlú:
Certainly. To commence, clearly, this has been a difficult issue for the Minister and the Department. Indeed, the Minister apologised to Dáil Éireann in that regard and we would obviously reiterate that apology in terms of the impact on students in the first term of the last academic year.
I would make the point, however, that the system has processed more applications by early this year than the 66 centres did last year. In effect, the system caught up towards the end of the first term and we are actually ahead now in terms of processing than we were at the same stage last year. That is an important message to give. However, that is not to say there are not real challenges faced in completing the applications. There are challenges and we are working with the students and the institutions to complete that.
In relation to appeals, the current position, as at 20 February 2013, is 5,275 appeals have been made, 3,264 have had their initial decision overturned and 1,861 have had their initial decision upheld. Some 150 have yet to be processed and there are 806 reassessments.
Gerald Nash (Louth, Labour)
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There is a high rate of success for appeals. If there was that rate of success in social welfare appeals - that had been the case with some disability payments - a flag would go up and the Department would make some intervention to improve the system. What has the Department learned from the high rate of appeals?
Mr. Seán Ó Foghlú:
A flag is up. We understand that some of those arise out of a change in circumstances and we are getting a report from the City of Dublin Vocational Education Committee to get behind the reasons for successful appeals. That is very important information.
Also, this is in the context of the comparative position on successful applications so far being lower than it would have been for all applications generally. We cannot be definitive about this until we have completed all of the applications. What we have now, effectively, is a single system being applied for new applications. Whether there can be absolute standardised practices in assessments within a single institution such as the City of Dublin Vocational Education Committee is always open to question, but it is a standardised approach compared with 66 approaches which were aimed to be consistent but where the possibility for inconsistency may have been greater given 66 different bodies had responsibility. The appeals issue combined with the rate of success issue is something we are looking at but we will not know if the rate of success is an issue until all the applications have been worked through because we cannot rely on partial information from a year.
Gerald Nash (Louth, Labour)
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One of the major bugbears for applicants is the problem of mislaid material. This is material that applicants are convinced they have sent in but which they are informed, perhaps six weeks to two months later, is missing. In the meantime, they have been trying to contact the Department to get an understanding of the status of their application. I understand the Department has engaged Accenture to undertake a review of why these problems are being encountered. When will that review be completed, when will we have that report and how much is it costing?
Mr. Seán Ó Foghlú:
There are a number of difficulties and challenges in relation to the process operations. We would certainly agree that one of the lessons that has been learned is the manner in which, when applications were made, further information was sought and the further information was provided, the application did not come up for reconsideration quickly enough.
The City of Dublin Vocational Education Committee is undertaking a review. It advertised for tenders and the closing date for the receipt of tenders was 8 February. A selection process was finalised by the VEC and Accenture was appointed. It will identify and analyse the current business process. It will measure the performance of the current process with reference to the overall objectives of the administrative reform of student grants. It will identify any gaps in performance against the overall objectives, establish the root causes of these gaps, including those relating to documentation, processing and payment, as Deputy Nash stated, produce a report which summarises its findings, and make detailed proposals, including an implementation plan for improvement in the timeliness and effectiveness of processing and payments with reference to the proposed scale of operations for the 2013-2014 academic year and future years. The proposed timeline for completion of the review is the end of March and the review is under way.
Gerald Nash (Louth, Labour)
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I expect the report will be published.
Gerald Nash (Louth, Labour)
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Is Mr. Ó Foghlú confident, given the remit of SUSI will be extended next year to cover existing grant holders, that the organisation will be in a position to contend with that and to operate adequately and to the standards that we and, more importantly, the public expect?
Mr. Seán Ó Foghlú:
The first issue is the extension of the remit of SUSI. The remit of the City of Dublin Vocational Education Committee will be extended in relation to the continuing applications it has plus new applications. It is not taking over responsibility for existing grants which are with the VECs or the local authorities.
We are endeavouring to ensure, through the review and arising from it, that arrangements will be put in place to ensure the system is much more effective and efficient than it has been this year. There are real challenges with the student grant system. There were real challenges in the 66 locations. The centralising has brought some of those challenges to the fore, especially the delay in the first term. We need to ensure, as a result of the review and the new arrangements put in place, that those challenges are addressed and the systems operate much better.
Gerald Nash (Louth, Labour)
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On the systems, I took the opportunity this morning to look at the SUSI website which probably could be described more appropriately as a webpage. Essentially, it is a snapshot. I tried to get onto the SUSI icon and it did not take me to the City of Dublin Vocational Education Committee, CDVEC. Clearly, I was aware that CDVEC is the appropriate authority to contact on the applications process.
It is quite difficult to negotiate around the City of Dublin Vocational Education Committee website, particularly if one is trying to understand what additional paperwork one needs to send to the organisation. I have been told also it is particularly difficult to navigate the system if one is using, for example, an Apple device. I note that has been highlighted to SUSI. Has the Secretary General any idea how much the IT application system cost because it appears to be quite basic and contains some gaps?
Mr. Seán Ó Foghlú:
I do not have that information with me today but we can certainly get it to the Deputy. The City of Dublin Vocational Education Committee, in partnership with a number of VECs and local authorities, placed on trial in advance the first step of the system, which was the online application. The general perception is that the initial online application, where somebody registers an interest in applying for student support, works quite well. The difficulties are with the follow-up in terms of providing the additional information, and so on. Certainly, we will pass on Deputy Nash's comments and we will come back to him with information on the expenditure on IT.
Gerald Nash (Louth, Labour)
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Is the Secretary General satisfied with the performance of the City of Dublin Vocational Education Committee? There was an open tendering process for this. CDVEC, like other VECs across the country, does valuable and excellent work and stands on its record, but this particular project has not been its finest hour. Clearly, it and the Department have lessons to learn. The public will be the ultimate arbiter in terms of whether it is satisfied, but are there any sanctions available to the Department if it is dissatisfied with the performance of that contract?
10:50 am
Mr. Seán Ó Foghlú:
It was not a tender for services in the typical understanding of a tender for services. We asked local authorities, VECs and other public bodies who might be interested in taking on the responsibility for the grants system to apply to us. This issue had been addressed in an amendment to the student support legislation and we had been advised by the Attorney General's office as part of the work we had done that given we were going to give the centralised function and certain statutory responsibilities, they had to be given to a State body. That did not mean the State body could not outsource a large element of the work, as the CDVEC has done. We had expressions of interest from a range of State bodies and we had a range of State bodies expressing interest in continuing with it. We have made the decision that we will continue with the CDVEC at least in the short term. Even to consider doing anything else would take a number of years of lead-in, so it is not an option not to have the VEC processing next year.
In terms of sanction, obviously we will have to look at the outcome of the review and other reviews. I understand the Comptroller and Auditor General is looking further at the issues. There is no evidence of inappropriate behaviour
Gerald Nash (Louth, Labour)
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I do not suggest that at all.
Gerald Nash (Louth, Labour)
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When does the contract expire? When is it up for review?
Mr. Seán Ó Foghlú:
We will keep it under constant review in the context of the review we have under way and in terms of the effectiveness of the work. The issue for us is once a system is put in place, we cannot simply turn it off because there are people in the process and there are a number of years of lead-in. We made a decision to go with the CDVEC well over a year in advance of the first processing taking place. There is a need for long-term planning for any change in terms of who is processing grants centrally.
Gerald Nash (Louth, Labour)
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Are additional staff being deployed by the CDVEC to the SUSI operation?
Gerald Nash (Louth, Labour)
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How many are there currently?
Mr. Seán Ó Foghlú:
On 31 January 2012, there were 69 whole-time equivalents within the CDVEC on this. As well as that, a number of staff are employed by the private contractor but they do not come within the public sector numbers. We responded at all times to any request for staff from SUSI as the difficulties emerged in the autumn, and we have met all those requirements.
Gerald Nash (Louth, Labour)
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Was that through redeployment?
Mr. Seán Ó Foghlú:
Initially, we worked through redeployment to the greatest extent possible. Some direct recruitment and also some direct recruitment of temporary staff is included. We work through the redeployment panels and we worked closely with the Department of Public Expenditure and Reform to make staff available for SUSI initially.
Paschal Donohoe (Dublin Central, Fine Gael)
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I welcome the officials and thank them for their preparation for this session. Given the number of files in front of Ms Dowling, I am led to think there will not be a question I can ask for which she will not have a comprehensive answer.
I have questions on public private partnerships, primary schools, the status of the Grangegorman project, school transport and school patronage. However, I would like to pick up on SUSI first. I spent a morning in the organisation's offices with the staff on Mespil Road and witnessed their work. I received many representations about the system as well. Once they recognised the scale of the difficulty, a quality effort went in to overcoming it. I acknowledge that people such as Mr. John Conroy recognise the scale of the challenge and they are committed to overcoming it.
However, even in recent years, a number of efforts have been made to centralise the processing of applications for State schemes and each time the same difficulty has been encountered. Medical card applications were centralised in offices in a number of locations throughout the State, including one near me in Ballymun, and there were huge delays in dealing with applications for quite a period until the system bedded down. The same happened with carer's allowance applications in the aftermath of the medical cards issue and then this happened. While I accept Mr. Ó Foghlú's point that, within the educational sphere, this represents a big effort to centralise things, things happened to which we have to respond. Within the government sphere, this keeps on happening. Was an analysis conducted of what happened when medical card applications were centralised? Did people ask what could be learned from that? Was this perspective taken across government or was the SUSI process examined in isolation without considering what had happened elsewhere over the previous 18 months?
Mr. Seán Ó Foghlú:
We did not advance with the centralisation agenda alone. We would have very much been in partnership with the Department of Public Expenditure and Reform in trying to learn lessons from the approaches of which they had experience in terms of developing the plans. There was also piloting of two particular aspects of the processing - the initial online application and the regular monthly payment of students rather than every term. The difficulty and the challenge came because of the scale of the operation when everything came together, and that highlighted that it is hard to pilot the scale of everything coming together.
However, we have had successful examples within the Department. The other major topic we have discussed so far is the payroll system. We put in place centralised arrangements for the payment of online claims following detailed consultation with the sector and without major difficulty or delays. We have some good experience of working through the provision of centralised services as opposed to services in individual schools, as would have been the case at the time. There are a number of benefits to centralising services. The costs can be reduced and we can also have more consistent application of arrangements.
Within the Department, we are seeking to develop a shared service expertise and we are working closely with the Department of Public Expenditure and Reform in that regard. The Government, as a whole, is looking at increasingly putting in place shared services. We recognise that there is a deficiency in the competence of people in public sector employment in developing shared services and, therefore, we are in the process of employing expertise from outside the public service in the implementation of a shared services agenda, and we recognise we need to broaden our experience in that regard.
Paschal Donohoe (Dublin Central, Fine Gael)
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Mr. Ó Foghlú said that when the applications started to come in, issues became apparent. The same happened with the processing of medical card applications. He said lessons were learned. What lessons were learned from the medical cards issue that helped with this process?
Mr. Seán Ó Foghlú:
I am not an expert on the medical cards issue. The difference between SUSI and grants schemes in other areas is there is a once-off deadline. It is a grant application for somebody to start college at a certain time and people have an expectation that they will know whether their student contribution will be paid or whether they will receive a maintenance grant.
They want to know as early as possible, of course, but they have only decided to go to college a short time before that for definite. That is different, if one likes, from the medical cards where a demand comes on, but not everyone is applying at the same time. There is a slightly different applications challenge for us. We thought we were trying to address it to a certain extent by having the initial online application, which did help. One of the lessons we are likely to take is we need to go a lot further than that in terms of getting information in advance from people who wish and are very likely to go on to college in its various forms and for which student support is available.
11:00 am
Paschal Donohoe (Dublin Central, Fine Gael)
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Does anybody have the job to look at the various centralising activities that have taken place in the State in the past two years in order to ensure the next one goes better? I accept that Mr. Ó Foghlú is not a medic or an expert in medical cards, but there must be somebody who looks at the processing of carer's applications and medical card applications in order to ascertain what we can do when we make the next processing change decision.
Mr. Seán Ó Foghlú:
Yes, is the answer. I thank that this is where the Government has advanced with the pro tem public sector reform, which means it is within each Department now and we are establishing it now. We have an operational office to ensure that within each Department the centralising of the lessons learned in terms of change process and push for implementation has been put in place. There is one in the big public sector Departments, if one likes, and they are working together on a collective basis to address issues on a combined basis. A shared service expertise has come into the Department of Public Expenditure and Reform which is to challenge each Department to put more arrangements in place, but also to ensure lessons learned are disseminated among Departments in that regard.
Paschal Donohoe (Dublin Central, Fine Gael)
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I think that is key. As someone involved in these matters in my constituency and from commenting on them in the Oireachtas, I can see a clear thread of lessons across these different activities that should be picked up and made public. I hope the report we mentioned earlier will allow that to happen.
I wish to discuss PPPs in the educational sphere. The Comptroller and Auditor General made a point about post-implementation evaluation. From an educational point of view we are moving into future bundles of PPPs and a number of bundles - bundles 1 and 2 for schools - are already implemented. I ask Mr. Ó Foghlú to respond to the observation that the Office of the Comptroller and Auditor General is not aware of work that has been done to look at post-implementation review and whether the actual costs and the benefits that materialised were in line with original assumptions.
Mr. Seán Ó Foghlú:
To be fair to the Comptroller and Auditor General, I think he said he was not aware that work had been completed. I think he is aware that work is under way. We have a formal evaluation of the original PPP projects under way. As the Comptroller and Auditor General outlined, these projects need to operate for a while before we can undertake that VFM, if one likes.
Paschal Donohoe (Dublin Central, Fine Gael)
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How long have they been in operation?
Paschal Donohoe (Dublin Central, Fine Gael)
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What is the lifespan of the project?
Paschal Donohoe (Dublin Central, Fine Gael)
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The Department will review one set of schools delivered via the PPP route and another set that were delivered via the so-called traditional route, and compare both.
Paschal Donohoe (Dublin Central, Fine Gael)
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Who is undertaking that work at the moment?
Paschal Donohoe (Dublin Central, Fine Gael)
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When will that work be complete?
Paschal Donohoe (Dublin Central, Fine Gael)
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Will a copy of that be made available?
Paschal Donohoe (Dublin Central, Fine Gael)
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I want to pick up on that phrase, which represents a real challenge for us. Whenever we raise a question over how they perform, we are told we cannot be given the actual information because of commercial sensitivity. While I understand that, it makes it very difficult to carry out a public evaluation of the performance of these projects.
Mr. Seán Ó Foghlú:
I accept that and I do not mean to say that we have made a decision. I think we are in a position on the publication of the sensitive information that it is not a simple decision that either we can take or the NDFA or the Department of Public Expenditure and Reform. It is a, kind of, joint decision. We face the same challenge in relation to the public sector benchmark. Those are the two - the VFM publication and the public sector benchmark publication. We would like to complete the VFM and then make the call. The public sector benchmark decision certainly is commercially sensitive for a number of years, but we are in discussions with the NDFA and the Department about a timescale on-----
Paschal Donohoe (Dublin Central, Fine Gael)
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I was about to ask about that matter. Surely there is a point at which the commercial sensitivity becomes less of a concern than it was previously. For example, some companies that were involved in tendering for the PPPs may no longer be in existence. Will we reach a point when a decision can be made to release some of the information because it will no longer have the market sensitivity it had in the past?
Mr. Seán Ó Foghlú:
Clearly, the commercial sensitivity declines. Obviously we are in the market at the moment - we have bundle 3 under way and we are going towards bundles 4 and 5. We have to work that through. Obviously the Comptroller and Auditor General has access to all of the information in the PSB. We would acknowledge that it loses its currency after a period of time and we are giving consideration to an appropriate timescale. I would like to be able to be definitive about the timescale, but I cannot give a definitive statement about the timescale. We have been reading the transcripts from the committee's recent hearings about PPP projects generally and we are very conscious of the demands and the suggestions the committee is making in this regard and we are actively considering them.
Paschal Donohoe (Dublin Central, Fine Gael)
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The largest of them under consideration at the moment is the Grangegorman project, a gigantic project involving more than 70 acres in the city centre. How is that proceeding?
Mr. Seán Ó Foghlú:
Grangegorman is more than just a PPP project, obviously. It is a number of different phases over the project as a whole. DIT aims that the first group of 1,000 students will be on site by 1 September 2014 in time for the 2014-15 academic year. The first phase of PPPs proper will be completed in 2017 - that is their aim with 9,500 students moving into 50,000 sq. m of new facilities in science, technology and engineering, and creative arts and digital media. The infrastructural works towards the PPPs will commence this year. We hope it will be in April, but to be precise about a month is difficult. We estimate about €80 million for enabling works, including VAT payments. In parallel, the adaption of the existing facilities - the college of art, design, photography and social science - is under way and is aimed for completion by 1 September. There is also an Educate Together primary school planned for the site, and the Grangegorman Development Agency will lead on that as well.
Paschal Donohoe (Dublin Central, Fine Gael)
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From an Exchequer point of view, as Mr. Ó Foghlú has acknowledged, it is not just a PPP. It is a variety of them with some direct State funding going in also. Can Mr. Ó Foghlú confirm that we are funded at the moment to deliver the commitments we have in order to ensure that project is delivered on time?
Paschal Donohoe (Dublin Central, Fine Gael)
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School transport is a topic of interest to many of my colleagues.
An issue which keeps arising is the contention that Bus Éireann does not make a profit from the school transport scheme. I understand this was referenced in a recent court case. Will Mr. Ó Foghlú give the committee an understanding of the information which allows this conclusion to be drawn?
11:10 am
Mr. Seán Ó Foghlú:
School transport costs continuously increased throughout the past decade. This arose particularly because of the requirement to provide a seat for every child with a place on a bus, which was an appropriate decision taken on safety grounds arising from the Kentstown crash. Other factors also impacted to increase costs. The Department has been endeavouring to reduce expenditure on school transport over the past five years, and we have put in place arrangements to bring about reductions in expenditure. A value-for-money review on school transport was carried out, which fundamentally examined all aspects the scheme. Arising from this the Government made a number of decisions to change some very inefficient rules of the school transport scheme, in particular the closed school rule for primary schools which in limited cases resulted in people being entitled to school transport to a school which was not their nearest school. The catchment boundary rule meant we required boundary commissions to change a boundary between post-primary areas. These rules have been changed so that transport for new starters is to their nearest school. We have also pushed for efficiencies in expenditure on tendering for services. We have pushed Bus Éireann on costs and this has reduced expenditure on school transport.
As part of the review we considered whether we should have school transport, and if so who should organise and provide it. We worked through the various issues in the value for money report, which has been published. We considered a number of possibilities on how to go forward and found we should have a central management body to organise the service, and that this body should be Bus Éireann. We also found that we should continue the existing arrangement we have with Bus Éireann, which would outsource a high proportion of service delivery while provide a certain limited amount of service itself. This was consistent with the policy approach which had led to increased outsourcing by Bus Éireann of the provision of vehicles and transport generally over a period of time.
Of the funding we provide directly to Bus Éireann at present, approximately 65% is used to pay private contractors to provide services. This is an increase from almost 50% ten years ago and outsourcing by Bus Éireann has generally increased. The key service Bus Éireann provides for us is its national transport management expertise throughout the regions, with regard to route mapping and tendering for services. This is the key relationship we have with Bus Éireann and it underpins the arrangement we have.
We pay Bus Éireann on the basis of service delivery and the arrangement does not allow for profit to be taken by Bus Éireann. It is useful to consider what is meant by a layman's understanding of the word "profit". In a private company, "profit" means something the shareholders can take out and use themselves as a return on their capital or something which can be re-invested. This does not happen in a public company, where there is also the risk of cross-subsidisation of other activities. We fund Bus Éireann on a cost recovery basis and it has assured us it does not subsidise its other services from the money we pay it for school transport and nor does it take out money. It has assured us it does not make a profit in any of the understood meanings of the word. The belief that a profit may be made by Bus Éireann may arise from the arrangement we have with it, whereby we pay it a management and administration charge which was traditionally 13% but which has been reduced in recent years and which is not directly assigned for direct costs in its published accounts. When we engage with Bus Éireann on what this 13% - which has been reduced - is spent on, we are told it is spent on a range of items, including direct costs, indirect support and regional costs and property associated costs. The is also the issue of the portion of contributions to other areas, such as capital investment in IT or general capital investment for garage equipment, which relates to the school transport service. Deputy Donohoe raised this issue in the context of the court case.
Paschal Donohoe (Dublin Central, Fine Gael)
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Not particularly. The context is that we had a hearing with the Department of Transport, Tourism and Sport several weeks ago and it made the point it is engaging with CIE on its accounts on a fortnightly basis, or perhaps more frequently, to understand the viability of the company and ensure it continues to be stable and do well in the future. Given this level of penetration I am struck by the assurances Mr. Ó Foghlú offers, which I take in good faith, that no transfer of funds to other parts of the operation is happening. I seek to understand how this is verified. I am aware of the court case, but the particular issue I want to understand is how can we verify this and assure ourselves it is the case.
Mr. Seán Ó Foghlú:
My understanding of the court case is that this was not a primary issue, so I do not think it has an immediate bearing on the court case. The judgment delivered was that the operation of the scheme does not establish the existence of a contract and the judge was satisfied on the evidence that there was no contract within the meaning of the directive or regulations, and that the provisions of the remedies directive and remedies regulations do not apply. The court's finding was that it was not directly related to profit. We do not conduct a parallel accounting service in Bus Éireann. It has its own accounting service which engages external auditors to sign off on the accounts. Bus Éireann has assured us it does not use the school transport allocation to subsidise other aspects of its business or take money from the allocation. This has been signed off by Bus Éireann and the external accountants. The key issue is that over the past five years we have been pressing Bus Éireann on reducing costs across the board. As we have reduced spend the company has talked us through many of the efficiency measures it has undertaken and we have been working it through with them. These efficiency measures have been across the board in the provision of all of its services. We work very closely with Bus Éireann and encourage it to reduce what we must pay it to operate services.
Paschal Donohoe (Dublin Central, Fine Gael)
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I am sure some of my colleagues will return to this point. I wish to touch on the issue of patronage at second level.
The Educate Together movement was mentioned. Work is under way to try to identify a further second level school for Educate Together on the north side of Dublin. What is the Department's perspective of how this work is going?
11:20 am
Mr. Seán Ó Foghlú:
Patronage is one of our most active policy and implementation areas. Arrangements are in place for the Minister to decide on the patronage of new primary and post-primary schools. Our new schools establishment group invites applications from people in areas where new schools are to be located. Decisions are made based on criteria. Arising from these decisions, a variety of new patronage arrangements are emerging. For example, Educate Together is involved in three emerging models at second level. Under one model, Educate Together is to be the direct patron - the sole patron, as it were - of a school that will open in west Dublin in September 2014. It is to be joint patron with County Louth Vocational Education Committee, VEC, of a new second level community school that is due to open in September 2014. It has a partnership in the patronage role of County Dublin VEC in the designated community college model of a school that is opening in Clonburris in Lucan, also in September 2014. Educate Together is moving into that sector.
Changes in the patronage of existing primary schools have been the subject of great debate. We held a forum on patronage and so on. Arising out of that process, we are in discussions with the Edmund Rice Schools Trust, ERST, concerning a school in Basin Lane, Dublin 8. We have requested the Catholic Church authorities to consider divesting schools in five areas in which we have completed surveys. We have completed 38 surveys, but we are still working through the findings. We are likely to publish the findings within the next four to six weeks.
We have not had a formal process to consider changes in patronage at post-primary level. This is partly because the policy agenda is so busy. Another reason is that the key driver of changes to primary schools was the number of people who were limited to English-medium or denominational education and desired to have multidenominational or Irish medium provision. An exact parallel is not found in post-primary provision, as choices other than straight denominational options are in place, for example, in the VEC, community and comprehensive sectors.
There have been patronage changes at post-primary level. It is an issue that we are actively examining. It is linked with a contentious issue, that of rationalisation and amalgamations. We are finalising work on a value for money review of small primary schools, in which context the rationalisation issue arises. We are considering an analysis to consider post-primary infrastructure and the potential for rationalisation, which may have implications for patronage. In particular, we are considering possibilities in a couple of urban areas in several cities. It is an active policy agenda.
Paschal Donohoe (Dublin Central, Fine Gael)
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I will leave it at that and ask the Department to give as much consideration as it can to the request regarding Dublin's north side. I thank the delegates for the preparation that went into this meeting.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Before calling on Deputy Dowds, I wish to clarify a matter raised by Deputy Donohoe, namely, school transport. What is the level of departmental intervention with Bus Éireann as regards the running of the contract? Does the Department reorganise routes with Bus Éireann or does the former issue instructions and rules? What is the company's reporting mechanism to the Department in terms of value for money issues, savings, costs, profitability and so on? What do the auditors to Bus Éireann tell the Department in writing regarding the contract and the issue of profitability?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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What is the arrangement? Is it a written arrangement?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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That is not a contract.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Was it signed by the Department and Bus Éireann?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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If Mr. Ó Foghlú would, please.
Mr. Seán Ó Foghlú:
It is a cost recovery arrangement and does not relate to profit in terms of the understanding of profit that I outlined. That understanding is slightly different for a public sector commercial company than it is for a private sector one. Bus Éireann provides us with details on its expenditure every year and with copies of its school transport accounts, which are published on its website. Bus Éireann gives us its assurance that it is spending all of the money that we provide to it on school transport and that it is not cross-subsidising other elements of its work.
Bus Éireann is the transport management company. It decides on the most efficient and effective routes for collecting children at appropriate stops. It also decides on health and safety issues relating to the question of where children can be collected. All of the above form part of Bus Éireann's transport management expertise. We do not establish the routes - that is Bus Éireann's task. It is for us to establish and the Minister to sign off on the overall policy approach and rules on, for example, the minimum number of children for a service, the minimum distance for a service, how services relate to choices between schools, etc. Bus Éireann implements these policy decisions.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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The policy decisions are laid down by the Minister.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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The Minister gets down and dirty as regards this aspect of the agreement. The collection-----
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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I understand that.
Mr. Seán Ó Foghlú:
-----on the rules of the scheme, the distances in which people have an entitlement to access transport, the closed school rule, catchment boundaries, etc. The Minister does not make calls on routes, collection points or so on. We advise the Minister and he decides on the scheme's overall parameters, which Bus Éireann is required to implement.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Bus Éireann puts in place a route that it believes is the most efficient.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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It arranges collection points and so on. This is the national transport expertise to which Mr. Ó Foghlú referred.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Yes, within Bus Éireann's remit. It reduced its costs by €8.5 million in 2011. There was an underspend.
11:30 am
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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If costs were reduced by €8.5 million in one year and there was an Exchequer gain of €6.8 million in the same year, does that mean €15 million was not for one reason or another used in the school transport scheme that year?
Mr. Seán Ó Foghlú:
The €8.47 million reduction was achieved through the reorganisation of transport services, including route amalgamations and downsizing of vehicles, reflecting a drop in demand for new services and reduced numbers availing thereof. We pushed for the most efficient reorganisation of routes.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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We can dispute the reasons for it but there was a saving of €8.5 million.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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There was also an Exchequer gain of €6.8 million in 2011.
Mr. Seamus McCarthy:
The figure of €6.8 million to which the Chairman refers is the Exchequer extra receipt in 2011. I understand it relates to an advance to Bus Éireann, in 2010, which was in excess of what it required when the audited figures became available. The excess was remitted in 2011 but relates to a settlement in 2010.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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The explanation is that if it were not for the Department's intervention and oversight of that scheme, the saving of €8.5 million might not have been achieved. In other words, that saving would probably not have been identified had the Department not raised the issue. Were there surplus funds in the scheme over many years or were there inefficiencies therein which caused money to be wasted? As I understand the saving was made not because of the company's intervention but because the Department insisted on cost reductions. The margin in transport is so small transport operators chase down costs every day. When one considers that Bus Éireann off-loaded two-thirds of this scheme to private operators and adds to this the reservations PwC had about its accounts in the first instance, one wonders if would not have been better off putting the scheme out to tender. The only real way of finding out whether one is getting value for money or if a scheme is efficient or not is by going to tender. If it had gone to tender it would then have been able to cross reference one tender with another and learn in real terms whether it was getting value for money for the €152 million of taxpayers' money being spent on the scheme.
I raise this issue because at the committee's last hearing with Mr. O'Mahony the figures in regard to transport were broken down for us and the figures in terms of social welfare were also broken down for us. It is impossible to determine from the CIE accounts what is going on. Surely the best way of doing this business for the State, bearing in mind what is involved is €152 million of taxpayers' money, is to go to tender. What are the obstacles within the Department in this regard?
Mr. Seán Ó Foghlú:
On the first question, to be fair to Bus Éireann, the €8.47 million did not arise only as a result of departmental pressure on it. We have been changing the rules arising from the value for money report, from which savings have been achieved. As a result of the increase in student charges there has been a reduction in the number of students whose parents wish to avail of the saving. There are a number of different factors arising which impacted. This is not only a matter of our requiring Bus Éireann to make savings. We are working with it to ensure that the cost to the State in terms of school transport is as little as possible. Given that two-thirds of the funding is already tendered for by Bus Éireann to private contractors, it is not a case of an arrangement being in place with Bus Éireann which would result in a great saving on the €152 million. Two thirds of that expenditure is already tendered for by Bus Éireann to private contractors, ranging from drivers of taxis to bus companies with a number of routes. As such, there is not a €152 million potential tender.
We looked at these issues in detail in the VFM. The Government bought into the approach that we would stick going forward for the mean time with Bus Éireann as the central organiser and maximise, having regard to the need for Bus Éireann to have some reserved fleet operations, the amount of outsourcing that Bus Éireann undertook. If we were to consider going to tender - we are not actively considering doing so now - we would most likely opt for two different approaches, namely, a management company which would tender and another form of tendering for the provision of school transport. We see them as different functions. All students apply to Bus Éireann for school transport. It has to examine all applications and make its decisions based on critical mass and the provision of services. We are not obliged to go to tender on this. We have consulted legally on the matter in terms of its being part of the court case and on the EU issues involved. We are not obliged, given we have an arrangement in place, to go to tender. We believe we are getting good value for money from the arrangement currently in place.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Mr. Foghlú cannot say that definitively because the scheme has not been put out to tender. I am not following the court case, which was mentioned by Deputy Donohoe. I am following the principle of spending €152 million of taxpayers' money and the additional €11.5 million in charges collected by Bus Éireann. The Department refuses to go to tender in respect of this amount of money, even if only to put its mind at ease. There are companies in the private sector who have the required expertise in this regard because they have been operating buses and making money in difficult times. The management company mentioned is not a rare animal either. It could be established to accommodate a tender process. Surely, the test of value for money is to tender in respect of the €152 million. It is almost unacceptable in this day and age that the Department would be doing what it is doing in relation to the school transport system.
I have not in any of the discussion we have heard thus far heard the end user being mentioned. I hear nothing but complaints about the school transport system, in terms of management of applications and use of the service. It would be much easier if, as a public representative, I could point to a process that is transparent, which, to me, the current system is not. I have tried over a number of meetings to get precise information from different accounting officers and CIE. This is another attempt to do so. How can the Department stand over the quality of the tender process operated by CIE? I have heard some startling stories in terms of the provision under this scheme of school transport. I would like to be able to stand over the quality of the procurement process relative to those small operators and how CIE operates the system.
With regard to the audit going on in CIE, how is the money used and what of the question of cross-subsidisation? What is the written message from auditors with regard to inspection of all these processes? How confident are they that cross-subsidisation does not happen? How confident are they about the quality of the tendering process into which Bus Éireann enters with other subcontractors? Will the witness outline the obstacles within the Department that prevent it from going to tender?
11:40 am
Mr. Seán Ó Foghlú:
With regard to tendering by Bus Éireann, 65% of the expenditure is on private contractors, for which there is tendering. We are not of the view that €152 million has arisen for tendering. If the committee has any concerns about individual cases where there has been inappropriate tendering, I would appreciate it if it could be brought to our attention.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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I am asking Mr. Ó Foghlú about his concerns. We should get this straight. Some €105 million goes on contractors and their costs. That is my understanding of the figures in front of us. I would like the witness to tell me how confident he is about the quality of that tender process. That is my first question. It is €152 million involved in all this spend. Some €105 million may be tendered for but is the Department directly involved in the tender process? Is the witness confident about the process? Have the auditors examined it and are they confident about it? Are they confident about the cross-subsidisation issue? Has the Department written confirmation from them on those two issues?
Mr. Seán Ó Foghlú:
Yes, the Department has confidence in the contracting arrangements in place in Bus Éireann. I am not aware that we have written confirmation from the auditors but I will check and revert to the committee on that.
I should clearly state to the committee that we, as a Department, have had serious concerns about value for money within school transport and we undertook a very detailed value for money review in that regard. Arising from that, the review and outcome were noted by the Government and changes in policy were made. The decision was made to stick with Bus Éireann as a central transport organiser but to maximise the amount of services procured by Bus Éireann as part of the process. That is the arrangement in place but we are keeping it under review.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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I will return to the issue later.
Robert Dowds (Dublin Mid West, Labour)
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Ba mhaith liom fáilte a chur roimh na hoifigigh atá i láthair inniu. Mar iar-mhúinteoir, ba mhaith liom a rá go bhfuair mise agus mo chomhghleacaithe ár n-ioncam in am ar feadh na blianta. Is maith an rud é go n-oibríonn cuid mhaith rudaí go maith.
I missed some of the questions from Deputy Donohoe and I may overlap a little with him, so I hope the witnesses can forgive me for that. I have a variety of questions, with the first relating to information technology, IT, and communications activities. If I understand it correctly, there was a reduction of €5.5 million in schools' IT and communications activities due to expenditure decreases, deferrals and lower expenditure on broadband. Will the witnesses explain that? How does that have an impact on IT education for students? Is the process consistent with our emphasis on the smart economy? How does it tie into the plans of the Minister for Communications, Energy and Natural Resources to bring broadband to all schools over time?
Mr. Seán Ó Foghlú:
The reasons for the savings in 2011 were a lower than estimated spend by the National Centre for Technology in Education, the technological support service we had, due to a combination of staff cost savings arising from the moratorium, discontinuation of lower priority activities and deferral of projects. We had a second national series of e-learning seminars that were envisaged and costed but they did not proceed. We had lower than expected rental costs from the schools broadband programme due to the rolling out of new services under the second phase of contracts. That is not the programme with the Department of Communications, Energy and Natural Resources but rather one for which we are tendering. There was a €1.1 million saving resulting from anticipated expenditure under the schools broadband capital programme. We are advancing with the Department of Communications, Energy and Natural Resources the issue of availability of broadband to all post-primary schools. The aim is to have that completed by the end of next year, and there is no delay in that regard.
The focus we have on ICT in general is very much the focus of the Minister. We are looking to ensure that ICT has a real impact on teaching, learning and assessment, and we really want to build in the use of ICT in teaching and learning rather than having it as a separate process. It must be embedded. We are undertaking an ICT census of schools in this quarter. There was a previous census in 2005 which mainly related to ICT planning, infrastructure and continuing professional development. This will be a broader process and we are trying to get to the issue of the extent to which ICT is embedded in teaching and learning. We hope the results of the census will provide a sound research base that will, in turn, inform key policy decisions in integrating ICT and teaching and learning over the next three to five years. The census covers primary, post-primary and special schools.
Robert Dowds (Dublin Mid West, Labour)
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Turning to special needs assistants, SNAs, I am surprised that the spending in the area is down by €10.4 million. Perhaps I am incorrect but I understood that the number of SNAs was maintained. What is the explanation for that?
Mr. Seán Ó Foghlú:
We have a maximum number of SNAs available, with an effective cap on the allocation of SNAs. We had to hold back some of the SNA allocations for allocations that may arise during the year. We are operating within a maximum cap but we must hold back so that there can be allocations throughout the year. The saving of €10.4 million primarily arises from that.
Robert Dowds (Dublin Mid West, Labour)
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It is primarily because some SNAs would not have started at the beginning of the school year and came into the system later. By the year end, had numbers reached the maximum of, if I recall correctly, 10,475?
Robert Dowds (Dublin Mid West, Labour)
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How is that expected to pan out?
Mr. Seán Ó Foghlú:
We have not reduced the ceiling and the number of pupils in schools is increasing. We know the ceiling of potential SNAs available for employment within the employment control framework and our budget. However, the National Council for Special Education is finalising some policy advice to us regarding the provision of special educational needs and supports in schools. Aspects of that may lead to further consideration of the balance of our policy in the provision of resource teachers on the one hand and SNAs on the other.
Robert Dowds (Dublin Mid West, Labour)
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Perhaps I should move to that area.
11:50 am
Robert Dowds (Dublin Mid West, Labour)
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Was there a significant delay between the need for SNAs in certain situations and the delivery of that special needs assistance to the relevant students?
Mr. Seán Ó Foghlú:
I do not think the issue was about the identification of the need versus the person being employed. There will always be some short-term time lag. The issue was more that we needed to maintain - "surplus" is the wrong word - numbers available to us so that we did not go over the cap which the Government had decided as the maximum numbers of SNAs to be employed.
Robert Dowds (Dublin Mid West, Labour)
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Presumably individual SNAs that were taken on later would have twiddled their thumbs, to some degree, while awaiting employment.
Robert Dowds (Dublin Mid West, Labour)
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Mr. Ó Foghlú referred to the National Council for Special Education. The explanation for its savings was that it was due to a reduction in grant funding made available due to an operating surplus in its accounts. Can the secretary general explain how the operation surplus arose? How does the Department monitor surpluses and bank balances belonging to bodies within its remit?
Robert Dowds (Dublin Mid West, Labour)
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Yes.
Mr. Seán Ó Foghlú:
The operation of cash surpluses was considered by the committee when I attended here last autumn to discuss third level institutions and VECs. The Comptroller and Auditor General had compiled a report on the issue in regard to VECs and third level institutions. Regular reports are made either to us, the VECs or the HEA. There were reasons they had cash surpluses and those were worked through. Arising from that and from some of the suggestions made in this forum, a budget decision was made, informed by the considerations in this forum, that we would make a one-off saving by having a cash balance, a delay in grant allocations in a particular year, to take account of the fact that VECs, on the one hand, and institutes of technology and universities, on the other, had some cash balances. As much as 40% of funding for third level institutions does not come from the State and a cash balance can arise for various reasons. We have changed some of our policies regarding tranche funding, payment of the free fees grant and so on. Notwithstanding that, we also felt that there was a one-off saving which we are implementing this year having regard to the individual arrangements in place within each third level institution. Universities may have slightly higher cash balances than the institutes of technologies. We are working on that, and we have something similar, but not exactly the same, in place with the VECs.
With regard to the specific question on the National Council for Special Education, there were unplanned staff changes and unpaid staff absences, including retirement, career breaks, unpaid maternity leave and sick leave, social welfare reimbursements and shorter working arrangements. That led to the NCSE having a surplus in cash so we took it as a one-off in terms of the next year's allocation.
Robert Dowds (Dublin Mid West, Labour)
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Am I right in thinking that the work of special educational needs organisers comes under the NCSE? I happened to have worked in the area of special education before I was elected to the Dáil and we often found them very difficult to deal with in that it was very difficult to get a response out of them and they would let things drag on. I can give one example in my own situation where I sought laptops for physically disabled children and it took them three years to come to a decision. That is far too long, particularly when it comes to children and teenagers. I do not know how widespread that is. There was a joke that went around school staffrooms that SENOs were called "say nos". I do know how fair that is but that was the view. I appreciate that they cannot always respond to everybody's needs but if people are being turned down, the sooner they are turned down, the better because at least then they know where they stand. I do not expect the secretary general to comment on all of that business.
With regard to student supports, if I have read the figures correctly, the amount is down by €31 million due to discontinuing the practice of allowing students to hold a maintenance grant in conjunction with back to education and vocational training opportunities scheme, VTOS, allowances and a change in qualifying criteria. Can the secretary general say what impact that has had upon students? Has it significantly reduced the financial means of certain students?
Mr. Seán Ó Foghlú:
Clearly, as we are making reductions in student supports, that is impacting on students, and we are very conscious of the difficult and challenging times students are facing in terms of accessing higher education. Notwithstanding the maintenance of the proportionate school leavers and other students going into higher education, we recognise that, as with all other parts of society, they are very challenged in terms of supporting themselves. The environment has worsened a lot in recent years and we have made additional funding available under the student assistance fund, both in 2011 and 2012, to third level institutions to allow them to make local decisions and so that they can make funding available where the need arises, that they can identify needs that are beyond the scope of the overall student support arrangements. We are very conscious of that.
Earlier we talked about Student Universal Support Ireland, SUSI. The impact of SUSI at the same time compounded what I have just referred to. As with all other parts of society, and we are very conscious of it, everybody is stretched. That is certainly the case with students. Notwithstanding that, clearly, budget decisions had to be made and we had to ensure our expenditure was reduced in each of the years. We made those decisions about student supports in that context.
Robert Dowds (Dublin Mid West, Labour)
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Does the Department monitor that or does it depend on third level institutions monitoring that and coming back to the Department if they see that a particular cohort of students are in difficulty?
Mr. Seán Ó Foghlú:
In terms of the availability of the student assistance fund, the HEA gets feedback from all of the higher education institutions regarding applications and need and then can seek additional funding from us in that regard. On two occasions in the past two and half to three years we have provided some additional funding to assist under the student assistance fund.
Robert Dowds (Dublin Mid West, Labour)
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On the question of temporary school accommodation, as somebody who on many occasions worked in temporary school accommodation, I am very conscious of the fact that there is a sense in which one is throwing good money after bad in that there is a limit to how long temporary accommodation lasts. Is the amount of money spent on prefabs and so on increasing or decreasing? To what extent are prefabs owned or rented out by schools? Has the Department sought to negotiate a decrease in costs when it comes to prefabs?
Mr. Seán Ó Foghlú:
Prefabs have been a difficult issue for a number of years but we have made some good progress in recent years in relation to prefabs. The total number of prefabs being rented is decreasing year on year, being just under 1,700 in 2010, 1,500 in 2011 and 1,400 in 2012.
Our expenditure has come down on all rental of temporary accommodation over the past three years, from €29 million in 2010 to €24.7 million in 2012. There are a number of reasons for the decreasing expenditure. We implemented a 10% reduction in rental sanctions and schools negotiated the 10% with their renter. We have also been buying out some older prefabs. Schools can be quite resistant to the buying out of older prefabs because we only buy ones we deem to be in good condition. Schools feel that if we buy out a prefab, it means the school will not have a permanent solution for a while. With the demographic increase, a lot of additional accommodation is being granted. We put in place a scheme whereby if temporary accommodation is needed for more than three years, we will give the schools a grant to build rather than to buy or rent a prefab. The majority of schools-----
12:00 pm
Robert Dowds (Dublin Mid West, Labour)
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When Mr. Ó Foghlú says build, does he mean to build a permanent structure?
Mr. Seán Ó Foghlú:
Yes, to build a permanent structure. It is a devolved grant and that is increasingly being taken up by schools. It is one of the reason the number of schools with prefabs has decreased. We are not increasing the number. With the success of completions on the schools building programme, schools are having temporary accommodation replaced while additional accommodation is being going ahead.
Finally, we have a prefabs replacement initiative, which was announced this time last year. Almost 200 schools have been offered an opportunity to avail of grant aid to replace rented prefab accommodation. A total of €35 million has been allocated to the initiative. Savings will arise in the long run. That is not to say, and I do not mean to convey, that we will not have children in prefabs, because we will. However, we have advanced with a number of initiatives to try to address the number of prefabs and the number of children in prefabs.
Robert Dowds (Dublin Mid West, Labour)
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I am glad to hear that this is the trend and I hope it continues, because it certainly is an unsatisfactory situation. To what extent does it cost more to heat a prefab than permanent school classroom?
Mr. Seán Ó Foghlú:
That depends. If one is buying or renting a very modern prefab, the standards can be very good in terms of the general heating and general issues around energy usage. At the same time, the standards we have for new build of schools is very high and we are at the leading edge in terms of some of those standards, in terms of energy efficiency and so on.
Robert Dowds (Dublin Mid West, Labour)
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The more we continue down that route, the better. Apart from anything else, it is not a good thing for children to be in substandard temporary accommodation. It does not create the right frame of mind for children in terms of their learning experience.
I understand the summer works scheme and the minor works grants have been suspended because of financial constraints. As someone who has had experience with schools over many years, I know those funds were very useful for doing maintenance work in schools. I understand the way things are now, it is only in emergencies that such money is available. How are such emergencies defined? I have got some queries from schools on this issue.
Mr. Seán Ó Foghlú:
In the first instance we have had to prioritise our investment according to the demographics for schools. We recognise that it is unfortunate that we do not have money for refurbishment. We found the summer works scheme very helpful. We did invest significant resources in summer works from about 2006 to about 2011, and in minor works grants as well, right up until the end of 2011. If we had additional funding available, it certainly is a way that money can be allocated effectively to help schools.
It is part of the challenge we are facing with the demographic bulge, which is really challenging. We have had to radically change how we do our business on the planning and building side to cope with it. Going back to 2008, we initiated the RAPID school programme. We were close to the edge in terms of having enough places for children in 2008. Our five-year plan is very much focused on the demographic needs. At second level there will be increases every year through to 2025 and 2026. At primary school we only know going back five years but there is no sign of the birth rate decreasing. It has decreased by approximately 1,000 but there is no real sign of any major change.
We do not have a major budget for emergency works. It is approximately €10 million a year and is for real emergencies. If there is a real problem with a window or part of the roof, we consider funding the replacement of the window or part of the roof but we cannot get into major works that schools seek. That is an unfortunate reflection of where we are in terms of funding.
Robert Dowds (Dublin Mid West, Labour)
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I appreciate the fact that the Department of Education and Skills is under huge pressure because of demographics. Part of my concern is that, sometimes, avoiding spending money is not value for money in the long run. If the condition of a school gets worse, the sooner the problem is tackled, the better, and probably the less the cost will be in the long run. I do not know if Mr. Ó Foghlú has any sense of that situation and whether that dictates how the Department might release money in that regard.
Mr. Seán Ó Foghlú:
The allocation for 2013 is €14 million for emergency works. It is hard to disagree with the statement that we need some investment, and some investment would be very helpful. We have prioritised, within our investment, the replacement of prefabs. That is how we would see that as being the best investment of the available funding. We must be realistic about the capital budget available to us. The Government has prioritised the delivery of school places and we are fortunate that is the case. We do not have significant other funding available to us at the moment.
That is one of the reasons we are maximising the use of public private partnerships with schools. The choice of schools for public private partnerships often relates to their need for refurbishment. The model is most effective and efficient when the school will be as full as possible when first opened. With new schools being started off, such as a new post-primary school, for example, the public private partnership process involves a group of schools going through the process together. If there are planning difficulties with one, the group of schools can be delayed, which can then have a knock-on effect on new schools being established. We must be very careful about that. In any of bundle of public private partnership projects, we tend not to bundle five new schools that need to open in 2017. Instead, we consider where there might be one or two new schools but we might have a number of schools where there are amalgamations or replacement schools, and in this way there is a varying need of different types of schools. We must be realistic that money is very tight on the capital side and we are doing our best to prioritise within that.
Robert Dowds (Dublin Mid West, Labour)
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Does Mr. Ó Foghlú see a situation where there will be some sort of minor works scheme at some time in the future or is it the case that the Department is so stretched that it feels it is not be possible?
Kieran O'Donnell (Limerick City, Fine Gael)
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I welcome the Secretary General and his colleagues. There is an article in one of today's national newspapers about a Deloitte & Touche report concerning Waterford Institute of Technology. The Department has been asked to carry out an investigation. Could Mr. Ó Foghlú give us an update on where that is currently?
12:10 pm
Kieran O'Donnell (Limerick City, Fine Gael)
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Which appears to be in the newspapers this morning.
Kieran O'Donnell (Limerick City, Fine Gael)
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The right place for it.
Kieran O'Donnell (Limerick City, Fine Gael)
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It is now in the public domain so I would encourage the Department to contact WIT directly and ask for the report to be passed on as a matter of urgency.
Kieran O'Donnell (Limerick City, Fine Gael)
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The second report?
Mr. Seán Ó Foghlú:
It is not that we do not have the report; we do not have the corporate response of WIT to the report. We must consider that because we need the response to both reports to see what the governing body of WIT feels on the major issues that have arisen, which we and the HEA can then consider.
Kieran O'Donnell (Limerick City, Fine Gael)
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The fact that it is in the public domain this morning would indicate that a response should be forthcoming from WIT as soon as possible.
Kieran O'Donnell (Limerick City, Fine Gael)
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It is being led by Mr. Quigley.
Kieran O'Donnell (Limerick City, Fine Gael)
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Is he the sole investigator?
Kieran O'Donnell (Limerick City, Fine Gael)
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How long will it take?
Kieran O'Donnell (Limerick City, Fine Gael)
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Will he report to the Minister then?
Kieran O'Donnell (Limerick City, Fine Gael)
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How much money does the Department have in the bank at the moment?
Mr. Seán Ó Foghlú:
The Department's payments are facilitated by the Office of the Paymaster General, which provides services to Government Departments. We do not routinely hold cash sums in commercial bank accounts. We typically use commercial bank accounts to collect receipts and facilitate the payment of staff. We arrange for these commercial bank accounts to be put in fund as required.
Kieran O'Donnell (Limerick City, Fine Gael)
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I am quite familiar with that. All I want to know is how much capital funding and how much revenue funding the Department has in the bank at the moment.
Kieran O'Donnell (Limerick City, Fine Gael)
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What is that for?
Kieran O'Donnell (Limerick City, Fine Gael)
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So it is currently with the NTMA for investment?
Kieran O'Donnell (Limerick City, Fine Gael)
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Apart from that, what is the amount of capital funding and revenue funding?
Kieran O'Donnell (Limerick City, Fine Gael)
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So the Department holds no cash balance for capital funding?
Kieran O'Donnell (Limerick City, Fine Gael)
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If I might refer to the report of the Comptroller and Auditor General, what is PMG?
Kieran O'Donnell (Limerick City, Fine Gael)
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The amount in that account increased from €29.6 million at the end of 2010 to €61.7 million at the end of 2011. Is that Paymaster General?
Kieran O'Donnell (Limerick City, Fine Gael)
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No, at the Department of Education and Skills. I want to get an idea of the level of cash and bank balances that Departments would have at any one time. There must be money in the bank accounts for capital funding and revenue funding. Does the fact that the PMG bank balance increased from €30 million to €62 million between 2010 and 2011 ring a bell?
Mr. Seán Ó Foghlú:
In the context of monthly Exchequer returns of expenditure, we advise the Department of Public Expenditure and Reform of our anticipated net expenditure requirements each month. On that basis, the Departments of Finance and Public Expenditure and Reform arrange for the Exchequer supply account to have adequate funds to support us and all of our payments. We draw from that as we need to.
Kieran O'Donnell (Limerick City, Fine Gael)
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Any payment the Department has would be on deposit with the Central Bank. I am looking at the interest-earning capacity of that money when it is not being used.
Mr. Eamonn Moran:
Typically, the Department does not hold money; it is held by the Central Bank. The Department operates a number of suspense accounts with various purposes at the Central Bank, which gets the benefit of any balances in those suspense accounts and gets interest on them. We seek to ensure the interest of any money we have, which would generally be there for temporary purposes, is garnered by the Central Bank.
Kieran O'Donnell (Limerick City, Fine Gael)
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How many people have yet to receive their third level grants from SUSI?
Kieran O'Donnell (Limerick City, Fine Gael)
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Out of what total number of applications?
Kieran O'Donnell (Limerick City, Fine Gael)
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I would like a breakdown of the total number who applied, the number who were refused, the number who were approved and the number that are yet to be processed.
Mr. Seán Ó Foghlú:
As of 24 February, there were 69,361 grant applications, an increase of 20% on last year. When we talk about grant applications, that might be just filling in the initial information and not seeking anything more. Of those, 54,754 are now complete - that is to say, awarded, provisionally awarded or refused.
Kieran O'Donnell (Limerick City, Fine Gael)
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So 14,607 applications remain?
Mr. Seán Ó Foghlú:
There are 391 with SUSI for processing, and 14,216 are incomplete applications awaiting supporting documentation. The figure of 14,216 can be broken down into 6,859 who have not responded to contacts since the initial response, 4,176 who have returned incomplete documentation and have been asked to return complete documentation or the application will be closed, and 3,181 from whom supplementary documentation has been requested.
12:20 pm
Kieran O'Donnell (Limerick City, Fine Gael)
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To recap, of the 14,216 applications that are outstanding 6,849 applicants have not responded. Some 4,176 applicants have made a return with incomplete information and 3,181 have returned supplementary documentation to be considered.
Kieran O'Donnell (Limerick City, Fine Gael)
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So that leaves 7,357 applications and 391 applications, as the numbers in process and 2,164 applications have been awarded a grant but have yet to be paid. Some 391 grants are in the process of being awarded, 4,176 have returned incomplete information and 3,181 have not responded to requests for supplementary information. In total that comes to 9,912, which is just short of 10,000 which is about 15% of the total applications. Is Mr. Ó Foghlú satisfied that after six months,15% of live applications are still due to be paid? I am excluding the 6,859 people who have not responded.
Kieran O'Donnell (Limerick City, Fine Gael)
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SUSI has been most unsatisfactory. In many cases one cannot talk to a person on the phone; one person can give one reason and another person will give other information. One is chasing for information and one is invariably trying to find a person who is good at the job. I have no doubt that my colleagues have had to do the same. What budget was given to the City of Dublin VEC to do this work? Did it have to tender for the work?
Kieran O'Donnell (Limerick City, Fine Gael)
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I want to know whether the City of Dublin VEC tendered for the work?
Kieran O'Donnell (Limerick City, Fine Gael)
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What was the value of the tender?
Kieran O'Donnell (Limerick City, Fine Gael)
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Clearly the amount of money is significant. Could Mr. Ó Foghlú give a range of the costs involved?
Kieran O'Donnell (Limerick City, Fine Gael)
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What is the number of staff?
Kieran O'Donnell (Limerick City, Fine Gael)
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The figure is 69 in total?
Kieran O'Donnell (Limerick City, Fine Gael)
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To process the grant applications of 69,000 students, that is approximately 1,000 applications per person. Was a process of due diligence completed by the Department in order to establish whether the process put in place was fit for purpose? I regard education as one of the greatest services that a Government can provide. It is the gateway to a myriad of opportunity from primary, to post-primary to third level. If a service is put in place that impedes those with financial difficulties from progressing in their studies, I have a major issue. It is a bottom line issue. Parents want to see their children progress through the system. Children from disadvantaged areas have striven to get a third level place. Some students have exams at Christmas time that contribute to their overall result for the year. I am not making a personal comment but this is just not good enough. Mr. Ó Foghlú should have the figures at his fingertips, because this is taxpayers' money. Approximately 10,000 grant applications have yet to be processed. What resources will be put in place to ensure that grants will be processed as quickly as possible? What is the timeframe? Will Mr. Ó Foghlú give an assurance of the timeframe for the processing of the applications?
The process was not fit for purpose. In cases where it should have been a single telephone call, we would have made 20. There are inherent flaws in the system.
Kieran O'Donnell (Limerick City, Fine Gael)
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The problem is that we have abstract discussions on education. This is about students who are worried about having enough money to keep going during their Christmas exams? Their parents are in the same position. The one thing the State can provide is a gateway. That is what we want for our population. We want people to upskill, but we cannot put impediments in their way. I am not in any way questioning Mr. Ó Foghlú's veracity. I want to know when the issue will be sorted, when the students will be paid their grants and the cost in pounds, shillings and pence. A review will be carried out in the normal way.
Mr. Seán Ó Foghlú:
We are in a better position this January than our position last year. The difficulties arose in the autumn. We have the information. We did a census of the VECs in early January last year. Our position has improved on the same time last year. We fully accept the difficulties and the challenges. The Minister has apologised and we reiterate that apology.
Kieran O'Donnell (Limerick City, Fine Gael)
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Many people in SUSI are doing a very good job. However, is it feasible that 69 staff can process 69,000 applications in a short period?
Mr. Seán Ó Foghlú:
It is not a staffing numbers issue. We have given additional staff that SUSI requested and there is an outsourcing arrangement in place as well. The issue around the payments is about the students giving their bank details. One of the challenges we have had in the whole process, is that the process has moved on from being a parents-led process to being a student-led process. As communications have gone back to students, the students themselves may not have communicated with us. That is one of the difficulties. I am in no sense trying to blame students. Students have been engaging on this. The City of Dublin VEC is trying to get the details on the bank accounts to pay the 2,164 students. I cannot give a guarantee. All I can say is that when CDVEC gets the applications it will pay them as soon as possible.
Kieran O'Donnell (Limerick City, Fine Gael)
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What campaign is now in place?
Mr. Seán Ó Foghlú:
Lots of campaigns have been put in place. The City of Dublin VEC is working very closely with the USI, the student unions and the higher education institutions.
Kieran O'Donnell (Limerick City, Fine Gael)
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That is for the 2,164 students that have been awarded their grants. There is another 7,800 applications, in which the returns are incomplete or they have provided supplementary information. Some 4,176 applicants have made incomplete returns and supplementary information has been requested from 3,181 applicants, but obviously the bulk of the information has been provided. Will Mr. Ó Foghlú give me a timeframe for processing them?
Mr. Seán Ó Foghlú:
Again, the timescale for processing the applications on hand is very quick. There is no difficulty processing applications on hand. We cannot give a definitive timescale until SUSI gets the information that is required. Where documentation is outstanding SUSI is working very closely to provide the final opportunity for students to submit documentation. If it is more than six weeks from the time SUSI contacted them and they have not responded, SUSI will close them out.
Otherwise, it is working closely with students to try to get the documentation back.
12:30 pm
Kieran O'Donnell (Limerick City, Fine Gael)
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So if a student has not responded within six weeks of being written to or e-mailed, his or her file will be closed?
Kieran O'Donnell (Limerick City, Fine Gael)
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What about the 3,181 applications in which supplementary documentation is sought? How quickly will they be dealt with?
Kieran O'Donnell (Limerick City, Fine Gael)
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On day one, when SUSI was being set up, what type of due diligence was done on the structures that City of Dublin VEC was able to provide to implement this?
Mr. Seán Ó Foghlú:
Initially, we put in place an implementation group with ourselves and the CDVEC, as well as the Department of Public Expenditure and Reform, to come up with the initial implementation plan. Since then, the Department of Education and Skills has been supporting the CDVEC in implementing the plan. Two trials were carried out, one of monthly payments to students and another of the initial online application process. Those trials went relatively well, although a number of difficulties and challenges arose. Nobody could have guessed the nature of the information flows. That is one of the biggest issues that will show up in the review - the need to go back on initial applications with documentation and keep on going back. The issue is not only the efficiency with which people provided further information but the efficiency with which the system got back in to review the further information, whether the applicants had to go to the back of the queue or back into-----
Kieran O'Donnell (Limerick City, Fine Gael)
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Does Mr. Ó Foghlú agree that the current position, in which approximately 10,000 applications are yet to be dealt with in some shape or form six months later, is most unsatisfactory?
Kieran O'Donnell (Limerick City, Fine Gael)
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I am approaching the overpayment of teachers from a slightly different perspective. I have been contacted by young teachers who have received correspondence in the past two weeks seeking the repayment of overpayments made in their wages. The letters they received stated that moneys would be deducted from their salaries within two weeks. The individuals in question have been in contact with the Department for the past two years questioning the rate they were being paid. They were informed they were being paid the correct rate and have letters to that effect. Many of them are part-time and under financial pressure. This is a little like a person informing his bank manager that he is being paid the wrong rate of interest and being told it is the correct interest rate, only to have the rate increased 18 months later, with a view to securing a large sum that the customer does not have. How did this situation arise? Will Mr. Ó Foghlú give a commitment to cease collecting arrears until there has been some interaction with the young teachers in question? They are frustrated because when they contacted the Department to query the rate they were being paid they were told they were on the correct rate. Now they have received letters out of the blue seeking repayment and many of them do not have the money to do so because they are employed part-time. I ask Mr. Ó Foghlú to explain how this happened. He will appreciate that Deputies have a representational role in the matter and, as such, I am not being personal. I have met these young teachers and they are very upset. They are not earning a fortune; far from it. The Department has indicated the amounts to be repaid. Some of the teachers in question cannot afford to pay these amounts. I have raised the matter with the Minister and I have no doubt my representations will be passed on to Mr. Ó Foghlú. How did this matter arise and how will the teachers in question be treated?
Kieran O'Donnell (Limerick City, Fine Gael)
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I refer to a particular group of teachers.
Kieran O'Donnell (Limerick City, Fine Gael)
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The individuals who have contacted me are young teachers.
Kieran O'Donnell (Limerick City, Fine Gael)
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They have received letters from the Department in the past two weeks.
Kieran O'Donnell (Limerick City, Fine Gael)
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Will Mr. Ó Foghlú provide the dates for which the repayments are owed?
Kieran O'Donnell (Limerick City, Fine Gael)
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That is not the case.
Kieran O'Donnell (Limerick City, Fine Gael)
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Under a previous circular, where a teacher was working in a school prior to qualification, this was taken into account in his or her pay scale. However, the main issue is that the teachers in question expressed concerns that they were not on the correct pay scale and contacted the Department repeatedly. They were informed, by letter, that they were on the correct pay scale but have received letters in the past two weeks pointing out that they were on an incorrect pay rate and indicating the Department will recoup the overpayments from their salaries. I understand they are paid fortnightly.
Kieran O'Donnell (Limerick City, Fine Gael)
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It would strike me as normal not to proceed with the proposed deductions until some interaction has taken place with the young teachers in question, who are going from school to school and working part-time. It is a little perplexing that when they queried this matter over the past two years the Department informed them there was not a problem. They are now receiving letters informing them that money will be deducted from their fortnightly wages with almost immediate effect. I ask Mr. Ó Foghlú to give a commitment to allow some form of proper interaction with the teachers in this specific category before proceeding to deduct the overpayments. There is clearly some confusion.
Mr. Seán Ó Foghlú:
We will certainly look at the case the Deputy has outlined. It is difficult to give a commitment to cease payments while we are looking at a case given that the payments are €20 every two weeks. I cannot give an outright assurance, but as soon as we find out that we have made a mistake or error in any of these cases - we do make errors in cases such as this - we would stop the deduction and seek to pay any money back. We are genuinely not aware of the group of teachers the Deputy is talking about but we will immediately look at it.
12:40 pm
Kieran O'Donnell (Limerick City, Fine Gael)
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That is great. I thank Mr. Ó Foghlú.
Eoghan Murphy (Dublin South East, Fine Gael)
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I thank the Chairman. As I had to attend a number of votes, I apologise if I go over any territory that has already been discussed. If I do, please tell me and I will move on to something else. Returning to something that was said at the beginning when Deputy Gerald Nash was asking about the overpayments to teachers, the Secretary General spoke about the difficulty in managing the payroll system and said that every two weeks, 10,000-----
Eoghan Murphy (Dublin South East, Fine Gael)
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What does that mean?
Mr. Seán Ó Foghlú:
It goes back to the nature of the online claims system. We have an IT system which all schools link into online. If somebody substitutes for as little as one class at post-primary or a day at primary school, he or she is entered onto the system so that we can make payments to him or her at the appropriate rate. The appropriate rate will depend on a number of things.
Eoghan Murphy (Dublin South East, Fine Gael)
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Does that mean that every two weeks 10,000 teachers are sick for a period of time?
Eoghan Murphy (Dublin South East, Fine Gael)
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What percentage of the comers and goers are a result of sick leave in terms of substitution?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Let us have in writing the overall breakdown for the different categories.
Eoghan Murphy (Dublin South East, Fine Gael)
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Has that question never been asked? Ten thousand is-----
Mr. Seán Ó Foghlú:
It is the nature of the system. We actually provided to the committee over the years quite a lot of breakdowns of substitution. I remember there was a report by the Comptroller and Auditor General on the supervision and substitution scheme. The occasion of sick leave has been reduced significantly in teaching and we are referring people to the occupational health service, which deals with them much more speedily with a view to reducing sick leave time. It is not just sick leave; it is the nature of the system. Especially at second level, there are is a lot of part-time working involved because schools have to be subject-specific in their provision of teaching.
Eoghan Murphy (Dublin South East, Fine Gael)
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At second level on a particular week there is a requirement for substitution because the geography teacher is not in. More often than not another teacher will come in and take that class, whether qualified or not. He or she will sit in and either the students will do what they wish or the teacher will try to take them through the next chapter as best they can in their studies. In that arrangement, is substitution payment made?
Mr. Seán Ó Foghlú:
It would depend on what the arrangement was. We have a supervision and substitution scheme in place in schools. If substitution takes place under the supervision and substitution scheme, it is done by existing teachers. If there is an arrangement under another category of leave that the school cannot fill, it will bring in, if possible, a teacher in the subject, but if that is not possible it will bring in somebody to supervise the class.
Eoghan Murphy (Dublin South East, Fine Gael)
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If we were to see a change in that substitution arrangement, given that talks are ongoing, that would change the system.
Mr. Seán Ó Foghlú:
If the proposal as suggested is implemented there would be a number of efficiencies for us, as well as complexities. One of the efficiencies is that the 37-hour supervision and substitution scheme would no longer be a separate scheme and would be part of the general work of a teacher. Furthermore, some of the substitution categories would be reduced, so there would be a reduced call on substitution and, therefore, fewer claims for substitution cover.
Eoghan Murphy (Dublin South East, Fine Gael)
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It will reduce complication in the payroll system.
Eoghan Murphy (Dublin South East, Fine Gael)
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In terms of a primary school's autonomy when it needs to substitute, if a teacher is sick in a given week or for a week, what is the budgetary arrangement? Where a primary school teacher pays for a sub to come in, does the pay come from a particular fund?
Mr. Seán Ó Foghlú:
The school does not have a devolved budget for teacher pay, which is paid centrally by the Department. If a teacher is going on certified sick leave for a number of weeks, one would not be aware initially that it was for a number of weeks, except in certain circumstances. Often a teacher would be on sick leave for a few days and then move on. Primary schools are required by circular to keep lists of potential substitutes available to them, but sometimes these are not available. There are support services available from the Irish Primary Principals' Network and so on which a school could use to get somebody to come in at short notice. If it then realised it would be a longer-term substitution, it would have time after a couple of days to put a more extended arrangement in place.
Eoghan Murphy (Dublin South East, Fine Gael)
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The budget is not devolved but the decision by the principal in a primary school to take on a substitute teacher rests with him or her.
Eoghan Murphy (Dublin South East, Fine Gael)
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Who provides the substitute cover for the first day?
Eoghan Murphy (Dublin South East, Fine Gael)
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Does the school have a budget to call somebody down the road who is on the list to cover for the first day?
Mr. Seán Ó Foghlú:
No. If a school had access to its own resources it would be allowed to do that. Because of the complexities in the teaching grades, increments and so on, as well as the Protection of Employees (Part-Time Work) Act 2001 and the Protection of Employees (Fixed-Term Work) Act 2003, we needed to centralise the arrangements because it would have been too big an administrative burden on schools. It would have been hard for us to manage centrally and know where teachers were in terms of income, skills, entitlements etc. The on-line claims system allows all that to take place.
Eoghan Murphy (Dublin South East, Fine Gael)
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On the second and third day, the school is allowed bring in a substitute teacher.
Eoghan Murphy (Dublin South East, Fine Gael)
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Does the principal make a telephone call to somebody he or she knows? How does the system work?
Eoghan Murphy (Dublin South East, Fine Gael)
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I know that, because young teachers have come to me about this. They will stay around in the morning waiting for a telephone call. If it does not come by a certain time they do not get work that day, and if it does then they are off, perhaps to one of the schools they have had to lobby in their area, which they can get to on time. That, essentially, is how the system works. It is very much a free hand. I like schools to have as much autonomy as possible, but the principal has a free hand in choosing the person.
Eoghan Murphy (Dublin South East, Fine Gael)
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What about choosing somebody who has retired? Does he or she have a free hand in that as well?
Mr. Seán Ó Foghlú:
It is the principal's decision to employ whom he or she wishes. We have issued circulars encouraging schools to employ teachers who are not retired. Principals are required to report to their boards of management where they have decided to employ retired teachers. We have also put in place measures to reduce the starting pay of retired teachers to that of a new teacher to discourage retired teachers in seeking to return to the workplace. We have also been monitoring long-term substitution by retired teachers. This has decreased significantly in the past four years, but we are seeking to put in place further measures, including regular monitoring in order that we can see where a school has commenced an arrangement. We will consult with the school management bodies and the teacher unions because at the moment it often happens too late, and we might identify that a retired teacher has been working somewhere for a number of months. We would like to establish a mechanism whereby we can let schools and management bodies know that we know, which will encourage them not to employ retired teachers.
In the first term of the 2009-2010 school year, retired teachers worked 15,260 days in primary schools. That has declined in the first term of this year to 2,295, which is a significant decrease. I must admit that we would have some sympathy for situations where there is not a qualified teacher close by for the first couple of days of absence but what we have less sympathy for is somebody coming back for a prolonged period, in other words, a situation where a school principal asks a retired teacher to come back to cover a prolonged absence.
12:50 pm
Eoghan Murphy (Dublin South East, Fine Gael)
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One can see the natural bias, of course, and it is understandable where there is a person out sick and the principal knows that the person who retired was good with staff and pupils. Does the Department track how many people are coming back for longer periods of time?
Eoghan Murphy (Dublin South East, Fine Gael)
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The improvement is definitely significant, I agree.
Mr. Seán Ó Foghlú:
We cannot track it as exactly at post-primary level because there is the day's pay at primary versus an individual's hours or class at post-primary. However, we know that there has been a decrease of over 50% in the same time period. The decrease has been much more significant at primary level. The level of engagement at post-primary was always lower anyway.
Eoghan Murphy (Dublin South East, Fine Gael)
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Moving on, the second issue I want to raise relates to an article I read last week in the Irish Examiner about County Cork VEC. The issue has been raised at meetings of this committee before. The article states that "County Cork VEC secured more than €430,000 in unauthorised borrowings from Mallow Credit Union and signed up to a long lease with no permission ... it gave conflicting accounts of the arrangements underpinning the deal and misled the department over the lease". What is happening with County Cork VEC?
Eoghan Murphy (Dublin South East, Fine Gael)
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Yes, in terms of what the Department is doing. The issue has been raised at this committee before in the context of the VEC and irregularities there but this is new information, as far as I know.
Mr. Seán Ó Foghlú:
There was an issue with regard to ICT expenditure and a number of other issues were raised previously. On this particular matter, we met the VEC the week before last and are seeking clarification on a number of matters with regard to the Mallow Youthreach centre and the lease arrangements for same.
Eoghan Murphy (Dublin South East, Fine Gael)
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When did that meeting take place?
Eoghan Murphy (Dublin South East, Fine Gael)
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With whom was that meeting held?
Mr. Seán Ó Foghlú:
I know the CEO of the VEC was there but I do not know who else attended the meeting with her. A number of officers of the Department were in attendance.
Eoghan Murphy (Dublin South East, Fine Gael)
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Is there a senior officer or assistant secretary in the Department responsible for the VECs in general, who would also be responsible for dealing with individual VECs when these cases arise?
Mr. Seán Ó Foghlú:
The way the responsibilities are split up within the Department is such that there is a lead assistant secretary for the VECs generally and another lead assistant secretary for further education and training, and this Mallow issue would be a cross-over issue between the two of them.
Mr. Seán Ó Foghlú:
Would Mr. Ó Foghlú have spoken to the relevant persons about the County Cork VEC issue before it arose?
Eoghan Murphy (Dublin South East, Fine Gael)
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The Department is also awaiting clarification on payments for 1,000 tutor hours that were not timetabled, estimated at €60,000, payments to teachers for non-teaching work, allowances paid to ineligible learners, additional travel allowances paid and the hiring of a person to drive a bus who did not have an appropriate background check. Has any clarification been received from the VEC since the Department sought it?
Mr. Seán Ó Foghlú:
This relates to Macroom and the answer is "yes", a number of clarifications have come back. The major outstanding issue in the Macroom case relates to the payments of allowances to ineligible learners. We are seeking proposals from the VEC as to how it will seek to recoup that money.
Eoghan Murphy (Dublin South East, Fine Gael)
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That is the only outstanding issue, is that correct?
Eoghan Murphy (Dublin South East, Fine Gael)
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In terms of those incidents in Macroom and what is happening now with County Cork VEC, what level of concern would Mr. Ó Foghlú have regarding the VEC?
Mr. Seán Ó Foghlú:
Clearly, there have been a number of governance challenges in the VEC on which it is engaging with us to seek to address. We would be anxious that it assures us that it has revised and updated systems in place to ensure such incidents do not recur.
Eoghan Murphy (Dublin South East, Fine Gael)
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Are we walking about a systems failure here?
Mr. Seán Ó Foghlú:
The issues relating to Macroom and Mallow go back a number of years. I believe there was a systems failure and a breakdown within the VEC in terms of its reporting arrangements and so on.
Eoghan Murphy (Dublin South East, Fine Gael)
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Does Mr. Ó Foghlú believe the VEC intentionally misled the Department on the lease arrangement for the Youthreach centre?
Eoghan Murphy (Dublin South East, Fine Gael)
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It is not the first time that the Department got wrong information. Blaming a system can sometimes be the easy option but sometimes there can be a culture of failure within an organisation. We have seen that before - quite a lot - in society. It is bit more difficult to detect but it is a lot more poisonous. One wonders if there comes a point when the Department has to decide to step in and send someone down to the VEC and find out what is going on.
Eoghan Murphy (Dublin South East, Fine Gael)
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How long is the Department prepared to wait? The issues that arose were brought to the attention of this committee and the Department over 12 months ago, is that not correct?
Eoghan Murphy (Dublin South East, Fine Gael)
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Something needs to happen.
Eoghan Murphy (Dublin South East, Fine Gael)
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Is there anything else of which Mr.Ó Foghlú is aware, in terms of reports or allegations, that may be of concern relating to the VEC or operations under its aegis?
Eoghan Murphy (Dublin South East, Fine Gael)
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Can Mr. Ó Foghlú comment on them?
Eoghan Murphy (Dublin South East, Fine Gael)
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Sorry, I missed the latter point. Plans for what?
Mr. Seán Ó Foghlú:
A boat that was given to the VEC as a gift. The question is whether it should be refurbished or destroyed.
Eoghan Murphy (Dublin South East, Fine Gael)
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Has the Department given a deadline to the VEC to come back to it regarding the loan for €430,000?
Eoghan Murphy (Dublin South East, Fine Gael)
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It would be helpful to get an update to the committee as soon as possible regarding what is happening here. We are starting to see a pattern with this particular VEC and the way it operates. It would be good to keep the pressure on from the committee's side so that we can be clear as to what the money has been spent on or, if there are irregularities, how they are being addressed by the Department. We must have confidence that the VEC is being chased up in a timely fashion so that it does not become another legacy issue that we simply cannot deal with because the relevant people are no longer there.
Eoghan Murphy (Dublin South East, Fine Gael)
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I wish to raise the issue of the change to the pupil-teacher ratio in private schools that was implemented in a previous budget. Has the Department had contacts from any private schools seeking to enter into the State system as a result of their position having changed over the last two years?
Mr. Seán Ó Foghlú:
The term "private" schools is probably unfair on many schools, which are more correctly known as fee-charging schools. One has moved into the free scheme and another has agreed to move. It is already in the public domain that a number of other schools are in dialogue with us but I cannot say if any of them will definitely change. I could not say that any of them will change.
1:00 pm
Eoghan Murphy (Dublin South East, Fine Gael)
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Which school has moved into the free scheme and which school is due to move?
Eoghan Murphy (Dublin South East, Fine Gael)
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In terms of its contacts with other fee-paying schools, does the Department have any idea of the number of other schools that might consider moving?
Eoghan Murphy (Dublin South East, Fine Gael)
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From a financial point of view the Department must be anticipating or at least drawing up plans for the cost involved to the State should these and other schools decide to change their status. Is that the case?
Mr. Seán Ó Foghlú:
Yes, when the school decides to come in, it is not simply a matter of us agreeing. There is a need for us to assure ourselves on behalf of the State that there is a need for the school, in particular having regard to denominational issues. It just so happens that the two schools that have come into the free scheme are Protestant schools serving widely dispersed populations, so while the issue has not arisen, it does arise. We are conscious that the savings measures we have introduced have the potential to be offset somewhat if some schools decide to come into the free scheme. The offsetting would not arise to any extent yet.
We also undertook an analysis of what schools effectively spend their fees on and the income available to them. The outcome of the analysis is to be published by the Minister in the near future.
Eoghan Murphy (Dublin South East, Fine Gael)
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Does Mr. Ó Foghlú know how soon that will be published?
Eoghan Murphy (Dublin South East, Fine Gael)
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Does Mr. Ó Foghlú know at what point in terms of numbers of schools or the number of pupils coming in from the fee-paying schools that the savings made in the budget will be offset by such pupils returning to the system?
Eoghan Murphy (Dublin South East, Fine Gael)
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It would be interesting to know the threshold at which no saving has been made in terms of the Department’s planning and budgeting and at which point the change in the pupil-teacher ratio would become a liability. Is it intended to carry out such work?
Eoghan Murphy (Dublin South East, Fine Gael)
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Will the report come out this year?
Eoghan Murphy (Dublin South East, Fine Gael)
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When the changeover happens, what will be different in the schools?
Mr. Seán Ó Foghlú:
The biggest difference is that students are no longer charged tuition fees to attend and therefore parents will no longer have to pay fees. Anyone who wishes to attend the school will be able to attend, rather than it being limited to people who can pay the fees. Having said that, to be fair, in the Protestant fee-charging sector we have block grant funding available for schools to assist people to attend. Furthermore, most fee-charging schools have some arrangements in place to subsidise entry. Effectively, it opens up the entry. The schools will be funded like every other school. In both of the schools that have come into the free scheme, they also operate boarding and they are free to charge for boarding. Boarding and fee-charging are not necessarily the same. We have a number of boarding schools that are in the free scheme.
The overall funding available to the school will reduce because the funding available to the school with fees was higher given the combination of State funding and funding from fees, but schools are planning to manage within that system.
Eoghan Murphy (Dublin South East, Fine Gael)
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Will they not get more teachers as well?
Eoghan Murphy (Dublin South East, Fine Gael)
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Will they still have their own admission criteria, as every school does?
Eoghan Murphy (Dublin South East, Fine Gael)
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Essentially, it is taking the financial burden of sending a child to school from the parent and putting it back on the State.
Eoghan Murphy (Dublin South East, Fine Gael)
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It is a greater cost.
Eoghan Murphy (Dublin South East, Fine Gael)
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Yes, but it is almost twice the cost to the State. If a child attends a fee-paying school, the funding provided by the State per child is half the amount it gives to a child attending a non-fee-paying school.
Eoghan Murphy (Dublin South East, Fine Gael)
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I am trying to think of the figures. The subvention we give to fee-paying schools is in the order of €100 million.
Eoghan Murphy (Dublin South East, Fine Gael)
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I see, but if we were to remove that in its entirety, for example, the burden coming back onto the State in terms of providing teachers for the pupils would be in the order of €200 million.
Eoghan Murphy (Dublin South East, Fine Gael)
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I did not bring the figures with me.
Eoghan Murphy (Dublin South East, Fine Gael)
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It will be covered in the report that is due.
Eoghan Murphy (Dublin South East, Fine Gael)
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Yes. The resources have come from parents deciding to spend their additional income on that aspect of their family life.
Eoghan Murphy (Dublin South East, Fine Gael)
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Does the State cover the teaching costs?
Eoghan Murphy (Dublin South East, Fine Gael)
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The State covers some but not all of the teaching costs, but essentially funding goes towards paying teachers in schools. Mr. Ó Foghlú said we will see the report in the next few weeks and it will cover all of those issues.
Seán Fleming (Laois-Offaly, Fianna Fail)
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Mr. Ó Foghlú and his colleagues are welcome. I wish to raise four or five points. I will be as brief as possible. I will not rehash anything but I wish to clarify one figure relating to SUSI. Mr. Ó Foghlú indicated there were 69,000 applicants and 55,000 applications have been completed. How many of the 55,000 were refused? I will not inquire about the current level of processing. I just want to inquire about completed cases. How many applications were granted and how many were refused?
Seán Fleming (Laois-Offaly, Fianna Fail)
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Out of the 55,000 completed applications, 52%-----
Seán Fleming (Laois-Offaly, Fianna Fail)
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I would have thought the number of applications that have been granted would be basic information.
Seán Fleming (Laois-Offaly, Fianna Fail)
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Sometimes the most obvious question is the one to which the answer is not available. How many grants have been awarded?
Seán Fleming (Laois-Offaly, Fianna Fail)
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Okay, we will.
If 69,000 applications were received and 55,000 were completed, how many have been granted? I am sure I will get an answer in a few minutes.
I will move on to the appeals process as some of these applications have been refused. I tried to get this figure before asking the question but we will get the figure in any event. What is the appeal system for someone who has been refused? The Secretary General should talk me through the appeal system.
1:10 pm
Seán Fleming (Laois-Offaly, Fianna Fail)
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How many?
Seán Fleming (Laois-Offaly, Fianna Fail)
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A total of 5,275 appeals have gone in. To where did they go?
Seán Fleming (Laois-Offaly, Fianna Fail)
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I do not think that is right at all.
Seán Fleming (Laois-Offaly, Fianna Fail)
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I doubt that.
Seán Fleming (Laois-Offaly, Fianna Fail)
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Because of the replies to two parliamentary questions. While there might be an internal review or internal appeal process, an appeals board was established on 8 September 2011. It is chaired by Ms Maureen Waldron and is comprised of Mr. Pádraic McNamara, Dr. Marie Clarke, Ms Rebecca Murphy, Ms Eithne Frost, Dr. Brenna Clarke and Professor Kevin Ryan. This is the appeals board established to deal with appeals from all third level grant awarding authorities, with Student Universal Support Ireland, SUSI, being the main one. Obviously, it deals with appeals in respect of applications to SUSI. While I wish to go through the appeals process, this information was given to me in response to a parliamentary question two days ago, that is, on 26 February 2013.
Much more importantly, on 7 February 2013, having asked the Minister for Education and Skills to provide the number of appeals to the student grant appeal board for the academic year, I received a reply stating the total number of appeals received and considered by 7 February was 89. The numbers of decisions upheld and overturned were 54 and ten, respectively, while 23 had been referred back to the grant awarding authority and two had been referred back to the student for further information. These figures pertain to the number of appeals that had been considered and 157 had been received in total. It appears to me as though there is an internal system within SUSI which has dealt with 5,275 appeals to which the Secretary General referred a minute ago. However, up to 7 February, the appeals board to which the Secretary General referred had received 157 applications, of which only 127 related to SUSI. The others pertained to the other VECs and local authorities across Ireland, which still are processing third level grants for people who are in second, third or subsequent years and still are being dealt with. The Secretary General is confusing the appeals board with some internal appeal system within SUSI.
Seán Fleming (Laois-Offaly, Fianna Fail)
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That is a screening process.
Seán Fleming (Laois-Offaly, Fianna Fail)
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The Secretary General should talk me through the appeals process system.
Seán Fleming (Laois-Offaly, Fianna Fail)
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Within SUSI, that is, within the City of Dublin Vocational Education Committee, CDVEC.
Mr. Seán Ó Foghlú:
While it is within CDVEC, I understand that it is getting help from another VEC in order that the appeals are being considered externally to those who looked at them initially.
Seán Fleming (Laois-Offaly, Fianna Fail)
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Okay, so 5,000 applicants had what I will call the internal review within the SUSI organisation.
Seán Fleming (Laois-Offaly, Fianna Fail)
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And approximately 3,000 were-----
Seán Fleming (Laois-Offaly, Fianna Fail)
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How many were upheld?
Seán Fleming (Laois-Offaly, Fianna Fail)
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Okay. I refer to the 1,861 cases in which the appeals were not upheld. Most people, when I raise the issue of this independent appeals board, the membership of which I have just read out, are not even aware of its existence. It is not referred to in the system. The fact that only approximately 100 appeals have gone to that independent appeals board shows there is a complete lack of awareness among the student population. I am not just stating it shows it but am making this point categorically. Journalists who deal with this area and even representatives of the Union of Students in Ireland were not aware of this separate independent appeals board chaired by Maureen Waldron. As I noted, there are seven people on the board. In his reply to my parliamentary question two days ago, the Minister stated "The Appeals Board is fully independent in the performance of its functions". However, I also asked who carried out the administrative support for the appeals board and the last sentence in the Minister's reply was "Administrative support to the Appeals Board is provided by my Department". Presumably the independent appeals board can only make decisions on the information provided to it but the only people providing information to it are departmental officials. How can one claim this is an independent appeals board in the interests of students if the only information going to it comprises files from the Department's officials? I do not accept its independence if the files being prepared for it are coming from within the Department. That is not independence.
I will go further. Why has the Department constructed such a system this year in which applicants who came into the system since last May or whenever they began to apply last summer have no right whatsoever to go to the Ombudsman if they are unhappy with the operation of SUSI? The Ombudsman's office has confirmed to me directly that she has no role or entitlement to consider this issue. She will have an entitlement to deal with maladministration, unfair appeals or processing of applications for next year, that is, for those applications that will pertain to the academic year 2012-13. The Secretary General should explain the reason the Department constructed this system for year one to exclude the right of students to go to the Ombudsman which is there for practically every other public body?
Mr. Seán Ó Foghlú:
On the first issue, the Deputy obviously is correct. As part of the processing, it was very important that there was an internal appeals mechanism and that obviously has been very effective in addressing issues. As I stated earlier, we have a concern about the number of decisions overturned and have asked for a report from SUSI on that issue. The statutory appeals board is established under the Student Support Act and as for awareness of it, I will have to check the extent to which people who are refused an appeal within SUSI are formally informed this second process is in place.
Seán Fleming (Laois-Offaly, Fianna Fail)
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Is it not now a bit late, three quarters of the way through the academic year, for the Secretary General to inquire whether students are informed of such a right or of the existence of an independent appeals board? We are almost at the end of the process. The Secretary General indicated that most of them have been dealt with and I accept that 55,000 out of 69,000 have been completed. Moreover, some of them may have been merely speculative applications in which people sent in the forms. As the Secretary General noted, thousands have not pursued their application when asked for further information and their completion may never come to pass. As for talking about the awareness of this independent appeals board, it is proved by Mr. Ó Foghlú's observation that having nearly reached the end of the year, 2,000 people have been refused but only approximately 100 appeals have been lodged.
On the operation of the aforementioned independent appeals board, it is funded by the Department of Education and Skills and I do not object to that. The Minister confirmed that in the period between its establishment in October 2011 and November 2012, the board members were paid €15,450 in allowances and €6,591 in travel and subsistence at a total cost for the board of €22,000, which I accept is a modest figure. However, the Department is paying for that board, its departmental staff are providing its administrative support, students do not really know about it and the Secretary General is now going to inquire whether they are even informed about it. The Department already has cut off their right to go to the Ombudsman by the manner in which it established SUSI at the outset. They can go to the Ombudsman next year, in year two, if they are still around and have not been obliged to withdraw from school.
However, the reply to the parliamentary question I tabled on 7 February 2013, only two weeks ago, indicated that at that stage, 62 appeals had been received and dealt with by the board, only four of which were overturned. Out of the 2,000 people who were refused by the SUSI internal appeals system, very few knew about the existence of this board but only four people have had their decisions overturned by that independent board. It appears to be simply rubber-stamping what is coming into it.
Then it stated that a further 37 cases would be dealt with in the meeting on 13 February and a further 28 would be due for consideration on 12 March.
In the height of all of this, the board is meeting only once a month to consider appeals and students are dropping out of college because they are not getting their grants. I have before me the timetable of the meetings of the board. Students who do not make it in for the February meeting are told they must wait for a month. Then it transpires only four out of 62 have been successful in this board. In this case, it seems totally staked against the student. Some 2,000 have been refused. Mr. Ó Foghlú does not even know whether the students are made aware of the appeals board. Very few go to the board. Of those who do, only four were successful up to February. Now we find the Department had also cut off a citizen's right to go to the Ombudsman. Whoever set up this system specifically excluded that. It was not fair to students the way this was constructed.
1:20 pm
Mr. Seán Ó Foghlú:
Taking those one by one, I said I was not aware whether students are referred, and I am not aware. I was going to say I assume that they are, as part of the appeals process because it is a statutory process. They are. It is a robust internal mechanism that they have in place and it has turned over a number of cases.
It is a statutory appeals process. It is on the Statute Book. I understand that the rationale is that a second Ombudsman check, where there is already a statutory check in place, was not deemed necessary. We can reflect on Deputy Seán Fleming's view and come back to him, but SUSI has been quite effective in being open to having its internal appeals process in place.
Seán Fleming (Laois-Offaly, Fianna Fail)
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Mr. Ó Foghlú contradicted himself there, if he does not mind me saying so. He stated the Department has an independent statutory appeals board in place and the Department did not allow the Ombudsman into the situation because that would be second guessing an independent appeals board. I am confirming to him the Ombudsman has stated she will have the right to examine these cases for the next academic year and his argument of not having the Ombudsman involved because there is an independent appeals board does not hold up this year. It held up for the previous academic year. Why was it agreed? Why did the Department decide to let the Ombudsman in after year 1, and not in year 1?
Seán Fleming (Laois-Offaly, Fianna Fail)
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The right of citizens to go to the Ombudsman when dealing with public bodies is fundamental. It does a grave disservice to students for whoever drafted the scheme to exclude the right to go to the Ombudsman in the first year of its operation. Probably, it was decided there would be such a mess that the Ombudsman should not be involved at the outset but that she could become involved in a year or two when it is up and running. I would ask the Secretary General to ensure that the students are made aware of this independent appeals board because few know of it. From speaking to the media when I submitted these parliamentary questions, I am aware that it was news. It is fine to state it is on the Statute Book but the people do not know every element of statute law.
I will move on from that. I have a quick question-----
Seán Fleming (Laois-Offaly, Fianna Fail)
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Did the Secretary General find the figures on how many were granted?
Seán Fleming (Laois-Offaly, Fianna Fail)
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Did the Secretary General find the number of applications that have been granted or refused?
Mr. Seán Ó Foghlú:
I have here in a table the information from mid-January when the total number of applications was 67,352. At that time, the number of applications refused was 16,000 and the number awarded was 29,276, but the number awarded is over 34,000 at present. The number has gone up significantly since.
Seán Fleming (Laois-Offaly, Fianna Fail)
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Certainly, at least one third of the students are being refused where decisions are completed. Either way, even if it is 32,000 or 33,000, and 16,000 have been refused, definitely, one third of all applications are being refused.
Perhaps that is correct, that they do not pass the means test. We understand that. It seems a high figure, that there is one third of all applicants being refused. Would that have been the norm, before SUSI was set up, in the other grant awarding authorities?
Seán Fleming (Laois-Offaly, Fianna Fail)
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I have a few points I want to cover.
Under school transport, who decides where the measuring points are in deciding the distance between a student's home and his or her secondary school given that the distance to the nearest school determines the student's eligibility? Would the Secretary General outline the system? Who does the measuring? Is it the Department or Bus Éireann?
Seán Fleming (Laois-Offaly, Fianna Fail)
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Given that the Department pays for it, what guidelines has the Department given Bus Éireann?
Seán Fleming (Laois-Offaly, Fianna Fail)
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Getting on to the specifics, my real question - I understand they measure the distance - relates to towns where there are a number of schools where there is an issue with what is called the central measuring point. Would the Secretary General speak about who picked the central measuring point, probably whenever the system was established? How was the measuring point identified? It is fine if it is one house to one school in a local town because the people know it is from the front gate of one to the front gate of the other. In a town with three secondary schools, however, the Department operates what it calls a central measuring point. How is that selected or who identifies which is the point because the point one picks will have an impact on the distance to the student's home as to whether or not the student is eligible? How does the Department pick the central measuring point in towns?
Seán Fleming (Laois-Offaly, Fianna Fail)
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Is the Secretary General satisfied Bus Éireann selects the correct central measuring points? If the company has a wrong measuring point, it may be carrying students it should not carry or it may be excluding students who it should carry.
Seán Fleming (Laois-Offaly, Fianna Fail)
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I refer specifically to Portlaoise where, as the Secretary General will be well aware, there is one of the finest PPP school projects in the country. He will be aware that those two new school buildings are at the edge of the town, one mile or two away from the old school sites. The Department and CIE have not moved their central measuring point, even though the schools have moved up to two miles. That is utterly unfair. Now there are students who live far beyond the distance from the school to meet the requirement but they are told that the service measures them, not to the school to which it brings them but to a central measuring point in a town for schools that were build 150 years ago and that no longer exist. When the Department and the taxpayer builds new schools, is it logical that the measuring point for school transport should be related to the new schools, not the old schools that no longer exist?
I refer to the facts. I have it documented from the Minister that the central measuring point is the old point, which is now of zero relevance. What is the Secretary General's view on how the Department operates the school transport system to a central measuring point that has no relevance to the schools to which it is carrying the students? He might not be aware of the detail but these are the problems that arise with parents every day of the week.
Seán Fleming (Laois-Offaly, Fianna Fail)
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What of the general principle of the central measuring point? Who selects it?
Seán Fleming (Laois-Offaly, Fianna Fail)
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The Department pays Bus Éireann. That is like somebody saying-----
Seán Fleming (Laois-Offaly, Fianna Fail)
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Okay. On the general question, whether it is the State transport company or the Department of Education and Skills, it is between them who is responsible for getting the students to and from school. If there is a wrong central measuring point being used, how can that be corrected?
Seán Fleming (Laois-Offaly, Fianna Fail)
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I will send the Secretary General the specifics because, like every other Oireachtas Member in my area, I have been trying to sort out the matter. It is not merely a personal difficulty.
I have a quick question on overpayment of teachers' salaries. It is a question I ran into previously and it is a complex area. It has nothing to do with the report about teachers' salaries and how the office is run. Does a teacher who goes on maternity leave get maternity benefit or is there a recoupment from the Department of Social Protection? Such teachers would be entitled to maternity benefit but if the Department continues to pay their salaries, does it get a recoupment from the Department of Social Protection? Will the Secretary General tell the committee how this system works?
Seán Fleming (Laois-Offaly, Fianna Fail)
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I would not expect the Secretary General to have a note on this topic. If somebody has the information, that would be excellent.
Perhaps Mr. Moloney could send a note to the committee on the number cases of recoupment from the Department of Social Protection in regard to maternity benefit over the past five or six years? That should be an appropriation-in-aid. What is the appropriation-in-aid figure in the Department's accounts for that?
1:30 pm
Mr. Padraig Moloney:
I will explain what happens with maternity benefit. Full salary continues to be paid to the teacher. The value of the benefit is deducted from the salary and the teacher claims the value of the benefit from the Department of Social Protection. That is the arrangement that is in place.
Seán Fleming (Laois-Offaly, Fianna Fail)
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How long is that arrangement in place?
Seán Fleming (Laois-Offaly, Fianna Fail)
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Something must have happened up to 2009. The Department was not claiming when it should have been or something like that. Why was that system changed? Would it not be simpler to pay the benefit directly to the Department instead of tens of thousands of teachers having to make individual claims? If somebody goes out on maternity leave, the Department will be informed. In terms of efficiency would it be not better to notify the Department of Social Protection every payroll period about how much maternity benefit it owes the Department rather than having thousands of individual claims with many officials in the Department of Social Protection having to process them? Could it not be done centrally through the Department as the employer? That happens in many organisations.
Mr. Padraig Moloney:
The arrangement in place is efficient from a payment perspective. We are in discussions with the Department of Social Protection to try to simplify the arrangements. As the Deputy outlined, there is huge administration involved between ourselves and the Department of Social Protection and we have had some preliminary discussions with its officials and we will continue them.
Seán Fleming (Laois-Offaly, Fianna Fail)
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Therefore, the Department is examining this issue.
Seán Fleming (Laois-Offaly, Fianna Fail)
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What about maternity benefit?
Seán Fleming (Laois-Offaly, Fianna Fail)
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Given those on maternity benefit will be taxed from July onwards for the first time as a result of budget, will that have implications for the Department's payroll system?
Seán Fleming (Laois-Offaly, Fianna Fail)
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Were the discussions ongoing before the budget announcement, given Mr. Moloney mentioned the Revenue in the context of taxing this benefit, or did they only start in the past few weeks?
Seán Fleming (Laois-Offaly, Fianna Fail)
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In light of this change to tax maternity benefit.
Seán Fleming (Laois-Offaly, Fianna Fail)
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It is not for me to put the Revenue's case but if this was done centrally rather than having to chase every teacher on maternity benefit individually, it would be simpler if the Department collected this on Revenue's behalf through its payroll system. I presume that is what Revenue officials are trying to say.
Seán Fleming (Laois-Offaly, Fianna Fail)
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So they are ongoing?
Seán Fleming (Laois-Offaly, Fianna Fail)
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I have heard about problems relating to this issue from teachers, which is why I raised that.
Mr. Seán Ó Foghlú:
I have a few clarifications. Students are made aware of appeals at every step and the decision letters quote the next stage of appeals so they are made available. The reason the number of sittings of the appeals board was increased was to ensure the responses were done as quickly as possible. The Ombudsman issue is because of the designation of the VECs under the Ombudsman legislation; it has nothing to do with our legislation. Many of the VECs are not designated under the Ombudsman's legislation. It is only when they are that the Ombudsman can be involved in an appeal. The ETBs will be designated the same. There will be an appeal following the appeals board decision to the Ombudsman.
Seán Fleming (Laois-Offaly, Fianna Fail)
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Next year.
Seán Fleming (Laois-Offaly, Fianna Fail)
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I accept what Mr. Ó Foghlú is saying but it is not the full picture because local authorities, which also process grant applications, were always under the Ombudsman's remit, even though the VECs were not.
I refer to the €20 million in unspent capital funds in 2012. The Department's Estimates contained an allocation of €500,000 for a special memorial project for the victims of child abuse. That did not proceed. I attended another committee meeting an hour before this one at which the Minister for Public Expenditure and Reform dealt with the deferred surrender to the central fund of unspent funds and provided that they could be transferred to the 2013 budget. Given the Oireachtas gave the Department the money to undertake this project for victims of child abuse 12 months ago, why did it not happen? While I acknowledge it is the intention to commence the project in the second half of the year, is Mr. Ó Foghlú satisfied it will proceed?
Seán Fleming (Laois-Offaly, Fianna Fail)
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Where is the location?
Seán Fleming (Laois-Offaly, Fianna Fail)
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It may not happen this year.
Seán Fleming (Laois-Offaly, Fianna Fail)
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We all hope it happens as soon as possible.
Seán Fleming (Laois-Offaly, Fianna Fail)
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A sum of €9.9 million for third level building projects was unspent in 2012. The main reason for this was the difficulties associated with the building project at St. Patrick's teacher training college in Drumcondra. This substantial project was tendered and, subsequently, a contractor was appointed in 2010. However, the contractor later ceased trading and a receiver was appointed. While the project has been re-tendered, progress in the selection of a contractor has been slower than expected and building work did not commence in 2012. When did the contractor go bust? What is position on the legal enforceabilty of the commitments the Department entered into with the contractor before he ceased trading? What was the total contract value? Given he subsequently ceased trading, what was the additional cost to the taxpayer for the re-tendering? It is always a messy job to go on to a site left by another contractor with somebody else having to pick up the pieces. When will the new contractor be on site?
Mr. Kevin McCarthy:
We will have to revert to the Deputy about some of the detail around contract price. I am not sure that we have that information with us today. The issue of the contractor going into liquidation was obviously the main factor in occasioning the delay to the placement of the contract and will involve additional costs for us. It is an unfortunate feature of the volatility in the construction sector generally that where a tender process has been completed and a contractor has been appointed, we find ourselves in a difficulty in terms of delays being occasioned. With regard to the cost of tendering, the second preferred tenderer was awarded the contract once the initial contractor went into liquidation and, therefore, from that point of view, there was not an additional cost, as I understand it, in terms of the tender process itself. The main impact was in the delay in getting somebody on site to commence the construction work.
Seán Fleming (Laois-Offaly, Fianna Fail)
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Has that work commenced yet?
Seán Fleming (Laois-Offaly, Fianna Fail)
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I attended another committee meeting in the room next door at 10 a.m. with the Minister for Public Expenditure and Reform about the deferred surrender to the central fund of unspent money in the capital envelope for last year where he provided that it could be used this year. The briefing note given by the Department of Education and Skills to the Minister, which was circulated to us at the meeting, states, "However, the contractor later ceased trading with the appointment of a receiver. While the project has been re-tendered...".
The note the Department of Education and Skills gave to the Minister, Deputy Howlin, this morning on this issue stated it was retendered and according to that note it did not go to the next in line. Which is correct?
1:40 pm
Seán Fleming (Laois-Offaly, Fianna Fail)
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It may have been the under-bidder, but the document we were given at the meeting with the Minister, Deputy Howlin, at 10 o'clock this morning states it was retendered.
Seán Fleming (Laois-Offaly, Fianna Fail)
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He may have got that job, but is this morning's document from the Minister, Deputy Howlin, inaccurate?
Seán Fleming (Laois-Offaly, Fianna Fail)
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Okay. What was the scale of the cost of the project, if the witnesses do not have exact details? Was it €10 million, €20 million, €30 million, €40 million or €80 million?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Can Mr. McCarthy come back to us on that?
Seán Fleming (Laois-Offaly, Fianna Fail)
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I will help Mr. McCarthy, because it is in his own notes on the appropriation accounts. The account the Department gave us for today states that the expenditure on the St. Patrick's, Drumcondra, campus development in 2010 was €5.5 million, in 2011 it was €1.8 million and the legally enforceable commitments to be met in subsequent years, according to the Department's appropriation accounts signed off by the Comptroller and Auditor General last March, was €32.4 million, giving a total cost of expenditure incurred up to the end of 2011 plus legally enforceable commitments of €39.736 million. Is that the cost of the project?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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He is asking a question and he does not know the answer to it.
Seán Fleming (Laois-Offaly, Fianna Fail)
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I understand that, Chairman, but it is helpful sometimes. Perhaps the Comptroller and Auditor General will have a comment to make on this. In what year did that contractor go bust? Was it 2012?
Seán Fleming (Laois-Offaly, Fianna Fail)
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I ask Mr. McCarthy to explain the appropriation account, which used the phrase "legally enforceable commitments to be met in subsequent years in relation to the St. Patrick's Drumcondra development of €32.405 million". Who had the legally enforceable commitment if the contractor had gone bust? How could he legally enforce a commitment if he had ceased trading?
Mr. Kevin McCarthy:
I think the reference there may be in terms of overall capital commitments and the commitments we have entered into. The commitments at this stage in terms of spend commitments on third level capital relate to projects that had reached a point of contractual commitment in November 2011.
Seán Fleming (Laois-Offaly, Fianna Fail)
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This contract was null and void if the contractor had ceased trading. There was no enforceable contract against the Department because the contractor did not complete the job. Why does the Department refer to a "legally enforceable commitment" if nobody can legally enforce it against the Department? Who was the contracting authority for this, St. Patrick's or the Department?
Seán Fleming (Laois-Offaly, Fianna Fail)
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There have been other schools projects that have attracted much publicity where contractors have gone bust. How many of them have occurred under the Department's Vote since 2010? Can we get a list of all the schools and campuses where the contractor has ceased trading during the course of the project and another contractor had to come in? After it had happened once or twice, it must have set alarm bells ringing. Does the Department have mechanisms in place because unfortunately this is not unusual now? I hope the Department is on top of the potential problems that can arise. Does it have such a thing as a completion bond? In other words, when a contractor is given a €10 million or €20 million job to do, does he not need to produce a bond guaranteeing that he will complete the job before the Department gives him the job? Surely the Department would not enter an agreement for, for example, €40 million without the contractor having a bond to guarantee that the job will be completed? Would there not be some insurance bond from which it could claim?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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It would be helpful for us to get a list of those schools that have not been completed where a contractor has gone out of business, including details of the bonds that were in place and whether they were subsequently retendered or what happened. The witnesses will be aware that Loreto school in Kilkenny is in the same circumstances and I would like to know about it. It is difficult to get up-to-date information on it. If Deputy Fleming is agreeable, we will ask the witnesses to submit that to us.
John Deasy (Waterford, Fine Gael)
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Mr. Ó Foghlú will be glad to hear that I wish to raise just one issue. I believe Deputy Dowds touched upon the costs and benefits of prefabs as opposed to permanent builds in schools. In his opening statement Mr. Ó Foghlú explained the capital resource challenges that exist within the Department. I will use the specific example of Kilmacthomas national school in Waterford and will get into the national policy after that. The school needs an extension and the Department insisted that it get quotes for the cost of buying two replacement prefabs. Based on the preferred tender just received, buying the two prefabs and connecting them to the school's heating system would cost €160,000, which is approximately 80% of the cost of a new build - the capital cost estimate for two permanent build classrooms is €200,000.
As Mr. Ó Foghlú will be aware the prefabs have a book life of approximately ten years even though many of us have been in prefabs that are 20 or 25 years old and still in use. I thought the Department had changed its policy direction on the issue. It might be preferable to give the school the €160,000 and let it raise additional money locally. In the case of Kilmacthomas, the architect involved has said that the provision of two prefabs does not represent value for money in the medium or long term and recommends that the school seek to have the proposed prefabs funding reallocated towards a two-year permanent classroom extension and then try to raise the money locally.
I will ask about the national policy and how it has evolved in recent years. Kilmacthomas is a clear example of the cost-benefit question. I want Mr. Ó Foghlú to respond specifically to the example I have raised and consider the option of building permanent classrooms in Kilmacthomas as opposed to providing new prefabs and all the financial issues that surround that school specifically.
On the national issue, my information is that at the height of the boom the previous Government had a policy of renting prefabs in schools as we all know. I believe 715 new rental contracts were agreed in 2007 alone. The average rental cost of a standard 80 sq. m prefab classroom in 2008-09 was €15,000 to €16,000 per annum. That was reduced by April 2012 to €15,000. The expenditure on rental accommodation, including prefabs, has gone from €39 million in 2009 to €29 million in 2012, a reduction of approximately €10 million. As of April 2012, some 580 schools were renting temporary accommodation. The programme for Government contains a commitment to reduce the reliance on rented prefabs in schools. Only 35 new primary school contracts were entered into in 2011 so we have seen the progression, but the example of Kilmacthomas begs the question of how much progression there has been in the case of a school that does not want to face the prospect of having prefabs for another 15 or 20 years.
The difference between permanent build and renting is not great. That is the basis of it.
1:50 pm
Mr. Seán Ó Foghlú:
In simple terms, what Deputy Deasy has outlined is inconsistent with the approach. We do not know the underlying reason. We will have to look at the issue in question. Our policy is quite clear. We provide grant aid to allow for permanent build at a rate of €100,000 per classroom in primary schools. I do not understand the reason for the issue the Deputy raises. We will have to look at the papers. There may be a particular reason in this case. We will have to check and revert to the Deputy.
John Deasy (Waterford, Fine Gael)
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Will Mr. Ó Foghlú have his departmental officials examine the specific example and revert to me? These are the figures which have been provided to me by the school as dealt with by the architect in question. It seems contrary to the direction I thought the Government was going in. The differential here is too little in the case of the particular school and the matter requires answering. Can Mr. Ó Foghlú provide the committee with an outline in respect of the direction of national policy?
Mr. Seán Ó Foghlú:
The national policy is quite clear. We are trying to reduce the number of prefabs in a number of ways. Since 2008, if temporary accommodation is needed for more than three years, we have supported the grant aiding of schools on a devolved basis to purchase prefabs or a permanent building. The trend of going for prefabs has reduced significantly and schools are opting in the main for permanent build. We have implemented to a certain extent a scheme to buy out some of the older prefabs which were in good condition. We have spent €35 million on a replacement-prefab scheme. While we would like to do more, we have clearly established a trend wherein the numbers of prefabs being rented and total spend are being reduced. That is not to say there are not occasions on which short-term renting is necessary. That is not to say also there are not many prefabs in the accommodation stock, but we lack the budget for refurbishment.
John Deasy (Waterford, Fine Gael)
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If my figures are correct and €160,000 has been provided in grant aid by the Department and the overall cost of two permanent build classrooms is €200,000, Mr. Ó Foghlú might concede that there may be a problem which needs to be revisited.
Mr. Seán Ó Foghlú:
It is not a question of the figures but of whether the Department agrees that a primary school needs two extra classrooms. I wish to check on the rationale for why we would not grant €200,000 to allow a school to go in that direction. There may be other circumstances involved. I cannot comment on an individual case. My comment is in general.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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I forgot to ask a question on school transport. Is Mr. Ó Foghlú aware of a termination agreement within the school transport agreement that should it be terminated, Bus Éireann would be paid in the region of €55 million?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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I suggest to members in that regard that we leave Vote 26 open. Mr. Ó Foghlú has mentioned the value for money audit undertaken by his Department on the school transport scheme. We want to examine that audit. Mr. Ó Foghlú might let us have a copy of it. I know it is a public document on the Department's website.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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There are other documents related to this matter which the Department is going to send to the committee, including the documentation on the underlying agreement. We want the information on the way in which the amount Bus Éireann would have to be paid should the contract be wound up was arrived at. We will have the total information on who made the arrangement and how it was arrived at. We want all the information relevant to the school transport system to allow us to examine it in more detail and, if necessary, pass it to the Comptroller and Auditor General for his view. The question of whether the agreement should be subject to a proper tendering system is something we may look at depending on the information from the Department. I am not satisfied with the way the system is operated and the lack of a proper tendering process.
The Department wrote to the committee on 27 February 2013 on VECs. We would like further information. One of the concerns I raised in the past was on the legal costs of actions taken or advice sought by VECs. The Department might ask VECs, particularly those which have spent a great deal on legal services, the reasons and the detail of the tendering processes in that regard.
Deputy Seán Fleming referred to the building programme. I am anxious to know about the Loreto Convent project in Kilkenny.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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I do not want to delay the meeting, but if it can be done quickly, it would be useful.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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The Minister will receive the report on Waterford Institute of Technology by the end of March. How soon thereafter will the committee receive it?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Is that the three month period?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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I also ask the Department to provide the detail of the business plan for capital works at the Institute of Technology Tallaght. What building programme was gone into and what was the business plan? Was the Department involved? The Department might also let us know about the monitoring of institutes of technology expenditure and accounting generally. Is there a unit in the Department to chase those matters, as is the case with VECs? These are issues I want to return to at some stage. There are the general issues on one side and the specific issue of school transport on the other. Therefore, I will not dispose of Vote 26. Are chapters 6 and 18 agreed? Agreed.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Is that a new tendering process?