Oireachtas Joint and Select Committees
Thursday, 4 July 2013
Public Accounts Committee
2011 Annual Report of the Comptroller and Auditor General and Appropriation Accounts
Chapter 17 - European Globalisation Adjustment Fund
FÁS Financial Statements 2012
National Training Fund
Before we begin, I remind Members and witnesses to turn off their mobile telephones as they interfere with the sound quality and transmission of the meeting.
I wish to advise witnesses that you are protected by absolute privilege in respect of the evidence you are to give this committee. If you are directed by the committee to cease giving evidence in relation to a particular matter and you continue to so do, you are entitled thereafter only to a qualified privilege in respect of your evidence. You are directed that only evidence connected with the subject matter of these proceedings is to be given and you are asked to respect the parliamentary practice to the effect that, where possible, you should not criticise nor make charges against a Member of either House, a person outside the House, nor an official, by name or in such a way as to make him or her identifiable.
Members are reminded of the provisions 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 want to welcome, Mr. Seán Ó Foghlú, Secretary General, Department of Education and Skills. I ask Mr. Ó Foghlú to introduce his officials.
Mr. Seamus McCarthy:
Thank you, Chairman. The European Globalisation Adjustment Fund, which is generally referred to as the EGF, was established by the European Union to assist workers made redundant as a result of the impact of globalisation trends, or arising from the economic crisis. Programmes funded by the EGF aim to facilitate the early reintegration of workers into alternative employment and to promote entrepreneurship.
In Ireland, EGF programmes were established to assist workers affected by the Dell, Waterford Crystal, SR Technics and TalkTalk closures. A further programme was established aimed at assisting three categories of workers in the construction industry. The budgeted cost of the five programmes was €99 million, and they were planned to meet the needs of a total of around 14,000 workers.
The EGF funded 65% of the budgeted cost of the early programmes, reducing to 50% of the budgeted cost for TalkTalk employees. EGF funds are provided in advance by the EU, based on the estimated programme cost. Where the outturn cost is less than budgeted, a refund must be made to the EU.
Supports available for those who participated in the programmes included training programmes provided by FÁS, local authorities, vocational education committees and private colleges; assistance in undertaking third level education courses; and county enterprise board assistance for small business start ups. Income support during retraining or re-education was also be eligible for funding.
Each of the programmes has a maximum of two years’ duration from the date of application for EGF funding. At the time of finalising my report, the programmes for Dell, Waterford Crystal and SR Technics workers had finished and outturn data were available. The programmes did not attract the expected number of workers and those who participated took up less costly measures than originally envisaged. As a result, the final cost of the three completed programmes was €17 million, or 45% less than estimated, and €11 million was due to be refunded to the EU.
Early engagement with affected workers is a key factor in maximising participation in the programmes. Overall participation in the three completed company-based programmes was 87% of eligible workers, with participation lowest for the SR Technics programme at 76%. This may have been due to the fact that there was no central co-ordination unit for that programme. There was also a longer period of waiting for EU approval of the proposed programme.
The Department’s application for funding for the construction programme was submitted in June 2010, which meant it could include support measures for workers in that sector until June 2012. Final EU approval for the programme was received in November 2011.
It was only at that stage, about six months prior to the programme's completion, that eligible construction workers were contacted and became aware of the opportunities. The Accounting Officer will be able to inform the committee on the final programme uptake relative to target. The expenditure outturn on the construction programme was approximately €35 million, which was €20 million or 37% less than estimated. As a result, a refund of €13 million was due to the EU. The chapter found that the Department did not regularly monitor participation or expenditure and was dependent on the support providers for such information. This prevented the Department from identifying the low uptake of support at an early stage. That would have allowed more scope for steps to be taken to improve participation.
Determining the outcomes for the targeted workforce is critical in evaluating the effectiveness of programmes and in shaping future programmes. In particular, it is important to establish how many workers were re-employed and to assess what the outcome might have been in the absence of the programme. The response of participants to the Departments' surveys on outcomes was low and there was little canvassing of non-participants to establish the reason they had not availed of the opportunities available to them. As a result, it is not clear that any of the reviews of the three complete programmes gives reliable overall indicators of the outcomes for the targeted workforce.
In the interests of better targeting of any further programmes, the report recommended the use of person-by-person data to monitor participation and help identify whether there is a need to re-direct the focus of measures, the introduction and monitoring of implementation plans for participants and more comprehensive assessment of outcomes for both participants and non-participants.
The National Training Fund was established in 2000 as a ring-fenced fund to support the training of those in employment and those who wish to take up employment. It also is used to provide funding of research into existing and future skills requirements of the economy. The context for the fund's establishment was a shortage at the time of skilled labour in certain key economic sectors. The fund is resourced primarily by a levy on employers of 0.7% of reckonable earnings of certain categories of employees. In July 2011, the levy was reduced to 0.35% for employees earning less than €356 per week. The income of the fund from the levy proceeds in 2011 was €316 million, which was a marginal increase on 2010 levy income. European Social Fund, ESF, receipts into the fund tend to be less consistent from year to year. In 2011, some €80 million was received, including €24 million in refunds relating to ESF programme activity from 2000 to 2006. No ESF funding was received in 2010.
The resources in the fund are applied under two main programme areas. Approximately three quarters are spent on programmes of training for those seeking employment. Most of the remaining expenditure is on training and upskilling of those currently in employment. FÁS is funded under both headings. It received a total of €286 million from the fund in 2011. The other main beneficiary of the fund in 2011 was Skillnets Limited, which received a total of €14.5 million. This is a company established mainly to provide financial support for training of employees of established businesses. My office reported in 2010 on the utilisation by Skillnets of its funding and on weaknesses in the control of its spending. I should also point out that the audit of the 2012 accounts for the National Training Fund is ongoing at present.
The audit of the 2012 financial statements of FÁS has been completed and they also are before the committee today. The primary function of FÁS is to provide a range of training programmes and supports to both unemployed and employed people. The agency's activities in 2012 were mainly funded from the Vote of the Department of Education and Skills and the National Training Fund. Total expenditure by FÁS in 2012 was €442 million, compared with €943 million in 2011. The transfer on 1 January 2012 of the employment services and community programmes functions from FÁS to the Department of Social Protection accounts for most of the decrease in expenditure year on year. A clear audit opinion was issued in respect of the 2012 financial statements. However, my audit report drew attention to an impairment charge in 2012 of €4.1 million in respect of a vacated training centre, as well as asset write-offs in 2012 of €1.2 million with regard to two vacated leasehold properties. I also drew attention to an investigation of a jobs initiative scheme being carried out by FÁS. Potential irregular expenditure with regard to this investigation is estimated at up to €150,000.
Mr. Seán Ó Foghlú:
I thank the Chairman for the opportunity to make this statement concerning the examination of three areas of interest to the committee. As requested, I have forwarded some advance briefing in respect of each of these issues and I will therefore keep this opening statement quite short. I will deal with each of the issues in turn.
The European Globalisation Adjustment Fund, EGF, is an EU fund that provides co-financing for approved programmes of guidance, training, education and enterprise supports for workers made redundant as a result of the adverse impacts of globalisation. National sources must meet between 35% and 50% of total costs of EGF programmes. To date since 2009, Ireland has had seven EGF programmes approved in support of approximately 13,100 redundant workers. One programme is still operational, namely, that in support of almost 600 workers made redundant at the TalkTalk call centre facility in Waterford and at a number of ancillary enterprises. Since 2009, the Irish authorities, overseen by the EGF managing authority in the Department of Education and Skills, have provided more than 21,330 individual interventions to some 9,355 beneficiaries on the six completed programmes. To date on the TalkTalk programme, almost 1,760 interventions have been provided to 390 beneficiaries. Approximately €59 million in funding has been expended on the completed Irish EGF programmes with €5.4 million available for the TalkTalk programme, which will finish in February 2014.
A review of the EGF process in Ireland was undertaken by the Department in 2012 to assess the fund's strengths and weaknesses. This involved a public consultation process. Irish EGF programmes have also been audited by the European Commission and the European Court of Auditors and examined by the Comptroller and Auditor General. Arising from these various examinations and the review of the EGF conducted on Irish programmes, greater emphasis is now being placed by the EGF managing authority on the improved monitoring and evaluation of outcomes for EGF beneficiaries. This approach has been assisted by improved data flows from the Department of Social Protection and the Office of the Revenue Commissioners and by the undertaking of a series of longitudinal surveys for the managing authority both during the actual programme implementation period and up to 12 months after programme completion. These analyses indicate increasing levels of employment and corresponding decreases in unemployment for the cohorts involved on all relevant EGF programmes.
The Irish Presidency of the European Council achieved the agreement of a general approach on a new EGF regulation for the next 2014 to 2020 funding round at the Employment, Social Policy, Health and Consumer Affairs, EPSCO, Council in Luxembourg on 20 June 2013. The agreement allows the next Presidency to enter into trilogue discussions with the European Parliament with a view to implementing a new and significantly broadened EGF by 1 January 2014. All institutional stakeholders view the fund as a concrete and practical instrument of solidarity with the tens of thousands of workers being made redundant through changing world trade patterns.
On the 2012 FÁS financial statements, as members will be aware, FÁS has undergone significant organisational change over the past few years. On 1 May 2010, responsibility for FÁS and all its functions transferred to the Department of Education and Skills. Responsibility for budget and policy in respect of employment services and community employment programmes transferred to the Department of Social Protection with effect from 1 January 2011. FÁS was therefore funded by both Departments for the financial year 2011. FÁS employment services and community employment programmes, including approximately 700 staff, subsequently were transferred to the Department of Social Protection on 1 January 2012.
The financial statements and annual report for 2012 were laid before both Houses of the Oireachtas in June 2013 in keeping with the code of practice for the governance of State bodies. In 2012, FÁS received €424 million from the Department of Education and Skills and approximately €700,000 from other Departments. FÁS was also in receipt of other income of €3 million from training and other activities. The Estimate for FÁS for 2013 from this Department amounts to €419 million.
Staff costs amounted to €63 million. The FÁS staff count, as at 31 December 2012, was 1,096 full-time equivalents.
FÁS delivers an extensive range of programmes to those seeking and changing employment, redundant persons and school leavers as well as marginalised and disadvantaged groups. Over 65,000 persons completed training programmes in 2012. This included over 30,000 persons, both unemployed and employed, who participated in evening courses and online programmes.
The number of those entering apprenticeship during 2012 was 1,434 which was 10% higher than the 2011 level. In 2012, the total number of apprentices across all phases of training was 8,862.
Following the enactment of the Further Education and Training Bill 2013, it is expected that FÁS will cease to exist later in the year. It will be replaced by the new further education and training authority, SOLAS. As part of this process, FÁS training courses will be transferred on a gradual basis to the newly-formed Education and Training Boards.
On 1 May 2010, responsibility for the National Training Fund was transferred from the Minister for Jobs, Enterprise and Innovation to the Minister for Education and Skills. Funding from the National Training Fund is allocated by the Minister for Education and Skills with the consent of the Minister for Public Expenditure and Reform, in accordance with the provisions of the National Training Fund Act 2000.
The fund provides for expenditure on training for those seeking employment, training for persons in employment, literacy and numeracy training; early school leavers; and persons with disabilities. It also provides funding for the identification of existing and future skills needs for the economy. While the fund does not form part of the Vote of the Department, expenditure is allocated as part of the Estimates process.
The fund is mainly funded by a levy on employers of 0.7% of reckonable earnings in respect of employees in class A and class H employments, which represents 75% of all insured employees. This was reduced, in 2011, to 0.35% for low-earning employees as part of the Government's jobs initiative. It also receives funding from other sources such as the European Social Fund and the European Globalisation Adjustment Fund. The total income in 2011 was €400 million and expenditure amounted to €326 million. The surplus in the fund at the end of 2011 amounted to €178 million and this will reduce to an estimated €117 million at the end of 2013 due to an anticipated reduction in receipts.
On an annual basis, FÁS receives approximately 77% of the expenditure from the fund. In recent years, a number of innovative projects have been funded through the National Training Fund's contribution to the Government's Pathways to Work and Action Plan for Jobs initiatives. Funding for these in 2013 include €22 million for Springboard, €20 million for Momentum and €5 million for ICT skills conversion course.
Expenditure from the fund is subject to public service accounting rules and is audited by the Comptroller and Auditor General. The 2011 accounts were audited and certified by the Comptroller and Auditor General.
Together with officials from the Department and our colleagues in FÁS, I will be happy to deal with any questions arising from the issues outlined.
Mr. Paul O'Toole:
I will provide a brief opening statement regarding the work of FÁS during 2011 and since. The figures I will quote have all been rounded off.
Over this period, FÁS has concentrated on meeting its core objectives. These are to provide relevant training to our learners who are mainly unemployed persons; to provide employment support services to our clients, which responsibility ceased following the successful transfer of the FÁS employment services and community employment programmes, with their accompanying staff and other resources, to the Department of Social Protection at the end of 2011 - 772 staff members or 720 full-time equivalents were redeployed as part of this process; to continue the programme of improvements and reforms to our training products, quality control systems and governance systems; and following the decision of Government, to prepare for the winding down of FÁS, the establishment of SOLAS and the transfer of training centres, staff and other resources to the new education and training boards. This work was carried out in the context of ensuring prudent management of budget resources and meeting the obligations of the Employment Control Framework. Since the beginning of the moratorium, staff numbers - full-time equivalents - have been reduced from 2,271 to 1,068 today, a fall of over 1,200 or 53%. Over the period from 2009-12, the cost of operating FÁS has reduced by some €480 million in total compared to 2008 as a base year. This takes into account the transfer of resources to the Department of Social Protection.
Unemployment rates continue to be high with average unemployment over the period, ranging from 14.5% in January 2011, to 15% in January 2012 and to 13.7% currently. Yesterday, according to the live register report, it stood at 13.6%. FÁS responded by introducing a new training strategy in 2011 which seeks to optimise the use of its resources. This entails balancing the opportunities that employers are providing and the skills-sets they require, with the needs of persons who are more distant from the labour market and, therefore, require longer periods of support and progression. This has, for example, meant responding to the needs of the ICT industry for entry level and intermediate skills while providing digital literacy tuition for learners seeking to improve their competency. It has also meant a reduction in the volumes of construction related training which, in turn, has been reoriented to courses supporting green technologies and retro-fitting.
In 2011, 50% of the overall FÁS budget of €943.3 million, representing 64% of the programme budget, was used to provide income support to those accessing our programmes. Of the balance, 28% was spent on other programme costs, 15.4% was spent on pay and overheads and 6.6% on pensions. Some 163,000 interventions were provided across the range of programmes. I have similar figures available for 2012.
As referred to previously, with the expected passage of the legislation to establish a new further education and training authority, SOLAS will be established and FÁS will be wound down. This will bring to an end an organisation which has served Ireland for some 25 years. Despite the many challenges and serious issues which the organisation has faced, particularly in recent years, it has demonstrated a considerable commitment to supporting its learners and other clients. In so doing, the staff of FÁS have demonstrated considerable resolve, resilience and expertise in their work. No doubt this team of people, who will soon leave FÁS, will bring their commitment and expertise to bear in the new education and training boards and in SOLAS as they transfer in the near future.
I thank Mr. Ó Foghlú and Mr. O'Toole and their teams for being here today.
In my questions, I will focus on the European Globalisation Adjustment Fund, and Deputy Nolan on FÁS. If I can make one comment, I acknowledge what Mr. O'Toole acknowledges in his statement. We have had many a stormy meeting with FÁS at this committee, in my time and previously, but as FÁS is about to be wound down and new structures put in place, it is important to acknowledge the excellent work carried out by the overwhelming majority of Mr. O'Toole's staff throughout the country who I and my colleagues on this committee would deal with on a regular basis in all of our communities. Change in any workplace is difficult but when one looks at the figures that Mr. O'Toole presented, in terms of both the structural change and the vast drop in the number of staff at a time when we are facing an unemployment crisis compared to the large numbers of staff at a time when there was full employment in this country, it is a testament to their dedication. I wish to put that on the record of this committee.
I will direct my questions to Mr. Ó Foghlú on the European Globalisation Adjustment Fund. We all will be aware of the unemployment crisis that we are going through and clearly we want to see every possible cent of funding tapped and utilised effectively. In looking through the Comptroller and Auditor General's report, no doubt there is good work being done on in the utilisation of the European Globalisation Adjustment Fund for Ireland but there are a number of areas where, as Mr. Ó Foghlú acknowledge, there is room for improvement. He also acknowledged in his opening statement that there are new regulations on the future operation of the fund, and I might get his opinion on that later.
The first point that struck me was what constitutes an intervention as opposed to an effective intervention. I note in the Comptroller and Auditor General's report, at 17.27, states:
The Department collates data on the number of occupational guidance interviews provided. However, it does not record the extent to which individuals availed of more than one guidance interview.If, for example, I was a worker in Waterford Crystal or TalkTalk and I turn up for an initial guidance meeting about my future options, that constitutes an intervention but I may go away and never obtain further educational training, go on another course, re-skill or up-skill. Mr. Ó Foghlú might comment on how the system captures effective interventions as opposed to actual interventions.
Mr. Seán Ó Foghlú:
I thank Deputy Harris. There have been a number of different reviews of the EGAF and we have certainly learnt a lot from them.
We should place the Deputy's comment in the context of considering a group of redundant workers. We all recognise the trauma that a group of workers goes through in the time leading up to redundancy. Typically but not absolutely in terms of the EGF, the workers would be working in a company, although I know there are companies that are linked. Sometimes, the company might help in getting staff ready for a redundancy and sometimes it might not. We are all aware, from our interaction with our friends in society, never mind the EGF, of the trauma that unemployment brings to any individual. In the early days of redundancy, it is quite difficult to find ways to engage. What we are seeking to do and what we have learned in the EGF unit is that we must seek to engage in as many different ways as possible.
The standard former mechanisms that were in place within FÁS and the Department of Social Protection have been integrated in Intreo. That has to be a very formal part of the intervention such that people who have been made redundant will have interaction with the State services. That is an appropriate interaction. The interaction can lead to some people moving on to further training immediately, or it can lead to a period of reflection for those who may want to enter training at a later date. Others may already be moving to employment and may not even need the type of interaction in question. The difficulty and challenge with knowing what is effective and not effective is that, because of the different backgrounds of people who are made redundant, they can take different options. The key for us, as has been advised in the audits of the European Court of Auditors and Comptroller and Auditor General, is to try to capture a way of measuring the effectiveness of the overall outputs - that is to learn for the future - while at the same time having a real manner of engagement with the groups of people who are made redundant so we can try to develop the programme locally to meet their needs to the greatest extent possible. In some cases, it is possible to develop particular unique programmes to assist where there are a number of redundant workers in a similar position. This can mean the work is done by a private contractor, or it can mean that FÁS steps in. It is all in the manner of the engagement.
In terms of the review of the effectiveness, on an ongoing basis and afterwards, the comparison has to be between those for whom there has been some intervention and those for whom there has been none, while not forgetting that there may be reasons there has not been an intervention. The reason may be because somebody has moved on to employment relatively quickly and, therefore, did not need an intervention. It may be that it is more mobile workers who do not require intervention. That may not always be the case. We have developed - we have given quite a lot of details in the brief - a quite sophisticated way of trying to measure the outcomes. We did this for the construction workers and for TalkTalk. It is a matter of trying to contrast the impact on those who had no intervention with the impact on those who did. We have a lot to learn from that on a continuing basis.
We are not just learning for the EGF. It is right and proper that we have be a big focus on the EGF. Obviously, today, there is a chapter on the EGF, but for us it is really a matter of how we deal with people being made redundant. Not all workers who are made redundant are made redundant in the context of a redundancy that arises from globalisation or under the crisis derogation that we had. They may not be of that scale. Therefore, we must learn continuously how to work with people who have been made redundant and the unemployed. In that regard, we work very much in partnership with the Department of Social Protection. We are working very closely with FÁS in that regard.
That is reasonable. Mr. Ó Foghlú mentioned the issue of linkages. There has been some success in finding linkages from other companies, spin-offs or spun-off areas that are adversely affected by the closure of a firm. On a cursory glance, one would be concerned to see that there were no linkages established with construction programmes. When one goes beyond a cursory look, one sees the real difficulty. The construction applications related to 3,272 different companies in the sector. I very much understand the difficulty in applying the concept of linkages. Given the particular crisis in terms of unemployment within the construction sector, has Mr. Ó Foghlú any thoughts on how linkages could possibly be formed? Do we really need to face the harsh, unpalatable reality that it is nearly impossible to apply the fund to linkages when so many smaller-scale companies are involved?
Mr. Seán Ó Foghlú:
I think we have succeeded to a certain extent. Where there has been a redundancy in a company, it is easier to identify the linked companies. We have had some success in identifying the linked companies. With the sectoral one, it was much more difficult. That was not realty an option to the same extent because there was not the same regional aspect to a group of workers that could be worked with. There were not the same types of companies linked informally.
With regard to TalkTalk, the role of the FÁS co-ordination unit is very helpful because it can be the one to identify the various individuals, whether they were employed by TalkTalk or in the linked companies. It can talk through the options and supports and then consider various individualised possibilities, such as personalised services. We would have introduced a new element after the various reviews and audits. We introduced an expenses contribution scheme. We were getting feedback to suggest that while the fees we were willing to pay for further and higher education were helpful, there were additional expenses arising from attendance and participation in learning. We introduced a particular scheme on that basis that has been in operation for the TalkTalk staff. We understand from the feedback that it is very well received and is enhancing participation and learning.
I want to explore the issue of using private companies to manage the records of one of these programmes, most specifically the SR Technics one. The Comptroller and Auditor General's report states the records for the SR Technics programme were collated by a private company. The next point outlines how there can be difficulties in that there may be long periods before valid records are received, etc. What is the logic behind using a private company? Do we lack the capacity to do this work internally?
Mr. Seán Ó Foghlú:
I suppose we are seeking as a government to have a certain level of outsourcing of work, where appropriate. We have had difficulties and challenges in making staffing resources available. We are all in a declining ECF environment. In this regard, I include ourselves and FÁS. That was one of the reasons, in particular, for the delay in putting the necessary co-ordination arrangements in place for SR Technics. We ended up putting a contact point in place for both FÁS and the Department of Social Protection in relation to SR Technics. We have learned from that and we will be having a FÁS co-ordination unit for any further case.
We found the involvement of a private company very helpful. We tendered for the assistance of a private company. We had to go through two tenders in respect of SR Technics to come up with somebody. The advantage of having a private company is that the EGF can be sporadic. We had the cases of three companies and the construction sector very much in quick succession, then a bit of a break and then TalkTalk. It is more difficult and challenging to assign FÁS and departmental staff at short notice when an urgent matter arises. If there is a contract, it is easier not to have to pay unless there is a need. When a need arises, we can draw down the assistance. We have found that very helpful.
Consider the use of private colleges to provide course programmes for people availing of intervention.
It refers to courses which are not available within the public system. Can Mr. Ó Foghlú expand on what such courses are?
Mr. Seán Ó Foghlú:
Ireland has a strong private training system and of the 80% of FÁS funding which is outsourced to public and private providers, a high proportion goes to the latter. There are many private colleges in the higher education sector. We are very supportive of their active engagement in the various programmes. An example is the momentum initiative, which is deliberately designed to have programmes which lead to people accessing employment again. We had open tenders, which FÁS organised, for public and private providers. This is outside the EGF. We are very supportive of the private sector getting involved. We are trying to put in place an appropriate mix of public sector further and higher education and training which must meet a wide range of needs. Public sector provision must meet the needs of school leavers, adult learners and the long-term unemployed, including the needs of the long-term unemployed aged under 25 years. We have been developing aspects of specialism within that over the last three or four years and there are limits and cost pressures to address. We have had to increase the pupil-teacher ratio for post-leaving certificate courses and reduce the funding for higher education institutions. We have had to reduce the funding and number of staff available to FÁS.
There are challenges to operating within the private sector and we are very open to the concept in the EGF of grants which a redundant worker can use for a training or higher education programme. The person will know what programme will meet his or her needs and fund the fees with the grant. We are as positive as possible about the balance between the public and private sectors. The EGF is framed in that context.
The area about which I am most critical and which needs most improvement, as the Department has acknowledged in the Comptroller and Auditor General's report, is the evaluation of outcomes. The Department has also acknowledged it to an extent today. People who have availed of an intervention are asked to complete a survey. In the case of SR Technics, the rate of non-response to the survey of outcomes was 67%. Even in the case of Dell, it was 42%. While people have suffered what Mr. Ó Foghrú correctly calls "the trauma of redundancy", they have also availed of public money and received a benefit from it in terms of returning to employment or starting a business. However, there is an unwillingness to respond to the survey. Perhaps it is a matter of human nature that people get surveys and do not fill them out. Can we strengthen the structures in place to ensure that we get the information back? It is not a question of filling out the survey for the sake of it. It is about the fact that we do not know how 67% of people in SR Technics who received an intervention felt how it went. It makes it difficult to form an opinion on the success of the outcome.
Mr. Seán Ó Foghlú:
We recognise the challenge and the difficulty. The change we have implemented on foot of our own review and the various audits to which I have referred is to integrate information from the Revenue Commissioners and the Department of Social Protection to provide that the assessment of outcomes is not primarily survey based. We can get the full information by looking at pps numbers to see if people are in employment or receiving something from the Department of Social Protection. If there is no record, it may be that the person has departed from the labour force completely, is not in receipt of a welfare payment and is not making a Revenue return. He or she may have emigrated. The information we have provided to the committee sets out the various data sources we use in that context.
We made a call arising from the Comptroller and Auditor General's report about the extent to which we would go back to get information. We carried out a detailed examination and decided to include construction workers. We were not sure we could do so, but made a big push to ensure we included them in the Department of Social Protection and Revenue information to the greatest extent possible. We have done it with the construction workers and are doing it with TalkTalk. We will operate on that basis going forward.
That sounds like a dramatic improvement, which is good. I have read the Department's views on the issue of the return of €11 million, which was not spent. I understand that the issue is more complex than it appears at first glance. Some people would take the view that the Department received €11 million which it did not spend, whereas the Department might say that there was an overestimation. The idea is that it is almost better to ask for more than one needs, which can be given back, rather than to have too little. I do not know if that is a fair way to portray it. I am not sure that view is fully borne out in respect of the lack of awareness of the availability of interventions. For example, only one third of the publicity budget which was made available to promote interventions was spent. On the three finalised programmes, as little as 10% of the available publicity budget was spent. Is the Department satisfied that the money that is being given to Ireland for these interventions is being spent in devastated towns where there have been major job losses? Are we doing everything we possibly can to ensure we do not have to give the money back and that everybody who is eligible for an intervention can access it?
Mr. Seán Ó Foghlú:
Clearly, we seek to maximise the expenditure from the estimation we have given and the available funding. We are not happy to have to return amounts of any significance. However, it is very challenging to maximise expenditure in the context of the nature of EGF arrangements as confirmation comes fairly late in the process. We have sought and discussed upfront ways to increase expenditure by reference to the national training fund and the Exchequer contribution. We know that we will never achieve 100% spending because a maximum amount will never be realised. The TalkTalk experience shows that even where we are implementing a programme having learned all the lessons and are getting relatively positive feedback from the workers, there are still workers who do not engage or who have engaged to an extent, but have entered employment and do not want further measures. We know that the spending maximum is not 100%, it is somewhat below that. All other countries are struggling in this regard. While I am not sure if a spending average has been calculated since 2011, we are above the average overall and have only had one programme which was below the European average.
The question of awareness is a key one. One of the difficulties we have experienced has related to the initial national blast from the media to say that money is available. There has been some criticism about this. When we started off initially, we did not have the communications systems in place to ensure that people attending FÁS would be made aware of the programme. We accept that. It often happens in our business that there is a media announcement but not everybody on the ground knows about it. It was exacerbated in that case as the initial media announcement took place before we had worked out exactly what we were going to do. We were developing the concepts and ideas as the announcement was happening.
Engaging with workers is harder in sectoral rather than non-sectoral programmes.
The engagement in a company-based one is to get in on the ground with the company with the FÁS co-ordination unit and a consultative group that is recognised by the workers as being representative of them and meeting their needs. Where we do that, we will seek to maximise.
It is worth saying that we deliberately overestimate when we make the initial submission because we want to leave scope for any possibility for any worker whereas when it comes to the actual expenditure, the expenditure has typically been somewhat less even on a per worker basis in respect of those who have assessed. In summary, we are not happy to be returning money. It is not a position we want to be in and we are seeking to maximise the return from TalkTalk and any future ones.
Is the rate of return in line with other European countries? I understand the point Mr. Ó Foghlú is making. These are estimations the Department is submitting and it is asking for the maximum to cover all eventualities but are we in line with the rest of Europe?
Mr. Seán Ó Foghlú:
We are about 10% better than the average. As far as I know, the average is a 2011 average and I am giving the Deputy our total, counting TalkTalk. I expect that like everything else, other countries have improved as well. I do not want to over-egg that but it is higher than the average we have.
I want to return to the construction sector. Obviously, it is an extremely important sector where huge numbers of people are unemployed. I know Mr. Ó Foghlú sent some of this in the material but could we pad it out a little for the record of the meeting? The Comptroller and Auditor General report noted that the Department did not have standardised procedures in place for the compilation of regular meaningful data on the number of individuals participating, interventions provided and the related costs in respect of the three construction programmes. I know this was because these outturns do not become available until the programme is completed. I understand that this is the Department operating completely in line with the scheme but while it might operating by the rule book, are there not missed opportunities in terms of not having this data at an earlier stage to make sure the interventions are as tailored and targeted as possible?
Mr. Seán Ó Foghlú:
We listened carefully to what the Comptroller and Auditor General said to us and have put in place tighter monitoring arrangements in respect of the TalkTalk programme so that we can see better as we go along. It cannot ever be an absolute tracking because there may be additional EGF-only expenditure associated with it but there is also expenditure running in various programmes which is part of the typical expenditure of FÁS or an institute of technology that is very difficult to track and take out. It can be monitored but it cannot be done so absolutely. Yes, we have learned the lesson and are seeking to do it in a more co-ordinated and enhanced way. We will have a real challenge if and when we have another sectoral. We are obviously not pleased that there was another occasion in TalkTalk but the fact that we had another opportunity to test the concepts for improvement that have been identified in the various reviews was very fortuitous for us in the context of being able to design a set of arrangements.
We also have a lot of challenges if there is another sectoral application. I do not know if there will be another sectoral application but we talked about the possibility. It is looking very likely that we will have an EGF. Unfortunately, in the past couple of days, we have also had job loss announcements. Whether those announcements give rise to the possibility of EGF applications remains to be seen because they must be made in periods of time and of certain volumes within periods of time. They are within globalisation but, hopefully, it will be expanded back into the crisis after the start of 2014. We must take the lessons we learned from construction and seek to apply them to the overall if there is another sectoral. The figure of 63% in construction is in the context of the difficulties and challenges we had with construction. It is notable that we got that level of completion. I would like it to have been higher but it is notable that we got to 63%. Even looking at the effectiveness of it and the numbers of people involved who are in employment, in the context of the national dialogue about construction workers, the fact that a certain proportion of those construction workers are back in employment, regardless of whether or not they received support under the EGF, is heartening. It is heartening that it is possible for construction workers to re-enter the labour market at the moment.
Mr. Seán Ó Foghlú:
We were up to 2011. We have not received the 2012 report which will have the various comparative data. The maximum programme was €55 million for construction. Under the EGF, the Commission annually spends around €130 million. We did not spend all of the €55 million and it was not all in a single year but that will give the Deputy an idea of the scale.
The Irish Independent reported on 23 July 2012 that in some instances, the Department of Education and Skills had to step in with funding so that workers accessing funding could finish third level courses they had started and that spanned longer than the two years covered by the fund. Somebody might have had funding for part but not all of a course. Obviously, this leaves people in a situation where they are effectively left out of funding. Why were workers approved for funding for courses that spanned longer timeframes than the amount of funding they were provided with?
Mr. Seán Ó Foghlú:
One of the difficulties with the EGF and one of the issues we hit in our own review is the question of whether we could commit to longer funding than the two years allowed under the EGF. Obviously, there are some relevant higher education courses that are longer than two years and if workers were willing to commence on an understanding that they would seek to complete them, I do not think we should not allow workers to commence them under the EGF. We would seek to help them in any way we can, provided it is in a manner consistent with the EGF and our overall funding arrangements.
I have a question for both FÁS and the Department that is probably connected with Deputy Nolan's questions for FÁS. The Economic Adjustment Programme for Ireland - Winter 2012 Review, which was published in April 2013, contained a number of comments about the high level of unemployment and the fact that this continues to be a very pressing issue and talked about the structural reform agenda. It acknowledged that reforms relating to further education and training are progressing but it basically said that fast progress is needed and we need training programmes that are closely linked to the labour market. Could representatives from the Department and FÁS give a response about where they feel we are in respect of the troika review?
Mr. Seán Ó Foghlú:
We have detailed engagement with the troika when it is here and certainly are seeking to address many of the issues it is raising. We have quite a few initiatives under way to seek to enhance employment relevance. I will let Mr. O'Toole deal with the detail of what is happening within FÁS. A NESC review of the employment relevance of further education and training generally is under way and will be completed in the autumn. We have commenced a very important review of apprenticeships. There is a considerable amount of discussion on the European stage about the relevance of apprenticeships so we have commenced work on that and are looking options for developing the apprenticeship model. We have also issued guidelines to the VECs in respect of aligning their provision with the skills needs of enterprise on the basis of some Forfás work on the alignment of further education needs with the labour market. We have a number of specific initiatives where we are targeting unemployed people and are working with higher education on part-time and Springboard courses. We are also working on the Momentum programme, which FÁS is organising on our behalf. We can provide the committee with more details of those.
The IECT programme is an important skills initiative not primarily aimed at the unemployed. We provide a number of conversion programmes in ICT for graduates to encourage students to take up ICT and science and technology programmes generally. This goes back to secondary level education through, for example, the literacy and numeracy emphasis, project maths, bonus points for maths in the leaving certificate and the work being done to reform the junior cycle. In regard to bonus points for maths, the proportion of leaving certificate students taking honours maths at leaving certificate level increased from 16% to 20% last year and the indication is that the proportion will increase by a further 4% this year, although that will not be confirmed until the examination results are issued. When people study maths, it opens them to considering other career options. We provide a wide range of measures across the higher education and training system to enhance the employment links of education and training. This is not to say that education is solely for employment. I do not need to get into this debate, other than to note that education is underpinned by a range of other values. The work of the expert group on future skills needs is important in this regard, by ensuring education and training are relevant to employment.
Mr. Paul O'Toole:
In the FÁS part of the equation, the reform involves structural and strategic aspects. We have been working with the Department and others to implement reforms on both fronts. In terms of structural reform, the organisation has downsized and transferred two significant divisions to the Department of Social Protection. In line with the enactment of the legislation, we will wind down FÁS, work with the Department of Education and Skills to establish SOLAS and transfer approximately 80% of the remaining staff along with the training centres to the 16 new education and training boards. As members can imagine, these structural reforms involve a lot of work in themselves.
Strategic reform relates to the fitness for purpose of investments in training. We are as aware as everybody else of the need to continually reflect on the impact of our work. In 2011 we introduced a new training strategy through which we sought to balance the resources available to us against our purpose. We identified various drivers of our training, including those with a primarily economic focus, that is, were designed to meet the needs of employers in terms of the skills provided, and the programmes that are primarily driven by social inclusion and equity. We are seeking to balance those drivers, measure their impacts and improve them. We have introduced 100 new or redeveloped programmes, many of which are tailored to specific skill niches. Others being improved through the common award system that was formerly under FETAC to ensure fitness for purpose. We are also improving how we survey and measure outcomes in this regard.
The SOLAS legislation anticipates that SOLAS will propose a strategy to the Department of Education and Skills on how its investment in further education and training can be optimised for the future. The intention is to prepare that strategy in the first six months of the life of SOLAS so that it can be brought to the Department for broader consideration. That strategic development process will be informed by a wide ranging consultation with the actors in the area and the review outputs of the NESC report on the impact of further education and training, both of which will give us a better understanding of further education and training.
Perhaps it is useful to explain the role FÁS will play in this process. Like many countries, Ireland operates a national framework for qualifications from level one to level ten. The FÁS training space is between levels three and six. We are primarily focused on entry and intermediate skills, whether in crafts or basic entry level for people who need to go further. We are constantly striving to optimise the impact of that.
I will primarily focus on Mr. O'Toole's organisation. I agree with Deputy Harris regarding the good work that we regularly encounter FÁS doing in our communities. This work never gets headlines in the press but it valuable none the less and some excellent people have dedicated their entire careers to working with FÁS. That needs to be acknowledged. The dissolution of FÁS and the transfer of its functions should not be seen as a reflection on these individuals' work.
Mr. O'Toole outlined the process of transformation in FÁS. When is it expected that the sign will be taken down from the organisation's door? I am not sure what will happen to Mr. O'Toole or his board. I assume the board has to dissolve and his position become redundant. When does he expect the door to be locked?
Mr. Paul O'Toole:
That is in the remit of the Department. The legislation is well advanced and once it has been enacted it will be for the Minister for Education and Skills to determine a date for its commencement and for the establishment of SOLAS. I know from the Department and the Secretary General that the intention is to do so at the earliest opportunity this year.
Mr. Seán Ó Foghlú:
The Bill has almost completed its passage through the Houses. I understand it finished Committee and Report Stages in the Seanad yesterday. The Minister is keen to establish SOLAS at the earliest opportunity and he has met the board of FÁS and thanked it for its work, while recognising that it must continue to do that work until it is completed. He gave his thanks, and that of the Department, for the work it has done over the previous three years.
We hope to establish SOLAS as a body as early as possible in the autumn. SOLAS will not be able to undertake all of its tasks at that stage, however. It will begin to undertake its tasks but it will still need to organise the delivery of training until the training centres are transferred to the education and training boards. Our target is to transfer at least six centres before the end of the year and the remaining centres by the end of the following year. There will be a rolling transfer of training centres to the education and training boards from the point when SOLAS is established and for approximately one year afterwards.
SOLAS is designed to have nothing to do with training centres. Instead of transferring the training centres first it is being given a function for which it is not designed so that it can dispose of that function over the course of a year. That appears the wrong way to proceed.
Mr. Seán Ó Foghlú:
A considerable amount of detailed work will need to be done in respect of transferring the training centres. By establishing SOLAS, it can continue to manage the responsibilities of FÁS while taking over overall policy advisory responsibilities in regard to the further education and training sector and work on the proposals to which Mr. O'Toole referred. It is a matter of ensuring the new arrangements are in place and planning to transfer the others. We found that a big bang transfer date would not work and it is more helpful to plan for a number of stages. We entered into a consultative process and have published an implementation plan. This is a huge programme of public sector reform when combined with the education and training boards established on Monday.
We have established an education and training reform office in the Department. We are bringing in experts to be part of that to help plan and work with FÁS and the ETBs in rolling out its implementation. It is a three- to four-year programme of change, which will involve the introduction of shared services, new ways of doing business and new financial systems in the ETBs in a consistent manner across all of them, and it will take a lot of work. We are conscious, for example, that we planned for the establishment for SUSI. Notwithstanding that, what is clear from the review we undertook is we did not plan sufficiently. We needed to invest as many resources in the initial planning for this, so that is why we are not jumping into the transfers. We are seeking to plan them appropriately and well. It is vital that there is continuity of provision because we are in an economic downturn and, technically, in recession again, and we need to ensure the provision of further education and training is not threatened by this and that no balls are dropped. That is the important thing that makes a difference for the learner on the ground. We are working closely with FÁS and the ETBs to ensure the transfer takes place as seamlessly and in as planned a way as possible.
Mr. Ó Foghlú mentioned that the ETBs were established on Monday. They are basically entities established with the future capacity to deal with these skills and training centres. Are they currently continuing their main operations under separate VECs? Did anything substantial happen on Monday bar a legal transformation?
Mr. Seán Ó Foghlú:
The difference on Monday particularly was that 33 entities stopped existing and 16 replaced them. We had a series of amalgamation of bodies. It was just as I described and it was business as usual. There was no difference in the provision of services. The teachers are being paid by ETBs this week when they were paid last week by VECs and so on. There is a continuation in the provision of services.
The ETBs will have developing functions over time. Training is one example of that. The fact that they are there will enable them to support schools in different ways over time. There are some changes but, again, it is not a big bang. It will be a gradual change and one of the important things we had worked through over a long period was identifying who the chief executive officers of the ETBs would be. They all commenced office on Monday. Each ETB has agreed a date with the Department on when they will have their first meeting. Technically the Minister has to decide the date but he decided that on advice from the ETBs. They are all having their first meeting in the next few weeks. Some may have had that meeting. They are working on with their regular business. The ETBs include all the members of the former VECs, but after the next local government elections their membership will be reduced.
One issue should be monitored carefully during the establishment of the ETBs. All the VECs had separate branding, including logos, letterheads and so on. This needs to be controlled in order that millions of euro is not spent on new signs, logo design and rebranding of offices and so on. If there is a backlash, that is where it will come from if we spend a fortune rebranding and making things look nice with the new headings.
Mr. Seán Ó Foghlú:
Of course we will try to make things look as nice as possible. We heard concerns such as that during the process and to be fair to the ETBs and Education and Training Board Ireland, which is the IVEA's successor body, they have taken an initiative in partnership with a private partner to design a consistent logo for all the ETBs in order that there will not be separate logo design going on. There will be a single consistent logo for all the ETBs.
That is good.
I refer to the 2012 FÁS accounts. The Comptroller and Auditor General mentioned a number of issues relating to fixed assets in his opening statement. The note referred to intangible assets, the first of which was in respect of the Cabra training centre, for which there was an impairment charge of €4 million in 2012. According to the notes, €7.4 million was spent on the centre and there was an impairment charge of €4 million but at the end of December 2012, the €7.4 million expenditure was worth €1 million. Can Mr. O'Toole explain this?
Mr. Paul O'Toole:
I will do my best. The Cabra training centre was brought into being in 1975 when AnCO purchased a factory that made bowling equipment for approximately €400,000. Over the intervening 35 years, FÁS and AnCO spent approximately €7 million on capital works improving and equipping the centre and making it fit for purpose. The total expenditure over 35 years was about €7.4 million. The building was built in the 1950s and over that period of time literally tens of thousands of learners either attended Cabra or had training managed from there.
The impairment arises because at the time of disposal following 2010, the carrying value of asset - in other words, how it was reflected in the books of FÁS - was greater than the net recoverable amount. It was carried in the books on an historical cost basis. The €7.4 million charge is accumulated, the depreciation is charged against that annually and the result is termed the net book value. That is the accounting convention used by FÁS and by many organisations. Buildings are written off over a period of 50 years. There is not an active market in FÁS training centres so on the rare occasion they come to the market, it is basically what the value is for their alternative use. It was on the basis that people might use the asset. What has happened is that the site and the buildings are going to different State organisations. An Post is developing a sorting office on the site and we have handed the remainder of the site to the Department of Education and Skills for a national school. At the time of disposal, we looked at what market opportunities were there and we had the site and buildings valued at €1.5 million. A repair was required to the roof and that is where the net realisable value of €1.2 million came into being. It reflects the commercial value of its alternative use at the time of disposal.
The observations of the Comptroller and Auditor General mean we need to look at our depreciation policy to see if it is appropriate to write off buildings and fittings over that period of time. It reflects the fact that the assets are purchased and developed not as commercial assets but as State institutions and if they go on the market where one is looking for alternative uses, it will depend on market conditions at the time.
Mr. Paul O'Toole:
There are different views on this. The accounting policy of historic cost and accumulating depreciation is the correct one. We do not have a revaluation policy on an ongoing basis because there is no simple basis for that and there are accounting criteria in this regard. What it prompts is a need to look at whether the universal, one-size-fits-all depreciation charge of buildings over 50 years is appropriate in all cases going forward. That is the issue, as distinct from an inappropriate accounting policy.
The Comptroller and Auditor General also draws attention to an issue with the two offices in Birr and Athlone. There was an asset write-off of €1.8 million on one of the leasehold properties. Can Mr. O'Toole explain that?
Mr. Paul O'Toole:
Birr was chosen as the site for a FÁS head office on the back of the decentralisation decision in 2004. FÁS acquired a temporary premises in, I think, 2007 and began the process of putting some people into it. It took a ten-year lease on a building in Birr and it equipped and fitted out that building to operate as a temporary premises for the ten-year period. In 2010, the then Government indicated that some of the functions would be split off and in July 2011, the current Government decided on the winding down of FÁS and the establishment of SOLAS. In February 2012, the Government decided that the decentralisation in respect of FÁS was to be discontinued. We had a five-year break clause on the lease in 2012.
We took the option to close the operation because we believed it to be the most commercially sensible thing to do at the time as we did not require the out office. This entailed writing off the accumulated fitting costs carried in our books. It was a sunk cost at the time. We have saved the rent and operation costs for five years and we believe on balance it was the correct decision to take and hence the charge arose.
Mr. Paul O'Toole:
There is an advertised minimum value of €150,000 but I do not know what it actually will be. In common with other sites we have had available we will go through the State system, and we have commenced the process to see whether any other State organisation can make use of it. We will weigh up the options on whether the State could use it for another purpose or whether it would make more sense to sell it commercially.
This is not directed at Mr. O'Toole or FÁS because I know they were following a policy and were instructed by a Minister of the day to do so. To implement the decentralisation policy, 17 people were put in an office in Birr at a rent of €100,000 a year and a site for €1.5 million was bought which is now worth €150,000. Five years into the lease it was broken, leading to a capital write-off of approximately €1 million in 2012 and the policy was ended. This seems to be an extraordinary waste of money for no benefit and a policy which was questionable from the outset. I understand FÁS was under instruction at the time to implement the policy but it seems an extraordinary waste of resources.
Mr. Seamus McCarthy:
I wish to make a point on the depreciation charge with regard to the lease in this case. The depreciation charge is 2%, which assumes a 50 year life of the improvements. This is the point we have raised with FÁS. We must examine this because in reality it should be depreciated over the life of the lease and in this case it was a ten year lease because it was anticipated that at the end of ten years a new building would be on the site. More generally we will examine with FÁS its accounting policy and see the implications. FÁS is effectively in its last year of operation and it will wash out anyway in the final reckoning, but it is an important principle that improvements made to a leasehold building should be depreciated over the life of the lease or otherwise as appropriate to the nature of the improvements made.
Another issue arises under note 7 with regard to the Baggot Street office and an accelerated depreciation charge in 2012 of €860,000. Will Mr. O'Toole update us on the Baggot Street premises. What is the current lease and when does FÁS intend to be out? I know the plan is to leave the premises.
Mr. Paul O'Toole:
Mr. Dunne will answer the question on the accelerated depreciation charge. FÁS has had a long lease on two premises on Baggot Street, a main office and an adjoining office. The tenure in one is due to complete this year and we are actively seeking alternative premises suitable for SOLAS which will have a much smaller staff compliment than the FÁS head office. We are taking advice on this and looking for an appropriate premises. We aim to exit the building this year if it is possible and move to an appropriate premises for SOLAS which will be much smaller and should be more economical to run and operate.
Mr. Conor Dunne:
There are two leases on the Baggot Street buildings. One is up this year and we intend to hand back the building. The other is not up until 2017. It is a much smaller building and we will have a use for it. With regard to the overall accelerated depreciation we went through an exercise where we reviewed much of the expenditure on leases, particularly before the transfer to the Department of Social Protection, and where they had been written down over 50 years and we brought them back to the period of the lease. Unfortunately some of them slipped through, Birr being one. With regard to the accelerated depreciation in 2012, we looked at the depreciation policy on this and put in an additional charge for 2012 given that we would be exiting in 2013.
There are times I wish I were an accountant. We always examine the big changes from one year to the next and I did a little financial analysis. The noticeable change in 2012 is that the cash in the bank went from €8 million at the end of 2011 to €13 million at the end of 2012. This seems to be a large increase in cash on hand. Will Mr. Dunne explain this?
I want to pick up on another aspect of the accounts, which is the statements regarding investigations which have taken place in the organisation and statements on internal financial control.
The report lists three investigations that were in progress or had been concluded. The first was an investigation into a jobs initiative in Tipperary, with a potential inappropriate expenditure of €150,000. The report on this was due to be completed by the end of last month and there had been communication with the Garda on the matter. Will Mr. O'Toole update the committee on that report?
Mr. Paul O'Toole:
We have finished that report and passed it to the Department of Social Protection, which has responsibility for the jobs initiative. We had responsibility for it at the time. There was what we believed to be irregular expenditure. The greater bulk of expenditure on a jobs initiative programme by FÁS is on the cost to participants. We have reviewed the initiative from our perspective and believe that some of the expenditure was inappropriate. We have been in constant contact with the Garda and have sent the report to it. The Garda will consider the report from the point of view of whether matters of a criminal nature arise. We cannot determine that.
The report has just been produced. It will go to the next meeting of our audit committee, which will be this month. We will consider it and its implications then. Due to its nature, we are constrained in what we can say. The report has just gone to the Garda for consideration.
Mr. Paul O'Toole:
It is called a jobs initiative scheme, a type that has existed for many years. Originally, it was directed in particular towards unemployed men who had been affected by previous recessions. The scheme in question closed a number of years ago, but several of its participants and participants on other schemes around the country are still in position.
The number of people who have retired early when we put these questions to various witnesses is amazing. Is Mr. O'Toole satisfied that the governance that is in place means that this situation cannot arise again?
Mr. Paul O'Toole:
I will never say that something can never happen again. Time and again, experience demonstrates otherwise. In recent years, we have sought to improve our governance in every aspect of what we do. We are making good strides in some areas in this regard. Human nature being what it is, though, one can never say that something will never happen again.
One must do two things. First, one must concentrate on getting systems, controls, governance, culture and behaviours as right as possible. Second, when issues occur, which they always do, one must tackle them. This is the approach that we would take.
The second issue that arises in the report is an investigation into a community employment, CE, scheme with ineligible expenditure of €28,000 between 2004 and 2007. According to the report, there was "no loss to FÁS as claims due to the sponsor group have been put on hold". Will Mr. O'Toole update the committee on this matter?
Mr. Conor Dunne:
There was an issue with this CE scheme in Cashel. Funding stopped. There has been no loss to FÁS, but the Garda has been informed and is following up on certain matters. An issue was noted and we stopped the funding immediately. We owned the money. The State has lost no money, but there is a problem with the scheme. It has been handed over to the Department of Social Protection and the Garda is actively investigating it. I do not want to discuss it further, as it is sensitive.
The third investigation related to the renting of a property in the Tolka Valley Business Park and was completed in 2012. It concluded that "appropriate procedures had not been followed in procuring a lease at an annual cost of €42,000". Will Mr. Dunne update the committee?
Mr. Conor Dunne:
It was reported in previous accounts as nugatory expenditure. There were two separate leases over two time periods. We held two investigations. We rented a premises that was not fit for purpose or used as a training centre. It had been used for storage. Nearly everyone involved in the lease has retired. We have new procedures in place whereby, if someone wants to renew a lease, one must make a business case that must be approved by the assistant director general of operations and signed off by me. The case must then go before the chairman and the director general for approval. We have had a robust procedure for a number of years.
Mr. Conor Dunne:
At the time of purchase, it was zoned for housing. The problem was that in Birr there was very little land available for the proposed head office. It would have been within the OPW's then range of €100 to €500 per acre. The site was zoned for residential and mixed use. There is planning permission on it, although not for a building but for an access road.
We will now move on to the Tipperary hostel project. The figure of €150,000 was mentioned. This is a matter that has been raised in the House and at this committee a number of times by Deputy McGrath. The report states that the estimated cost of work on the site to date is approximately €4 million, that some or most of that €4 million was taxpayers' money and that the project is not yet complete. Whose responsibility is it, in terms of ownership of the project, that almost €4 million in taxpayers' money has been spent on this project to date? It is now not only a question of an investigation into the spending of €150,000 but an investigation into how this asset will be realised for the State, which has already spent €4 million on it.
Mr. Conor Dunne:
There were two sources of funding, the first from Pobal, which was spent on materials, and the second from FÁS, which was used to pay workers on the jobs initiative, JI, scheme. The project involved refurbishment of a famine hostel outside Tipperary town. There are a number of items included in the €150,000. Pobal is conducting an investigation, which I understand is also with the Garda Síochána. Wearing the State's hat, we provided funding for the scheme which, in our view, was not spent correctly.
Mr. Dunne does not know the exact figure because funding was provided by Pobal rather than the Department. The reported figure is €4 million of taxpayers' money and some public donations. The project has now cost the State in the region of €4 million. I understand a considerable amount of work remains to be done. Will the State now have to write off further moneys in terms of security for the building, etc.? I am interested in knowing what is happening in the regard to the €4 million. It is one thing if an investigation into how the €150,000 and €4 million was spent is under way, but who is investigating the state of the property and what can be done with it to save the money already invested in it so that there is not a further loss to the State? Obviously, it would be of benefit to the local community if this project were to be completed. I agree on the need to investigate what happened in regard to the €150,000 and the €4 million but I would like to know if our €4 million is being protected in terms of the construction and works already completed. It is not good enough to just say there is an investigation going on.
Some of that amount was probably made up of donations, which I acknowledge. I am interested in knowing if the Garda investigation, in terms of the €150,000 and other spend processed through Pobal, will go ahead. A considerable amount of taxpayers' money has been spent on that building. We accept that.
The Committee of Public Accounts wants to know how the money already spent will be protected. Is it the case that this building or the work already carried out could be vandalised or lost to the State? It is reasonable to ask this, and Mr. Ó Foghlú or Mr. Dunne should tell us what Department will give us the answer. How can we get a report on the matter detailing how the State spend on the site can be protected? It is a simple question.
Mr. Seán Ó Foghlú:
As far as I understand, that funding did not come through either the Department of Education and Skills or the former Department of Enterprise, Trade and Employment, which funded FÁS at the time. We will check which Department is responsible and revert to the Chairman. That Department should respond to the committee formally.
The witness should revert to us as soon as possible indicating where the line of management exists for the money that has been spent so we can ask the Accounting Officer responsible for a comprehensive report on the site itself, the money spent on the security costs and the potential to complete this work. Apparently, according to reports, there is a year and a half of work left to be completed on the site.
Is there any other property of this kind around the State owned by FÁS which is relevant to decentralisation? Are there idle properties and are there buildings with leases that have nobody occupying them?
I apologise for arriving late but I had business in the Chamber. The witnesses can tell me if I am being repetitive. I want to revisit the Tolka Valley Business Park unit which the witnesses have told us was used for storage, and if I understand them correctly, it incurred a cost of almost €150,000. It has been stated that the person responsible for the health and safety non-compliance issue has retired. Is that correct?
The person retired, which is fine, but there obviously was an issue and the lease had been entered into. Prior to the retirement of this individual - the principal individual - what discussion occurred on the matter?
Mr. Paul O'Toole:
If I understand it correctly, the person retired in normal course. The problem came to my attention in 2009 and 2010 and we carried out a review of the lease. We have concluded that the lease of the premises was not capable of fulfilling its remit, which was to provide a workshop. I understand that at the time - a period in the last decade - FÁS was rapidly scaling up to meet the demands of the construction sector and was acquiring temporary premises around the country to put in additional workshops for apprentice and craft training. This was one such location. The issue is that this was such a building, but the health and safety requirements on our side for putting in an apprenticeship workshop meant the premises were not suitable. That is when the problem arose. The individual concerned left in 2008 and we have been trying to get to the bottom of that over the past couple of years.
Mr. Paul O'Toole:
The options are limited because virtually all of the people involved one way or another left some years ago. We are delving into the history and records as we find them. As part of the review there was a written response from the individual concerned, which outlined the background to the lease. He considered the need to provide a workshop and there were probably issues within the team as to whether the premises were suitable and whether the building would comply with regulations. There was a question that was not sorted out prior to entering the lease and that is the core of the issue.
As my colleague indicated, we have carried out two actions since. We have divested ourselves of significant numbers of properties and we have been bringing down and managing-----
That is no harm, but I want to stick to this issue. I do not want to get the wrong end of the stick, so I ask for a "Yes" or "No" answer. Was the lease signed in the knowledge that there was a problem with health and safety compliance? Is that the witness's understanding?
So there was a complication. The lease was signed and the person concerned was in employment for a period afterwards. Can the witness tell me what, if any, action or discussion was had with that person? It is not a good day out for any agency to be signing leases with health and safety issues and it is a really bad day out for any agency to sign a lease knowing there is a health and safety compliance issue. Is that not fair to say?
Mr. Paul O'Toole:
That is the situation. To clarify, we take all these issues very seriously and what we have sought to do with any issue - a number have been flagged in this room and elsewhere - is to deal with them all. We are trying to bring them to an orderly close, understand what happened and fix the process so we can deal with what is there. We are looking to get it sorted for the future and we have done that.
I appreciate that. Mr. O'Toole has appeared before the committee previously and we have pored over the entrails of FÁS and the controversies therein. I am not questioning his position in that respect. However, I do not believe one can create this new culture if there is what amounts institutional amnesia. We all understand that people come and go and people retire, and when one is newly arrived in a position one cannot have immediate access to the fine detail. However, on any matter, and I am choosing this specific example, there must be a paper trail, records and some recollection of what happened. It is astonishing that somebody who is charged with signing a lease on behalf of a State agency, knowing that there was a health and safety issue, got no rap on the knuckles, reprimand or questioning, in so far as we can ascertain because there would be a record of that too. In different circumstances, and there is an investigation of other, albeit different, circumstances involving similar expense, it is a matter for Garda consideration, and that is as it should be. I accept the witness's answer on that. However, one cannot have corporate negligence and sloppiness, and then the answer is that person in question retires and the organisation does not remember.
Mr. Conor Dunne:
It would be quite onerous on us. The staff numbers have been reduced dramatically. Most people are doubling or tripling up in FÁS. We even struggle to answer parliamentary questions and freedom of information requests at present. To be honest, as to uploading, some of the reports are very verbose.
It is just for the purposes of illustration. I am not asking about all of the reports. On this specific issue, can the committee have that report and see the written response made? Did the Comptroller and Auditor Genera see that?
It is really unsatisfactory , although I realise it was on a different watch. One might argue that the sum of money concerned is modest in the broader scheme of things, but it is not acceptable practice that a mistake is knowingly made that involves a loss of taxpayers' money and I do not see any follow-up or accountability for the person concerned. I guess that people in other parts of FÁS or other parts of the public service would not get a pass if a mistake was knowingly made that incurred a cost.
Can we have details of the rent that was paid and so forth? I asked questions earlier so perhaps you could give us a comprehensive report on that and a copy of the report. It will assist in our understanding of it.
Mr. Paul O'Toole:
The Cabra training centre was purchased by AnCO in 1975. It was formerly a factory which made bowling alley equipment, as we understand it. It was purchased for approximately €400,000 and over time AnCO and then FÁS spent €7 million on improvements to it, equipping it, modernising it and all the things that needed to be done over that period of time. The State's investment over 35 years was €7.4 million in capital and tens of thousands of people were either trained in the centre or their training was managed from that centre. It closed in 2010 and at the time we took a view on the property. What has happened is two State organisations are going to utilise it. An Post is developing a sorting office there and the remainder of the site and building is going to the Department of Education and Skills for a new national school. That is what happened the investment over the period of time.
The impairment charge arises because the carrying value in our books, which is the historical cost of the centre less accumulated depreciation, was greater than the commercial value as an alternative use. There is no market in FÁS training centres so when the issue crystalises if one closes a centre and one looks at it commercially, it is what alternative use could be made of it. At that time in 2010 the valuation was €1.5 million, but there was a charge relating to the roof and therefore it became a net €1.2 million. That has been taken up by An Post and the Department of Education and Skills. The impairment charge therefore arises because we sought to depreciate the building and the improvements over a 50 year period at 2% per annum, and the historical cost, the accumulated depreciation and the carrying value was greater than €1.2 million. That is where the impairment charge arises.
Finally, this is a question in respect of the European Globalisation Adjustment Fund. I looked at the figures regarding Dell, Waterford Crystal, SR Technics and TalkTalk. The inadequacies of the monitoring processes and the need to beef them up have been acknowledged all round. I have two worries in respect of that fund. The first is the reimbursement of over €11 million to the EU. We discussed this here previously. The Minister was moved to describe the handling of that matter as maladministration, if I recall it correctly. He used very strong language about it. That is worrying. How effective is this?
We make investments at an EU level in the likes of this initiative or in FÁS. I note that, in 2012, FÁS spent €298.9 million on the basis that persons were upskilled and re-entered the workforce. One would not draw much heart from the limited feedback that one sees here in respect of Dell, Waterford Crystal and SR Technics. There is a significant non-response rate to outcome surveys. On those in education, in the case of Dell, the surveys showed 9%; in Waterford Crystal, 12%; and in SR Technics, 10%. For skilled workforces, that strikes me as low. On those employed or self-employed, in Dell, it was 21% of those reporting back which is a small number; in respect of Waterford Crystal, 15%, which is also a small response rate; and in respect of SR Technics, 15%. There is no outcome data for TalkTalk. This might be a general question but I want to put it nonetheless. Are we getting value for money? Are the workers getting value for money? Is there a flaw in that approach? Is it tied up with the maladministration of which the Minister spoke at the time?
I put the same question in respect of FÁS. Of the moneys spent, there were 83,000 learners and 5 million training days. That sounds impressive, but what is the outcome? What is the return because that is why the investment is made in the first instance? If these are not getting the unemployed back into the labour market, albeit in difficult circumstances, surely we need to re-evaluate not only the systems and the oversight, but maybe the approach itself.
Mr. Seán Ó Foghlú:
Touching on the maladministration first, I do not want to go back over old ground but Ms McManus covered that with the committee when she was here in February of last year and indicated that there had been communications issues. Perhaps that is what the Minister had been referring to. She indicated that she had written to the European Commission about that following the Minister's comments at the time.
Deputy McDonald raises an important issue. We have had some discussion about this already today. It is not just a question about the EGF. It is a question about our further education and training and our higher education interventions generally, but, obviously, it arises particularly in the context of the EGF. In a challenged labour market, how effective is it possible to be in getting people back to work?
In the EGF, we have certainly learned from the various programmes that we have and the way in which we work with the workers, especially in TalkTalk, which is not yet completed and for which we cannot yet have the outcome data, to design a package which suits their needs best in the context of where they are living and where they wish to work. It enhances the likelihood of employment as much as we possibly can in the current labour market. Obviously, it cannot always be an immediate likelihood, given the challenging time we face, but it certainly enhances their likelihood as much as we can.
The figures we have for Dell, Waterford Crystal and SR Technics show that, of those surveys, a relatively high proportion were in employment 12 months after the post EGF final report: 44.85% for Dell, 58% for Waterford Crystal and 53% for SR Technics. Then there are some others who are in education and training. That is not to say that we should not seek to have a higher proportion in employment over time. Of course, we should.
There is the nature of the various elements which we fund under the EGF - ensuring that the learning opportunities are accredited is a key item; ensuring that it is not necessarily just that people can follow learning opportunities where they are provided by State-funded providers and that they can also access private provision; the support we give to people to pay for the fees, whether for further or higher education; the enhanced educational costs that we are willing to pay as well, which we have paid under TalkTalk; and the elements of customisation that we have been able to mix-in having regard to each of the groups, which has been very important.
As I was saying earlier - I know that we are in a very challenging time - the extent of the people under the various programmes on construction who have entered the labour market is relatively high given the negativity that we hear about construction and about former construction workers. We fully accept that it could be better, but if we look at our surveys, for example, on the basis of the Revenue data and on the basis of Department of Social Protection, DSP, data, 43% of those who completed NACE 41, 41.5% of NACE 43, and 62.9% of NACE 71 are back in employment, and we have on active labour market programmes approximately 10%, 11% or 12% in each of those categories. That is not to say that we would be satisfied at all with the 30.6%, the 29% and 14.8%, respectively, who are unemployed, or the other, which is 13.7%, 17.8% and 11.4%, respectively, which could be, for example, either that they have left the workforce and have retired or that they have emigrated. We are getting more effective data in terms of the outcomes from the EGF which if helpful to us.
Furthermore, and coming back to the broad point, we need to continually work on the labour market relevance of further education and training programmes. NESC is undertaking a piece of work for us at present. We have issued advice to the VEC sector to try to ensure that it is making its programmes as relevant to the labour market as possible. The establishment of SOLAS and the initiatives that it will take over time will assist and enhance the labour market relevance. We are also reviewing the apprenticeship which we see as an important element in terms of the labour market.
We also have a number of important interventions. Momentum is one, which FÁS is undertaking on our behalf, which involves public and private providers. Springboard, which involves part-time higher education, is important. The ICT Skills is more of a higher education intervention but is particularly aimed at ensuring that we have enough people to move into the ICT skills area where a lot of employment is available at present. We are trying to ensure that we have a balanced provision across further and higher education of relevance to employment, and it is absolutely vital that we seek to enhance that.
Mr. Paul O'Toole:
We are reviewing 2012. First, what is the FÁS part of the equation? If we consider the national framework of qualifications as being a ten-point scale, FÁS primarily operates at levels 3 to 6. Therefore, we deal with entry level, intermediate skills, reskilling and upskilling. That is our space within the equation. Our client group includes people who are among the most vulnerable and disadvantaged in the country, people with significant levels of educational attainment and skills who cannot find a job in their particular areas of expertise, and everyone in between. Manifestly, there are not enough jobs for everybody, so we help people to compete for the jobs that are available. For many people, it is not a one-shot fix whereby we carry out an intervention and a job is offered - it is not a question of pass or fail. Many people need a lot of support due to their background, their educational attainment, their levels of skills and confidence and their generic and specific skills. At all times we optimise the use of the resources available to us.
There are two primary drivers of the programmes that we provide. First, there is an economic driver, with skills and programmes tailored as best we can to an identified need in the labour market. The primary driver of other programmes is social inclusion and equity, with the aim of ensuring we do not exclude people from what is a very difficult labour and employment market.
In 2012 our total expenditure was €441.6 million. It is important that members understand that €164.3 million of that figure is spent on income support, which provides people with an income while they undergo the training programme. The balance of the investment, €277 million, is spent on putting programmes in place. For that investment we undertook or provided 83,500 interventions, 77,000 of which were for unemployed people and 5,600 of which were for the apprentice cohort, with a smaller quantity of 2,000 mainly for people employed in other sectors.
The first attainment that one can examine is the learning outcome. As many as 88,000 certificates were received by FÁS learners. Obviously, this figure of 88,000 does not map exactly onto the figure of 83,500 interventions, because people are in transition from one year to another and may not have finished a programme. That is why the figures are not exactly the same. All of the 88,000 certificates are third-party and are not issued by FÁS but by other accrediting bodies, principally FETAC, which is now called Quality and Qualifications Ireland and accounts for 70% of accreditations, but also a range of other accrediting bodies, such as City & Guilds or industry-specific bodies. Therefore, the learning outcome is tangible in terms of recognition of a person's attainment or completion of a course.
One then can examine the impact and what happens to learners after they exit a FÁS course. There have been a range of positive outcomes. Obviously, at all stages, one would like people to find work. Many people have found work but some are moving on to further education and training, so we divide these into two categories: those who are progressing in their training, and those who are moving on to work experience or other programmes. FÁS seeks to track those outcomes in what is a very volatile market and is conducting two pieces of research that are relevant. First, research is being conducted on how the population in general are undergoing transition between employment, unemployment and what is termed economic inactivity, such as retirement or education. There is an enormous volume of movement. A lot of people are moving from unemployment to employment and back out again. They have periods of inactivity when they go on to further education, third level education or whatever they are doing, and then they go back to employment. There is a huge volume of activity for people who are employed or moving between jobs both in their own fields and outside them. I draw attention to that point because these are not simple top-line numbers from which one can draw conclusions. It is really important to understand the dynamics of the labour market.
At present we have only preliminary outcomes for the second piece of research, and the work is still ongoing. We have taken a sample of people who exited FÁS courses in 2012 and analysed what happened to them over the year. The preliminary results indicate a total positive outcome for the economically driven programmes that varies between 71% and 81%. A positive outcome is a period of employment or progression to a work experience programme or further or higher education. With regard to the programmes that are driven by social inclusion and equity - which cater to people who are always going to find it more difficult - there are positive outcomes for between 54% and 74%. In other words, the intervention, whatever it was, has enabled them to progress or be placed in work.
Mr. Paul O'Toole:
Labour market transition is a new piece of research by FÁS and was done in conjunction with the expert group on future skills needs. The findings will be published as part of the annual national skills bulletin over the next number of weeks. We are completing the fieldwork analysis of the other research work. It will be completed over the summer and published in the autumn.
I apologise for being late. I wish to touch on a couple of issues. I do not know if my general question has been asked already. The total annual budget stated in the FÁS annual report for 2011 was just short of €1 billion, but programmes cost €736 million, overheads cost €40 million, pension cost €62 million and staff cost about €105 million. If one divides the sum for programmes by 163 interventions for that year it works out at roughly €4,500 per intervention, and if one includes the overall costs of €1 billion then it is roughly €6,000 per intervention. Is that value for money? The role of FÁS is to provide jobs and get people ready for jobs. Would it be better to give the money to employers to take people on rather than giving it to FÁS to provide more training? That is a hard question but a relevant one, and I ask Mr. O'Toole to address the matter.
Mr. Paul O'Toole:
Yes. One is looking at that. I suppose the other point is that FÁS does not provide employment. FÁS training helps people to compete in a labour market, which is the most difficult it has been for as long as I can remember. We are one part of the equation. We are helping people gain entry level and intermediate skills within our remit which gives them a better chance of competing for the jobs available.
Mr. Paul O'Toole:
We would have had a bank of 300 to 400 courses. A lot of those are inactive. We have looked at changing the mix. Traditionally, FÁS was known for providing construction-related courses, and we still do a small proportion of those. There are still 100,000 people employed in construction, notwithstanding the challenges of the sector. However, we have moved into areas we believe are more relevant to current labour market conditions and, as I said, are helping people to access service level jobs. ICT, for example, is topical and a lot of the demand there is at the top end of the scale. This year, or maybe last year, we put in place 6,000 places at entry and intermediate level for ICT skills that are relevant to the ICT industry. There is a huge demand from learners, unemployed people, for programmes which help them in digital literacy and we are satisfying that demand, in conjunction with the Department of Social Protection.
Dr. Bryan Fields:
We have a bank of courses on which we draw in terms of the suitability of them, or the labour market demand at a particular time. For example, in the past 15 years, we have developed in the region of approximately 40 traineeships, of which we have a bank of approximately 20 plus that are suitable for the current environment. We are running in the region of ten of those currently.
Mr. Paul O'Toole:
We have preliminary figures from a study which has not yet been published. It is literally a preliminary study and field work is being done, so there are caveats to that. Of our very market-led courses, the best performing would be traineeships and 60% of those people are getting jobs. The next batch would be around 45% plus getting jobs having exited a course.
Is there a tracking system in that having done a course, FÁS knows whether somebody is in employment? Mr. O'Toole spoke about a survey. When somebody does a course, has FÁS some way of knowing what he or she is doing over the following 12 months? Is there a database to see if courses are fulfilling the criteria for the market and to ensure people get jobs?
Mr. Paul O'Toole:
As the Deputy knows, in the past FÁS had responsibility for both the employment services and the training but it no longer has that. However, we work in conjunction with the Department of Social Protection to ensure there is a flow of data between the Department and ourselves and at a macro level informing the Department of Education and Skills. We have certain tracking systems but as the Secretary General said earlier, we are developing new systems. As part of the development work from Intreo and the development of SOLAS and the new education and training boards, we will develop a new learner database that will plug in and integrate with the Intreo system, so that we can improve our more direct tracking of individuals.
I refer to the European Globalisation Adjustment Fund. Obviously, coming from Limerick and given what happened with Dell, I have a particular interest in it. In regard to the funding which has been returned to the EU, in Dell's case, 40% was returned. Interestingly, in the case of Waterford Crystal, it was a low as 20% while in the case of SR Technics, it was 60%. In terms of NACE 41, construction of buildings, 35% was returned, in the case of NACE 43, specialised construction activities, it was 39% and in NACE 71, architectural services construction, it was 15%. Why is there such a disparity? It looks as if approximately €23 million of EU funding will be returned, which has to be queried.
In the case of Dell, the reason was the application process. I was able to download the application from the EU website but it did not match the requirements of many of the people. A large amount of it was to do with courses they would not attend. The amount put towards people going down the self-employed route was very small and that is borne out by the fact that in July 2012, of the number of people employed by Dell, only 67 of them, which was fewer than 5%, were self-employed. I know many of the people from Dell and there was a huge entrepreneurial spirit in Dell.
If the application process was right, nothing would be returned to the EU. Some €23 million in funding from the EU should have been spent. How is there such a disparity in the level of refunds between the different groups? Will Mr. O'Toole tell me abut the application process which was grossly deficient in the context of Dell? I studied the application process and it did not match the overall requirements. The people involved in the implementation of the EGAF on the ground - I think at that point they were from FÁS - were very good but they were constrained by what was in the application.
A general approach on the Commission's proposal for a regulation on the EGAF 2014-2020 has been agreed. One of the weaknesses of the original application for those in Dell was that one could not transfer between different categories. One could not switch between the self-employed or the third level categories, for example. Given the way the applications were made, funds were going to be returned because they could not be spent as they did not cater for the needs of people in Dell.
I feel strongly about this issue. I believe the money could have been better used in the area of enterprise and employment. A number of people who worked with Dell could not qualify for assistance because there was no mention of funding for enterprise in the application form.
Mr. Seán Ó Foghlú:
We take this matter very seriously. We appreciate the concerns expressed by the Deputy. More effort and energy has been put into reviewing our initial approach, whether by the Department's officials or auditors and the Comptroller and Auditor General's report. We have learned a great deal from the various reviews and audits that have been undertaken. In terms of the comparison between how we are doing relative to others internationally, which I covered earlier, we do not have information on international comparisons since 2012, but on average we are 10% better than the average on average.
I do not particularly want to be average. I think we can design programmes to meet the needs of individuals. From the surveys conducted on the former Dell employees, a significant proportion of the 2,600 former employees had an education standard of junior certificate or less. One would like people to get to the point at which they could do third level degrees. However, such an aspiration was not compatible with the profile of people who had worked in Dell. These people wanted to work.
We need to have an overall rethink on education. Third level degree level education is only part of the spectrum of education. Let us consider the educational system in other countries. Germany is a powerhouse in terms of manufacturing. Germany has a traditional third level education system but in addition it has a crafts and an apprenticeships stream, in which people are being trained while working in jobs. That is one of the reasons it has kept its manufacturing base. I am well aware that Italy and other countries refunded 60% or more of the funds they received. My hope is that we will spend all the money that we get from Europe. I ask Mr. Ó Foghlú to comment on the application process.
Mr. Seán Ó Foghlú:
I accept what the Deputy has said. We do not want to be average and we are already 10% above average, which is quite a lot and we would like to do better than that. It is not possible because of the way it is set up to spend fully under this measure. We have learned a great deal from its operation
Mr. Seán Ó Foghlú:
One applies on the basis of all redundant workers and all redundant workers do not want to take up services. We are learning that under TalkTalk. There are some people who do not want to engage and they could well be people who are already in employment. It is possible to do much better but it is not possible to get 100%. I do not think there is a disagreement on that.
The nature of what is offered is not designed to be predominantly higher education. It is designed to be what meets the needs of the groups.
Mr. Seán Ó Foghlú:
On all of the applications, there is freedom to get grants towards further or higher education programmes and so on. I accept the Deputy's criticisms on the Dell applications. We could have done better under all of them. We are seeking to have an initial guidance so that we can plan to meet the needs of people. We have identified under TalkTalk that we will continue to have the further and higher education grants, as well as particular programmes, developed to meet the needs of groups of redundant workers who have similar needs. We have also identified the need for course costs and a particular grant for that. There were innovations such as particular customisation needs under the Dell programme. FÁS designed an internship programme which included training and on the job placement for a number of private companies. I know the Deputy will be aware of that.
In parallel but not under the EGF, we did an accelerated tailored level 7 conversion course.
How much was allocated under the Dell programme to enterprise? Of the total grant of €22 million, how much was allocated to the area of enterprise? Will Mr. Ó Foghlú given an indication of the total funding allocated under the various headings in the application? How much of that was spent and how much was unspent? I certainly know that some of categories could have spent a great deal more but there was no flexibility to switch among categories.
The allocation to FÁS was €5.35 million, the allocation for higher education was €2.53 million and the allocation to the category of self-employed or entrepreneurship was €3.28 million, making a total of €11.16 million. What happened to the balance?
Mr. Seán Ó Foghlú:
The allocation to further education was €0.62 million, the allocation to the Department of Social Protection was €1.45 million and the allocation for technical assistance was €0.39 million. Some 333 people accessed higher education but 306 people accessed enterprise supports under the CEB scheme, 410 accessed further education and some 1,348 people availed of training under FÁS and apprenticeships. The programme was not entirely dominated by higher education.
I know that. The point I am trying to establish is how much was the refund in respect of those categories? The total refund was €13.619 million. What was the refund in respect of each of the individual categories?
May I suggest that the review of the course is incomplete? I make a simple point. If 40% of the fund was refunded, that means that money were returned from other categories. Will Mr. Ó Foghlú come up with the figure and provide it to the committee?
Is it correct that with the €5.35 allocation to FÁS, €1.45 million to the Department of Social Protection and €0.39 million for technical support, more than €7 million of the total funding allocated in effect went to FÁS?
It seems that more than 55% of the funding that was allocated went to FÁS. How much of the funding that was allocated went to FÁS?
Okay. I would like to know the reason for the disparity in refunds between the various programmes. It is clear that almost 80% of the fund was spent in the Waterford example. That is to be welcomed. In the case of SR Technics, approximately 40% of the fund was spent and 60%, which is very high, was refunded. Has the Department come to a conclusion - apart from the overall issues relating to Ireland, Inc. - regarding the reason the refund amounts were much lower in the cases of some of the particular EGF programmes for individual companies or groups? To give some examples, some 75% of the fund was spent in the case of the architectural services programme, nearly 60% of the fund was spent in the case of the specialised construction programme and some 65% of the fund was spent in the case of the construction of buildings programme. All of that is to be welcomed. The case of SR Technics clearly stands out because just 40% of the fund was spent. Can Mr. Ó Foghlú outline the reason for that disparity, as revealed by the review process?
Mr. Seán Ó Foghlú:
The SR Technics programme was certainly the most challenging one. We did not put in a co-ordination unit in that case. We have learned from that. We put in contact points in FÁS and the Department of Social Protection, but we were not as engaged on the ground as we were in subsequent cases. We have learned from that.
I would like to pick up on the point Mr. Ó Foghlú just made about engagement on the ground. He said a couple of times that this area is reviewed constantly and that the Department has learned a great deal since the initial approaches. I suppose I am trying to get a picture of what is happening with regard to TalkTalk. Can Mr. Ó Foghlú give the committee an idea of what exactly the Department has changed? What has it learned about the EGF as it has evolved, when it comes to these companies? I am asking with particular reference to the Department's involvement with the TalkTalk workers.
Mr. Seán Ó Foghlú:
The TalkTalk programme came at a separate time from all the other programmes. We were really in a learning process when the first three come together. We were challenged by that. The TalkTalk programme came along after we had completed a review process. We knew that engagement with the local workers, the local community and the FÁS co-ordination unit on the ground needed to take place at an early a stage as possible. We provided money upfront on a national basis outside of our national contribution to the EGF. The specific design elements of the TalkTalk programme included the provision of job-focused private training, arranged through Skillnets, and the EGF course contribution. We were providing grants to pay for fees, but we have now broadened that out to defray expenses relating to mobility, accommodation, course equipment and materials. There has been a high level of ministerial engagement as well.
Mr. Seán Ó Foghlú:
Yes. We have made sure we have been engaging with the community. The community has been taking the lead as well. We have enabled the community to take the lead. We have managed to get a type of engagement in the case of TalkTalk that we did not succeed in getting in the previous programmes.
According to figures I have seen, the level of participation in the measures is 62% in the case of TalkTalk, 55% in the case of Dell, 57% in the case of Waterford Crystal and 50% in the case of SR Technics. There is an increase in the case of TalkTalk, but it is not massive. Can Mr. Ó Foghlú explain the factors that apply to the 38% of TalkTalk workers who do not get involved in, engage with or participate in the measures? As he said earlier, many of them went into additional employment. He has explained why the participation level cannot reach 90% or 100%. Can he outline why it is just 62%?
Mr. Seán Ó Foghlú:
When I say "we", I mean "we" in the broadest sense. FÁS on the ground in Waterford is seeking to follow up with every individual worker to try to get him or her to engage in the initial career guidance discussion. I do not think we will ever get to 100% because there will always be people who move on and are happy.
I do not have a calculator, but on the basis of the figure Mr. Ó Foghlú has just given, the participation rate among TalkTalk workers has reached 70%. I presume he considers that to be a very high percentage.
Mr. Seán Ó Foghlú:
All we know is that they have not engaged. We cannot get a response from them. It is very hard to get behind the figures. We have some information on their labour market status, which can be gleaned from Revenue and Department of Social Protection data. Of the 194 people in question - this information was compiled before we got the extra 28 people to engage - 98 were already employed and 62 were categorised as "other", which could mean they had emigrated or had retired. There could be other reasons. Five people were on programmes which do not fall within the ambit of the EGF and 29 people were unemployed. Obviously, we are really trying to influence and engage with those who are unemployed.
It seems the Department has tracked down and accounted for the majority of those who were affected by redundancy in this case. That is fair enough. Does the Department have any idea of what the projected underspend will be when the course finishes in February 2014? That might be a difficult question. I would like Mr. Ó Foghlú to compare the figure in the case of TalkTalk with the figures for the other companies we are looking at here. Maybe it is impossible for him to do so right now.
I presume the Department is hopeful, based on the reviews it has done, the changes it has made and the expansion to include certain areas, that the underspend will be far less than it was in the previous cases.
Mr. Seán Ó Foghlú:
I would be disappointed if the spend in the case of this company was not the highest of all the companies. I think the success in the case of the construction programme that achieved an access rate of approximately 85% can be attributed to the small and very engaged population in that example. I would not overstate the level of engagement in that case. The average figure across the construction sector as a whole is 63%. We would hope that TalkTalk would be the highest. I am not saying it will be, however.
Mr. Seán Ó Foghlú:
We would be very surprised if there was a high level of dissatisfaction with the TalkTalk programme after it is completed, regardless of the final engagement rate that is achieved. That is not to say we will be unable to learn things from the TalkTalk example. I am sure there will be things we can learn from.
I would like to ask Dr. Fields about the design of the courses, which was mentioned earlier. The case of TalkTalk is relevant to where I am from. The bigger picture relates to the national agencies that deal with these cases. How much interaction and connectivity do Dr. Fields and his colleagues have with IDA Ireland and Enterprise Ireland when they are designing courses? When the two agencies recently looked at Waterford and the south east, they identified deficiencies in the skills base in the region, for example, when it comes to languages.
This may not be directly relevant in some cases. Does it have connectivity and interaction with the agencies, based on their experience and where they believe the deficits may be?
Dr. Bryan Fields:
We have a direct connection with the IDA, which we have met on a number of occasions, most recently in relation to social media training for the companies it will invite into the Grand Canal area of Dublin. We have the skills and labour market research unit which assists with the publication of the skills bulletins of the Expert Group on Future Skills Needs. The IDA is also represented on that group. We have direct and indirect interaction.
Is Dr. Fields aware of the issues I have raised? Do such minutiae reach his desk? An example of a big issue would be an advance factory not being available or the language deficit in the south east to which I referred. Does such information reach Dr. Fields and is it filtered down at that point?
Dr. Bryan Fields:
Yes, such information reaches me. I was present at a meeting in the IDA offices in relation to a company that was about to come into Ireland. We discussed what FÁS could do to meet its skills needs, which it set out for us in that area. We communicate this information to the appropriate regional director who builds it into the business planning process. We can fast-track some of this, depending on the location of the inward investment. We have a strong business planning process, which the board reviews every three months. Each region has to submit a business plan, setting out the connections it has made in the region and nationally. We have a good process in place in that regard.
Mr. Paul O'Toole:
We discharge all debts to private contractors within 15 days as far as we can. One company has initiated a High Court action against us, claiming it is owed money going back a number of years. It has not at this point advanced the action beyond initiation and we intend to defend the case.
Mr. Paul O'Toole:
In this particular case, it has failed. Without getting into too many specifics, we looked at the claim and paid it a sum of money which we believed was owing. The company is not satisfied with that outcome and has indicated it wishes to pursue the matter through the courts. It has not gone beyond initiation at this stage.
I thank the witnesses for attending this morning's session.
Is it agreed to dispose of Vote 26 - Education and Skills; Chapter 17 - European Globalisation Adjustment Fund; FÁS Financial Statements 2012; and National Training Fund? Agreed.