Ruairi Quinn (Dublin South East, Labour)
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I thank the committee for the invitation to discuss the pre-budget position for the Department of Education and Skills for 2014. I welcome the initiative to enhance the role of the Oireachtas committees in the Estimates and budgetary process. I am happy to hear inputs from committee members that could assist the Government in formulating the education and skills element of the budget.

The enhanced budgetary role of the committees, together with the new performance budgeting format of the Estimates process, are important elements of the commitment to improve this process and make it more open. I am happy the Department is involved in the pilot project regarding the whole-of-year budgeting process. Notwithstanding the inevitable teething problems, I hope the lessons from the pilot will lead eventually to a wider and more productive engagement in the Estimates process.

Under new arrangements, the budget this year will be announced on 15 October, also moving forward the other elements of the budgetary calendar. This earlier date presents particular challenges for the education sector, given that the academic year only starts in September when a clearer picture of the student population for the year ahead emerges. My Department will be required to make an earlier call than usual on the projected expenditure position for 2013 and its likely impact on requirements for 2014. This will require close attention in the lead up to the budget.

Budget 2013 saw the identification of savings measures on current expenditure amounting to some €90 million on the Department of Education and Skills Vote, increasing to €103 million in 2014 and to €123 million in a full year. These measures were taken to ensure overall expenditure on the Vote remained within the ceiling set as part of the comprehensive expenditure review. They also facilitated funding for additional initiatives on the Vote and the offsetting of emerging cost pressures on the pay side. These initiatives included funding for the literacy and numeracy strategy in schools, junior certificate reform and the continued roll-out of 100 Mbits broadband to second level schools. Important funding was also provided for extra places under the labour market education and training fund, Momentum, and the Springboard programme.

The Estimate for 2013 also made provision for up to an additional net 900 teachers in schools in September 2013, clue to increasing demographics. These demographic drivers are likely to be of similar scale for 2014. While the savings measures announced in budget 2013, and in earlier budgets, will have follow-through effects in 2014, committee members will see that I am still required to identify measures to yield a further €44 million in current expenditure savings next year. I will also be required to take account of further upward pressures on expenditure that may emerge in 2014. While it is very early to make strong projections at this stage of the year, it is anticipated that the last of the payments to be made under the redress scheme will impose upward pressure on the 2014 ceiling.

In addition, I will need to take account of the surge in demand for resource teachers in schools. Members will recall that I recently authorised the National Council for Special Education to retain the level of resource teachers available to students with special educational needs at the 2012-2013 levels. The costs of additional resource teachers will have to be met from within the ceiling for 2014.

My Department will also have to pay close attention for 2014 to expenditure on superannuation payments which account for over €1.1 billion, 13% of current expenditure, on the Vote. The scale of this expenditure, over which I have effectively no control, means that even slight increases in retirements can have a significant impact on other areas of the Vote.

The 2014 expenditure ceiling for the Department will also be adjusted to take account of savings arising from the implementation of the Haddington Road agreement. This adjustment will be determined in conjunction with the Department of Public Expenditure and Reform. Securing additional savings of €44 million and containing upward expenditure pressures next year, while continuing to seek to protect front-line education services, will be a difficult challenge. The budgetary arithmetic for 2014 already takes account of extra savings that will accrue in that year as a result of decisions taken in previous budgets. These decisions include increases in the third level student contribution up to 2015; reductions in the levels of capitation payments to schools and to higher education institutions, also up to 2015; and savings from adjustments to the staffing schedule in small schools up to 2014.

The Department has sought in the briefing material provided to give some perspective regarding the savings requirement for 2014. It shows that 78% of current expenditure is on pay and pensions, which covers the pay costs of approximately 94,000 staff in education and goes towards the superannuation costs of some 41,000 pensioners. Apart from the payroll adjustments arising from the Haddington Road agreement, securing further savings on pay expenditure on my Vote will essentially require reductions in numbers of staff in education. Discounting for demographics, it can be seen that significant staff numbers have already been withdrawn from all levels of the education sector, as a result of measures announced in previous budgets. Nevertheless, if further savings are to be found in this area, the maths is simple, if the resulting impacts are not.

The key elements of non-pay expenditure are also set out in the slides provided. Effectively all elements of non-pay expenditure have been the subject of budgetary adjustments since budget 2009. Making further adjustments in these areas, which are already close to the bone, will certainly present challenges to the continued delivery of quality education services.

Efforts to improve the delivery of education and training services continue. The new education and training boards will soon be responsible for the delivery of local education and training on a much larger scale than ever before, when they assume control of the 16 FÁS training centres later this year and during 2014. SOLAS, Seirbhísí Oideachais Leanunaigh agus Scileanna, will be formally established before the end of this year and will provide a national strategy for the wider further education and training sector, including those services delivered by the education and training boards.

I am also anxious to progress implementation of the national strategy for higher education, so that we can have a higher education system providing a high quality education for increasing numbers of students. A key priority will be the establishment of a new relationship between the State and the 39 publicly funded higher education institutions to make sure graduates are being provided with the skills needed for the social and economic well-being of the nation. A proportion of public funding to the institutions will be set aside as performance funding in this regard.

The determination of the overall budgetary strategy for 2014, including adhering to the deficit targets that were set by the ECOFIN council in 2010, will be finalised over October. While we would prefer that education and skills expenditures were insulated from further reductions, the reality is that the savings measures necessary to regain economic equilibrium will have to be secured across all areas of government.

I hope I have sketched out for members the challenging backdrop to the formulation of the Department of Education and Skills Estimate for 2014.