Mr. Seamus McCarthy:

The appropriation account for Vote 34 shows that the National Gallery spent €8.4 million in 2012 on voted services. The most significant element of expenditure was pay, which accounted for €5.2 million, while non-pay costs were €2.2 million. Grant-in-aid funding of just over €1 million was provided in 2012. This was paid into two grant-in-aid fund accounts. Transactions on the grant-in-aid fund accounts are set out in note 7 to the appropriation account. The National Gallery's gross expenditure fell by around €1 million between 2011 and 2012. Almost all of the reduction related to cut of 50% in the grant-in-aid provision under subhead A.3. Up to 2011, that grant-in-aid funding was allocated for the acquisition and conservation of artworks. Accumulated reserves of €3 million were held at the end of 2011 for those purposes. In 2012 the bulk of the €1 million grant was allocated to building refurbishment work. This change in scope of the subhead is in the context of the National Gallery's master development plan, which aims to complete the renovation of the two oldest wings by spring 2016.

Members may also wish to note that the statement on internal financial control in the introduction to the account discloses that the National Gallery undertook a review of its security procedures following an incident in June 2012 in which a visitor to the National Gallery caused substantial damage to a painting on public display.

In examining the appropriation account, the committee should be aware that the National Gallery's income from retail and fundraising activities is not treated as appropriations in aid of the Vote. Those activities and the related expenditure are accounted for in consolidated financial statements which are prepared on an accruals basis. They are separately audited by me.

Following the 2010 audit, we proposed changes to improve the format of the consolidated statements. The National Gallery agreed and substantially revised the format of the consolidated statements for the 2011 year of account. The process of preparing and auditing the revised-format accounts has been protracted, but I expect the files on the audits of both the 2011 and 2012 financial statements to be submitted to me shortly for my review.

Chapter 15 of my report on the accounts for public services 2012 deals with two matters relating to staff appointments at the National Gallery. The chapter outlines the circumstances surrounding a payment made in 2012 to the newly appointed director of the National Gallery. The audit found that, in addition to salary, an amount of €40,000 was paid to the director. The Department of Public Expenditure and Reform had sanctioned the pay and conditions and specified that no additional benefits in cash or in kind were payable apart from reasonable vouched removal expenses. Of the €40,000 paid, supporting vouchers to the value of some €3,700 had been received by the National Gallery. For tax compliance purposes, the National Gallery grossed the unvouched element of the expenses payment to around €87,000 and paid the related tax.

The full amount of this expenditure was met from the National Gallery's non-Exchequer resources.

The other matter dealt with in the Chapter concerns the costs related to the outcome of a Labour Court case. During 2012, the National Gallery reinstated six security attendants who had been made redundant in September 2011. The attendants had originally been hired in 2002 on fixed-term contracts. Following legal proceedings by some of the attendants, the Labour Court found that they were entitled to contracts of indefinite duration. The National Gallery incurred expenditure in the region of €420,000 as a result, including arrears of salary for the 15-month period between redundancy and reinstatement. Further legal costs of approximately €7,500 were in dispute.

The legal provision underpinning contracts of indefinite duration is the Protection of Employees (Fixed-Term Work) Act 2003. That Act prohibits the use of successive fixed-term contracts and provides that an employee is entitled to a contract of indefinite duration once he or she has been on fixed-term contracts for more than four years, unless there is objective justification for keeping the employee on fixed-term contracts. Entitlement to contracts of indefinite duration is an issue that also arises in other public bodies, especially in the education sector.