Oireachtas Joint and Select Committees
Thursday, 15 May 2014
Public Accounts Committee
2012 Annual Report of the Comptroller and Auditor General and Appropriation Accounts
Vote 26 - Education and Skills
Chapter 4 - Vote Accounting
Chapter 12 - Contract Management in Education PPP Projects
Financial Accounts 2012
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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No. 7 is the 2012 Annual Report of the Comptroller and Auditor General and Appropriation Accounts. Chapter 4 deals with Vote Accounting and Chapter 12 relates to contract management and education PPP projects; Vote 26 - Education and Skills National Training Fund account 2012.
I remind witnesses and those in the Visitors Gallery to, please, turn off their mobile phones because they interfere with the sound quality of the recording.
I advise witnesses that they are protected by absolute privilege in respect of their evidence to the committee. However, if they are directed by the it to cease giving evidence on a particular matter and continue to do so, they are entitled thereafter only to qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of these proceedings is to be given and asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against a Member of either House, a person outside the Houses, or an official by name or in such a way as to make him or her identifiable. Members are reminded of the provisions of Standing Order 163 that the committee shall 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 policy or policies.
I welcome Mr. Séan Ó Foghlú, Secretary General, Department of Education and Skills, and his officials. Will he, please, introduce them?
Mr. Seamus McCarthy:
Vote 26 for the Department of Education and Skills is the third largest of the Votes, accounting for 17.5% of overall gross Voted expenditure in 2012. The appropriation account indicates gross expenditure of €8.6 billion in 2012. Salaries and pensions accounted for more than three quarters of current expenditure, with approximately 93,500 whole-time equivalent staff in the sector. Capital services expenditure amounted to just over €450 million.
The school transport service is also funded from Vote 26. Payments for the service amounted to almost €169 million in 2012. This includes a sum of €150 million paid to Bus Éireann which, under a long-standing arrangement with the Department, manages the provision of most school transport, using a combination of services contracted in from private bus operators and vehicles in its own fleet. The remaining €19 million was spent on direct school transport grants and school bus escort payments.
The national training fund was established in 2000 as a ring-fenced fund designed primarily to support the training of those in employment and those who wished to take up employment. When the fund was established, there was a shortage of skilled labour in certain key economic sectors. The fund is resourced mainly by a levy on employers of 0.7% of reckonable earnings of certain categories of employee. The income of the fund from the levy in 2012 was €299 million, down slightly on the figure for 2011. The other main recurrent source of funding is European Social Fund, ESF, receipts which tend to vary significantly from year to year. In 2011 some €80 million was received, including €24 million in final refunds relating to ESF programme activity from 2000 to 2006. No ESF funding was received in 2012, but €32 million was received early in 2013. Approximately three quarters of the expenditure in 2012 was on training programmes for those seeking employment. Most of the remaining expenditure was on providing training for and the upskilling of those already in employment.
The main beneficiary of the national training fund in 2012 was FÁS which received a total of €297 million. In addition, the Department paid FÁS almost €12 million from the Vote for its training and integration support activity. Payments to FÁS from the Vote amounting to €23 million were provided for in the Estimate in subhead G2, but when the Department identified potential budget difficulties for the Vote, it stopped the Vote payments to FÁS. To compensate, it increased the provision from the fund by just over €9 million. Subsequently, when it became clear that there would be a substantial surplus in the Vote, the fund was reimbursed by that amount, paid also from subhead G2. I drew attention to this in the chapter on Vote accounting because the circumstances were not consistent with the principle that Vote holders should manage expenditure within the spending limits set by Dáil Éireann for the Vote, while meeting all legitimate liabilities that arise in the year.
In the comprehensive review of expenditure the expenditure ceiling set for the Department for 2012 comprehended both the Voted spending allocation and the national training fund expenditure allocation. This, in effect, makes the Vote and the fund a single account for budget management purposes. Because the Vote and the fund are accounted for separately, significant intra-account transactions should be clearly disclosed in both accounts. The Accounting Officer has undertaken to do this in the future.
Better transparency of the cost of public services could also be achieved if all payments for specific services issued from a single funding source. Rather than making parallel payments to payees from multiple sources, Exchequer support for the target activities of a departmental fund, if required, could be achieved by voting a grant payment to the relevant fund. For example, this is what happens with the Social Insurance Fund subsidy paid from the Vote for the Department of Social Protection.
Chapter 12 deals with the control of expenditure on the education sector public private partnership projects, PPPs, that were at an operational stage in 2012. It considers the adequacy of controls in place in respect of the key contract elements of price indexation, service performance and benchmarking. At the end of 2012 cumulative expenditure on the five operational PPPs in the education sector was just over €300 million, with outstanding commitments estimated at over €1 billion, and annual expenditure running at almost €50 million. The projects relate to three bundles of primary and post-primary schools, the National Maritime College and the Cork School of Music, both of which are colleges of the Cork Institute of Technology. The Department of Education and Skills is the contracting authority for all of the PPP projects and costs are borne in the Vote. Towards the end of 2012 the National Development Finance Agency took on some of the contract management functions for the school bundles previously undertaken by the Department. The college contracts are jointly managed by the Department and the institute. At the request of the Department, the agency carried out a review of the indexation calculations submitted by the respective PPP companies during 2012 for each of the five contracts. Errors were noted in the invoicing for both colleges, amounting to a potential overcharging of €43,000. The chapter recommended that all future payment indexation calculations on all projects should be reviewed by the agency and that the Department should satisfy itself that calculations for prior years were correct and that no overpayments had been made.
Schools PPP companies are required to submit monthly performance reports to the agency, outlining activities in the previous month. These reviews are circulated to each school principal for confirmation that all service failures that may have occurred are included and that the dates regarding the handling of service requests are correct. When service failures occur, the agency ensures the appropriate deduction, if any, is made for the next monthly unitary charge payment. Up to the end of 2012, deductions totalling just over €1 million had been made from payments to the schools PPP companies. Our examination found several instances in 2012 where individual schools had not responded to the request from the agency for confirmation that the monthly performance monitoring report was complete and accurate. As payments to the PPP companies were not delayed in these cases, non-response from the schools is, effectively, being treated as confirmation that the performance report is correct. The chapter recommended that the Department remind schools of the importance of providing formal feedback on the monthly performance monitoring reports in order to ensure contracted services are being delivered and that deductions, where appropriate, are applied.
Benchmarking and market testing are used in PPP contracts as a means of ensuring the contracting authority continues to receive value for money over the life of the contract. I reported in chapter 3 how an exercise of this kind had been undertaken by the Courts Service in relation to the Criminal Courts of Justice PPP and that significant financial savings had been achieved as a result. For the PPP projects in the education sector, the options of benchmarking and market testing were available in the fifth year of operation and will be available every five years thereafter, but the examination found that the Department had decided not to invoke these provisions. We found no documentary evidence of any detailed analysis supporting the decisions to forgo the benchmarking opportunities. The chapter recommended that in the future the Department formally consider whether savings could potentially be delivered by way of benchmarking and market testing. Reasons for proceeding, or not proceeding, with benchmarking should also be documented.
Mr. Seán Ó Foghlú:
I thank the Chairman for allowing me to make this opening statement concerning the examination of the 2012 Appropriation Accounts for Vote 26, the National Training Fund Accounts, as well as chapter 12 of the Comptroller’s report on contract management in education public-private partnerships, and chapter 4 of the same report in relation to Vote accounting matters.
As requested, the Department has supplied the committee with briefing regarding the Department’s expenditure for 2012, as well as more up-to-date details for 2013 and 2014. I will, therefore, keep these remarks brief.
As a result of a Government decision, this Department restructured its Vote from 1 January 2013, to reflect the new performance budgeting approach to expenditure Estimates. Expenditure under the restructured Vote from 2013 is now categorised across four programme areas, reflecting the four high-level goals of the Department. The new format replaces the seven main expenditure headings used in the Vote accounts up to 2012.
As a result of these significant changes to the structure of the Vote between 2012 and 2013, it is difficult to correlate exactly subhead expenditure for the 2012 voted subheads with the new performance budgeting presentation of the Estimates. However, the briefing material supplied to the committee seeks to match these expenditures as far as possible.
In relation to voted expenditure the Department’s gross outturn for 2012 was €8.6 billion, of which €410 million, or approximately 5%, related to capital expenditure. The provisional outturn for 2013 was €8.5 billion, of which approximately 5%, €440 million, was capital expenditure. The bulk of voted current expenditure, 79%, is on pay and pensions. In addition, expenditure under the non-voted National Training Fund amounted to €341 million in 2012, while the provisional outturn for 2013 was €349 million.
The Comptroller’s report contains two chapters relating to public-private partnerships. Chapter 3 examines overall financial commitments under PPPs, while chapter 12 considers specific issues relating to contract management in Department of Education and Skills PPP projects. The Department welcomes the recommendations identified in chapter 12 of the report. The recommendations are consistent with the policy direction being taken by the Department in relation to overall arrangements for the management of PPP contracts. A significant recent development in this regard has been the move in the course of 2012 to vest responsibility for the management of PPP contracts with the National Development Finance Agency. This takes advantage of the core specialist expertise and skills that have been developed within the NDFA as the State agency responsible for supporting the Government’s overall PPP programme.
Arrangements have been put in place to avail of the expertise of the NDFA through outsourcing contract management for existing and future PPP school projects and to avail of its support in managing issues relating to indexation, benchmarking and monitoring service performance. Ensuring that PPP companies provide quality infrastructure and services on a value-for-money basis is a paramount objective of PPP policy. Ongoing feedback from each of the PPP schools and from Cork Institute of Technology has been largely very positive in relation to the overall quality of infrastructure and services. The Department, with the assistance and support of the NDFA, will continue to work closely with all relevant stakeholders in ensuring that the objectives of the PPP programme in this regard continue to be delivered.
Good progress is being made on the planned PPP bundles referred to in the report. Construction has recently completed on all of the schools in the latest PPP bundle which is schools bundle 3. Schools bundles 4 and 5 are in development, with tenders now received for bundle 4 and the process of assessment of tenders under way. An invitation to negotiate has recently been issued to shortlisted tenders for the Grangegorman PPP development.
In the interest of enhancing transparency around the value for money process, the Department has recently published the public sector benchmarks for schools bundles 1 and 2. It is understood that these are the first public service benchmarks to be published under the Government’s PPP programme.
Chapter 4 of the Comptroller’s report deals with Vote accounting issues across a number of Departments. The chapter includes a section on funding for FÁS training and integration supports and arises from the fact that FÁS, now SOLAS, receives funding from both the Department’s Vote and from the National Training Fund. During 2012, expenditure pressures on the Vote led to the decision to place a hold on funding of FÁS from the Vote and to replace this with funding from the NTF. The report recommended that transactions between the Vote and the fund be more clearly shown in the annual accounts. Second, it considered that greater transparency could be achieved if payments in respect of specific services or programmes were issued from a single source.
The Department welcomed the report’s recommendations and has sought in the draft 2013 NTF accounts to show more clearly transactions between the Vote and the NTF. The Department is also examining the second recommendation in the report, in conjunction with the Department of Public Expenditure and Reform, and in the context of the National Training Fund Act, which provides the legislative basis for the NTF. Both recommendations will also of course be discussed by the Department with staff from the office of the Comptroller and Auditor General.
My colleagues and I will be happy to deal with any issues arising from the Comptroller’s report.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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I thank the Secretary General. May we publish the statement?
Robert Dowds (Dublin Mid West, Labour)
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Cuirim fáilte roimh an bhfoireann ón Roinn. As someone who has been paid for many years by the Department I acknowledge that in general, the Department has been a good paymaster and pay for teachers has always arrived on time. I wish to record that fact and thank the Department.
I have a few questions about general spending. The Secretary General has outlined the amount expended in the different levels of education. To what extent is third-level education funded from the Department and to what extent does it depend on private funding? What changes have been implemented in recent years and what will be the plan for the future?
Mr. Seán Ó Foghlú:
There is a balance of different sources of expenditure for third level, such as the direct Exchequer support which is part of the block grant; the student charge, some of which is paid for by means of the student grant scheme; student fees which are paid on behalf of students but directly from the State; other State expenditures such as research being carried out in third-level institutions.
Robert Dowds (Dublin Mid West, Labour)
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Which might be coming from other Departments.
Mr. Seán Ó Foghlú:
Yes or via the HEA and some research expenditure from the research council, from Science Foundation Ireland and EU funding. Many of the institutions, particularly the universities, are expanding as a result of funding from private sources, to the extent they can do so. The biggest changes over the past five to six years have been the increase in the student charge which is now at €2,500 and it is planned to increase it by €250 in each of the next two years, at which time it will be €3,000. A total of 47% of all undergraduate students receive either full or partial support towards that charge from the student grant system, leaving 53% of all undergraduates who pay the student charge fully themselves. Of all students eligible for free fees, over 50% have some support under student grants.
We have also been reducing the State expenditure on higher education and reducing the numbers of staff employed in higher education. We reduced the grant by 2% three years ago, by 2% two years ago and by 1% this year, with plans for 1% next year. Similarly the numbers of staff are being reduced so there is a decrease in expenditure. There has been a gradual decrease in State expenditure and an increase in the student charge along with increases in the various private funding available to higher education institutions.
The Department has a major higher education strategy under way, one element of which is an overall performance framework for higher education. Each of the institutions made submissions to the Higher Education Authority which met and discussed plans over a number of years with each of the institutions. A report on the outcome of the policy decisions arising is in the process of being submitted to the Minister and hopefully will be published in the near future.
The Department has other work under way. We are looking at the issues related to the future financing of higher education. We are working in co-operation with the Higher Education Authority on a process with a number of elements, such as ensuring efficient use of resources in higher education.
Robert Dowds (Dublin Mid West, Labour)
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I have a related question.
To what extent does the Department monitor the impact changes in funding might have on the quality of third level education being provided?
Mr. Seán Ó Foghlú:
The State primarily engages with the institutions in two ways. On the one hand, the engagement is by way of the performance dialogue between the Higher Education Authority and the institutions, which would facilitate discussion of these types of issue. On the other hand, Quality and Qualifications Ireland, QQI, undertakes reviews of the effectiveness of quality assurance processes within the institutions. In addition, the institutions are implementing their own quality assurance programmes. We also have a programme in place to increase shared services and enhance procurement in order to ensure efficiencies are advanced to the greatest extent possible.
We recognise that there is a challenge within the funding of higher education. In recent years we have seen a decrease in the number of school leavers year on year. We are now at a stage, however, where this has bottomed out. The number of school leavers is increasing and will probably continue to increase for the next 15 years or so. Some 63% of all school leavers enter higher education on an undergraduate programme within five years of their leaving school. If we are seeking to maintain that 63% progression rate as a goal, we will have to look for greater efficiencies within the system and examine other policy options.
The Minister published earlier this week a further education and training strategy earlier which had been undertaken by SOLAS and endorsed by the Government. There is interaction in the issues between the policy on the numbers in further education and training and the numbers in higher education. That is something we will have to examine in the future. We are looking at the development of a national skills strategy which might involve something of a rethink regarding the balance of numbers between further education and training and higher education and training. One example of what we are doing in this regard is our recently completed review of apprenticeships. We have many good ideas about the future of apprenticeship programmes which involve a crossover between further and higher education. We are working on an implementation plan which we hope to complete by the end of June. There is a great deal of demand across further education and training and higher education. We have been working through a time of reducing funding and are looking at options for the future.
Robert Dowds (Dublin Mid West, Labour)
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Turning to capital expenditure, I presume that most of the figure of almost €453 million is accounted for by the construction of buildings and so on?
Robert Dowds (Dublin Mid West, Labour)
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To what extent does the Department control that spending, particularly in the area of primary education? When a school gets the go-ahead to construct a new building or classroom, for example, am I right in saying primary control at that point rests with the board of management, rather than the Department? Is it essentially the case that the Department passes over a tranche of money to the board which uses it to have the new accommodation constructed?
Mr. Seán Ó Foghlú:
The first control we have is in deciding how the capital budget will be spent. We have had to prioritise additional schools to cater for additional numbers. However, we did receive some additional moneys which enabled us to go back to some projects which, for instance, involved refurbishments. This year we have also been able to give some money towards summer works and so on. If we are working on a project which a board of management has responsibility for managing, a process is put in place which would involve the appointment of a design team. The design team will build a tender, based on a specification we provide and with an indication of the typical and expected cost from our perspective. There is that type of engagement with the Department on the issue of cost even before the tender is issued. After the design team has issued the tender, it might have to come back to us to discuss issues such as cost overruns.
Robert Dowds (Dublin Mid West, Labour)
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Perhaps I might clarify why I am asking this question. I cannot go into the details of the individual school because I do not have sufficient evidence, but an allegation was made to me regarding the construction of a new school building which had been given the go-ahead from the Department to the effect that the builder was not employing people according to the regulations. Specifically, the claim was that workers were coming down from the North and getting money in their back pockets. Having conducted some investigations, the problem seems to be that there was no capacity on the part of the Department to investigate the issue because the responsibility was with the school. The point I am making is that this is a very difficult responsibility to put on the shoulders of a board of management, the main concern of which, once it has secured the necessary funding, will surely be to get the building up and running as soon as possible.
I am raising the issue because I do not like to see anybody employed improperly, which can lead to the exclusion of people who are legitimate. Will Mr. Ó Foghlú indicate whether the Department might be in a position to take a more proactive role in these situations? Any individual school will not be in a good position to make the checks that might be necessary. Its concern, understandably, will be to proceed with the building work.
Mr. Seán Ó Foghlú:
We are very conscious generally of the workload put on schools in managing building programmes and have made several changes in this regard in recent years. For instance, we have introduced a range of measures to diversify delivery arrangements for school building programmes. This has involved working with the education and training boards, the Office of Public Works and the National Development Finance Agency, not just on PPPs but also on traditional builds. We have even worked on a couple of occasions with local authorities. It is all about increased diversification in terms of the bodies that can take responsibility for these projects and thereby remove the onus from the schools to ensure delivery.
Taking the Deputy's example as a case in a point-----
Robert Dowds (Dublin Mid West, Labour)
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To clarify, the school in question is a traditional school under Catholic management.
Mr. Seán Ó Foghlú:
In that particular issue several State authorities, primarily the National Employment Rights Authority, NERA, and the Revenue Commissioners, can appropriately investigate where they are of the view that something untoward may be happening. Further to this, we operate a series of random audits and can also initiate an audit at the request of a school if it is concerned that something is going on. We outsource this work to a company called Contractors Administration Services, CAS, which has completed 13 random audits on school and college construction sites, which two more ongoing. As a result of these audits, information on five projects has been referred to Revenue, one project has been referred to the Department of Social Protection and one to NERA. We have different ways to assist schools where such practices are happening. I suggest the Deputy bring the details of the particular case to which he referred to our attention and we will follow up on it.
Robert Dowds (Dublin Mid West, Labour)
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Part of the point I am making is that this type of thing is not something in which a school wants to get involved, its primary concern being to get the building up and running. I appreciate that the education and training board would have the mechanism to check out such things, but in the case of the traditional school under Catholic or Protestant patronage, or even an Educate Together school, there would not be that type of easy facility.
Mr. Seán Ó Foghlú:
We organise delivery through the mechanisms to which I referred for all types of school, not just ETB schools. For example, a large number of new Educate Together schools have been built in recent years under the rapid delivery programme, in which cases the board of management is not as involved as it would be in the case of a traditional build. We are very conscious of the types of issue to which the Deputy is referring, which is why the Department, with the strong support of the Minister, put in place the system of random audits. It ensures we have a mechanism outside of the formal mechanisms involving the likes of Revenue and NERA to address these concerns. If a school has concerns, there are channels through which it can communicate them.
Robert Dowds (Dublin Mid West, Labour)
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The concerns put to me came from people who were working on the site in question and had lost their positions.
Mr. Seán Ó Foghlú:
If a union has a concern, it can approach us. We have direct dialogue with all of the unions. There are a number of ways by which we can learn about things and decide on where we might ask the organisation undertaking the random audit to look. To learn more from the process, we have even asked the company to provide a monitoring service for the full construction of a school from start to finish in order to establish the value added. One of the things about the labour market and the construction sector - the Government announced another stimulus package yesterday - is that the sector keeps changing all the time and new issues emerge. Bonds were an issue last year and it is quite possible that increasing costs are going to emerge as an issue this year on foot of increased demand. Our basic build costs have risen slightly in the past year and we have raised the standard amount for basic build costs. The sector continues to change and we must be as flexible as possible.
Robert Dowds (Dublin Mid West, Labour)
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Therefore, Mr. Ó Foghlú is stating that if a union had serious concerns, it could discuss them with someone in the Department of Education and Skills.
Robert Dowds (Dublin Mid West, Labour)
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Will Mr. Ó Foghlú explain how the €380 million set aside for skills development is used?
Robert Dowds (Dublin Mid West, Labour)
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Yes. It is listed as being for skills development in the outturn for 2012.
Robert Dowds (Dublin Mid West, Labour)
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Yes.
Mr. Seán Ó Foghlú:
The purpose of the skills development programme is to provide opportunities for upskilling and reskilling to meet the needs of individuals and the labour market in line with the overall targets of the national skills strategy. The strategy highlights the fact that in the future upskilling or reskilling will be required in respect of virtually all occupations and sets ambitious targets in that regard. Funding under the skills development programme has been made available to cover administration costs relating to SOLAS, as well as training grants and supports and costs associated with the operation of the ESF.
Robert Dowds (Dublin Mid West, Labour)
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Therefore, it primarily relates to adults.
Robert Dowds (Dublin Mid West, Labour)
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In the context of skills development for primary and secondary school teachers, what level of funding is provided? One of the Department's core aims is to ensure there is a well skilled body of teachers working in schools. How has the funding in this regard changed in recent years and how is it going to develop in the future? I presume there will be a need for a fair amount of investment in this area, particularly in rolling out the alternative to the junior certificate, etc.
Mr. Seán Ó Foghlú:
That is an important matter and we have a range of initiatives in respect of it. The main initiative is the professional development service for teachers, PDST. We also have a national scheme in place which supports in-career development for teachers. In addition, education centres throughout the country organise courses for teachers and enable them to engage in further career development and learning. Across a number of areas we have in place a range of continuous professional development programmes. We fully accept that we have been obliged to reduce funding in this area in recent years. We reduced overall funding for continuous professional development from approximately €23.7 million to just over €19 million from 2008 to early 2013. We made special arrangements and put a dedicated team in place in respect of project maths to facilitate the roll-out of that subject.
Robert Dowds (Dublin Mid West, Labour)
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In a sense, it was obligatory for teachers.
Mr. Seán Ó Foghlú:
Similarly, we have an investment programme in place for the junior cycle. This is a good example of an area in which we would like to be in a position to allocate additional funding. It is certainly one of the areas being raised in dialogue with partners on the increasing demand for investment. We place huge value on investment in the teaching profession and greatly emphasise the need to upgrade it. This is being achieved by means of developments such as the establishment of the Teaching Council, the extension of the original teacher education courses and the amalgamation of the teacher education colleges. The amalgamation process has resulted in there now being only six centres as opposed to 19 separate institutions. In the context of pay, we are seeking to make teaching as attractive a career as possible. Under the Haddington Road agreement, we are in discussions with the unions about making arrangements to try to minimise the casualisation of teaching, particularly at second level. This is a major issue. We have a range of initiatives to support the teaching profession, of which continuous professional development is one.
Robert Dowds (Dublin Mid West, Labour)
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Therefore, the Department is trying to ensure there will be less casualisation in the teaching profession. This phenomenon seems to have grown to a great degree at both primary and secondary level. I presume the position is the same at tertiary level. Casualisation places teachers in a very difficult position over a long period.
Mr. Seán Ó Foghlú:
It is a problem across the board, but it is a real problem at second level, where it can take somebody quite some time to work his or her way towards either a permanent position or a one where they are employed for the full number of hours. Under the terms of the Haddington Road agreement, arrangements are in place for a working group to examine new mechanisms to ensure teachers can have more certainty with regard to permanency.
Robert Dowds (Dublin Mid West, Labour)
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Is the fact that too many primary level teachers are being trained, particularly by non-State institutions, part of the problem? When I was training to be a teacher, there was a good balance between the number of people being trained and the number of jobs available. That does not appear to be the case now.
Mr. Seán Ó Foghlú:
There are a few points to make in that regard. We were very fortunate that the likes of Hibernia College were available to assist in training unqualified teachers, particularly those in the primary education sector. We would not have been able to implement section 30 of the Teaching Council Act, under which all teachers are required to be fully qualified, if such institutions had not been in operation during the past ten years. We are now facing a different set of issues, including what should be the level of supply into the future. Technically, there is an oversupply of teachers. There are more teachers being trained than there are jobs available. We do not have control over the numbers trained in the private sector and fund the training of those who attend public sector institutions. We have asked the Teaching Council for advice in this matter. Hibernia College has indicated that it is happy to engage with us and it is not the case that it is operating to its own agenda. It has indicated that it will be happy to engage with the Department once it has obtained the advice of the Teaching Council.
It must also be borne in mind that there is an international market for people who have qualified as teachers and that certain individuals may wish to move abroad. It is not, therefore, a case of there being a national benchmark in the context of the precise level of supply and demand. This is a complex issue on which we have engaged in quite a bit of consideration. We are very pleased that we have a qualified teaching workforce. We want to provide increased in-career development opportunities for those within teaching. We also want to improve initial teacher education and carry out further work on a range of other issues.
I will ask Mr. Burke to comment on casualisation, a matter on which he has been doing quite an amount of work.
Mr. Pat Burke:
The first step in many of these issues is recognising that there is actually an issue. Collectively, we were probably slow to do this in the case of second-level teaching. Many young teachers in that sector spend quite a few years on fixed-term contracts which do not provide stability or security and which have ramifications in terms of their ability to buy houses, etc. There is also the fact that they may not be on full hours because their services are not required for all of the school day. Steps and measures - one of which involves the ability to redeploy resources - could be taken to improve the position in both the medium and longer term. One of the difficulties in the system - we have made some strides towards improvements in this regard - concerns the stand-alone employer at the level of the school.
If a school ends up in a situation where there is a mismatch between the teachers it has and the curriculum it wishes to offer, that can create a problem for it. In a way we need to create more flexibility in movement in the system to be able to move on the agenda of giving people greater permanency. This is an area, as the Secretary General said, that has been one of the commitments in the Haddington Road agreement and we are working on it with the unions and management at present.
1:00 am
Robert Dowds (Dublin Mid West, Labour)
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I wish to move on to one or two other issues and then I will conclude. Under the residential institutions redress subhead, there is an underspend of almost €32 million due to the lower than expected number of applications that have been finalised by the board. Can Mr. Ó Foghlú give me some information on that and the reason for the low numbers? Was there an increase in that respect in 2013 and how does he see that panning out in the future?
Mr. Seán Ó Foghlú:
We want to complete this as soon as possible and we had been hopeful that we would get it competed late last year or early this year. It is an issue of the volume of cases and working through them as we have the resources in the board. We are hopeful that we will complete the processing of these this year. We have €45.5 million in the budget for that this year.
Robert Dowds (Dublin Mid West, Labour)
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Mr. Ó Foghlú referred to the volume of cases. What volume are we talking about?
Robert Dowds (Dublin Mid West, Labour)
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Basically the board is trying to ascertain the validity of the claims lodged against it.
Robert Dowds (Dublin Mid West, Labour)
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Is there still a problem of getting moneys promised from the various Catholic institutions involved or what is the position on that at this stage?
Mr. Seán Ó Foghlú:
There are a number of different dimensions to that. There was the initial agreement and then there was the call for additional contributions. Under the initial agreement, the outstanding issue is principally the properties issue whereby there are some 20 properties remaining to have their transfers finalised. The Government decided last summer that properties which did not fully meet the standard of good and marketable title required in the agreement would be accepted where the qualification is technical and does not materially affect the valuation of the property. We are working through a number of properties on that basis. Property transfers are complex issues but significant progress has been made given that this is the case and there is continuous engagement with the Chief State Solicitor's office.
With regard to the additional contributions, we have been seeking the additional contributions and the Minister would have met with the congregations to seek the additional contributions and there are a number of offers received. We are working through some of the property issues in relation to those offers and there are some cash offers received and some transfers have been made. At the same time, the view of the Minister and of the Government is that we would wish to have further transfers made and further offers made, but that has not come to fruition.
Robert Dowds (Dublin Mid West, Labour)
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I will leave it at that.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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I call Deputy Collins.
Áine Collins (Cork North West, Fine Gael)
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I welcome the witnesses and thank them for attending this morning. I have a few questions on public private partnerships. I note there was an issue with how these were processed from the point of view of not confirming spending with schools and people being paid without that process being done. Is that still continuing?
Áine Collins (Cork North West, Fine Gael)
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Schools were not responding to confirming various costs.
Áine Collins (Cork North West, Fine Gael)
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I presume there was an audit procedure in place where the school would respond.
Áine Collins (Cork North West, Fine Gael)
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Can Mr. Ó Foghlú tell me what those processes are? Does the Department write to the school?
Mr. Seán Ó Foghlú:
In addition to writing formally to schools on foot of their report, the NDFA keeps in regular contact with the schools and it informs us if there are any difficulties arising. Issues have not been brought to our attention that there is a difficulty now in getting the feedback from the schools.
Áine Collins (Cork North West, Fine Gael)
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Who is the NDFA? I know it is the National Development Finance Agency.
Áine Collins (Cork North West, Fine Gael)
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To what Department does it belong?
Mr. Seán Ó Foghlú:
Given the complexity of the PPPs and the very technical issues that arise in relation to them, we have made a call that we will work as closely as possible with the NDFA and have it undertake particular tasks on our behalf. It is able to keep people with expertise in the technical areas of PPPs together as part of a team. We have found in the Department that people may develop that expertise for a while but then they might move on. In this way, we do not have to restart every time. The NDFA has been of huge assistance to us on the PPP programme, and because of its assistance on that programme, it is even undertaking three bundles of traditionally procured schools on our behalf and organising that for us.
Áine Collins (Cork North West, Fine Gael)
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What is it organising?
Áine Collins (Cork North West, Fine Gael)
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It oversees the management of that.
Áine Collins (Cork North West, Fine Gael)
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The recommendations have now been implemented and there are no payments without confirmation from the school.
Áine Collins (Cork North West, Fine Gael)
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Did Mr. Ó Foghlú look back on previous years to see if any savings could have been made? Obviously, a great deal of payments were made, but I am talking about where schools had not confirmed the payments.
Mr. Séan Ó Foghlú:
We are looking back at previous years in a number of different areas. One is on indexation and one is in regard to reviewing services provided. In a number of cases there would have been challenges to the PPP companies and we would have got some money back as part of that because they did not provide services. There are relatively small issues where the services were not provided for a range of reasons. It is not a major issue. We do not have major delivery problems with the PPP companies. Usually there are particular reasons around why a PPP company has not been able to deliver something, but if it is in the contract, then it is in the contact and we follow through with it.
There is also the issue of when we wish to review a contract for the cost of a particular service and, arising from the recommendations of the Comptroller and Auditor General, we have put in place a more formal process to decide whether we might review the provision by a PPP company of a service and the cost of it. It is a case of swings and roundabouts because, on the one hand, it will cost some money to put in place a review to ensure everything is taken account of and we may have to pay more money as a result of a review. Both sides have to agree to a review. We have put in place a formal process now to come to a decision about whether we have a review in any instance. We have a calendar of dates set out so that we know when the reviews will hit and when we will have the opportunity to do those. In some cases a PPP company may come to us saying that it wants a review but we have to decide whether we want a review at the same time.
One of the issues the Comptroller and Auditor General had raised is that while we made a decision in this regard in one case, there was not documented evidence that we had undertaken that. We are ensuring the work is undertaken and that it is documented.
Áine Collins (Cork North West, Fine Gael)
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Mr. Ó Foghlú mentioned the word "outsourcing". What was the Department outsourcing? It was mentioned in Mr. Ó Foghlú's initial address.
Mr. Seán Ó Foghlú:
I am trying to remember that. The work the NDFA do for us is outsourcing on our behalf. We would have a number of areas of our work where we are looking at the possibility of outsourcing. There are a range of areas across the Department. The one I mentioned was building compliance.
Áine Collins (Cork North West, Fine Gael)
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Yes.
Mr. Seán Ó Foghlú:
We do not have that expertise or staff in place to go and visit sites, so we would have put in place an arrangement where we have a service provided to us.
One of the advantages of outsourcing with something like that is one has a service that one only uses when one needs it, so one does not have to keep the staff employed. Another example of outsourcing which is not directly by ourselves but is undertaken by SUSI is the outsourcing of a number of elements of the service.
1:10 am
Áine Collins (Cork North West, Fine Gael)
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I am very much aware of it. I was not sure what area Mr. Ó Foghlú was talking about. That makes a lot of commercial sense. Where are we on the programme in terms of the stimulus package for schools that was announced in 2012?
Áine Collins (Cork North West, Fine Gael)
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Have they come in at cost?
Áine Collins (Cork North West, Fine Gael)
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That is good to hear. Does a percentage of the training levy that everyone pays go to the national training fund, NTF?
Áine Collins (Cork North West, Fine Gael)
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Is that €297 million?
Áine Collins (Cork North West, Fine Gael)
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Is the money spent on training teachers or adults?
Áine Collins (Cork North West, Fine Gael)
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Is it done through SOLAS?
Mr. Seán Ó Foghlú:
It is primarily SOLAS through the education and training boards, ETBs. Some of the former FÁS training centres were transferred in January and the remainder are to be transferred in July. There is also a little bit of funding for training grants to industry through the IDA and Enterprise Ireland. Many of our major initiatives such as Springboard, ICT skills and the labour market activation fund have been funded through the national training fund.
Áine Collins (Cork North West, Fine Gael)
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Are they the activation services that are provided by the Department of Social Protection?
Mr. Seán Ó Foghlú:
No. The Department gives us the money. It is estimated for within the annual Estimates process. It is another element of funding for the Department but it must be focused on the aims and objectives of the national training fund. We cannot decide to spend extra money on the NTF without approval from the Department of Public Expenditure and Reform.
Áine Collins (Cork North West, Fine Gael)
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I am just trying to understand where it goes on the ground.
Áine Collins (Cork North West, Fine Gael)
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Does the MOMENTUM programme come under it?
Áine Collins (Cork North West, Fine Gael)
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Does the Springboard programme come under it?
Áine Collins (Cork North West, Fine Gael)
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Is SOLAS under the remit of the Department?
Áine Collins (Cork North West, Fine Gael)
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What area will that cover? I assume it is linked to enterprise and job creation.
Mr. Seán Ó Foghlú:
We announced a new further education and training strategy earlier in the week. Effectively, we will have a range of different initiatives funded by SOLAS, the majority of which is funded now via the education and training boards with effect from 1 July when all the training centres transfer over. They will be funding what was previously further education and training, which took place in the training centres but also the training that was outsourced by the training centres. A good proportion of the FÁS budget is on outsourced training such as the money in the community training workshops. A range of initiatives across further education and training will be funded by SOLAS. The big advantage of having such an organisation is that we will have a coherent approach for funding, policy and regulation of the further education and training sector to parallel the arrangements in place with the Higher Education Authority in the higher education sector. SOLAS will not be like FÁS in terms of organising the national delivery of programmes. To a large extent it will work through the ETBs which are organising that. That does not mean that SOLAS will not be able to organise some programmes centrally itself.
Áine Collins (Cork North West, Fine Gael)
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Will the ETBs deliver SOLAS training?
Áine Collins (Cork North West, Fine Gael)
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How will the training be evaluated in terms of how many jobs are created, or business growth or impact? Is there a particular package?
Mr. Seán Ó Foghlú:
MOMENTUM, for example, was tendered for nationally by organisations which receive more money depending on their success in placing people in jobs. As part of its strategy, SOLAS has announced that it is looking at a performance framework for deciding on funding. I talked about what it is doing in the Higher Education Authority with the report to us on its approach to performance funding. In future, that will lead to higher education funding linking to outputs and outcomes. We are moving into the same area in further education and training. Over time, a precise approach will be developed in further education and training which focuses on that. We started with MOMENTUM but we will roll it out further. No decision has been made on the nature of the processes but the overall policy approach has been decided and we will look at it further.
Áine Collins (Cork North West, Fine Gael)
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I assume SOLAS will be the overall body to deliver training for apprenticeships. That is an area that has not been addressed for many years. In society we have people who go on to higher education or those who leave school and do not go any further. There is a great need, in particular in the tourism industry and catering, that has not been addressed. Is that part of the plan?
Mr. Seán Ó Foghlú:
Apprenticeships cut between further and higher education. We had an independent expert report which was submitted to the Minister at the end of last year and the Department is leading the drafting of an implementation plan in consultation with both SOLAS and the Higher Education Authority. The plan is to broaden the range of areas where apprenticeships will be provided. It will require the formal engagement of industry with education and training providers. That is part of our plan. It will have potential for involvement with different sectors of delivery. Those sectors will have an opportunity to come forward.
Áine Collins (Cork North West, Fine Gael)
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Will there be an evaluation programme?
Mr. Seán Ó Foghlú:
We will be setting up new mechanisms and we will have to see what works and what does not work. Apprenticeships are not the only way in which we can combine on-the-job and off-the-job learning. Across the board in further education and training, especially for people who are primarily moving into the labour market, a mix of on-the-job training and off-the-job training must be a key part of it. We will have to build an evaluation framework into our implementation plan for apprenticeships.
Áine Collins (Cork North West, Fine Gael)
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I agree that training on and off the job is necessary but at the moment there is a big gap in the area. There are many non-Irish people working in the tourism sector in particular, which is a concern for us.
I heard on the radio yesterday morning that the Irish education model is 22nd out of 38 in terms of teaching problem solving in national school and secondary school. Most of our teaching is based on rote learning for exam purposes, which is a problem. How will we address the issue?
Mr. Seán Ó Foghlú:
Dr. Andreas Schleicher was with us yesterday. He was also on the radio yesterday morning. He referred to the PISA study, which is a study of 15 year olds. The last set of general outcomes from that was in December of last year. It showed that our performance in mathematics generally was consistent with our performance in previous studies, other than in 2009 when there was a dip. Effectively, we have been standing still on mathematics, but within dimensions of mathematics there was a more detailed study, and problem solving is a particular area where we have difficulty. It is consistent with the changes we are putting in place with project maths in post-primary schools which is seeking to address the type of issues that have been identified as being relatively deficient in the Irish school-going population. We have put a huge effort in project maths and the upskilling of teachers who teach maths in post-primary schools. The same is true of the new curriculum and the new junior certificate and leaving certificate subjects. It is also consistent with the overall approach we are taking on junior cycle reform where problem solving is an issue across the curriculum, not just in maths. We are very conscious of the messages we are getting from the OECD. That said, there are areas where we are doing relatively well.
For example, the improvement in science, which has shown up in the programme for international student assessment is very positive. It reflects the changes we put in place in the junior cycle curriculum ten and 15 years ago, and we have gone up a good deal relatively in science. There are different messages but there is a particular issue within mathematics that identifies the serious issue regarding problem solving we were-----
1:20 am
Áine Collins (Cork North West, Fine Gael)
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And it was not only in mathematics because we can now get information from Google at the touch of a button. It is about being able to solve problems across a range of sectors, not only in ICT but in the way we will move forward with various public partnership projects. It is across a wide range of sectors, and not just in mathematics. I would be concerned about that because we do not want to be behind the curve as the market requires that skill, which has happened in the past. In recent years we have seen that we have a major issue with ICT programmers and so on.
Mr. Seán Ó Foghlú:
I agree with the Deputy, but we have the third highest proportion of science and technology graduates in the European Union. We have the highest proportion of graduates under 35. We have been relatively good at turning our higher education system towards skill needs, but the extent of demand for ICT is huge, and we have to become better at that. We are not in a bad position internationally, but I agree with the Deputy on the problem solving aspect.
Áine Collins (Cork North West, Fine Gael)
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My concern is not about ICT skills in the future but the broader sector in which we want to be ahead of the market before the market tells us we are short of skills. I am very concerned with regard to tourism also, which I see as a growth area. As one travels around the country one can see that we are far behind where we need to be in terms of the level of service agreement. There does not appear to be any level of training going into that market. If we are viewing it as a growth area, and it created 22,000 jobs in the past year, I am not sure that many of those were skilled jobs from the Irish sector, so to speak. That is a major issue for the future and we should examine it before it comes looking at us, as it were.
Áine Collins (Cork North West, Fine Gael)
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Great. I thank Mr. Ó Foghlú.
Kieran O'Donnell (Limerick City, Fine Gael)
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I welcome Mr. Ó Foghlú. I want to touch on a few issues. Mr. Ó Foghlú provided the committee with an item of correspondence about County Wexford Vocational Education Committee, which effectively is about something that has resulted in the waste of taxpayers' money to the tune of €420,500. It relates to a situation whereby the VEC moved to a new building in Ardcavan Business Park, in Wexford, on 1 July 2006 and left an existing building which was costing it €67,465 per annum in rent. That lease was first taken out in October 1984 but it still had eight years to run to 21 October 2014. It initially let the building it vacated where it had its headquarters for a two year period from July 2006 to June 2008 for an annual figure of €51,000, which effectively was €102,000. It could not secure a tenant post that event. It continued to try to sub-let the building and sub-let a portion of it from 2012 to October 2014, which is a two year period, at a rate of €7,000. That brings the total between 2006 and 2014 to €119,500, yet the rent it paid to a landlord on the premises was €540,000. The net cost, therefore, in terms of waste of taxpayers' money was €420,500.
How did that situation arise and how was it allowed to continue? Do similar situations arise with regard to other VEC buildings, now education and training boards, ETBs, in various areas under the control of Mr. Ó Foghlú's Department? This issue is hot off the press, so to speak, in that it is a letter of 13 May this year and it indicates what this committee is about, namely, appraising the use of taxpayers' money. How did it happen?
Mr. Seán Ó Foghlú:
I wrote to the committee on this a couple of days ago in response to the Deputy's query. This matter was drawn to our attention as a result of the Comptroller and Auditor General's audit. We checked with the VEC and the VEC assures us that it did seek our approval but as I said in our correspondence, we cannot find that approval. A check is going on but I did not want to leave the correspondence unresponded to in terms of getting back to the Deputy. I said in the correspondence to the committee that, without prejudice to the outcome of the process in terms of finding out what went on, at the time the VEC made the decision to move, it was making the decision to move with a view to renting out the property it had. Obviously, that did not continue after the first couple of years. It is very unfortunate that it did not continue after the first couple of years. I do not think it could have foreseen that would be the case given that the economics changed at the time.
Kieran O'Donnell (Limerick City, Fine Gael)
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Would it not have been the norm, if it had an exposure for eight years, to ensure it got a long-term lease in place? Even apart from that, the annual rent it was paying on the premises was €67,465. The rent from the sub-let was only €51,000. That is a shortfall of €16,500, and it was looking at an eight year exposure. Even with that there was €131,000 of taxpayers' money going down the drain. It is an old-fashioned principle that public servants should deem it to be their own money, but in the situation that arose in this case - I am not personalising it but merely making the point - from a business model it was flawed from day one because it would cost the taxpayer €132,000. There would be a shortfall of €16,500 per annum anyway. Was it required to seek approval from the Department?
Kieran O'Donnell (Limerick City, Fine Gael)
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Did it seek approval?
Kieran O'Donnell (Limerick City, Fine Gael)
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What is the average cost of a teacher to the Department?
Kieran O'Donnell (Limerick City, Fine Gael)
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What is the average cost of a special needs assistant, SNA, to the Department?
Kieran O'Donnell (Limerick City, Fine Gael)
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That is seven teachers and effectively 12 SNAs. My point is that the Department should be about front-line services. It is not about bricks and mortar unless it is a school. What does Mr. Ó Foghlú propose to do about this issue? Do any similar situations arise within the Department or the VECs? It is an enormous sum of money?
Kieran O'Donnell (Limerick City, Fine Gael)
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That does not take inflation into account.
Kieran O'Donnell (Limerick City, Fine Gael)
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When inflation is taken into account it is probably over €500,000.
Mr. Seán Ó Foghlú:
I do not disagree with the Deputy. It is a matter of concern to us too, and we want to find out what happened. We will check with other ETBs to determine whether they have vacant properties on which they are paying leases. The ETB should have approached us earlier to let us know but, on the other hand, I accept that there is a difference between the rent it was getting and the rent it was paying, and that there was a differential-----
Kieran O'Donnell (Limerick City, Fine Gael)
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It was a flawed model from day one.
Kieran O'Donnell (Limerick City, Fine Gael)
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With due respect, if a VEC is moving premises resulting in a shortfall of the order of €16,500 per annum - a sinking fund - the basic principle, regardless of whether it is approved, is flawed.
While I do not know the circumstances, this was in 2006 and the VEC was paying a rent of €67,465. If the VEC could only get €51,000 in rent in July 2006, which was at the peak of the Celtic tiger when rental values effectively were out of control, why was the VEC paying €67,465 for the rental of a premises? Was it overpaying? For how long was it paying that level of rent? Can the Secretary General answer that question for me?
1:30 am
Kieran O'Donnell (Limerick City, Fine Gael)
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On the face of it, one could make the case that as it was, the Department was overpaying for the building because the VEC was only able to get €51,000 on re-letting the premises at the height of the crazy tiger years. As part of the Department's due diligence, I ask the Secretary General to examine how a rate of €67,465 was negotiated on the rental of the premises. Why could the VEC only get €51,000 for it? How did the VEC justify moving to a new premises when the rental it was receiving on the old premises did not even cover the rental sum it was paying? Was there a break clause in the contract? On the whole, this appears to me to lack due diligence. Effectively, the locks were on but no one had a key to open the lock to get out the front door. Instead, the VEC climbed out the back window and effectively continued to pay the rent for the premises. Can I take it that the Department will look into this and report back?
Kieran O'Donnell (Limerick City, Fine Gael)
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I will follow on with an issue that frequently comes up on the ground in respect of young teachers, that is, of temporary posts arising and young teachers feeling they are not getting a fair shake of the dice in terms of being able to apply for or get these temporary positions. What is the policy within the Department to ensure that young, unemployed teachers are given some sort of priority in terms of filling temporary posts, sick posts and so on?
Kieran O'Donnell (Limerick City, Fine Gael)
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I do not in any way question the skill sets of the retired teachers. However, in a situation in which one person is retired and one also has a young person, married or single and perhaps with a family, who is unemployed, the question is-----
Mr. Seán Ó Foghlú:
We have taken a number of steps. We have reduced the number of retired teachers being employed and issued information notes requesting schools to prioritise unemployed teachers over those in receipt of a pension. We set out a set of measures that schools need to follow for the appointment of temporary teachers. This requires schools to prioritise them. We have also reduced the pay of retired teachers returning to teaching to ensure the reward was not there for people. Consequently, a number of different steps have been taken and there is a significant financial disincentive for teachers to retire. We also monitor the number of days being worked by retired teachers and it has declined. These are the arrangements that are in place. There are much reduced instances of retired teachers being employed by schools for longer than ten days. That number has fallen as a result of-----
Kieran O'Donnell (Limerick City, Fine Gael)
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However, it is still at the discretion of the principal in the school.
Kieran O'Donnell (Limerick City, Fine Gael)
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Obviously, there will be cases in which, because of various circumstances, a certain person is taken on. What I really am driving at is the policy - once again it comes to transparency - that all things being equal, priority is being given by the Department to young, unemployed teachers with regard to temporary placements.
Kieran O'Donnell (Limerick City, Fine Gael)
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I have two brief final questions. I refer to the issue of public private partnerships, PPPs, and the Department having in place a work programme. Obviously, as members can see on the ground, there has been a population explosion, particularly among the younger age groups now coming into primary school and, by definition, into the secondary schools thereafter. It has recently been reported that the Department's sister Department in the United Kingdom has concerns regarding the level of profit being taken out of PPPs by the private element. I have two questions in this regard without wishing to question in any way the professionalism of various contractors. Is the Department satisfied with the robustness of the PPP model in respect of the taxpayer getting proper value for money? Second, is the Department satisfied with regard to school bundles? As the numbers of building companies of scale in Ireland have reduced, will the Department have proper competition with regard to tenders coming in for PPPs in its next round of bundles? These are two linked questions.
Mr. Seán Ó Foghlú:
They are good questions we must keep on asking ourselves. I am aware that the value for money question about PPPs is an issue that concerns this committee greatly and we have taken and are taking a number of steps to ensure this is the case. The publication by the Department, at the committee's request, of the public service benchmark, PSB, for school bundles 1 and 2 is an example of the Department attempting to increase transparency and understanding regarding what we are doing. We also are reviewing some of our bundles to ensure the value for money and a review of that is under way that we hope to conclude by the end of the year. In addition, Cork Institute of Technology also is undertaking a review. It is something we must keep under constant review. We work out the public sector benchmark in all its different ways. Again, when I say "we", it is with the support of the National Development Finance Agency, NDFA. We then must ensure that when the tendering takes place, it comes in under that, in order that we know there is a value-for-money aspect to it. Were a number of tenders to come in as a result and were the outcome tender to be above the PSB because of an under-supply of builders willing to get involved, we would have concerns. It is not a concern we have at present.
There are several aspects to the market, including the availability of funding and so on. Obviously, things are slightly better now on that front than was the case two or three years ago. As the Deputy is aware and as we discussed here previously, we unfortunately were obliged to cancel our three third-level bundles. However, we now are well advanced on planning with our fifth schools bundle and the Grangegorman project also is advancing very well. We are pleased about the value for money so far but we must keep it under review. We think it is useful to have some of our building programme delivered through PPPs. We must be careful and do not wish to be completely involving PPPs. Given the increasing school population, we do not want every PPP to be for a new school that needs to open for demographic reasons. There are several different reasons for this, one being that a PPP does not suit new schools if such a new school is going to open gradually because it will not be used fully in the first year. Another reason is that there can be particular deadlines whereby one must have the school opened by a particular day. Consequently, were there some slippage over financing, this could mean it would be necessary for some other solution to be put in place. We like a balance of new schools and perhaps amalgamated schools. We are taking that balanced approach in respect of bundles 4 and 5 and certainly will be considering the possibility of further bundles, obviously in consultation with the Department of Public Expenditure and Reform for the future, as we are going into a capital review.
The Deputy also referred to the equity returns and obviously we are conscious of the issues in the United Kingdom. Again, we discussed them here last year as well. We must be careful because if one procures something, one does not get behind what is the profit for the person from whom one procured it. However, one must be careful, if there are not enough people in the market, that the profit-taking may be too high.
I suppose that is something that we have to keep talking to the NDFA about. It is in that balance. Some of the issues in the UK involve the state taking some sort of an interest in it, but that seems to make the whole thing very complicated and involve an up-front investment from the state, which is one of the issues that this approach avoids. It is a balanced approach.
1:40 am
Kieran O'Donnell (Limerick City, Fine Gael)
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Returning to the issue of Wexford VEC, now Wexford ETB, given the sheer scale of the wastage of €420,500 of taxpayers' money, I would hope that something immediate could be done on this. That level of drain of funding every year over that eight-year period in total defies logic to the ordinary persons up and down the country looking in who fund-raise for their schools, parents councils and boards of management. Suddenly, they see this drain of funding. It cannot be allowed to continue.
The Department needs to conduct due diligence of that area. Obviously, there is great work being done by VECs as well. Side by side with that, this is a management issue which is a wastage of taxpayers' money about which I would feel strongly. It should never have happened in the first place. I am sure the Secretary General would agree that there is a need for controls. Given that he cannot find the documentation on it, I would ask him to review the internal controls that operate within that sector and the linkages to the Department to ensure that it never happens again. Can I take it that he would have concerns about the type of controls that were in place at the time this contract was entered into?
Mr. Seán Ó Foghlú:
I share the Deputy's concerns about the taxpayers' money being wasted. I obviously have concerns about the expenditure. To say I have concerns about the controls, I would prefer the full documentary evidence to see what the documentation is but, obviously, I have concerns that it happened.
Kieran O'Donnell (Limerick City, Fine Gael)
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Will the Secretary General come back to the committee on it?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Is there a special section in the Department that oversees the VEC sector, or did in the past?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Would that have been there over all of the years of the existence of VECs?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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How does it function in terms of the accounts and governance of the VECs?
Mr. Seán Ó Foghlú:
Can I just comment? We also now have SOLAS coming into the mix. I will park the fact that SOLAS has come into the mix for the further education and training funding.
The primary function of that section is to allocate - the teachers are allocated separately - the non-teacher pay to the ETBs. To ensure that the governance arrangements are in place through the internal audit systems and so on, we have just now passed new legislation on the ETBs which has now strengthened the responsibilities in relation to internal audit and we have issued guidance on internal audit to the ETBs arising from that, and we have made a number of changes in relation to the ETB audits arising from a number of findings of this committee and from the work of the Comptroller and Auditor General.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Looking back over the years starting with this year, would the Secretary General say that the internal audits in the Department have been effective?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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I refer to the Department's oversight of those VECs. The Department has an oversight of each VEC. I suppose I am asking how detailed is that oversight. What does it go into? Does it look at the accounts? Does it look at the governing body, committee or whatever it might be described as?
Mr. Seán Ó Foghlú:
The first thing I would say, before we talk about the Department, is the primary responsibility is with the committee itself for its overall structures. They are the ones who are responsible. They have to make a statement of return and they have to submit their accounts and so on.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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To the Department?
Mr. Seán Ó Foghlú:
To the Comptroller and Auditor General and to the Department. They have to make all of those returns and they are the ones who have the primary responsibility. We cannot police them but we have to assist them. The main assistance that we would have is by the putting in place of the shared service in terms of the internal audit system and we have improved that as a result of the findings that we have had in place, and we have improved it further in the legislation.
In parallel with that then, we would have an overview of the accounts as they come in. That is not a detailed analysis. It is the responsibility of the ETBs themselves. They have to report to us as issues come up in their internal audits. They report those to us and we discuss those with them.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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In terms of the Cork VEC, because we have a number of pieces of correspondence, did the Secretary General ever examine the membership of the Cork VEC?
Mr. Seán Ó Foghlú:
The membership of the VEC is set out in statute. The membership of the VEC itself was filled in a manner inconsistent with the statutory provisions. We did examine the statutory provisions for the membership of ETBs as we were amalgamating the VECs and we now have new arrangements in place for the membership of the Education and Training Boards which include an initial number of local authority members which then gets augmented by other people who are included, and we are going through that process at the moment with the elections.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Over the years, once it was in line with what was set out, could the members of the VEC have been there for years?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Would it be uncommon for, and would there be anything unusual about, someone serving on a board for 21 years?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Is it the case, for instance, that board members of Cork VEC be members of Cork Institute of Technology?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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I refer to the general membership, not only local authority members.
Mr. Seán Ó Foghlú:
The RTC sector was under the aegis of the VEC sector until 1991 and they were legally part of the VEC sector. Then they got their independence in the legislation of 1991 and 1992, and there are a number of nominees of the VECs who are board members of the institutes of technology, as far as I can recall.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Has the Secretary General ever examined specifically the Cork VEC and the Cork Institute of Technology, CIT?
Mr. Seán Ó Foghlú:
We are reviewing the membership of the institutes of technology at the moment. We have legislation, which is being drafted following consideration by the education committee, about the composition of the membership of institutes of technology and we are also going to be doing the same with the universities. We have just done it with the ETBs as well.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Would it worry the Secretary General in this case that a considerable number were members of both organisations? That would not be good governance, would it?
Mr. Seán Ó Foghlú:
They do not relate to each other. Given that the then VEC nominated members to the board - I think that is the case, as far as I know, with all of the institutes of technology - there are a number of members of the local VECs who are members of the institutes. There is no longer the same statutory relationship in terms of funding or anything like that. It could assist in the policies in the area, in terms of joining up. At the moment, we are in a process of trying to ensure that there are clusters in place in higher education and if they shared knowledge, it could have a positive aspect.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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From accounts that the Department would receive, perhaps the Comptroller and Auditor General could clarify this, who can tell or comment on, for example, the number of board meetings in Cork VEC or CIT that were attended by the members, how much expenses did each one get, whether there is an overlap in terms of being a member of one and being a member of another, and the expenses attached to them?
Is that a matter for the Secretary General?
1:50 am
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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How much was claimed in expenses in either one of these organisations? Can Mr. Ó Foghlú demand that information from the organisation?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Can Mr. Ó Foghlú give me that information? Can he state who was on the boards over the years? What are the names that were common to both? Can he outline the payments and expenses arrangements?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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My second question, which again concerns County Cork VEC, concerns the number of human resources cases over the years. How many of the VEC's staff have taken cases against it, for one reason or another, in respect of their employment? How much did it cost? How many settlements were made out of court and how many were made through the courts? Is there an ongoing issue regarding staff members pursuing the VEC? Is this a matter for the Department? Can he seek that information?
Mr. Seán Ó Foghlú:
As the Chairman knows, there has been much discussion about County Cork VEC at this committee. We have a draft report from the Comptroller and Auditor General in that regard. We have been involved in detailed dialogue with the CEO of the ETB in that regard and previously with the acting CEO of the VEC. Therefore, we are following up in detail in relation to the cases that are under way. We would be updated as various cases are concluded. Cases can arise-----
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Across the report-----
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Would that report cover legal fees, etc.?
Mr. Seán Ó Foghlú:
We can certainly get information. We are in detailed dialogue with the VEC, or the ETB, about the issues that have come up and have been as a result of the issues that were raised here and in other places.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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I have a general question relative to that. I would have believed, given that there is a special section in the Department overseeing the VECs and institutes, that an audit committee, board or oversight committee would be reporting odd things to the Department. Is that not the case? Do the officials not regard it as part of their duty and good governance to report something that arises directly to the Secretary General?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Would Mr. Ó Foghlú have had many negative findings from the reports or audits reported to him over the years that would have raised alarm bells as to how the whole sector was being managed and staffed?
Deputy O'Donnell raised the issue of one particular VEC and the letter that the Department was discussing with him. However, other issues arose — in regard to Wexford VEC, for example — related to legal fees and other matters associated with issues raised at VEC meetings. I have looked at a number of the figures involved and must say I was shocked by the amount of money being paid out in legal fees and in dealing with these internal issues. I would have believed that the audit committee or internal audit process would have identified this and that the issues and figures would have been reported to whoever is responsible for the sector in the Department.
Mr. Seán Ó Foghlú:
We have issues reported to us as a result of the internal audit system. On the legal fees, we communicated to the authorities that they should be tendering for legal services. We have actually re-communicated that this week. We have got updates from those concerned in that regard. We have reviewed the legal fees being charged and have corresponded with the committee in that regard.
We must remember that the ETBs themselves, with their own corporate governance structures, are the entities that must decide for themselves. We cannot be on top of them with all their decision-making processes but, when we are informed about an issue, we can consider a collective approach, as was done regarding legal fees within the ETB sector. We cannot be on the shoulder of the ETBs while they are making a decision on what point on a scale a member of staff should be on. I refer to where a person might appeal a wrong decision through the relevant appeals process and obtain a settlement. We have not the capacity to be the top of every decision every ETB makes, but we-----
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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I refer to the big decisions, the ones that are a source of contention, be they associated with legal fees, accountancy fees or other big issues concerning the human resources problem. These are the types of issues I would have believed would have been made known to the Department so action could be taken. I ask these questions because of the volume of letters on the various issues concerning VECs that we have received in the past few years. It seems that the sector requires someone to be on its shoulder while it gets its house in order.
Mr. Seán Ó Foghlú:
That is one of the reasons we have reviewed and updated the ETB legislation. On the Chairman’s advice, we put in place arrangements. We get the same letters as the committee. We met at least one individual who had concerns about what was happening in an ETB. We would have listened to what they had to say and have required that there be an external chair of an internal audit committee, for example. Thus, responsibility is being taken.
The key issue is to ensure the ETBs have best-practice procedures in place so they can take ownership and make decisions themselves. Thus, there can be no way in which they can avoid considering the issues, and they can inform us as they proceed.
There is an opportunity for the Comptroller and Auditor General to raise issues and for us to take action in that regard. We are told of the major issues that arise in the internal audit reports. That is part of the requirements of the work of the VSSU.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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There are major issues in that regard that have to be dealt with. I will not go into them because we have to wait to see what the Comptroller and Auditor General’s report will tell us about some of them.
Mr. Seán Ó Foghlú:
We have discussed some of those here before. We agree that there certainly have been some control issues in relation to County Cork VEC. We have been working with the VEC and the ETB on resolving those over the past two years. The committee should not believe we are not working extremely hard with the ETB to resolve these issues. We had discussions with the CEO of the ETB on these issues on quite a few occasions over the past few years. We have had a large number of internal meetings to seek to obtain updates about each of the areas that was being identified. It is not that we are just waiting for somebody to write to us and tell us something has gone wrong. We are working very closely with the ETB in ensuring the issues are resolved and addressed and to learn from systems issues that arise as a result.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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How are the institutes of technology managed in the context of oversight?
Mr. Seán Ó Foghlú:
Primary oversight of the institutes of technology is within their own structures. They have their requirements in relation to the code of governance. They have to have a system of internal financial control and sign off on that. They have a shared service in relation to an internal audit service. Arising from that internal audit, there are common messages and approaches which can then be communicated to all of them. The HEA is now the primary body that works with the institutes of technology. It examines the accounts and raises issues. Even as late as this week, the HSE has written to the institutes of technology about whistleblowing, for example, and it has asked them to ensure that they put arrangements in place to deal with any issues that may arise prior to the completion of the legislation currently going through the Houses.
The HEA is the primary body in working with the institutes of technology and we work with it.
2:00 am
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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CIT would seem to have quite a number of members of its board who have served for a long time who are common to the VEC board. That should be examined in the context of their roles because there is a mention of the contract manager in terms of the work on PPPs. I am asking the Department to look at the board and its make up, but I also want to know who the contract manager is and what the role involves.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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What are the qualifications of the contract manager?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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What is the contract manager overseeing?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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What is the value of the PPPs?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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It is a fairly onerous responsibility.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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From that point of view, I would like to know what qualifications the contract manager should have, and in this, case what qualifications the contract manager actually has. Mr. Ó Foghlú might let me know.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Is it one salary? If the contract manager is employed elsewhere within the institute, is he being paid for being a contract manager also?
Mr. Seamus McCarthy:
I am satisfied that it is a staff member on a salary with that responsibility. We raised a question around the level of experience of the individual in managing the projects. There is a risk for the college if the individual leaves or retires. It is important with multi-annual projects which that there be continuity of handling, management and knowledge. A robust system must be in place. We drew attention to that requirement.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Is Mr. McCarthy saying there is not a robust system in place? Is the Department worried?
Mr. Seán Ó Foghlú:
Building on that, the Comptroller and Auditor General raised these concerns with us and we are very cognisant of them, as is CIT which is looking at possible changes. Like us, it is considering having certain aspects managed by the NDFA, given the care that needs to be taken in respect of over-reliance on a single individual.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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There were recent newspaper articles on portraits organised by CIT. Did the Department investigate the matter?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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What was the explanation?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Was it good value for money?
Mr. Seán Ó Foghlú:
We have to be balanced. While it is not a decision I would take in the Department, institutes of higher education have a history and tradition which they are trying to develop. They find different ways of recognising and developing them. While it is not a decision I would make, it is a call for the institute to make.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Was there travel involved in the work?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Can we find out for completeness?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Quite a lot of information on CIT was sent to me as Chairman of the committee which I will make available to members and the Department. It is too detailed to go through here and in any event, it would be unfair to ask questions, given that the Department is not aware of it. I will have it passed on and the Department might provide a general comment in response.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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I want to ask about the school transport scheme, about which I have asked before and many articles have been written. While I do not expect the Department to comment on any of the legal aspects of the scheme, it is worrying to see so much being written about it. I am anxious to know from a public accounts point of view whether the Department has the necessary oversight of the millions the taxpayer gives to Bus Éireann for the scheme. Would the officials like to comment on the articles? Is the Department investigating what is going on?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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The procurement.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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No; I am asking about the Department's oversight of the lump of money that goes into Bus Éireann.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Yes. I am referring to what we have been reading in the newspapers. It is about Bus Éireann procuring individuals or companies to provide transport.
Mr. Seán Ó Foghlú:
Obviously, I am aware that some of these matters have been referred to An Garda Síochána and that Bus Éireann representatives were with the Joint Committee on Transport and Communications last week. We received a letter in December 2013 from the Committee of Public Accounts on allegations relating to the awarding of contracts. This is a matter which also arose in the submission and affidavits around the other legal case. First, it is usual and appropriate for an allegation against an employee to be investigated by the employer in question. This relates to an allegation concerning an employee. The Chairman's committee requested a copy of the report when completed and it was provided. The committee sought our views in that regard and we made it clear that it was usual and appropriate that an allegation be looked at. We noted that a three-person investigation team had been established to investigate the allegations. On that basis, no evidence could be found to refer to the Garda.
There were further media reports and Deputies Leo Varadkar and Alan Kelly, the Minister and Minister of State at the Department of Transport, Tourism and Sport, respectively, and the Minister of State, Deputy Ciarán Cannon, asked for a report from Bus Éireann. The report was received by us and I understand sent to the committee. Arising from this, it appears to us that the process undertaken by Bus Éireann was robust. I understand the Joint Committee on Transport and Communications has referred all of the material to the Garda. If other issues arise, it would not be appropriate for us to take further action. If money was paid inappropriately, it would be a matter for the Garda. We do not see additional value in us becoming involved.
2:10 am
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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That is why we will not get into it here.
Mr. Seán Ó Foghlú:
In respect of the system, there are a number of elements to that. Obviously, this is an issue that the committee asked us to reflect on when we were here last year talking about this. We are confident in the robustness of the system of the systems we have in place but we have been seeking to enhance them and we are open to further enhancements. There are a number of different elements.
One could probably break down school transport into three elements for the sake of discussion and an overview. We have the contracted out services that are between €100 million and €110 million. We have the delivery by Bus Éireann of services, which is €30 million to €35 million. We have the administration charge, which I think is €15 million or so. We have different elements to assure us about each of the different parts. The overall approach is that we have an arrangement in place with Bus Éireann that we feel provides good value for money. We had a serious value for money review in place into which Bus Éireann fed information but was not part of and we had a wide range of recommendations arising from that in respect of the rules of the scheme and to bring about efficiency. Arising from those arrangements, while demand has gone up, particularly for special education needs services and particular routes, the costs have come down. State expenditure peaked at €186 million in 2008 and is now down around €171 million. The savings have been bigger than that although we have increased charges. The savings are bigger because there are additional services and there is a high number of services in place for children with special educational needs.
In reflecting on enhancing the assurances available in respect of each of the three areas, we must go back to what we concluded in the value for money review that the vast majority of the provision should be outsourced but that there should be a certain proportion retained by Bus Éireann partly for a reserve partly to ensure that the competition would maintain and partly because it brought down the costs as a whole for Bus Éireann as a transport organiser if it was providing some of the services. We requested Bus Éireann to maximise the amount that is outsourced in the scheme and that has been gradually increasing. We have asked Bus Éireann to put in place review procedures to ensure that all of the procurement arrangements are in line with appropriate national and EU requirements. It updated its tendering arrangements in 2011. We can provide the committee with details about this. This was discussed in detail by Bus Éireann with Oireachtas Committee on Transport and Communications. It updated its procurement arrangements in 2011. In addition to that, we are looking at increased assurances via its internal audit that it is taking the appropriate approaches.
This committee had a concern about the Comptroller and Auditor General's access to expenditure under our Vote. We reflected on that and discussed it with our partner Departments. We understand that there were ongoing parallel discussions at the Committee of Public Accounts. We concluded that we could see no reason the Comptroller and Auditor General would not be fully free to follow the school transport money into Bus Éireann if he so wished. Bus Éireann has agreed to that so there is no difficulty with Bus Éireann. Clearly, there has never been an issue about Bus Éireann coming or not coming to this committee because as far as I am aware, it was not asked but it would certainly be more than willing to engage in that regard. There has been an opening up of the arrangements. We have written to the Comptroller and Auditor General about this and discussed the arrangements with him in advance of concluding on them.
In respect of the administrative charge, the committee will clearly be aware that we undertook a particular review of this and got external consultants to undertake it for us. It raised issues. The decision we made arising from that was to focus on the rebate element of that. We are focusing on having annual discussions with Bus Éireann and getting a rebate in respect of the charge. We have had a rebate of over €10 million over a number of years. That is among the savings about which I have spoken. We have a three-yearly independent review of the nature of the administrative charge. We will put in place arrangements for the first of those reviews in the near future. There was much discussion about profit and we had a discussion about that at the last meeting. Bus Éireann has assured us that it does not make a profit. It does keep a reserve, the expenditure of which it discusses with us. It has provided more details on that reserve and how it is being spent to the Oireachtas Committee on Transport and Communications. We would be happy to talk that through but there is no money returning to central Bus Éireann for expenditure on other areas. The money within the school transport scheme is sealed and its annual accounts demonstrate that. Those are different elements to ensure that overall, a value for money approach is undertaken.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Is putting it out to tender an option?
Mr. Pat Burke:
The first thing is that the State has no legal obligation. This has been definitively decided by the High Court. That issue is subject to appeal to the Supreme Court but as of now and obviously on the assumption that the High Court prevails, the State has no legal obligation to put the matter out to tender. One then has an option. The State can obviously make a policy call to tender. Frankly, there are arguments that can made for and against that. The current arrangement has probably the significant strength that everything that is generated within the school transport scheme must remain within it. If there was any element of surplus in any given year, it is ring fenced entirely for expenditure on school transport.
The current arrangement also has the second significant advantage that the Department essentially has a demonstrated capacity to take money from it via the rebate. That was something that in the final analysis was within the capacity of the Department to impose. Those two characteristics are enormously valuable. There is then a call to be made as to whether the State would forego those characteristics and tender the scheme. If one was to ask my view, I would not be convinced of the value of that.
When we look at the scheme in its totality, there are essentially three core elements to it. The first is the €110 million, which is about two-thirds of the money. That is flowing through Bus Éireann to private contractors. There is no evidence available to me that a better deal would be achieved with anyone else running the scheme because there are very robust tendering processes underpinning it and the market essentially decides the rate there. That is the first element of the scheme which I am essentially saying would be pretty much neutral in any tendering context.
The second element is the Bus Éireann direct provision - ball park €30 million to €33 million. There are good strategic reasons for Bus Éireann direct provision. It is an advantage for Bus Éireann to have a fleet available that can step in in any set of circumstances if the market is not available to provide the service, if there is evidence of any type of cartel behaviour in the market and so on. The fact is that this element of provision has been declining in any event but there is a very strong argument that it would be extremely injudicious of the State to have this scheme entirely reliant on a range of contractors around the system without some capacity to underpin it in the final analysis in the event of failure of provision. What I am saying is that in respect the second element, albeit the fact that it is the smaller of the two I have mentioned, there is no overwhelming strategic reason tendering would be of any great benefit. I am offering it as my judgment.
The final element is the transport management charge. That is travelling at about €15 million at the moment. The Department has a demonstrated capacity. If it feels at any point that this transport management charge contains any form of surplus that is unwarranted, it has a demonstrated capacity to intervene and extract from that transport management charge, via rebate, an amount which it might determine.
While it is a policy matter for the State to decide whether it would tender the scheme, that judgment call would have to be made in a very considered way and in the round. If it were to tender, I suggest it might not tender that which exists. It might choose to tender for a strategic fleet of last resort and separately for an overall management of the scheme. It is a very major issue which would require deep analysis.
2:20 am
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Thank you. While it is a complex area in terms of the transport that is provided, it is not so complex that the Department could not put together some sort of tender arrangement whereby it would at least ask the market. Everyone, whether in business or Departments, is being encouraged to ask for a number of tenders. Given that of all the issues are being discussed in the media and elsewhere, it might be much more transparent if the Department could say it had tendered, explain the service it is receiving, outline the issues, explain how they are being dealt with and reveal the cost. Bus Éireann might win the tender again or might be the only company to submit a tender. I would have thought the Department would consider it to determine what such a system costs. Is Mr. Ó Foghlú suggesting that the Comptroller and Auditor General can examine the cost of school transport?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Is that a new arrangement?
Mr. Seán Ó Foghlú:
Reflecting on what the committee asked us to do, we talked to other Departments about how the State can get assurances in its different ways. The Comptroller and Auditor General is a backup method because the main responsibility is on the Department and on me as Accounting Officer. We see no reason that the Comptroller and Auditor General could not do that and Bus Éireann agrees. As a semi-State body, Bus Éireann has the power not to accept it but because it agrees, there is no difficulty. If, for example, the Comptroller and Auditor General wishes to examine the effectiveness of procurement by Bus Éireann there would be no difficulty with that.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Does Mr. McCarthy know he has that job?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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I commend the Department on this because there are many other examples of money going into the system. Mr. Burke has been open with us about the complex nature of it and Mr. Ó Foghlú has also been open with us about change. It is no harm that this would happen and it is good for it to happen by agreement.
My last question is on residential institutions redress. The Department funds organisations that look after those who were abused in institutions. Is it one organisation or a number of organisations? I think the headquarters are in Cork. Have all the property deals of years ago been sorted?
Mr. Seán Ó Foghlú:
Over the years we funded a number of services such as survivors' groups for victims of abuse. We signalled our intention to remove funding from these from 2011 and the funding ceased in 2014. We have recently established the new residential institutions statutory body, Caranua, which is responsible for advising former residents of its services and a range of new services can be funded for residents through the body.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Historically, the Department funded various service organisations. How did the organisations account for that funding? Did they have to submit accounts to the Department each year? Have they bought properties using that fund and, if so, who owns them?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Could Mr. Ó Foghlú give us a note on how much they received, the accountability process that was in place for each of them, whether they purchased properties and, if so, whether they are still in use and what will happen to them?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Will Mr. Ó Foghlú tell us about the other properties?
Mr. Seán Ó Foghlú:
Of the initial property transfers, 20 have not been completed. We have a Government decision that we do not need the absolute good and marketable title, because the properties are complex. We are working through the transfer of the remaining properties. Good progress has been made and we hope to complete several in the near future, but there are difficult issues regarding a small number of properties. All of the properties are in use by the State.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Could the Department send us a note on that?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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The work of both the commission on school accommodation and the inquiry into Kilkenny City Vocational School has been concluded. The overall cost of that is noted. Is it an ongoing cost regarding Kilkenny City Vocational School?
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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What was the total cost of it on conclusion?
Mr. Seán Ó Foghlú:
The cumulative expenditure was €327,825. Returning to what we discussed earlier, we had a process in place in the VEC sector that required a sworn inquiry. Those were the terms and conditions of staff members. Given that we have aligned the process for education and training boards, ETBs, with the other processes in place for teachers so they no longer require the sworn inquiry process, those issues should not arise in future. We had a commission on school accommodation which undertook various work, and a couple of years ago we stood it down. We had a subhead for it and we used money under the subhead to encourage the divesting of schools. We have created a different subhead for that so it will not come under the school accommodation needs subhead, which will no longer exist.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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The total cost of such expenditure on commissions and inquiries up to 2012 was €1.16 million.
Mr. Seán Ó Foghlú:
While that must go into the accounts as a formal statement, the Commission to Inquire into Child Abuse and the Residential Institutions Redress Board are the two main ones we had along with the review committee. The commission on school accommodation was an executive agency of the Department rather than a commission of inquiry. It undertook a number of reports about school provision. It produced a report on the number of schools needed in certain areas but we updated it when we got our new systems that tell us where people are in receipt of child benefit so we know where we need to build new schools and do not need that process.
John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Thank you. That brings our meeting to a conclusion.
Is it agreed to dispose of Vote 26 and Chapter 12 of the 2012 Annual Report and National Training Fund 2012? Agreed. Chapter 4 will be further examined until a later meeting. I thank the Secretary General and his officials for their attendance.