Oireachtas Joint and Select Committees
Thursday, 23 November 2017
Joint Oireachtas Committee on Social Protection
Money Advice and Budgeting Service Restructuring: Discussion (Resumed)
I welcome Ms Ita Mangan, chairperson of the Citizens Information Board, and Ms Angela Black, chief executive officer. I will shortly afford the witnesses an opportunity to make an opening statement, but before that I wish to draw the attention of the witnesses to the fact that by virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of their evidence to the committee. However, if they are directed by the committee to cease giving evidence on a particular matter and they continue to so do, they are entitled thereafter only to a qualified privilege in respect of their evidence. Witnesses are directed that only evidence connected with the subject matter of these proceedings is to be given and they are asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person, persons or entity by name or in such a way as to make him, her or it identifiable.
Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the Houses or an official either by name or in such a way as to make him or her identifiable.
If people have mobile telephones, please turn them off. Ms Mangan will now make her opening statement.
Ms Ita Mangan:
My understanding is that the committee wants to talk to us about the cost-benefit analysis which was published by the board and is on our website. All of the issues regarding the general principles of changing the structures of MABS and citizen information services, CISs, were thoroughly discussed in this forum last February. I acknowledge and accept that this committee does not agree with the decision of the Citizens Information Board. Nevertheless, the statutory responsibility for the delivery of the services and the manner of the delivery rests with the Citizens Information Board. Our decision of February stands and we are well into the process of implementing it.
The cost-benefit analysis we procured at the request of this committee is in my view a technical economic document which speaks for itself. While we never considered that financial considerations were the major reason for the reorganisation we intend to implement, nevertheless, this cost-benefit analysis as it happens provides backing in a financial sense for the decision we have made but I would emphasise again that the decision was not based on financial considerations. As I have explained here previously, it was based on good governance, good value for money and the prospect of improving services. I am happy to take any questions.
I thank Ms Mangan for coming in today. Ms Mangan said that the report provides backing in a financial sense. I have many detailed questions on the financial side of it but I will leave those until later. I have some general questions to begin with. I understand Ms Mangan stated as her reason for not attending the previous meeting of this committee that she had come in, laid out the entire position and told us exactly what was happening. My understanding is that what is happening currently is that there is a huge reorganisation of the two services under way. I would imagine that we, as the relevant Dáil committee, should be kept informed about the progress of that reorganisation. I believe we are entitled to discuss it with Ms Mangan and for her to discuss it with us as to how that is going etc. I do not believe that is in any way unreasonable.
We are told that the consultants' report was endorsed by Ms Mangan's board. I am speaking for myself, and the other members can speak for themselves, but my interpretation is that when the committee requested this consultants' report, it did not imagine they were looking for the Ten Commandments or something like that, that it could be just handed down and that nobody would be in a position to discuss any aspect of it, interrogate it or question it in any way. My information is that at a meeting on 20 September, the report was presented to the board by the executive, that the board requested that it be discussed and interrogated - they had various questions on it - and that that was not allowed. Contrary to what we have been told, the ordinary members of the board did not endorse this report and they recommended that that fact should be stated when the report was published, which it was not.
I ask Ms Mangan to comment on the statement on page 6 of the report which, to paraphrase slightly without losing anything of the sense of it, states that the CIB has been requested by the Department of Employment Affairs and Social Protection to take action. That seems to fly in the face of the excuse we got from the Minister to the effect that she has no legal right to interfere with any deliberations of the board in this regard and that it is only a day-to-day matter, with which I disagree. She says she is legally precluded from intervening in any way, but according to the report itself, she is not in any way legally precluded from requesting a massive, fundamental reorganisation. If we take what we are told, and if we take the Attorney General's advice, we are now in the position where, under the law, the Minster can request a huge and fundamental reorganisation, but if she changes her mind, she does not have power to revoke that. It is either a very peculiar law or a very peculiar interpretation of the law.
There are various references in the report to governance and oversight issues. They are not spelled out. I would have expected a report of this nature to spell out the alleged governance and oversight issues and how precisely they will be dealt with. I have read the report very carefully. I cannot find that. There is a good deal of confusion in the report, as I understand it. For example, there is reference to a principal agent problem and misaligned incentives between the board and the people on the ground.
The assumption is of course made straight away that the misalignment comes from the people on the ground. Broad, general statements are made such as those claiming that these local companies value their independence. It is not a question of local companies valuing their independence. The people for whom the taxpayers are providing this service value the fact that the present institutions are independent and this is where any misalignment comes from. The other thing I notice in this report is that the analysis is discussed as being opposed to a no-change option, a classic example of setting up a straw man just so as to knock him down again. There was no suggestion from any quarter, including from the organisations themselves, that a no-change option was the only alternative to reorganisation. The organisations themselves recommended very specific changes. What we are comparing here, then, are things there is no point comparing because nobody is in favour of a no-change option.
I have had communication from the trade unions representing some of the staff in these organisations. They have informed me that they have recently been contacted by KPMG in respect of the current reorganisation and requesting some detailed information which, according to the unions' legal advice, is contrary to data protection. The unions are very clear on this. If the legal advice is that this information is contrary to data protection, what steps does the board then propose to take in this regard? Will it withdraw this request? It has also been brought to my attention that views articulated at a recent board meeting seemed to indicate that development managers would not be expected by the board to carry out information provision. Part of the cost-saving mentioned in the report, in fact, is that information managers would do just that and yet the board is apparently not of this view.
I would like to have these preliminary matters clarified.
Ms Ita Mangan:
First, Deputy O'Dea should not have any information about what took place at a board meeting on 20 September. If, as he suggests, he has such information then that means that a member or members of the board have spoken out of turn. The minutes of the board meeting will be published in due course and I do not intend to break the code of conduct for State boards by discussing the internal workings of the board of which I am chair just because some other board members may have done so. It is quite unacceptable for a board member to speak to anyone outside of the board with regard to what happened at a board meeting when the minutes of that meeting have yet to be either approved or put up on the Internet. We put our board minutes up online within a week or so of approval and, as it happens, the minutes for that particular meeting are not yet online. The Deputy's information clearly comes from a source who ought not to have spoken to him. Let us be very clear on that to begin with.
Ms Ita Mangan:
These minutes were only approved in the last few days because the subsequent meeting only took place last week. The minutes will be up shortly but are not up now. What I am saying to the Deputy is that it is unacceptable that he has been made aware of the internal workings of the board and that I will have to take some action on this basis. It is unacceptable to me as chairperson that anyone on that board should speak to somebody on the outside about the internal workings of the board.
Ms Ita Mangan:
We cannot have a situation in which we are implementing a decision of our board while every single aspect of that decision is being questioned by a parliamentary committee. We have the statutory responsibility to implement the decision. The executive is bound by the decision of the board and it is currently implementing that decision. While I absolutely accept that this Oireachtas joint committee has an oversight role, I simply do not accept that it has a role in every detailed aspect of the implementation of that decision.
I will move on to the other issues. Deputy O'Dea drew attention to the fact that the cost-benefit analysis report points out that there was a request from the Department of Employment Affairs and Social Protection. Both this committee and the Minister can request that we do something but neither has the power to ensure that we do so. I happen to be a lawyer myself and my understanding is that the Minister does not have the power to intervene directly in the affairs of the Citizens Information Board, CIS, other than on very specific issues. It is the Oireachtas, however, that is the lawmaker. If Members of the Oireachtas decide, as lawmakers, to change the law then we as citizens and as members of boards will of course implement that law. It is the Members of the Oireachtas who make the law so if they wish to change the law on this matter, then by all means they can change it. It is not up to us to do so; it is up to them.
The Deputy is critical of a number of the terms in the report. I sympathise with this as I do not like some of the terms myself, but they are standard economic terms. This report was carried out by a professional economic organisation and uses standard economic terms that come from the Department of Public Expenditure and Reform guidelines on how services are to be assessed. They simply are what they are: standard economic terms. I accept that they are not part of common language but when a professional economic body is asked to carry out this kind of exercise then it has to use the terms that are accepted in the economic sphere, be it lawyer-speak, doctor-speak or whatever else you might like to call it. What it is is economic-speak.
In response to the other issues raised, I want to say quite clearly that the people who are using the services of CIS and MABS will be in no way affected by this change, a point I made repeatedly the last time I was here. The only change taking place here is in governance and not in the delivery of services. I hope, in fact, that there will be a change in the delivery of services in the future, only because I hope to be able to improve that delivery. With regard to the no-change option mentioned by the Deputy, there was no agreement among the parties concerned as to what any other option might be. One can carry out economic analysis from here to eternity and we did in fact consider various options other than the one that we decided upon. I have never suggested that what we decided upon was the Holy Grail, but we have decided upon it and we are now going for it. We have carried out the economic analysis on that.
I agree that opposition to the reorganisation is coming from some of the boards rather than the staff of the organisation. These boards have not been in agreement on an alternative to what is currently in place. I am certainly not going to start getting involved in trade union negotiations but I make the point that what KPMG is doing at present is going through the legal processes around what is known as the transfer of undertakings - protection of employment, TUPE, legislation and that this requires that it gathers all of the information on individual employees. I also point out that as all of the personal information involved here is redacted, there is no question of a breach of data protection. It would be impossible to carry out a transfer of any undertaking, be it in the area of commerce or of government, without going through the proper channels for TUPE. TUPE is the legal mechanism by which undertakings are transferred and it is a process that has to be gone through to change the structures. Many big companies in Ireland have gone through this process without data protection ever having been raised as an issue. It is not an issue in this instance.
I welcome Ms Mangan in this morning but I have to say that I am deeply concerned by her attitude towards this committee, particularly as displayed in the letter she sent to us in response to our request that she come in and talk about the cost-benefit analysis. She writes in the last line of that letter that she cannot see what benefit could be derived from the attendance either of herself or of the chief executive, Ms Black.
This attitude stinks. There was an exhaustive process carried out by this committee, with a thorough examination of the proposed changes. We published a comprehensive report, which seems to have fallen on deaf ears. I wish to put on the record that I think it is very concerning. The fact that the Citizens Information Board, CIB, could not or would not even submit an opening statement in advance of this meeting this morning is regrettable. In the contributions to us at this hearing, witnesses said that the opposition to these changes seemed to be coming from board members, not staff on the ground. That is totally contrary to the evidence that this committee has heard. It is also contrary to what I have found, particularly during my engagement with the Money and Budgeting Service, MABS, offices and staff across the State, who are not just concerned, they are fearful. We have heard evidence that volunteers have walked away from offices that had provided excellent services to the community. Ms Mangan must rectify this.
I wish to raise the issue of the last board meeting. It was said that the minutes of that meeting have only been signed off on in the last couple of days. Was the cost-benefit analysis signed of on by the board at its last meeting? Was there any opposition from board members to the cost-benefit analysis? Surely we do not need to wait for that information to be put on a website. Surely our witnesses can provide information now on whether the minutes have been signed off.
I have a couple of specific questions on the cost-benefit analysis and I hope the witnesses can provide some answers. The rationale for the proposed re-organisation states that the CIB had been requested by the Department of Employment Affairs and Social Protection to come into line with best practice. What concerns did the Department raise with the CIB, and when were those concerns raised? The rationale also states that the current structures are resulting in a poor use of resources at local level. Where exactly is the evidence of that? If the witnesses have that evidence, can they please let us know?
There were also set-up costs of €1.9 million. That is an estimate. How can those set-up costs be justified, and how do they compare with initial estimates given to this committee in our hearings? In addition to the initial costs, I ask the witnesses for a breakdown of the additional annual running costs under the restructuring.
I have some more questions that I think are important, if the Chair will bear with me for a couple of minutes. The cost-benefit analysis projects costs over an eight-year period. It is very difficult to understand these projections, let alone make any sense of them. Is it now accepted that the restructuring will not be cost-neutral? Having regard to the substantial additional cost to the Exchequer, what additional benefits will accrue to the end user? Why did the consultants not consult with anybody other than the CIB? Consultations with existing service providers would have been very beneficial. Can the witnesses elaborate on how a figure of €14.97 million can be achieved and 50% of managers' time can be freed up through restructuring? What work are they doing now that they will not have to do? Will there be no requirement to manage the local offices?
The cost-benefit analysis suggests that the only additional cost will be the employment of 16 new regional managers, at yearly salaries of roughly €65,000 each, plus pay-related social insurance, PRSI, contributions and pensions, etc. Can the witnesses confirm that no additional staff will be required? Will these regional managers incur any additional costs other than their salaries? The cost-benefit analysis suggests that there will be no additional cost.
I will leave it at that for the moment. There are other questions that I will hopefully have an opportunity to raise.
I welcome the witnesses. I absolutely respect their authority. They are bound by statute to implement the views and recommendations of the board. However, they are before this committee now. Has the voluntary aspect of these organisations, and the role that volunteers played over many years, been taken into consideration? Has that formed part of the cost-benefit analysis? If voluntary input within the organisation is lost, how will the organisation replace those people? Has there been an analysis of those costs?
I think it would be fair to say that if the CIB rents offices, it is likely to get space at reduced rates to deliver services. Has an analysis been done on that? Renting in a changed environment, will the CIB have to pay the market rate? Has an analysis been done in that regard?
Ms Ita Mangan:
The vast bulk of the questions that Deputy Brady has asked were addressed at the last meeting. We outlined all the background papers in detail and gave copies to the committee. This included all of the background details of how the decision was reached. We covered all the issues about regional managers. We covered more or less every question that has been asked by Deputy Brady here this morning. As I already said, I am not going to talk about the board meeting, because it is contrary to the code of conduct on state boards to talk about board meetings outside of the board meeting, and I do not intend to break that code. I have already explained that to Deputy O'Dea.
Addressing deputy Carey's issue on volunteers, I have no evidence that volunteers are walking away. There are two sets of volunteers involved in delivering our services. One of these groups consists of the volunteers who are members of boards. In the case of MABS, the service is entirely professional. The boards are voluntary, but the actual deliverers of the service are all employees. Some of those boards, I think about 4 out of 51, actually do the management themselves, in the sense of paying the staff and so on. In all the other cases, it is the staff who do the administration. One of the things that will improve when we undertake this re-organisation is that there will be centralised administration, so that the staff will be able to advise people on their money problems, rather than spending their time on administration.
The other group of volunteers that people are concerned about are those who volunteer to provide information in Citizens Information Board services. There are no similar people in the MABS services. In fact, tomorrow Ms Black and I, with the Minister present, will be presenting awards to volunteers of long standing, because we value their input. We have seen no evidence that any of the volunteers in that category are in any way concerned about the re-organisation because in general, they liaise with the staff of the Citizens Information Services and provide the services when required. The change in governance will not make any difference to them. They will simply be responding to a different voluntary board, because the new boards will all be voluntary as well. All we are doing, in effect, is reducing the number of boards from more than 90 to 16. The participants in those boards will all be volunteers. There will not be an affect on services, or and issue around volunteers at the Citizens Information Board losing out. As I have said, the volunteer staffing of MABS is entirely on the board side.
Deputy Carey was critical of our attitude.
I am absolutely sure that I cannot see the point of having a detailed discussion on what is a very technical document given that at the previous hearing, we provided all of the information and then commissioned this document because the committee requested it. As I said already, and I keep repeating, we were not doing this for financial reasons. We were doing it for other reasons, mainly governance and improved services. As the committee will see, the cost-benefit analysis actually provides that there will be a financial improvement for the Citizens Information Board when this reorganisation is implemented but there is a six to one benefits-cost conclusion in this report. We could discuss forever the details of whether the savings would accrue in year one or year eight but in all honesty, I do not really see the point of it.
Regarding Deputy Carey's point about the rent, we pay rent at commercial rates virtually everywhere. There are a few places where we have access to offices that are other public sector offices. We will still have exactly the same arrangement. There will be no change in any of that.
Could Ms Mangan clarify one point for me because she touched on it a few times? She spoke about the cost-benefit analysis actually proving there would be a cost benefit, which was necessarily not what the Citizens Information Board set out to do but was pleasantly surprised. It relates to a point made by Deputy O'Dea. Is that effectively development managers providing front-line services? Is this the change in working roles?
Ms Ita Mangan:
No, I do not think so. This report is about the entirety of the change and the entirety of the change involves reducing the number of boards from 93 to 16. All of the boards that currently exist cost money. The 16 boards will also cost money but, obviously, they will cost a great deal less than the 93 we have. I keep repeating that the real benefit is that the people who are currently providing money advice services, for example, which are very badly needed and needed on a far more widespread scale that we are able to provide at present, will be able to spend all their time delivering services not providing administration because the costs of administration will all be centralised and there will be significant savings in all of that.
I have very quick questions because I am brand new on the committee and do not know the history and legacy of all this. I often go on first impressions and my first impression is that there is a huge irony in having the chairperson of the Citizens Information Board being very reluctant to give information to those elected by the citizens. That is my impression of it. I understand what Ms Mangan is saying, which is that this KHSK document is very technical and that it is one of economic-speak, which is like lawyer-speak and doctor-speak. If that is the case, and I have not read it, I will have real difficulty reading it if that is what it is full of. An explanatory document attached to it would be very helpful not just to Deputies and Senators but to those at the front line of delivering the services. That is just my view. Could Ms Mangan tell me about KHSK because she also mentioned KPMG? Are they the same? Is KHSK a branch of KPMG? I have never heard of KHSK before and am just asking the question. It may have been asked of Ms Mangan previously by other Deputies in the past but it strikes me as quite an unusual selection. Did the Citizens Information Board put it out to tender? Why was KHSK chosen?
As somebody who is on the ground and has been talking to MABS services in Dublin South Central, my observation is that the concern about this restructuring goes beyond the members of the boards. It extends to the staff and is an issue about which the wider community which avails of the services is concerned. They are not kicking up a stink and will not have a revolution and I doubt they will upset the Citizens Information Board's plan but there is a concern that is wider than that indicated by Ms Mangan. If this concern runs deep and is widespread, naturally, information about minutes will leak. We do not live under Joe Stalin and people do talk.
Ms Ita Mangan:
I am not reluctant to give information I can give in the public domain. We came in here in February and gave every background document. This has been going on for years. We gave every background document to it. This committee disagrees with our decision to ahead with the reorganisation. I accept that. This committee is entitled to disagree with it. However, we have the statutory responsibility and are going ahead with the reorganisation. This committee asked us to have an economic or cost-benefit analysis done. We went out to tender in the normal way. This company, which, to be perfectly honest, I had not heard of previously, tendered for this contract. It is not part of KPMG. It is a reputable firm of economic consultants and this is the form that a cost-benefit analysis takes. I accept that it is difficult enough to understand. I think I understand it myself but it is not an easy read, any more than any other cost-benefit analysis would be an easy read. However, it is what this committee asked for, it was properly procured, the normal procurement considerations were taken into account and the company in question won the tender. It is as simple as that. I cannot say any more about it than that.
The interaction between Citizens Information Board staff and the staff of the various services would suggest to us that, in general, the staff are actually quite well-disposed towards this - although I am sure there are some who are not - because, among other things, it greatly enhances their career prospects. They will be able to have opportunities to progress through the different services. At present, each member of staff is employed by a small organisation. When this is implemented, they will have a much wider possibility of progressing through the organisation so all in all, this is very good for staff. There is no question of any staff being changed from their current position if they do not want to be changed so it is a good option for staff.
We are concerned. Staff do have concerns. They would not be coming back to us if they did not. We are not lying to Ms Mangan. Staff have concerns and I do not know how they will be addressed and how they are being addressed. I am a trade unionist and there are ways of negotiating but I do not think they are concerned about their own jobs. I think they are concerned about the delivery of the MABS services. That is my impression.
I do not want to go over the same ground. I would simply note that it is not a matter of the committee simply disagreeing with the decision of the Citizens Information Board. It is that we raised concerns about the public interest, including the concern that an appropriate cost-benefit analysis had not been done. I will only touch on the two other issues because Ms Mangan has raised them. They are the questions of good governance and improvement in services. It seems that the only area where any potential improvement in services is being posited is if there is a freeing up of local managers to carry out more front-line work. I will come back to the question of whether that improvement in services might have been agreed in others but that is a very narrow proposal in terms of improving services. In terms of governance, the beginning of this cost-benefit analysis stated that concerns were raised by internal sources such as the Department of Social Protection, which, again, seemed to be a major influencer, and the Comptroller and Auditor General that this is a highly inefficient structure that does not optimise the use of available resources. We did request and were provided with documentation and I thank the Citizens Information Board for sharing documentation with us. We saw nothing from the Comptroller and Auditor General that suggests that office had a concern with the existing structure. It was very clear that anything we saw from the Comptroller and Auditor General related to the under-resourcing of internal compliance at the Citizens Information Board. That seemed to be reinforced by the comment in Ms Mangan's introduction to this new document where she spoke about difficulties coming to the fore as the number of staff in the Citizens Information Board reduced in recent years. It seems that it was the issue of internal capacity that was being flagged by the Comptroller and Auditor General.
Even though the terms were no-change, something nobody has looked into, there is a little bit of moving around. The report's cost benefit analysis talks about no-change but then throws in a hypothetical compliance unit that would cost €433,000 as something that could be done. This is no-change plus a compliance unit. When one says there is to be no-change, and then adds in a change, one is actually talking about an alternative. It is described in a couple of places as an alternative. Let us put the €433,000 compliance unit as an alternative. It is mentioned in the beginning of the report in respect of the costs but disappears in terms of the benefits. It really should have been followed through if it is an alternative. It should have been followed through as an alternative to which the restructuring should be compared, throughout this full document. Let us keep that €433,000 compliance unit figure in mind.
I want to dive in to the figures. I do not believe we have a problem with the language. I do not believe that we are intimidated by the economics. We have a concern around the fact that the logics in place here are flawed and inconsistent, and a real concern with the fact that the figures double up and sometimes do not add up. I shall not going to spend time on the key point at the beginning but I might come back in later on the wider question of accountability, which I believe is crucial. I shall dive in to the figures. The section on costs shows a figure for set-up costs of €1.94 million. Within that there is some talk-----
On page 13, in respect of the assignment of premises, a figure of €727,545 is given but it does not really address the concern that Deputy Carey rightly raised that there are cases where the organisation is not paying a market value rent and a very significant example is the extraordinary high value that is given in the discounted level for the premises in Dublin for the Dublin citizen information services, and in particular the very high profile property in O'Connell Street. There is a concern there about whether the board assume these favourable and preferential rates and costs for property will be carried through in the new structure. This seems to be an assumption. If this was not the case it will be a further significant cost in set up. I do not want to spend too much time on that.
I will now turn to the running and operational costs. The operational costs are estimated in the report at €7.47 million over eight years. That is €1.25 million additional operational costs every year. Added in is the €9.4 million cost for the proposed restructuring. It is not an inconsiderable amount. It is quite reasonable that this committee - and perhaps other committees in the future such as the Committee of Public Accounts - would want to know how this money is being allocated and spent. This €1.25 million is the cost of the proposed restructuring, but the board has previously told the committee that a compliance unit, which would do the minimum, would cost €433,000. The board's proposed restructuring is costing three times the cost of introducing a compliance unit that would satisfy governance concerns.
When we consider the costs that are not figured, with regard to the 16 new regional managers the report states "it is assumed ... that no travelling or other expenses would arise". Will these regional managers never visit local offices? Is it good governance if we have no travelling expenses and no assumption of travelling from these regional managers to all of the local offices? Can we say that is good governance? Will the board members of these companies not travel for longer distances?
The section of the report that deals with the cost, to reduce the €1.25 million, we see a very extraordinary assumption. I need to know about this because it is a very unusual move. On figures for the HR bill, which may be a certain amount, we see that income tax, PRSI and USC are to be taken out. Is it the case that miraculously, these items that go from payroll are suddenly no longer costs, that they are in fact benefits as it goes back to Revenue and the Exchequer? We do not know what tax reliefs or tax allowances people are using. It is a very unusual practice to take a direct payroll cost and just try to subtract it from the equations. This is very important because it appears a number of times in the report; costs become benefits, benefits become costs and they are swapped around. This is what I meant by doubling up on how things are calculated.
In the final calculations the report puts a compliance unit, not required, in as a saving but it is not happening at the moment. If we remove that cost, and do the calculations properly, and even allowing for the savings on board member expenses, audit fees, legal and professional fees, this restructuring is still costing €923,000 per annum. This is still more than twice the cost of a compliance unit.
There are a number of concerns but I want to move to the section of the report on the benefits of the restructuring. It is extraordinary, highly unusual and not normal economic practice that when the report looks at the benefits it switches to an entirely new economic frame. The report looks at the reorganisation from a socio-economic frame. It is an extremely unusual practice to have two completely different methodologies for each half of an equation. I wonder if Ms Mangan can answer this when we come to it. It is extraordinary. If the report was to use this socioeconomic frame when it looked at the costs I imagine that there would be many, many socioeconomic costs - which this committee has heard outlined and raised as concerns - that could be brought through. The report looks at three key figures within this socioeconomic frame. I refer the committee to page 25. The three key benefits under the socioeconomic frame, and the case being made for value for money and the cost benefit, are extraordinary. Ms Mangan was asked about volunteers. A reference to volunteers does appear in the report because the time given by volunteers - which anybody can see is a benefit to the organisation in respect of board members - is now flipped around. The report says it will be a benefit to society in not having volunteers and by losing all these volunteer hours. There is absolutely no capacity to say - and the report authors are in no position to say - what may happen to the people who are volunteering when they go out in to the world, freed from the arduous duties of contributing to the important work they do. We do not know what they will do and they may, for example, never volunteer again because they may be disheartened by their experience. That is not the main concern. It is, however, useful that the report quantifies the value of board members' voluntary contribution. That quantified value is €4.92 million, which is lost. We need to go right back to the section of the report on costs and say that now there is a cost - the loss of €4.92 million - in voluntary contributions by volunteers board members. It might not be as full as that because there will potentially be some board members in the new boards. If we leave it, however, at the €4.92 million per annum - or even €5 million - we are suddenly right back to a situation where the restructuring is costing us close to €2 million. In that case we would nearly be at four times the cost of a compliance unit.
I will address my final two points. It is crucial because we are here to discuss the cost benefit analysis.
I want to come to the conclusion. I will be briefer when addressing the other two questions, but they are important. The reduced volunteer time is a key issue. On the new salaries, it is really unusual that having first of all said the payroll does not count the report says that by paying people it is somehow a benefit to society.
As a result, those who compiled the report have managed to make some of the €7 million cost of the new salaries disappear on the basis that the money is paid to people. If I buy something in a shop, it is of benefit to the owner but I have less money because I have paid for what I bought. Extraordinarily, the new salaries are included as a benefit even though they represent a cost.
In the conclusion to the report, it is noted that the position needs to be monitored and reference is made to the 50% increase in front-line availability and an information provision availability on the part of development managers. That is the only solid figure provided. The €14.9 million figure assumes 50% new availability but the narrative of the report says that we could look at other assumptions. In other words, it could be 30% or there might be no efficiency gain and there will be no freeing-up of time in the context of the provision of front-line services. The 50% can be questioned because it is envisaged that 16 regional managers will take up the work of 50% of 42 posts - namely, that of 21 people - and deal with any compliance issues for Citizens Information Board centrally. There is a huge amount of work that is supposed to be taken on by these new regional managers. Then there are the terms and conditions of the existing development managers. Is information provision included in their terms and conditions? I know that Ms Mangan does not manage them directly but she cannot assume that this work will be taken on by them. There is a concern in this regard. How solid is the figure of 50%? Can Ms Mangan confirm whether she expects that 50% of front-line time will be freed up?
A huge amount of front-line work is currently being done by volunteers. As we discussed earlier, 1,080 volunteers are delivering services. We do not have to guess or speculate about these people because we have the figures. Very conveniently, the Citizens Information Board produced a report in 2010 which indicated that volunteers on the front line were contributing 2,700 hours per week. Using the board's estimate of volunteer time at being valued at €22.25 per hour, this means that volunteers are making an annual contribution to the value of €24 million in respect of front-line services. If even 20% of those volunteers leave, we loose €5 million worth of front-line service delivery. It seems that this missing figure should be in the mix. Giving the volunteers awards is all very well but we have not seen a risk assessment and concerns have been expressed, not only by the boards but also by staff representative organisations that have spoken to us.
Ms Ita Mangan:
As I said at outset, this is a technical, economic analysis done in accordance with the standard economic analysis techniques. It accords with the Department of Public Expenditure and Reform method of evaluating services. Although I do have a degree in economics, I do not consider myself qualified to question the report in the way that Senator Higgins does. This is not an analysis done by the Citizens Information Board, it is a technical analysis that was requested by the committee and paid for by the board. We could argue from here to eternity-----
I will interrupt Ms Mangan for a moment because I do not like where this is going. This document was not produced for no good reason. It may be technical in nature but there is an onus on all of us to understand it. If we do not understand it, we have to find somebody to explain how it works and what it is trying to drive at. It is not an academic exercise that was done to keep the committee happy and then to be parked. The purpose of today's meeting is to challenge and understand the assumptions that were made, the analysis that was carried out and the findings that were reached. That is what this meeting is about. I do not want there to be an argument that the committee made a recommendation and the Citizens Information Board had to do the analysis. The report was undertaken for a purpose, and the purpose of today's meeting is to analyse it, examine its assumptions, understand where it is going and assess whether the committee is satisfied that its recommendations represent the best way to proceed. The outcomes in the report are based on a range of assumptions of which we are quite well aware. We want to know whether they are real, whether this is a report that was done only to be parked and whether we are wasting our time. The committee is of the view that the analysis of this report is important.
Ms Ita Mangan:
I accept that but it is a technical analysis. We could argue about every one of the assumptions in it. We could argue about the outputs in all cases but I do not know if we would ever reach any consensus. What I consider to be important is the best services that we can provide. I will address the matter of establishing a compliance unit. The Citizens Information Board was told by the Comptroller and Auditor General that it would have to carry out 31 audits annually on its 93 services. If we were to do that, we would need a compliance unit. I would regard a compliance unit as an incredible waste of money. All it would do would be to visit individual services to ensure that each was doing its accounts properly. A far better way would be to have a much smaller number of companies, we have opted for 16, which would require five audits annually, according to the Comptroller and Auditor General, and then we would not need a compliance unit because we could do that from existing resources.
On the use of the local managers' time and so on, as I said earlier in the case of MABS, the money advisers are doing some of the administrative work. That will not happen under the new structure. They will be providing money advice on a full-time basis, which is what they are qualified to do. The regional managers, the administration, the back-up, the HR and so on will be centralised so that the staff who deliver the services - including the volunteers who provide services within the citizens information services - will all be freed up to do nothing other than deliver those services. That is the thinking behind all of it. I keep repeating that we never did this for financial gain, but to improve governance and services. We provided the committee with our estimated costs in February. There are some minor differences between those and the figures contained in this cost-benefit analysis but we did not outline benefits in any financial sense because we did not consider that to be the major issue. All the other reports, including the Pathfinder report, dealt with these issues but I cannot see the value of our getting into the minutiae of the benefits of having regional managers available to do front-line work and so on. I do not see how the members of the committee or I can challenge all the figures without merely substituting our assumptions for those made by the professionals. This is a professionally produced report. Members can criticise it - I can criticise it myself - but the overall finding is that there are financial benefits, although, as I keep saying, we are not unduly concerned about that. Our focus is on the governance and delivery of services.
I am not making any assumptions here. All of the facts and figures I have put forward reflect the facts and figures contained in the Citizens Information Board's 2010 report and other reports. I do not believe that the committee or the board should be intimidated by professionals having produced a report. We need to take this issue very seriously. The figure relating to front-line staff is the only one that indicates any potential benefit or that matters. It is interesting that we have obtained some clarity, particularly in view of the fact that the Comptroller and Auditor General wants 31 audits to be carried out annually.
That could be done by a compliance unit for €433,000, but the Citizens Information Board is proposing to spend three to four times that amount. It has not shown any wonderful efficiency. The only other efficiency it proposes is the potential freeing-up of front-line staff, which is, therefore, a key issue. Will the witnesses address the issue of volunteers? It is of concern if the witnesses are not interested in the detail of the report or the way figures regarding volunteers were moved around in respect of the report. Will the witnesses address the questions in terms of volunteers on the board and among front-line staff?
Ms Ita Mangan:
As I explained, volunteers in MABS are on the boards. They do not produce outcomes for citizens but staff do. In four of the 53 cases, those who serve on the boards do the accounts or administration or whatever. In all other places, the staff do that work and provide the service to the citizens. The boards of the MABS or CIS companies do not have a direct output to the citizen but the volunteers who work in CIS do, and I accept that. They will continue to provide that service in the same way they always have. Many of the assumptions in the report are not ones with which everyone would agree, but it is a technical professional report and I cannot second-guess it.
I fully understand where Ms Mangan is coming from in terms of the report, but in its executive summary it says:
The reorganisation involves the expenditure of public funds to provide a service to private citizens. Consequently, it is necessary to identify a rationale for the expenditure, the proposed change must constitute a feasible proposition and any proposed expenditure must be viable in that it can reasonably be expected to have a positive impact.
That is what we are trying to underpin and need to understand. I understand that the process was not begun as a cost-saving mechanism because the executive summary says:
There is currently a clear market failure in the form of a principal agent problem that has resulted in a poor alignment of the objectives of the CIB and local service delivery companies. This provides the rationale for the proposed change.
I accept and understand that the rationale for the change is to have a top-down organisation instead of independent companies introducing their own programmes and workloads and so forth. However, the financial consequences, implementation, staff positions and so forth are of concern to the committee. That is why the report was commissioned and why we must understand the assumptions made therein.
In terms of volunteers and their concerns, the 2010 CIB report from which I took the figure about the 2,700 hours contributed weekly pointed to the fact that community ethos was a key motivator for volunteers. A concern has been raised in respect of the restructuring regarding community ethos. As was mentioned by the Chair, the attachment of local services to independence, which is of concern to the witnesses and was called market failure and misalignment of goals, is very much valued not only by staff and volunteers but also by users.
There is a question about whom the CIB is accountable to. I will leave that aside and choose another point from those I have.
The witnesses said they answered members' points on the other report, but one very important concern was that this does not relate solely to service delivery for the CIB or to its internal governance but also to the governance of 93 independent companies. Do the witnesses agree that the restructuring proposes that the CIB should exert financial and other pressures on those 93 independent companies to change their internal governance structures? This issue was raised in the initial report, 4.41, and was not answered by the CIB in its response.
Ms Ita Mangan:
Inevitably, the result of the reorganisation will be that the individual local boards will be dissolved. However, we will retain local advisory committees and all those currently involved in the boards can be on those committees if they so wish.
I think I have already addressed Senator Higgins's point regarding volunteers. Volunteers in Citizens Information Service centres will not be affected by the reorganisation. They will continue to provide their services in Bray, Cork or wherever they are based. Their community ethos will not be affected because they will still be working with the same people in the same place providing services to the same people. The only difference will be that their current board will no longer exist but there will be a local advisory committee in which they may wish to take part.
I am becoming confused. Another point was made, possibly on community ethos-----
Ms Ita Mangan:
The question was to whom the CIB is accountable. We are under the aegis of the Department of Employment Affairs and Social Protection, as members know, but are accountable to the Comptroller and Auditor General, who has made it very clear that we need to exercise much greater control and compliance on the various companies. Those companies are entirely State-funded. They are not separate voluntary organisations that raise funds from other sources. It would be open to the CIB to cease funding them all in the morning. We have no intention of doing that but could theoretically do so and transfer their functions to other organisations. That is the reality of life. They are entirely State-funded. However, because we value matters such as volunteers and community ethos and must comply with the compliance requirements of the Comptroller and Auditor General, we have come up with this reorganisation which we believe is the best available option in the circumstances. It is not perfect. I made clear last February that it is not the perfect solution but it is much better than what we have.
Ms Ita Mangan:
No. We are not considering private providers. I recognise that many services throughout the country have been privatised. We are not considering private providers, nor are we considering changing providers. The providers of services will be exactly the same as those providing them today.
We are changing the model of governance to ensure that the State funds that they get are properly spent.
The fundamental point is that the chairperson said that the Comptroller and Auditor General wants more control. One way to do that would be a compliance unit. However, this is a much better way to do it because they now have fewer companies in that there will be regional companies. The local element is going to be lost. That is the problem. It is going to be centralised. There is great confidence in the system as it operates at the moment. That does not seem to be taken into account. I do not believe the witness nor the cost benefit analysis clearly explains what benefits are going to ensue and how exactly they are going to ensue to the end users. That is why we are all here. It is why this was set up. I do not understand what is happening.
The witness also stated that she thinks that the board members have all read this report, understand it and, I presume, are all in full agreement with it. However, I have been advised that is not the case. I have been reliably informed that the majority of the board do not agree with the conclusions of this report. I take the witness's point about not discussing board meetings when the minutes are not on the website. However, when the minutes are on the website we should have another discussion on this.
This is fundamental. I refer to the points I wanted to make about the benefits and cost. If we are estimating what this is going to cost we deduct tax and PRSI. Put that against what it is costing at the moment, including tax and PRSI, and the loss of volunteers is supposed to be a benefit. Nobody can understand that. This needs careful analysis, which it has not got to date.
Ms Ita Mangan:
We are keeping the local connection by means of the local advisory committees. We are keeping the community ethos. We are keeping the people who are working in the same place delivering the services to the same people. I think spending money on a compliance unit would be a terrible waste of money. I would much prefer to spend the money on improving services. There are many parts of the country that do not have MABS or CIS services and they badly need them. That is where we want to get to ultimately, where everybody has services everywhere.
Before I thank Ms Mangan for attending it is in the context that as a committee we produced a report which is at variance to what you are doing. That report identified concerns. It will be part of this committee's programme to oversee how you are doing and ensure that the concerns that were in the report do not materialise. A number of times you referred to what has been termed the "no-change option" and that there was no agreement. However, there was no agreement because there was not a process to make that agreement happen. From the committee's point of view, concerns have been raised at the way the cost benefit analysis document was produced and the assumptions on which it was based. You have heard some of those today.
Ms Ita Mangan:
I do not accept that no attempt was made to find out whether there would be agreement on the part of the service providers. Long before I became the chair, there was extensive consultation. As I outlined at the last meeting, between 2014 and 2016 all the service providers were consulted but there was no consensus. That is the reality.
We have moved to where we are today and to the implementation aspect. As a result of our report Ms Mangan understands this committee's concerns, mainly around volunteers and the outcomes. However, I would like to thank you and Ms Black for attending today. That concludes the business of today's meeting.