Mr. Seamus McCarthy:

Go raibh maith agat, a Chathaoirligh, and thank you for the good wishes. Obviously, the 100th anniversary of the establishment of any organisation is really important. It is time to reflect on the role and we look forward to contributing into the future in the same way.

The appropriation account for Vote 45 - Further and Higher Education, Research, Innovation and Science records total expenditure of €3.284 billion in 2022. Expenditure on the Vote in 2022 is accounted for under three programmes. Spending under the higher education programme amounted to €2.33 billion. Much of that funding was transferred to the Higher Education Authority, which has statutory responsibility for allocating public resources to the higher education institutions. Issues from the Vote included €1.33 billion to fund recurrent grant support for higher education institutions, €132 million provided for third level infrastructure projects, with a further €41 million for public private partnership, PPP, projects and €341 million to fund pension costs of retired third level staff. Just under €318 million was spent on student support and related expenses. Most of this was spent under the national SUSI scheme, which is operated on behalf of the Department by Dublin City Education and Training Board.

The programme for skills development involved expenditure of just over €695 million, including grant support to SOLAS, which funds further education and training activities, including apprenticeships. Just under €255 million was spent under the research, innovation and science programme. The bulk of this was transferred to Science Foundation Ireland. On the receipts side, appropriations-in-aid of the Vote amounted to €92 million in 2022. The majority of these receipts, just under €79 million, relate to additional superannuation contributions. These represent part of the pension contributions deducted from the salaries of staff in higher education institutions and in the Department’s aegis bodies. The Department also received €8.58 million in funding from Technological University Dublin towards the costs of the PPP to develop the university’s campus at Grangegorman.

The overall cost of the deal for that development is forecast to amount to €606 million over the term of the contract. The account also indicates that commitments of almost €718 million were entered into in 2022 in respect of a public-private partnership for six new projects for four higher education institutions, HEIs. For 2022, the net surplus on the Vote remaining at the year end was €18.94 million, which was liable for surrender to the Exchequer. I issued a clear audit opinion in relation to the appropriation account, and drew attention to disclosures in the account relating to some non-compliance with procurement rules, and a write-off of public funding of €117,000.

The National Training Fund was established by the National Training Fund Act 2000 as a dedicated fund to support employment-focused training. The Department has responsibility for the management and utilisation of the resources of the fund, and for related annual financial reporting. The NTF is funded mainly by way of a levy on employers collected through employers' pay related social insurance. The income of the fund in 2022 amounted to €951 million. Payments from the fund amounted to just over €681 million. Of this, €365 million was spent on skills acquisition for those looking to take up employment, while €313 million was spent on programmes for those currently in employment. The fund’s surplus for the year was €269 million, and the accumulated surplus at the year end was €1.37 billion.

The report before the committee today was undertaken to review the factors giving rise to the accumulated surplus of the fund, and the progress made on implementing recommendations made in 2018 to reform the National Training Fund. The 2022 fund income of €951 million was more than double that reported in 2017. The increase is largely due to a combination of increasing numbers in paid employment, increases in earnings, and increased annual levy rates over the period 2018 to 2020. The levy currently stands at a rate of 1% on reckonable earnings. Fund expenditure has also increased, but not at the same rate as income. This has given rise to annual surpluses each year since 2015. The Department agrees that the accumulated surplus at end 2022 was in excess of that required to maintain programme funding, and is not sustainable. However, plans to spend the accumulated surplus may be constrained due to budgetary and EU fiscal policy.

The NTF funds training programmes through a number of grantee bodies. In recent years, the main recipients of funds have been SOLAS and the Higher Education Authority, HEA. Funds allocated to the authority have increased from €37 million in 2017 to €314 million in 2022. We found there was a lack of consistency in the Department’s oversight and monitoring arrangements in place with bodies in receipt of funding from the training fund. I therefore recommended that the Department review its performance delivery arrangements with the grantee bodies to ensure specific relevant performance targets are agreed for all the grantees. An external review of the fund carried out in 2018 resulted in recommendations for reform across four key areas. While recommendations in three of the four areas have been addressed, little progress has been made on those aimed at improving the monitoring and evaluation of the fund. I recommended that the Department develop outcome-based performance metrics to evaluate both its own performance and that of the bodies it funds. The Department has accepted the recommendations made and has agreed timelines for implementation in 2024.