Brian Hayes (Dublin South West, Fine Gael)
Link to this: Individually | In context

Question 36: To ask the Minister for Education and Science the estimated cost of the rental of temporary accommodation in 2009; the number of units and their location in which in excess of €50,000 has been spent in rental costs to date by his Department; and if he will make a statement on the matter. [12287/09]

Ruairi Quinn (Dublin South East, Labour)
Link to this: Individually | In context

Question 39: To ask the Minister for Education and Science if he proposes to recommend to the boards of management of primary schools, who have contracts with prefab building suppliers, the rent of which is paid by his Department, that they seek to have the terms of the contract reviewed in order to reduce the rental cost to his Department and so release resources for other sectors of his estimate or alternatively, to secure savings that do not damage the delivery of educational services, as was discussed recently at a meeting of the Joint Committee on Education and Science with officials from his Department on 12 March 2009; and if he will make a statement on the matter. [12336/09]

Batt O'Keeffe (Cork North West, Fianna Fail)
Link to this: Individually | In context

I propose to take Questions Nos. 36 and 39 together.

The estimated rental cost for temporary accommodation for primary and post-primary schools in 2009 will be approximately €48 million. The rental of accommodation relates not only to prefabricated accommodation, but also to a number of permanent buildings which are used as schools.

I have asked my Department to compile a list as requested by the Deputy of all schools where the cumulative cost of renting prefabricated accommodation exceeds €50,000. I will forward this information to the Deputy shortly.

Demand for additional accommodation in schools has risen significantly over the past number of years with the appointment of 6,000 extra teachers in the primary sector alone since 2002. The overall policy goal is to ensure the highest standard of permanent accommodation for all schools. However, in the context of a rapidly increasing school population, the necessity to put additional accommodation in place in a short timeframe and competing pressure on the capital budget, it will continue to be necessary to use temporary accommodation to meet the needs of schools in some circumstances. This is because competing priorities mean that it will not always be possible to have a permanent accommodation solution in place in a short timeframe.

The Department will continue to provide funding for such prefabricated accommodation and the decision on whether to rent or purchase will depend on the likely length of time it will be required. In all cases, the approach will be to ensure best value for money. Following an analysis of costs by my Department, it is now the policy to purchase rather than rent temporary accommodation where the need is likely to last for more than three years. This will reduce the incidence of long-term rental of prefabricated classrooms.

Separately, as indicated by my officials at a recent meeting of the Joint Committee on Education and Science, my Department has already commenced a review of this area and has engaged a firm of chartered quantity surveyors to develop new procedures and systems for the provision of temporary accommodation with a view to achieving best value for money. This firm of specialists has already commenced and will work in close co-operation with the planning and building unit of the Department.

The review will involve new contractual terms to incorporate buy-out and relocation options to cater for individual local circumstances. It will also involve an assessment of all existing rental contracts between schools and suppliers with a view to identifying action to reduce overall rental costs for the Department. The Deputies will appreciate that there is a substantial amount of work involved in this approach. However, I have asked my Department to give this work priority and it is envisaged that it will be completed before the end of this year.

In the meantime, where the Department has given approval to a school to rent temporary accommodation, the school authorities must seek competitive quotes from suppliers. This will allow schools to take advantage of the best value available in the current market.

Brian Hayes (Dublin South West, Fine Gael)
Link to this: Individually | In context

I am disappointed that the Minister could not inform me of the total number of prefabs in the country where his Department has spent over €50,000. The fact that he cannot even give an estimate of that speaks volumes for the sense of chaos that exists within the Department.

At a time when commercial and residential rents are falling through the floor, he is effectively proposing to spend the same amount of money this year as last on renting prefab buildings. Never mind the consultants' report and what they produce at the end of this year. Would he not now consider a rent control policy under which he would immediately inform the 26 suppliers up and down the country that he wants to renegotiate directly with them on behalf of the schools in question and in terms of the amount of money, €50 million this year, the State is giving to them, given the extraordinary crisis facing the country and the challenges for his Department's budget in using resources for front line services?

Batt O'Keeffe (Cork North West, Fianna Fail)
Link to this: Individually | In context

I was not long in this office before Deputy Quinn first brought this matter to my attention and I was concerned at the level of funding being allocated to that particular area. I was of the view that it needed to be restructured and reviewed. I am doing precisely what Deputy Hayes is asking me to do. This group of experts is in contact with the 26 suppliers and looking at the length of time prefabs have been rented and the amount of money being paid with a view to carrying out a review of long-term rentals and deciding how much more appropriate levels may be achieved, as well as facilitating the Department in taking some of this accommodation into direct ownership.

I want to stress, however, that, given what has happened over the past number of years, we can never reach a point where temporary accommodation will not be needed. That is a fact of life. If one looks at the developing areas around this city, one finds there will be a demand. There was a presentation this morning showing how such demand may be anticipated and met. The Deputy will be aware, for example, that temporary recognition for a school may be forthcoming if there are 17 pupils on the roll and full recognition may be granted after three years if there are 54 pupils. However, in the interim period, temporary accommodation must be provided.

The Deputy will also be aware that I have put a system in place which gives schools that have received approval for a prefab the option of putting a permanent structure in place. As a matter of interest, some 52 projects have been completed in small schools in this area and 172 projects are under construction at present. It is, therefore, a system that is actually taking off.

Ruairi Quinn (Dublin South East, Labour)
Link to this: Individually | In context

This has been the subject of extensive discussion at our committee and I will not repeat what was said. In the real marketplace that is modern Ireland today, in every shopping mall and office block, tenants are demanding that landlords renegotiate their contracts or they will leave. That type of initiative should not be excluded from the public sphere either. The boards of management are the contractors with the suppliers, not the Minister, although he pays the bill. If he was to incentivise boards of management by getting them to negotiate a 15% reduction, it would amount to a saving of approximately €7.2 million. He could allow them to keep 40% while the Department took the balance of approximately €5.9 million over time. It is very much a buyers' market, but the boards of management have to be incentivised. If there is nothing in it for them and the Minister is paying the Bill, they will sit on their hands.

Batt O'Keeffe (Cork North West, Fianna Fail)
Link to this: Individually | In context

There are two issues here. The cost of temporary accommodation has actually come down. It is now less than €100,000, when four or five months ago it was over €120,000.

Ruairi Quinn (Dublin South East, Labour)
Link to this: Individually | In context

Is that for new contracts?

Batt O'Keeffe (Cork North West, Fianna Fail)
Link to this: Individually | In context

That is for new accommodation, and it is falling further. I agree with the Deputy and I am looking for better value for money.

Regarding the expert group, I want to get full control of this so that I can have a total assessment of what exactly we can do. The consultants are experts in the field and will be looking for the precise value for money the Deputy is seeking. I want to let them get on with their work. My officials met them again recently to emphasise the urgency involved. If we are renting particular accommodation for ten years, for example, there is no reason that we should be paying any more for that. These are questions we will be taking up with the suppliers and we will be seeking to ensure that we get that value for money.

Brian Hayes (Dublin South West, Fine Gael)
Link to this: Individually | In context

With the greatest degree of respect to the Minister, the questions relate to now and the scarcity of resources in all Departments, as he well knows. Why do we have to wait until later this year for a bunch of consultants to tell us something we already know?

Ruairi Quinn (Dublin South East, Labour)
Link to this: Individually | In context

Exactly.

Brian Hayes (Dublin South West, Fine Gael)
Link to this: Individually | In context

We know these contracts should be renegotiated now. Would the Minister consider, while in discussion with his officials, effectively setting his own maximum rent control on prefabricated units? I understand he has the power to do this. There are 26 suppliers and the Minister ultimately has to pay the bill. I believe efficiencies can be achieved here; money can be saved and used for more useful purposes within the Department.

Will the Minister inform the House to whom the consultancy contract was given and how much it will cost the Department this year? Is it not the case that this work could have been done within the Department or alternatively between the Department and the OPW, which has particular knowledge and expertise in this area?

Batt O'Keeffe (Cork North West, Fianna Fail)
Link to this: Individually | In context

I do not know this, and I would prefer to give the Deputy accurate information on the name of the company as well as the costs involved. The Deputy asked me about the purchase and getting a proper pricing structure. I am already doing that. There has been a significant reduction in the price. We are now forcing every——

Brian Hayes (Dublin South West, Fine Gael)
Link to this: Individually | In context

On the rent.

Batt O'Keeffe (Cork North West, Fianna Fail)
Link to this: Individually | In context

In the purchase. We will purchase anything we have for over three years rather than rent. That is a complete reversal of the policy we had.

Brian Hayes (Dublin South West, Fine Gael)
Link to this: Individually | In context

What about the rent?

Batt O'Keeffe (Cork North West, Fianna Fail)
Link to this: Individually | In context

We are getting value for money and are negotiating the prices downwards. The figure has gone from €120 million to under €100 million and I hope it will continue to fall.

I accept the criticism made. Something happened in the past and a series of rentals developed. It is important for me to get an aggregate and an appropriate response to see the extent of the rental and the cost and how I can do deals with these suppliers and say we have more than paid for these prefabricated buildings. The indications I am getting back from the negotiations going on are that we will be very successful in achieving what the Deputy and Deputy Quinn are trying to achieve.

Ruairi Quinn (Dublin South East, Labour)
Link to this: Individually | In context

Time is tight and we can pursue this later but I get the impression there are two players now. The formal client is the board of management which signs the contract and with whom the relationship with the supplier exists. I suggest the Minister should forget about the consultants. Can we have no more government by consultancy? Can we simply have political decisions saying to boards of management that they are empowered to renegotiate the rental circumstances, because they will vary around the country, and that if they do so, they will get to keep 40% of the saving they negotiate? Incidentally, it is a wonderful capitalist idea which makes sense in these straitened times, otherwise boards of management will not act. In broad figures, the Minister will save 60% of that 15% reduction which could possibly be negotiated. If the Department of Education and Science does it, the Minister will not see a single reduction this year.

Batt O'Keeffe (Cork North West, Fianna Fail)
Link to this: Individually | In context

I take issue with that because we are seeing significant reductions already.

Ruairi Quinn (Dublin South East, Labour)
Link to this: Individually | In context

In new contracts.

Batt O'Keeffe (Cork North West, Fianna Fail)
Link to this: Individually | In context

The Deputy must understand boards of management are there on a voluntary basis. This practice of rented accommodation has built up over the years. Boards of management did not say to companies they had been paying rent for a certain number of years and that they should be in full ownership now.

Ruairi Quinn (Dublin South East, Labour)
Link to this: Individually | In context

Empower them now.

Batt O'Keeffe (Cork North West, Fianna Fail)
Link to this: Individually | In context

Once and for all, I am putting a structure in place so that, into the future, those we rent for a significant amount of time will come into our ownership, that we cease paying rent and that we get much better value for money. By the end of the year, I will have a comprehensive programme in place which will save the type of significant funds about which the Deputy spoke.