I welcome the Comptroller and Auditor General to the meeting. After the committee has completed its inquiries into the Residential Institutions Redress Board, I propose that it should make a decision in private session on how it should organise a report. The committee will then consider the Vote of the Office of Public Works in public session. I call Deputy Fleming.
Chapter 9.1 — Residential Institutions Redress Board.
Paragraph 9.1 of the report of the Comptroller and Auditor General reads:
9.1Residential Institutions Redress BoardBackground
The Residential Institutions Redress Act, 2002 (the Act) provides for a scheme of awards to persons who were resident in certain institutions and have or have had injuries that are consistent with abuse received while resident in the institutions.
The redress scheme is administered by a Residential Institutions Redress Board (the Board). A Residential Institutions Review Committee (the Review Committee) has also been established to review awards of the Board. The general scope of the scheme was outlined in my 2002 Annual Report.
The redress scheme extends to former residents of 123 institutions regulated by the State. 87 of these were under the supervision of the Department of Education and Science (DOES). 82 of the 123 institutions were managed by religious congregations represented by the Conference of Religious in Ireland (CORI). 95% of the applications to the Board are from former residents of institutions which were managed by these congregations. In addition to claims from residents of DOES supervised institutions, former residents of certain institutions not under the supervision of the DOES can also apply for redress. The Department is examining proposals to extend the scheme to a further set of institutions. It is the DOES’s view that the number of applications to the Board arising from the addition of these institutions would not be significant.
In conjunction with the introduction of the redress scheme, the Government also reached an agreement with eighteen religious congregations, who had been represented in negotiations by CORI, that they would make a contribution of €128m, inclusive of some past contributions, towards the cost of the compensation scheme. In return, the State agreed to indemnify the congregations in respect of all cases where a person would have been eligible to make a claim under the Act, with the indemnity to apply to those cases where litigation was commenced within the following six years. On 5 June 2002, an Indemnity Agreement (the Agreement) to give effect to this was signed between the Minister for Education and Science, the Minister for Finance and eighteen religious congregations.
In accordance with a commitment given to the Committee of Public Accounts I reviewed the claim outturn to date, the likely cost of redress based on current information, the extent to which the State indemnity has been invoked and the progress of the DOES in collecting the contribution agreed with the congregations.
Redress Costs
The redress scheme has now been operating for 18 months and between the introduction of the scheme in December 2002 and 21 June 2004 the Board has received 3,763 valid applications. Applications have been made at a rate of approximately 48.5 per week.
By 21 June 2004 the Board had made 1,277 offers of awards since it commenced hearings in April 2003. The total amount of awards offered was €98.8m. To date, 77% of the total amount paid in awards has been agreed in a settlement process. The balance involved hearings. Table 33 sets out the pattern to date.
|
Nature of award |
Number of cases |
Total Amount |
Average award |
|
€m |
€ |
||
|
Settlement |
973 |
76.4 |
78,500 |
|
Hearing |
304 |
22.4 |
73,700 |
|
Total |
1,277 |
98.8 |
77,400 |
Applicants have one month to accept or reject an award or submit the award to the Review Committee, which is wholly independent of the Board. The number of cases sent to the Review Committee up to 21 June 2004 was 33. The Review Committee had 10 reviews on hand and had made 23 awards by that date. The details are set out in Table 34.
|
Nature of award |
Number of cases |
Total Amount |
Average award |
|
€m |
€ |
||
|
Initial award by Board |
23 |
0.96 |
41,565 |
|
Award following Review |
23 |
1.08 |
46,740 |
*The awards following review are included in Table 33.
The Board awards costs in respect of expenses incurred in the preparation and presentation of an application. Up to 21 June 2004 the Board had awarded costs, including related High Court costs, in 173 cases. The total amount of t0hese costs was around 15% of the cost of the awards made in these cases.
In cases where agreement about costs cannot be reached, either the claimant or the Board may submit the case to the Taxing Master of the High Court. Following a ruling by the Taxing Master either party has the option of appealing to the High Court. A number of cases have been submitted to the Taxing Master but the process has not yet concluded for any of these cases.
Based on the current level of the Board's own costs and the expected level of claims it is estimated that the Board's total costs (excluding costs paid to applicants) could be of the order of 5% of the cost of awards.
Estimated Redress Scheme Cost
The component elements in any estimate of the cost of redress are
·The number of qualifying persons who will apply for redress
·The extent of any awards made to them
·The extent of any costs which may arise.
Although the scheme has now operated for 18 months and greater estimation precision is possible there are still inherent uncertainties attached to any calculation. Consequently, I am presenting figures estimated on three different bases
·An estimate based on a survey of firms of solicitors representing approximately 36% of claimants to the Redress Board up to the end of May 2004
·An estimate based on trends in Freedom of Information (FOI) requests which evidence residency in these cases
·An extrapolation of the claim outturn of the Board.
In addition, I report the Board's own estimate of the likely liability on foot of claims.
For purposes of each estimate, the all-in-cost of awards is estimated at around €93,000 — the average award for cases finalised to date is €77,400 and costs have been estimated at 20%.
Estimate based on Survey of Solicitors
The Redress Board has informed me that almost all applicants to the Board have legal representation.
Using information from a file of FOI requests supplied by the DOES, I compiled a list of 20 law firms who had made 72% of the FOI requests that came from solicitors and around 44% of all FOI requests.
Following consultations with the Law Society of Ireland, and with their co-operation and assistance, I sent a questionnaire to the 20 firms. The information sought was
·The number of claims submitted to the Board, on behalf of clients, to 31 May 2004
·The number of cases on hand where there was a real prospect of an application being lodged with the Board
·The number of new cases coming to the firm in each month from January to May 2004.
Sixteen firms replied. The results of the survey are set out in Table 35.
|
Claims |
% |
|
|
Total applications to the Board to 31 May 2004 |
1,338 |
43% |
|
Cases on hand at 31 May 2004 |
1,775 |
57% |
|
Total cases |
3,113 |
100% |
The results of the survey indicate that less than half of the potential claims to the Board had been made by 31 May 2004. However, the rate of receipt of cases by solicitors in 2004 was declining. 6% of the total cases resulted from instructions received in the first five months of 2004.
The solicitors who replied to the survey accounted for 36% of all claims made to the Board in the period to 31 May 2004. If the cases on hand become claims to the Board and claims from these firms continue to represent around 36% of all claims, additional claims arising from cases on hand at 31 May 2004 could be in the region of 4,930. 3,681 claims had already been lodged to the Board at that date. This would indicate that the total number of claims to the Board could amount to something of the order of 8,900.
At a level of 8,900 claims the all-in cost could be around €828m.
Estimation based on FOI Trends
FOI requests are an indicator of potential claims since the information supplied by the DOES is used as evidence of residency. Residency in the case of the remainder is proved by letters supplied by the relevant religious order, detention orders and by various school documents. Information supplied by the DOES on foot of FOI requests may also be used to otherwise support a claim to the Board.
I requested the DOES to carry out an analysis of the information available on the number of potential applicants at 25 May 2004. Information was supplied to me on foot of this request, as follows
·A set of data on FOI requests
·A set of data on litigation cases, where the DOES is named as a defendant.
In addition, I obtained a set of data in relation to litigation cases, where the Department of Health and Children is named as a defendant, from that Department.
This information was adjusted in order to eliminate litigants whose claims related to non-qualifying institutions and also to eliminate duplicate records. An amended file containing 7,017 cases was compiled. The details are set out in Table 36.
Table 36 FOI and Litigation cases — May 2004
|
Category |
Number of cases |
|
Total FOI Requests |
6,212 |
|
Persons, not litigants, who had made a FOI request |
4,603 |
|
Litigants who had made a FOI request |
1,609 |
|
Litigants who had not made a FOI request |
805 |
|
Total |
7,017 |
The amended information was then returned to the DOES.
The Minister directed the Redress Board, under Section 26 of the Act, to prepare a report comparing its applications at 10 June 2004 with this information. The Board had received around 3,750 applications at that time. The Board's report in the form of a computer file, which the DOES forwarded to me, included the date of an application, if any, to the Board for each record. The information was returned in a format that ensured that no individual or institution involved in a redress claim could be identified as is required under Section 28 of the Act.
The following trends emerged from a detailed examination of the file
·70% of claimants to the Board had sought information from the DOES through FOI requests
·A sizeable percentage of claims are lodged in advance of the FOI request (around 13% in the period May 2003 to December 2003)
·Currently 70% of FOI requests are from solicitors. This proportion has risen steadily over the years. On average 62% of all FOI requests to date are from solicitors
·When FOI requests are tracked on a monthly basis it was noted that they are translating into claims at a steady rate with requests from solicitors converting into claims at a higher rate than cases where a solicitor has not made the request. To date around 46% of all requests from late 1998, when the FOI process commenced, up to 30 September 2003 have resulted in claims.
Different tranches of FOI requests were examined to determine the rate at which they were translating into claims taking account, in particular, of
·The date of the FOI request — different claim rates occurred for requests made before the Agreement and other key milestones in the process
·Solicitor-lodged FOI requests differed in the extent to which they converted into claims (49% to September 2003) from requests lodged by the public (42% to the same date)
·Litigation cases who also had made a FOI request had a much higher associated rate of claim to date (56%) than litigants who had not made a FOI request (30%).
Overall, it was concluded, based on trends to date, that ultimately between 75% and 80% of all FOI requests are likely to translate into claims.
6,212 FOI requests had been made up to 25 May 2004. Requests are running at the rate of 150 per month for the first five months of 2004, down from 2003 which had a rate of around 180 per month for the first half and 160 per month for the latter half. It is difficult to predict what impact the closing date, the processing of foreign cases and the fact that claims to the Board may be made in advance of a FOI request, will have on the volume of requests. It appears prudent to project an average of around 90 per month for the next eighteen to nineteen months. On this basis, the total number of FOI requests would be of the order of 7,900.
In addition, 30% of all claims to the Board to date have been made without a FOI request. Assuming that this reduces over time to 25%, for future claims, the total claim population, based on the trend in conversion of FOI requests into claims and on the trend in non-FOI based claims being experienced by the Board, would be in the range 8,200 to 8,700.
Based on an all-in cost of awards of €93,000 this could yield a liability in the range €763m to €809m.
Estimate based on Claim Outturn
In the first eighteen months of operation of the scheme, 3,750 individuals have made claims to the Board. Assuming claims continue to be received at the same rate and the average all-in cost of awards remains unchanged at €93,000, the overall liability will be of the order of €700m. However, based on the results of the survey of solicitors it appears that less than half of the claims have been lodged at this point.
Estimate of the Redress Board
The Board, in its annual report, noted that it anticipates receiving between 6,500 and 7,000 applications in the 3 years allowed under section 8(1) of the Redress Act 2002. The Board informed the Minister that this is based on information supplied by a number of the solicitors who have presented the most applications to date.
The Board stressed that this estimate was tentative as there are no precedents for this scheme. In addition, the extent to which potential applicants have postponed contact with their legal advisers and/or the Board until later is an unknown factor.
Based on the average all-in cost of awards of €93,000 this indicates a liability in the range €605m to €650m.
Overall Summary — Likely Cost of Redress
Summarising the estimations made above the likely cost of redress has been calculated as set out in Table 37.
Table 37 Estimations of Liability
|
Basis of estimation |
Liability |
|
Estimate based on survey of solicitors |
€828m |
|
Estimate based on trend relating to FOI-based and non-FOI based claims |
€763m to €809m |
|
Extrapolation based on claim outturn to date* |
€700m |
|
Board’s estimate in Annual Report to Minister |
€605m to €650m |
*This is a simple extrapolation based on current claim numbers. Solicitors indicate that the ratio of claims on hand to claims lodged could be of the order of 1.3: 1. Adjustment based on this ratio would suggest an outturn of up to €810m.
Sensitivity of the Estimates
All the above figures have been estimated based on the current claim and cost experience of the Board. Each 5% change in award levels would call for an adjustment of around €30m — €40m in the final outcome. It is quite possible that movements may be countervailing since initial indications are that cost trends following taxation may create upward cost pressure while award levels may drop if later cases involve less serious injury or consequences.
While there is a reasonable degree of association between the claimload reported by solicitors and that estimated based on the extent to which FOI data is translating into claims the following factors could impact on the ultimate claim levels
· Whether the steady trend in translation of FOI requests into claims continues and non-FOI based cases continue to represent at least 25% of the total claims received by the Board
·The extent of overseas cases — during the examination of the file of FOI requests it became clear that, while there was a significant number of requests from solicitors' firms based in the UK, as yet, only a small proportion have become claims to the Board.
The estimates, therefore, will need to be revised periodically to take account of emerging information. Particular uncertainties relate to
·The impact of cost taxation outcomes on future costs
·The characteristics of the residual population bearing in mind that injury and damage may adversely impact on their capacity to pursue claims
·The nature of the injuries suffered by more recent claimants compared to those whose claims have been finalised.
Only five nil awards have been made to date. Consequently, no downward adjustment for spurious claims is considered necessary.
In regard to the estimation of the redress liability the Accounting Officer drew attention to the fact that the average award has dropped from €84,000 in September 2003 to €77,400 in June 2004 and the rate of receipt of application had dropped from 50 to 48.5 per week. He stated that these figures would seem to reflect the DOES view expressed in my 2002 Report that it is possible that these averages will continue to fall. However, he stressed that any estimate will remain problematic as it involves surmise and conjecture and any view on the DOES former estimate of €508 million should have regard to that context.
Costs arising from the Indemnity
The indemnity has been invoked in relation to three cases. The total amount of the settlements in these cases was €380,000 while costs are of the order of 30% bringing the total cost to the State to almost €500,000.
In addition, the DOES has retained the services of the firms of solicitors who acted for the congregations in relation to litigation cases prior to the signing of the Agreement and has agreed a level of fees for the management of the files and the provision of specific legal services in respect of the files. The fees agreed, effective from 5 June 2002 were
·An annual fee of €250 for each of the first hundred cases
·An annual fee of €150 for each of the next hundred cases
·An annual fee of €50 for each of the remaining cases
·A fee of €250 per hour for specific types of legal work on a case.
The firms of solicitors were asked to put measures in place to ensure that, as cases are dealt with by the Board, they are removed from the list of open files.
The DOES informed me that the total fees payable to solicitors for the first full year was of the order of €750,000. The management of the indemnity files is to be transferred to the Chief State Solicitor's Office (CSSO) with effect from October 2004 and the solicitor firms involved have been so informed.
Implementation of the Agreement
The Agreement provided for a contribution of €128m by the congregations made up as follows
·General Contribution €28.44m
·Education Fund €12.70m
·Property €76.86m
·Counselling and Support €10.00m
The general contribution and the payment towards the Education Fund were duly made in accordance with the terms of the Agreement. In addition, the congregations contributed further cash payments totalling €4.99m in substitution for property of an equivalent value.
The total awards and medical and legal expenses paid to claimants by the end of June 2004 amounted to €86.95m. This has been funded from the proceeds of contributions from the congregations (€30.44m), interest earned on that contribution (€0.54m) and Exchequer funds (€55.97m). At 30 June 2004, €2.99m by way of the general cash contribution is held by the Minister for Finance and is available to fund future awards.
Education Fund
The Agreement allocated €12.7m of the contribution of the congregations to be used by the State for educational programmes for former residents of institutions and their families.
An ad-hoc committee was formed comprising one representative each from the Further Education Section of the DOES and the National Office for Victims of Abuse (NOVA), one representative from each of the four support groups affiliated to NOVA, the Adult Education Officer at City of Dublin VEC and the Adult Education Facilitator at NOVA. The committee advised on how the fund should be administered and developed a draft application form together with a document setting out criteria for eligibility for a grant scheme to operate from the academic year 2003-2004.
Applications by former residents of qualifying institutions and their families are assessed by the Adult Education Facilitator at NOVA to determine if they qualify under the criteria laid down by the committee. Following a recommendation by the facilitator, grants to cover the cost of fees and materials are paid by the Further Education Section in the DOES. To date approximately €502,000 has been paid under the scheme. The Education Fund is held in an account administered by the Minister for Finance and the value of this fund at 30 June 2004 after taking account of interest earned is €12.94m. The DOES has informed me there was some concern regarding the legislative basis for the operation of the Education Fund and that, with the agreement of the Department of Finance, payments to date have been charged to the Vote pending the enactment of legislation.
The DOES intends that the legislation will provide for the establishment of the fund as a separate self-financing entity with a managing board or committee made up of representatives of survivors, the wider education sector and other interested parties.
Property Contributions
Two categories of property were eligible to satisfy the contribution of the congregations
·Up to €40.32m could be provided by way of property which had been transferred to the State, State agencies, local authorities or voluntary organisations between 11 May 1999 and the date of the Agreement. There was, however, provision for the substitution of other property or cash in the event that this element of the contribution could not be fully satisfied from transfers in that period (previously transferred or substituted property).
·Further transfers of property which were to be made to the State, or its nominees, as soon as practicable after the signing of the Agreement, to the aggregate value of €36.54m (post-agreement property transfers).
Previously Transferred or Substituted Property
By the end of July 2004 the DOES had accepted, in principle, a total of 27 properties and valuations have been submitted for all but one of these by the congregations. The transferees and valuations of the 26 properties are outlined in Table 38.
|
Transferee |
Properties |
Valuation |
|
€m |
||
|
DOES |
7 |
7.04 |
|
Voluntary Organisations |
13 |
17.02 |
|
Local Authorities |
3 |
3.59 |
|
Health Boards |
3 |
0.78 |
|
Total |
26 |
28.43 |
The properties accepted comprise 17 properties which had been transferred prior to the signing of the Agreement. These properties had an aggregate valuation of €21.06m. In addition, by the end of July 2004, a further €7.37m of the contribution had been made in the form of replacement properties offered in instances where original properties were rejected. While the originally offered properties were transferred prior to the Agreement, the replacement properties represent new transfers. One further replacement property was still being considered in July 2004.
The current position in regard to validation is
·The congregations have submitted professional valuations for 26 of the 27 properties accepted in principle.
·Independent valuation by the Valuation Office of a sample of six properties resulted in five properties being accepted at the initial valuation submitted. A further property has been accepted, in principle, at a lower valuation put on it by the Valuation Office. The aggregate value of the accepted properties which were independently valued is €17.02m.
·The value of past grants made by the State in respect of these properties has not yet been determined as it must await completion of the acceptance in principle process.
·The responsibility to establish that a transferor holds a good title to a property rests with each transferee.
·13 of the properties which the Department has accepted in principle are properties which had been transferred to voluntary organisations. The Agreement provides that any such properties are required to have restrictions on alienation, whereby the transferee cannot dispose of them within a 25-year period without the consent of the Minister for Finance. The Department has sought the advice of the CSSO on the options available to restrict alienation and the CSSO has entered discussions with the congregations regarding the drafting of a Deed of Covenant between the congregations and the transferees.
Overall Summary — Previously Transferred or Substituted Property
The total target set in the Agreement was €40.32m. The DOES has accepted, in principle, 26 properties with an aggregate valuation of €28.43m. The DOES is awaiting the valuation of one property which has been accepted, in principle, and continues to examine one further replacement property offered.
Post-Agreement Property Transfers
The Agreement set a target of €36.54m as the contribution under this heading. By the end of July 2004, when account is taken of cash contributed in substitution for further property, this target had been exceeded, subject to valuation and good title.
By that date, the DOES had accepted, in principle, a total of 35 properties. The transferees of these properties are set out in Table 39.
|
Transferee |
Properties |
Valuation |
|
€m |
||
|
DOES |
4 |
5.11 |
|
Eastern Region Health Authority |
3 |
1.97 |
|
Southern Health Board |
19 |
13.49 |
|
Mid-Western Health Board |
2 |
0.66 |
|
South-Eastern Health Board |
5 |
1.89 |
|
Dublin City Council |
1 |
8.90 |
|
Office of Public Works |
1 |
1.27 |
|
Total |
35 |
33.29 |
In addition to the acceptance of property valued at €33.29m, the congregations had paid €4,987,500 to the DOES in lieu of property as follows
·€4,000,000 from one congregation in respect of a property which the DOES had rejected as not qualifying under the terms of the Agreement
·€987,500, the proceeds of the sale of a property which was the subject of a CPO.
As a result, the congregations have contributed the equivalent of €38.28m, €1.74m in excess of the target of €36.54m for this heading.
The congregations submitted professional valuations for properties. The transferees have been requested to obtain independent valuations of properties and submit these to the DOES. Up to the end of July 2004 the DOES had received these valuations in respect of 27 of the properties which have been accepted in principle.
In regard to previous State grants in respect of the properties, the DOES has written to the Health Boards, who are the transferees for a number of the properties to be transferred, requesting them to inform the DOES if any grants have been paid in respect of the properties being transferred.
The responsibility to establish that a transferor holds a good title to a property rests with each transferee.
Counselling and Support
The Agreement provided that the Congregations' contribution could take account of counselling and other support services for former residents of institutions and their families, already provided or to be provided, to the value of €10m.
In 1997, CORI had established an organisation called Faoiseamh with the aim of providing a confidential listening service and face-to-face counselling for adults who, as childrenwere abused by religious or diocesan clergy. Congregations could also provide counselling and other support services other than through Faoiseamh.
In the course of the negotiations the congregations had stated that much of the €10m contribution related to counselling and other services which had already been provided. The DOES sought details from the congregations' legal advisers.
Following the initial replies from the congregations' legal advisers, in May and June 2003, the DOES informed me that it was concerned that expenditure incurred could include the cost of services offered to victims of diocesan abuse as well as that provided to former residents of the institutions.
The congregations have reported that in addition to contributions to Faoiseamh of €4.53m to date, there was also a further €7.1m of qualifying expenditure for counselling and other support services. Also, in regard to the service generally, the congregations have maintained that they are committed to the continuation of counselling services for as long as they are required.
In response to the DOES's further enquiries the congregations' legal advisers delivered a file of documents to the DOES in June 2004. The DOES is currently examining this file to see if it provides the evidence required to support the qualifying expenditure claimed by the congregations.
I am pleased to have the opportunity to raise some issues about the Department of Education and Science and the Residential Institutions Redress Board, which is the subject of chapter 9.1 of the 2003 Annual Report of the Comptroller and Auditor General and Appropriation Accounts, as well as an extensive chapter in the 2002 report. As the Chairman has indicated, the committee has already had an intensive discussion on the issue. We have had several meetings to date but everything we are discussing has emanated from the report of the Comptroller and Auditor General. It would be remiss of this committee if it did not discuss the report as presented and laid before the Houses of the Oireachtas before contemplating preparing its own report.
I have a few observations and questions for the Comptroller and Auditor General because he is the author of the report and all our discussions on this topic have been based thereon. The issues are quite straightforward. What is his current estimate of the contingent liability to the State resulting from claims to the Residential Institutions Redress Board?
Mr. John Purcell
The most up-to-date information available dates from the period to the end of November 2004. Currently there are 4,933 claims and some 2,182 awards have been made, averaging at €77,693. This figure excludes costs. Both the Department of Education and Science and I are adding 20% to that figure to account for costs. The actual awards made amount to €169.5 million. If one adds 20% to this, one gets approximately €203 million.
Nothing has happened since the last meeting that would suggest that the average award was decreasing further. It seems to have stabilised between €77,000 and €78,000. If anything, the rate at which the board is receiving claims has increased and therefore I have no reason to change the figures I presented to the committee when it last met. The total cost could amount to €800 million. However, this figure must be accepted with caution because, as the Department stated, there could be a rush to make claims towards the end of the period in which it is allowed to do so. The board would accept incomplete applications. From our dealings with the solicitors involved, we noted that it is taking them some time to prepare claims owing to the need to obtain professional reports etc. The position remains as stated in the report of 2003.
That is my query. Four estimates of liability are listed on page 80 of the 2003 report. None of them is by the Comptroller and Auditor General. One is by solicitors, another is based on freedom of information requests, another is based on the extrapolation on returns to date and the last is by the Department. What is the estimate of the Comptroller and Auditor General?
Mr. Purcell
At least three of the estimates are by the Office of the Comptroller and Auditor General. I set down the basis on which each was made. There are different ways of estimating liability. One estimate was based on a survey of the cases the solicitors had on hand as against those that had been submitted. The second estimate tied very much into the freedom of information route, which is the acknowledged route for the vast majority of claims before the Residential Institutions Redress Board. The third estimate involved extrapolating a figure from the current claims outturn of the board, given that the outturn remains the same. Three of the estimates are mine and they suggest an overall liability of between €700 million and €800 million. The Department of Education and Science's estimate varies between €550 million and €650 million, depending on whether one includes costs. Therefore, it seems that the overall liability will amount to between €600 million and, perhaps, €850 million.
The 2003 report was much better than the 2002 report in that it listed four possible outcomes based on different approaches. This issue arose at the time of publication of the 2002 report, in which the Office of the Comptroller and Auditor General arrived at the headline figure of €1 billion. I know caveats were issued but that figure was determined on the basis of 233 cases. As a member of the Committee of Public Accounts, I contend that it was premature in 2002 to attempt to estimate overall liability. Many awards have been granted in the past 12 months and we are now being presented with four estimates that offer a more comprehensive view of the possible outcome. I am very critical of the fact that one figure was listed in the 2002 report. It would have been much more helpful to the Members of the Oireachtas and the public if the approach that had been adopted in 2003 had been adopted in 2002 and a range had been given rather than one headline figure. Perhaps a lesson was learned after the publication of the 2002 report, as is evident from the more rounded approach in the 2003 report.
Mr. Purcell
I did not opt for a headline figure at all. The chapter in question was perhaps 30 pages in length and the figure of €1 billion was stated only once or twice with a heavy caveat. The basis on which the exercise could have been carried out a year ago is totally different from that on which it can be carried today. I was asked by the committee to determine this figure. It is repeated ad nauseum during the report that this is very uncertain.
I was asked to do a job, which I did using the best information available at the time, and came up with a range of figures. People tend to concentrate, for their own reasons, on the higher end of the range. The ultimate cost may be within the range listed in the 2002 report, and could even amount to €869 million. I do not know if this will be the case but let us hope, for the sake of the State and Exchequer, that it will not. However, I would not rule it out. To call the 2002 report a flawed exercise on the basis of the information that was available at the time is questionable. It was hazardous to make the estimate made by my office, but I issued various caveats. I cannot be responsible for individuals or groups who take a particular figure and use it as a headline. I have said this before and for the purposes of this meeting will say it again. The range of the estimate may not be that far out; I would not discount it entirely at this stage.
I have a different opinion. The Comptroller and Auditor General says he cannot be responsible for the views people take but a person writing a report should think of how someone reading it will interpret it. Everyone interpreted the Comptroller and Auditor General's report as giving the €1 billion figure. Any reasonable interpretation would have led a person to that conclusion. The author of a report should be conscious of how it will look when published. While he or she is not responsible for people's responses, he or she should be conscious of how they will look at it.
There is no mention in the report about the savings to the taxpayer as a result of the establishment of the redress board. In the 2002 report it was stated there had been 2,460 claims in June 2001 in which the State was a co-defendant. Following the establishment of the redress board, the majority of these claims are not going to court but there is no reference to the savings made. Three cases have been settled on the steps of the court without going through the redress board for €200,000, half of which is made up by legal fees. Clearly, had a large number gone through the legal process, the State would have faced an enormous liability.
It would not have been possible to quantify the liability last year. Two weeks ago we established that no one had attempted to quantify it for the State at that stage. The report specifically mentions that last year the objective and scope of the examination was to examine the State's contingent liability from the establishment of the redress scheme. The establishment of the scheme did not create a liability; there was already a liability which threatened to overwhelm the taxpayer.
The Comptroller and Auditor General lists four principal points which the Minister made in his memorandum to Government in October 2000, one of which was that he was of the opinion that there was a compelling case for putting in place procedures outside the courts system for dealing with claims from victims of abuse to avoid significant delays and costs in litigation. Apart from the worthy purposes, from a financial point of view, a key reason for the establishment of the redress board was to avoid the significant costs involved in litigation. There is no reference to this massive saving anywhere in the report. The establishment of the redress board could result in a major saving to the taxpayer as opposed to fighting each case in court or on the steps of the court. The legal costs alone in the three cases settled on the steps of the court amounted to €100,000 in each one, more than the awards and costs through the redress board.
As a reader, I feel the report was wholly imbalanced when it dealt with the liability to the State but took no account of the savings to the State as a result of establishing the redress board. That is one of the reasons people came up with the €1 billion figure. It could have been put in the report that the 2,500 cases listed at that stage could potentially cost €200,000 each, a total of €500 million if they had all settled at the time, several times more than what the redress board is now estimated to cost. There is, however, no reference to this in the report.
Before we examine witnesses, we must examine the report being put before the Oireachtas. Some feel the Comptroller and Auditor General is almost infallible. When I said this in private session, I was jumped on by members for daring to question the Comptroller and Auditor General. They wanted one view of anything he wanted to achieve.
If the Comptroller and Auditor General played football in north Dublin, he can take a few knocks.
Mr. Purcell
I used the word "rail-roaded" last week in response to Deputy Curran which was inappropriate when talking about estimating the cost of doing nothing and letting the matter go to court. I wanted to say I could not be tempted to attempt to do so for a very good reason.
We are talking about three cases. Deputy Fleming talked about the inadvisability of going down the road taken in the 2002 report of doing a calculation on the basis of 133 claims that had been paid at the time. In this instance we are talking about three cases that have gone to court. We have no idea if they are representative. I accept that the costs in any cases that might go to court would be much higher than those dealt with by the redress board. We have to say also, however, that it is highly unlikely that 2,500 cases would be brought to court. Of the people who have applied for awards under the redress scheme, 70% are over 51 years of age — many are older than this. Some of these events happened 40 years ago and the burden of proof on these individuals, if they had been inclined to go to court, would have been enormous. That was one of the reasons the redress board was established.
The vast majority think it was a good idea to initiate the redress scheme and I do not question its establishment. Nothing like that was implied. There is no criticism in the 2002 report of the Department which had prime responsibility for producing such an estimate but did not do so because I felt, in common with the Department, it would have been totally unreasonable to try to come up with an estimate with so many imponderables.
The only figure I could access that we managed to include was the congregations' own estimate of what their liability might be if they did not join the scheme — €54 million. I would not give much credence to this figure but since it was the only figure, I felt I would include it in the report. I quoted it on page 72 and felt that was enough. I was trying to do this in the context of a scheme initiated for very good reasons. At all times when it was being put in place there was an expectation the congregations would come in. From the start there had been talk of a 50:50 contribution. That is in all of the papers going back to the start. It changed later. They talked about 50:50 but with a cap as some realism came into the estimates. The original estimate when negotiations started with the congregations was that the redress scheme would cost €256 million. We have come a long way from that. There was a lack of realism then and even in some of the later estimates. The Accounting Officer is not here but I said in his presence last week that we did not start with €550 million — far from it. We have gone up to that and he has notched it up somewhat to €600 million, which is fair enough, but when we looked at it, that was not there.
I can understand why someone would read the report in a particular way. I try to write and prepare these reports in such a way that I can put my name to them and they will represent the facts in so far as we can. Some people might put a different emphasis on certain elements. There might be some omissions where, on reflection, one might prefer an extra line here or paragraph there, or maybe rearrange the positioning of points.
I have written thousands of pages for public consumption but I know only too well that I and my office are far from infallible. One takes a risk every time one puts material in the public domain, despite having sent it to the organisation under scrutiny for its views and having incorporated those in the report. Different interpretations are inevitable. I am not trying to excuse this because both reports, those of 2002 and 2003, are factual. Maybe they do not hit all the right points. That is a matter of opinion. I believe they hit most of the right points, but that is for others to judge.
I do not want to bury or praise the Comptroller and Auditor General but to add my opinion on the quality of the information in the 2002 report and the most recent one. It could be argued that great prudence has been shown, even in the figures we are hearing now. I was the lead questioner on the previous occasion the Accounting Officer from the Department of Education and Science appeared before the committee. This €1 billion figure has assumed mythic proportions. There is almost a psychological aversion to it. The reassessment on the basis of existing trends has a top figure of €869 million which is not very far off €1 billion. Like the original €1 billion, the €869 million is only the cost of the awards.
Mr. Purcell
That is the cost. The contingent liability would include the awards and the administration costs.
The trends show an underestimate in respect of the freedom of information requests and the numbers coming to the tribunal. The numbers on which the Comptroller and Auditor General has based the existing figures are slightly exceeded. He estimated that 90 people would attend the tribunal weekly, including new claims and so on, whereas the number is running at approximately 120.
Mr. Purcell
That is true, but we allowed that there would be some fall-off before there was a surge towards the end.
The roadshow in the United Kingdom took place subsequent to the 2003 report and we do not know how that will affect the overall figures. There is also the human factor that we do not know what will happen as the scheme draws to a close, whether there will be a sudden rush or more applications than there might have been beforehand. Given that those factors were not even measured, the figures the Comptroller and Auditor General has presented are very prudent.
We should take every opportunity to question the Comptroller and Auditor General about the information provided to us. However, I would not like to think that any member of this committee would ever question the motivation behind what is presented and how it is presented. That has not happened today. We can only know the figures are close to what they are likely to be at the end of the day. I am more prepared to accept the reassessed figures of between €750 million and €869 million than the figures from the Department of Education and Science of between €550 million and €650 million because the Department has constantly revised its figures upwards and has been well off the mark. I would like the committee to put more faith in the figures before us.
The 2002 report covers negotiation of the indemnity deal extensively. This committee received an extensive file from the Departments of Education and Science and Finance. I have mentioned this before in private session. Document No. 23, dated 30 April 2001 from Tom Boland, the legal adviser in the Department of Education and Science, is addressed to the Secretary General and approved by the Minister. It outlines the State's negotiating position and was drawn up in consultation with the Department of Finance and the Office of the Attorney General. He mentions that £100 million, as it was then, would be the bottom line figure which the State would accept.
The final paragraph recommends that as a quid pro quo, the State, for a reasonable contribution, would grant an indemnity to the congregations which contribute to the scheme in respect of all civil actions arising from acts of abuse committed by people eligible to make a claim to the compensation scheme. In April 2001, the State’s negotiating position, approved by the Departments of Education and Science and Finance and the Office of the Attorney General, was to offer an indemnity in respect of all cases capable of going to the redress board, regardless of whether they chose to go there. The indemnity would also cover them if people chose to go to court. That was a fundamental issue. The State received €128 million from the religious orders in return for indemnity covering all cases before the redress board.
The Comptroller and Auditor General's report last year does not accurately or fairly represent the State's position. It mentions only the amount of money being paid but does not accurately reflect its position on granting the indemnity. There is an impression that the deal was made with the Minister behind closed doors some time during the following winter but it was clearly the State's agreed position. The report is lacking in that it did not accurately and fully include the State's position.
The Secretary General from the Department of Education and Science appeared before the committee on 2 October last year, and on 10 November 2003 he wrote to the committee. Paragraph 3, signed by John Dennehy, the Secretary General, deals with the same point. On 30 April 2001 the Minister for Finance and the Minister for Education and Science agreed the position to be adopted in the negotiations with the congregations. This was agreed with the knowledge of and in consultation with the Office of the Attorney General. It included the following: "an indemnity to the congregations which contribute to the scheme in respect of all civil actions arising from acts of abuse committed on people who were eligible to make a claim to the compensation scheme". It also included a cap of £100 million as the lowest contribution which would be accepted from the congregations. I would like to ask the Comptroller and Auditor General whether that is a true reflection of the State's position in April 2001.
Mr. Purcell
I believe I said at an earlier meeting at which this arose that I agreed it would have been better for me to include that sentence on page 83 when dealing with the State's position but I do not believe a great deal turns on it, and I do not make much of it in the report. It was included in the context of the intervention of Office of the Attorney General at the end of January and the beginning of February. It had come back and asked what it was all about, saying it they had never agreed to it or did not know it had done so. However, I was not suggesting it had not been the State's position. If we look at the letter on page 85 that the Department of Education and Science wrote to the congregations on 6 November, we will see the following point included. The State would provide for permanent indemnity against litigation in cases that would come under the remit of the redress board. That was the first occasion on which this had been communicated to the congregations. In April we knew the parameters of the State's negotiating position to which I did not ascribe great importance. I have thought about this matter since the last meeting and nothing really turns on it.
Ultimately, in its correspondence about being out of the loop the Office of the Attorney General stated it did not understand this to be the case. It is clearly set out in the report that during the negotiations there were only two meetings that the Minister and the Secretary General of the Department attended to represent the State. Nothing at all was given on the issue of the indemnity. I believe it is quoted in the report that the Minister said it could not be agreed unless and until they went to the Attorney General. The fact that the committee, for very good procedural reasons, has been unable to elicit information from the Office of the Attorney General on the circumstances under which it could make such an assertion in a letter has not been resolved. However, it is a fact that it made this assertion and continues to do so.
I do not want to speak for the Office of the Attorney General but someone may have overlooked the parameters set, perhaps because he or she was out of the loop for so long. Its greater interest was that, to be able to give proper legal advice, it should have been in the loop to cover such matters as whether the indemnity should have been open-ended as distinct from who should have been covered. At one stage the Minister mentioned a ten year timeframe. However, ultimately, the three year timeframe from the last date for claims to be made to the redress board has been adopted. There was also the very important issue of where the indemnity might not come into play such as court cases requiring the State to take charge of the legal defence. The Office of the Attorney General got senior counsel's view on its implications.
I am trying to explain the context but it is fairly clear that, regardless of the internal parameters of the State's negotiating position agreed in April 2001, it had been on the table from 6 November that the indemnity could cover all cases that might fall within the remit of the redress board.
I hope I have been of some help.
I am absolutely delighted and concur with every syllable said by the Comptroller and Auditor General. I am pleased he said it, since I had thought I would have to do so. My reading of the file and documentation is that from April 2001 the position had been cleared by the Office of the Attorney General that the indemnity should cover all cases capable of going before the redress board, regardless of whether they did so. That was agreed and drawn up in consultation with it. As the Comptroller and Auditor General said, this was reiterated in the November letter. In the first paragraph of page 3 of the letter in the file presented to us, document No. 51, the author, Liam O'Reilly of the Office of the Attorney General mentions his understanding of the issue. As the Comptroller and Auditor General said, he had misunderstood or forgotten what had been agreed. It is inexplicable. We brought them in and they chose not to say why they had come to write that letter. I have come to the conclusion — I believe the Attorney General has said the same — that for some reason those involved in the Office of the Attorney General had forgotten or misunderstood the indemnity that had been agreed in April 2001. I accept that nothing of a financial nature turns on it. However, that misunderstanding in the Office of the Attorney General led to the exchange of what I might term inappropriate tetchy letters on 30 January and 1 February that year which were subsequently followed up and the Attorney General complaining about being left out of the loop.
Fionnuala O'Flanagan who was here two weeks ago made it very clear to this committee that it had been quite in order for a Minister and a Secretary General to have had a high level meeting and it had not been necessary. There was no question of anyone being left out of the loop and we had a political controversy. It had nothing to do with the Comptroller and Auditor General but, although not a party political committee, we are politicians. A row ensued after the report's publication. The Comptroller and Auditor General refers to the letter on page 93 of his 2002 report. It mentions an understanding. The Comptroller and Auditor General is quite clear that there was a misunderstanding on the part of the author. Perhaps it might have been better if it had been checked out with the person in question before being included. However, I am not too concerned about this. I wish to establish that there was a misunderstanding in the Office of the Attorney General that resulted in a big public spat.
In the Office of the Attorney General.
Yes. I am pleased the Comptroller and Auditor General has again stated his satisfaction with how the case was handled by the Department of Education and Science.
Mr. Purcell
That is not what I said.
It is not far off it.
Mr. Purcell
Clarification is necessary. In reading and re-reading the papers it seemed to me there had been a clear lack of understanding or appreciation on all sides around the time the agreement in principle was given about what the indemnity should cover. If it was that crystal clear the Department of Education and Science, in responding to the tetchy letter, would have said "look, you boys signed up to this back in April". It did not and there was much discussion about whether the indemnity should cover those cases that would fall within the remit of the redress board. That was not resolved until the Minister wrote to the Attorney General two months later on 13 April, outlining the policy approach he proposed to adopt in the further negotiations on the indemnity. He proposed that the indemnity should extend to all the persons who could apply for redress and that the period should not be any longer than ten years, which was later changed. I appreciate that witnesses at this committee might not have everything at their dispoal at one time, but at the first meeting when this was put to the Secretary General of the Department of Education and Science and Mr. Boland, who was the correspondent at that time, they did not respond in that fashion. They later came back with a letterstating, "this is the rabbit we have to pull out of the hat". I would say "fair play to them", but there was real confusion and I would qualify Deputy Fleming's comment that I was satisfied with the way the Department handled the proceedings.
I just wanted to put a few points of view on the record this morning.
Deputy Hayes and Deputy Dennehy are the lead questioners for the session with the OPW. Our procedure is a bit unusual this morning. There was a suggestion the last day that we close the chapter. Deputy Fleming said that he was not in a position to question the Comptroller and Auditor General at the end of that meeting and that he needed some time. In consultation, we reordered this business with the full intention that Deputy Fleming, while not being the sole questioner, would be the primary questioner for this section.
Will the Chairman allow the rest of us in now?
Of course.
Following the two contributions made, I would be very concerned if we started defending the figure of €1.04 billion. We put people through the wringer here every week on their estimates of work at the outset. When they get them wrong, we ask them how they arrived at that figure. We are entitled to question our own figures because one of the primary reasons for examining this issue was to establish if the contribution made by religious orders was an adequate percentage of the total liability. Politicians asked at the time whether this was a fair deal for the public. A sum of €128 million is a far higher percentage of even the highest estimate of €828 million in liability than it would be of €1.04 billion. I remember Mr. Dennehy being put through the wringer extensively on the discrepancy between his estimate of €605 million to €650 million and that of the Comptroller and Auditor General. He was asked how he arrived at this figure and why it was not nearer to that of the Comptroller and Auditor General, which allegedly was the correct figure. However, I believe the Comptroller and Auditor General got it wrong. I welcome the merging of the figures, but I particularly welcome the fact that we have established what the potential liability could be in the courts and that the vast majority of the awards being made are going to those who were abused.
I was concerned about the direction the debate was taking because it might lead us to abandon the redress system in the future. If the Department's estimates were so far out, we could end up criticising the redress scheme. The Government certainly learned a clear lesson from Army deafness compensation claims. It learned to avoid confrontation in the courts if possible, in order to avoid legal costs. I felt we were taking away from the establishment of this case by using the figures. Other issues came up, such as the degree of liability, indemnity cover and so on, but the main argument centred on the potential costs. The simple fact is that the highest estimate of the four is closer to the Department's original figure.
Mr. Purcell
On a point of order, the original figure was €256 million.
I am sorry. The estimate on the annual report to the Minister was €605 million to €650 million. It is still closer to that than €1.04 billion. My concern was that it was obvious, once a bill was mentioned, that everything would be centred around the bill from there on and it did not matter what was right or wrong.
The new list of institutions, mentioned during the past week in the media, has been added. I appreciate that the Secretary General said there might only be potential liability for 100 cases. Will these be costed separately to the original costing? Will it be possible for us in two years to explain that the extra liability arose out of the decision to add the 12 or 14 institutions to the list?
Mr. Purcell
I do not know. I take the Accounting Officer's word that there will not be a great raft of claims from these institutions. Generally speaking, they are smaller institutions and they have an idea of the claims that were extant in respect of those. It was made clear last week and in the passing of the legislation that there was always a possibility of adding institutions to the schedule. It might be difficult to try to establish a particular cost for adding those institutions because claims to the redress board are confidential. At some stage in the future there may be some aggregate figures brought out, but there will be no requirement on the redress board to do that. It is therefore unlikely that we could get those figures. The number of claims mentioned, I think it was 100, is relatively small. That is neither here nor there when we have 5,000 claims, with another few thousand on the way. It will not have a great impact.
If we reconsider this matter when we report later, we might think our original billing was correct. Have we received any feedback on the case brought last week by one individual who had returned to the court in which there was a substantial change? The individual concerned was the redressee but had lost out and returned to the courts. Will this affect the report?
Mr. Purcell
I do not think so. I understand the congregations may have made an extra payment in that case which would not affect the cost of the redress scheme to the State. It is always difficult to say what impact a particular court outcome will have on other claims. However, in that case the fact that the congregations have made an additional payment should not affect the ultimate liability.
When we report, one of the key points we will make will be in regard to whether €128 million represented a reasonable proportion of the cost. We made the point previously that the State had agreed to pay everything regardless and had made the decision to set up the redress board. However, we are trying to say the sum was fair and perhaps accounted for 14% or 18% of the total. Any issue which would interfere with this would lower the percentage contribution of the congregations.
Mr. Purcell
The committee's original request to me was in regard to my carrying out a value for money examination of the church-State agreement. I refused to carry out such an exercise because I did not feel it came within my remit. However, the examination that was carried out fell within it.
As I did not carry out the examination, I do not want to get involved in a discussion on the issue of value for money. Ultimately, people will consider whatever the final figure is in the context of the cost to the State. However, they might also consider the nature of the €128 million contribution from the congregations which were party to the negotiations. Approximately €30 million worth of property has been transferred without it having any connection to the redress scheme. Counselling to the value of €10 million has also been provided because the congregations felt they should provide it. If one were to be churlish, which I am not——
That will not stop Mr. Purcell saying what he wants to say.
Mr. Purcell
If one considers value for money, one cannot consider the total liability at one end. One must also look at the nature of the contribution. This was conceded — it was a real sticking point — during the negotiations in the context of previously transferred property. I will not calculate that figure but merely state a cynic could state the contribution would be left at €128 million, whatever the ultimate liability might be.
I would hate to leave the last word to the Comptroller and Auditor General because I would have supported the abused victims regardless of what others might say. Whatever the victims get, they deserve it. In addition, we took on the cases of others who were getting some money from the congregations. One of my concerns is that, if it was not value for money, one would question why we have spent such time on it. However, sin scéal eile.
Does anyone else want a last word? May we dispose of chapter 9.1? Is that agreed?
Yes. We have to carry out a report.
Agreed.
The Committee went into private session at 12.35 p.m. and resumed in public session at 12.45 p.m.
Mr. S. Benton
(Chairman, Office of Public Works) called and examined.