Comptroller and Auditor General Special Report 98: Provision of School Transport

Mr. Seán Ó Foghlú (Secretary General, Department of Education and Skills), Mr. Stephen Kent(CEO, Bus Éireann) and Ms Deirdre Hanlon (assistant secretary, Department of Transport, Tourism and Sport) called and examined.

The committee will examine the Comptroller and Auditor General Special Report 98 on the provision of school transport. We are joined from the Department of Education and Skills by Mr. Seán Ó Foghlú, Secretary General, Mr. Ned Costello and Mr. Richard Dolan. They are accompanied by representatives of Bus Éireann: Mr. Stephen Kent, CEO, Mr. Tom Delaney and Ms Miriam Flynn. I also welcome Ms Deirdre Hanlon, assistant secretary, and Mr. Kevin Doyle from the Department of Transport, Tourism and Sport.

I remind members, witnesses and those in the Public Gallery that all mobile phones should be switched off or set to aeroplane mode. Phones that are on silent may interfere with the recording system.

I wish to advise witnesses of 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. They 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 of the committee are reminded of Standing Order 186, which provides that the committee shall refrain from inquiring into the merits of a policy or policies of the Government or a Minister or the merits of the objectives of such policies.

While we expect witnesses to answer questions put by committee members clearly and with candour, they can, and should, expect to be treated fairly and with respect and consideration at all times, in accordance with the witness protocol.

I call the Comptroller and Auditor General to make a brief opening statement.

Mr. Seamus McCarthy

Special report 98 looks at the arrangements in place for the provision of school transport. The examination was carried out to ascertain whether the Department of Education and Skills can demonstrate that it is achieving value for money through its arrangements with Bus Éireann to deliver the school transport service and whether there is adequate oversight of the service by the Department. The special report was based on financial and service data relating to 2015. The briefing material provided by the Department includes data for later periods and there have been some significant subsequent developments which the Accounting Officer will explain. However, as the key findings of the report are likely to still apply, I will present them as reported.

Primary school children are eligible to avail of school transport services if they live not less than 3.2 km from their nearest suitable school. The eligibility minimum distance for post-primary pupils is 4.8 km. Pupils who do not qualify under the eligibility rules may use the school transport service if there is spare capacity on a bus route. Such users are known as concessionary ticket holders. Eligible children who hold a medical card and special needs pupils are exempt from charges for availing of the service.

The cost to the Department of school transport services in 2015 was €173 million, or close to €1 million per school day. The bulk of the cost is accounted for by payments to Bus Éireann, which received €149 million in 2015, or 86% of the amount spent by the Department. Bus Éireann also collected a little less than €14 million in fees from fare-paying pupils. The balance of the expenditure by the Department is accounted for by various grants, including for special needs escorts and transport grants. The average annual cost of transporting eligible pupils was approximately €1,800 per head in 2015. Fees recouped from fare-paying pupils amounted to a little more than 8% of the costs.

Although there has been a steady increase in the total number of enrolments in primary and post-primary schools over the past decade, the number of pupils who are eligible for and avail of the school transport service has fallen significantly.

In 2007, the number of eligible pupils who availed of the scheme was 127,000 or 16% of enrolled pupils. By 2015, this had dropped to 89,000 or 10% of enrolled pupils.

The school transport bus fleet is made up of a mix of large, medium and small buses. Taxis are also used to transport some pupils with special needs. Much of the service is subcontracted by Bus Éireann to private bus and taxi operators. Payments to subcontractors accounted for 71% of the cost of the service provided by Bus Éireann in 2015. Based on assumed average carrying capacities for vehicle types, we estimated the bus fleet as a whole had a potential carrying capacity of 163,000 pupils in 2015. Relative to the number of eligible pupils, the estimated level of spare carrying capacity in the fleet was 48%. Some of this spare capacity is taken up by concessionary ticket holders but the estimated residual spare capacity in 2015 was still significant, at about 35%. There was also evidence that some ticket holders do not use the transport available on a daily basis resulting in further underutilisation. At the same time, there is local demand in certain areas for concessionary access to school transport services that cannot be accommodated.

The examination also looked at the oversight arrangements in place between the Department and Bus Éireann. We found that in 2015 the Department was still relying on arrangements that had been in place for over 40 years contained in a 1975 document entitled, Summary of Accounting Arrangements. I concluded that the accounting arrangements provided for in the 1975 agreement are inadequate given the level of costs involved. Reporting requirements are weak and there is an absence of key performance indicators or other metrics that would allow the Department to assess service performance and the achievement of value for money. I recognise there have been some developments since the report was completed on a service level agreement.

The accounting arrangements provide for the Department to pay an annual lump sum transport management charge to cover Bus Éireann's indirect and unspecified other direct costs. The charge is provided for in the agreement at 13% of direct costs. By agreement between Bus Éireann and the Department, the management charge was capped at €16.7 million in 2011, at €15 million a year between 2012 and 2014 and at €11.3 million for 2015. Information provided by Bus Éireann to the Department and the costs to be met from the management charge indicate that, notwithstanding the cap, the amount paid was in excess of costs in each of the four years to 2014, resulting in an accumulated surplus being held by Bus Éireann estimated by the Department at €11.2 million at the end of 2015. The report includes a number of recommendations for improvement in the oversight and accounting arrangements. The Accounting Officer will be able to brief members on implementation progress in that regard.

Mr. Seán Ó Foghlú

I thank the Chairman and the committee for the invitation to appear before it. I will not read my full opening statement given the tightness of time. I will focus on our response to the recommendations.

The Department’s general agreement with the recommendations is recorded in the Comptroller and Auditor General's report. As the Comptroller and Auditor General has stated, progress has been made on implementing the recommendations since that time.

On forecasting, while the school transport scheme continues to be a demand-led scheme, in planning for projected demand the Department liaises closely with the National Council for Special Education in regard to projected enrolment trends at primary and post-primary. The Department is undertaking a route audit with independent professional advice to ensure that route design is optimised from a value for money point of view, taking into account the location of eligible children. In the process of preparing for that review, the Department worked with Bus Éireann on the digitisation of its route maps.

The Department has strengthened the governance framework around school transport and continues to do so. We have worked with Bus Éireann to put in place a number of additional elements of our governance framework, which builds on the 1975 arrangement that underpins our relationship with Bus Éireann on school transport provision. A service level agreement has been put in place between the two organisations. This sets out the reporting arrangements in place between the two organisations, the roles and responsibilities of both organisations, the agreed outputs to be delivered by Bus Éireann and the key performance indicators for the operation of the scheme. The agreement is under review and it is intended that an updated service level agreement will be put in place in 2019, with a view to further strengthening the governance framework around school transport.

Also in the context of reporting and performance monitoring, certain overhead costs and other indirect costs attributable by Bus Éireann to the school transport scheme are known collectively as the transport management charge. The Department commissioned an independent expert to carry out a review of the apportionment methodology for it. The report was completed in March 2018. The report provides a detailed analysis and classification of the costs incorporated into the charge. Based on the recommendations of the report, the Department has developed a reporting framework and we are working with Bus Éireann with a view to completing these reports initially on a biannual basis with a view to moving to quarterly reports. In addition, the Department has been taking steps to reduce the accumulated surplus arising from the charge. The surplus of €11.2 million recorded in the Comptroller and Auditor General' report will be eliminated by the end of the current year.

In regard to the final recommendation, all operational meetings between the Department and Bus Éireann are minuted and agreed by all attendees as a standing agenda item. While it did not generate recommendations, it is noted that a central part of the Comptroller and Auditor General's report was an examination of Bus Éireann’s procurement processes. The report records that Bus Éireann was compliant with public procurement guidelines.

I will mention two other areas of note in the school transport scheme. The first concerns concessionary transport. The purpose of the school transport scheme, having regard to resources, is to support the transport of children who live in remote areas. We have heard about the distance criteria. Families of eligible children living in areas where it is uneconomic to provide a transport service are eligible for the remote area grant towards the cost of making private transport arrangements if a service is not available. A number of non-eligible children are also transported in those circumstances, where bus places are available, after all eligible children are catered for. The transport is provided in the interest of maximising the utilisation of the existing fleet and in providing a service to families where the capacity exists to do so. Since the number of spare places is dependent on the number of eligible children requiring transport, there can be no guarantee from year to year of a place for those who do not meet the eligibility criteria.

On the special education needs scheme, the purpose of the scheme, having regard to available resources, is to support the transport to and from school of children with special educational needs arising from a diagnosed disability. In general, such children are eligible for school transport if they are attending the nearest recognised mainstream school or unit that is or can be resourced to meet their needs. Eligibility is determined following consultation with the National Council for Special Education through its network of special education needs organisers, SENOs. The Department and Bus Éireann are very conscious of the specialised nature of transport provision for these children. This is reflected in the standard of service provided by Bus Éireann, factoring the individual requirements of the children concerned into the planning of these services which generally operate on a door-to-door basis. Eligible children are exempt from school transport charges.

At a cost of almost €190 million in 2017, school transport constitutes a significant expenditure of taxpayer money. The scheme is under financial pressure from increasing demographics at primary and post-primary level but, more significantly, from the increase in the numbers of children with special educational needs being transported. While cognisant of the costs associated with the scheme, and having taken on board the recommendations of the Comptroller and Auditor General's report, the Department is continuing to strengthen the process to ensure value for money in the delivery of the school transport scheme, while also ensuring that all eligible children are accommodated with school transport services.

I am very happy to provide any further information sought and respond to questions from the committee. As the Chairman noted, we are joined by representatives of Bus Éireann.

Mr. Stephen Kent

I am joined by Ms Miriam Flynn, who is our chief schools officer, and Mr. Tom Delaney, our chief financial officer. They have joined me as part of a new senior management team at Bus Éireann. We are very pleased to be here to answer any questions and assist the examination of the findings of the Comptroller and Auditor General's report.

We have been operating the school transport scheme successfully for over 50 years. We do not exercise discretion on the policy and all applications are simply dealt with in accordance with the rules and guidelines. It is important to note at the outset that the delivery of our operation on the ground is highly complex and the scheme is administered by Bus Éireann on a cost recovery basis only.

The scheme has expanded dramatically in terms of vehicle numbers as the number of services provided under the scheme has increased from 1,700 contractor vehicles in 1998 to more than 4,500 now.

More than 460 new school transport services were approved by the Department and introduced by Bus Éireann in 2017. This year alone, another 300 new services are expected to be introduced by Bus Éireann on behalf of the Department. The vast majority of these will cater for children with special educational needs. All newly sanctioned services are opened to public tender by Bus Éireann.

With regard to the management of the overall network, 95% of Bus Éireann fleet operates two double trips daily, with the bus used for different school runs both morning and evening, comprising two return trips. More than 60% of contractors also operate double trips. It is important to note that 83% of the costs of the scheme comprise payments to contractors. Due to the nature of special educational needs routes, where the individual needs of a child are taken into account, many of these services are operated in single vehicles on a door-to-door basis.

On procurement, more than 90% of routes are subcontracted to private operators and 20% of these routes are tendered on an annual basis by Bus Éireann in compliance with EU guidelines on procurement. We welcome the finding of the Comptroller and Auditor General's report, which demonstrates that Bus Éireann is fully compliant with public procurement standards. This is testament to our stringent and equitable standards, which we apply to all our procedures and practices.

The Comptroller and Auditor General's report highlighted opportunities for improved governance and I will touch on those. There has been the introduction of a service level agreement, there are monthly operations meetings to review periodic financial and statistical reports and there are quarterly meetings with the chief executive and senior officials from the Department. I can provide some context in the information we cover in this regard. We provide a formal budget and projected costs for the financial year, which are agreed at the start of every year, and these consider both internal and external cost drivers, emerging trends, the anticipated level of demand and policy developments which may have a bearing on each of the cost headings each year. We prepare a schedule of monthly payments based on the number of school days each month, the mode of transport and the eligible children travelling. This is furnished to the Department at the beginning of each year, and it is designed to provide an estimate of the annual projected cost. These figures are reviewed at monthly meetings and amended as required. Sometimes there must be change, such as when there is a status red weather warning and costs have to be reviewed.

Individual statutory accounts are not produced for school transport as it is not structured as a separate company within Bus Éireann. However, all finances pertaining to school transport are audited and a separate statement of account for the school transport scheme is prepared as part of the company’s annual independent audit.

Bus Éireann is committed to providing the highest levels of transparency to the Department across all cost allocations. We have engaged specifically with the Department on allocations related to the indirect costs of staff, property and information technology, which account for nearly 85% of these indirect charges. Most recently, we are in joint agreement that all these costs are demonstrably related to school transport. A biannual review is in place to ensure that the basis for cost allocation is robust and transparent. Bus Éireann accounts are fully audited by Deloitte. An additional audit of all school transport activity is undertaken to comply with the summary of accounting arrangement in line with the 1975 agreement. This year and taking into account the comments of the Comptroller and Auditor General, Bus Éireann is in discussions with our auditors regarding a separate audit under general accepted accounting principles for the school transport part of our business.

Bus Éireann’s 2017 accounts noted that a €6.7 million ring-fenced surplus was held within its reserves on behalf of the Department to be used solely for future expenditure on school transport-related activities. In recent years, this has included spend on the creation of a new online ticketing system, an improved telephony and call management system and new school buses, all of which were authorised by the Department. Currently there is no surplus in reserve and our 2018 financial statements will support this position.

On the subject of the special needs scheme, it has evolved in recent years with a significant growth in the provision of transport for special educational needs children. This year, we received in excess of 3,000 new individual special educational needs applications or requests for amendments to services and this contributes to the growing cost of providing services. It is also worth noting that while the volume of work has increased because it is complex to deliver, there has not been a corresponding increase in the costs of administration associated with this.

We welcome the expansion of the scheme in recent years and we are conscious that we must also continue to strategically refine our own resources, processes, procedures and technology supports to ensure we meet its growing needs. We will do all that in close liaison with the Department of Education and Skills. We are committed to full transparency and to continuing this close co-operation as the scheme evolves. We fully enforce the rules of the scheme, comply with the performance requirements of the service level agreement and every day we try to deliver high standards of safety, consistency and reliability for all students who avail of the school transport scheme. We do this on behalf of the State. We have been operating the school transport scheme for over 50 years and we look forward to continuing to providing this vital service into the future.

Deputy Aylward has 20 minutes and Deputy Connolly will have 15 minutes before we get to the ten-minute slots. I ask Deputies to stick to the time limits because we must take into account the business in the Chamber. I will be more strict than I am normally. If there is time for somebody to get in a second time, it is all well and good.

I welcome the representatives of the Department of Education and Skills, the Department of Transport, Tourism and Sport and Bus Éireann. The roll-out of the bus system for schools was a good idea and I availed of it when I attended secondary school in 1968, which is a good few years ago now. While it was a great scheme when it was rolled out, there is always a "but". I am a rural Deputy representing County Kilkenny and every year, from July onwards, school transport, in particular concessionary tickets, causes me a major headache. I will focus on that issue today. As I mentioned, the service is good for most but it is not good for those who are left behind. That is the problem. I hear daily about problems and even last week a constituent with four children contacted me here in Leinster House about a problem.

Most parents work nowadays and it is not like it was years ago, when one parent stayed at home while the other was the breadwinner. It has changed and both parents must work, so getting children to and from school is the issue. The Fianna Fáil Party did some research for the 2016 general election and we updated the results this year. It found that 350 pupils with concessionary tickets did not access the school transport service this year and that €4 million would be sufficient to cover the costs involved. I accept that is a simplified version and rolling out services to this group would be a different job for Bus Éireann. It is small money in the overall purse of taxpayers' money. The Department and the Minister should address the issue. I repeatedly bring it to his attention.

There was a recession and we changed the rules in 2009 or 2010. Now that the recession is over, we should review the scheme and look after the 350 children who have been left behind this year, if my figure is correct. We should try to include them in the school transport scheme. Will the witnesses comment on that first?

Mr. Seán Ó Foghlú

The concessionary element is a key part of this, as we organise the scheme on the basis of eligible pupils first and then concessionary pupils. All pupils are supposed to have applied for transport by the end of April and all payments are supposed to be made towards the end of July. The first problem is that people do not necessarily all apply and pay fees on time. That is a challenge when it comes to organising routes. Getting past that, Bus Éireann, on behalf of the Department, must organise the routes, starting on the basis of the people who applied and implementing them on the basis of those who have paid. Once all the eligible people who have paid have filled the seats, the remaining seats are available for concessionary tickets. A large number of children are travelling under the school transport scheme using concessionary tickets. In the 2017-18 school year, they numbered just over 27,000.

This year, there were approximately 3,000 applicants who applied for concessionary transport who did not receive it. Of those, just 1,129 applied on time but did not secure a seat, while 1,888 applied late and did not receive a seat.

The figure is just around about 3,000. We are speculating on a scheme here. It is a matter for a Government to make policy but I do not mind taking this a little distance. If were to have a scheme where concessionary transport was available to everyone then, we would have a different number of applicants. Those applicants are on the basis of the scheme we have at the moment, not on the basis of a putative scheme that may provide transport for all concessionary users.

We were very conscious of this being an issue. Obviously on the establishment of the current Government, we had a review and published the outcomes. We are continuing further work on the nature of "concessionary" and whether there is a way we can seek to meet some of the need that has been identified, such as for a large group of concessionary users - not individuals - who seek to go a certain distance and who may already be eligible for school transport. We are exploring options in that regard and, yes, they would cost money. They probably would cost more than the figure to which the Deputy has referred because obviously one must organise transport. We are looking at that. One of the tensions we have in the scheme is that we have a scheme where costs are going up, especially on the special education side. We also have a tension, and it is an appropriate tension, to provide a social service to people who want to have it. That is a tension always. We want to make sure that we strike the right balance and that balance is obviously in the rules of the scheme and so on. Yes, we recognise it is a difficult issue. I am not sure it is as small as the Deputy set out and I am not sure it is even as small as I have set out. If we had in place an open choice to be transported to anywhere up to a certain distance limit, that could actually cost a huge amount of money. Obviously there may be room to develop the scheme slightly. We are looking at whether that is a possibility and that would obviously cost money if we were to do that.

I understand there is waste and will give examples affecting my constituents. I have experienced this myself as I must drive through these areas. A 40-seater bus serves a small place called Paulstown and brings children to Kilkenny but seven children have been left off. I believe that it would not cost an awful lot of money to provide a 50-seater bus.

I disagree with the changes that have been made to the qualifying criteria for concessionary transport. I know that the Department is not to blame for the changes because we, as politicians, are responsible for the changes. I come from a little place called Ballyhale which is in the southern part of County Kilkenny. In 1967, the three primary schools in the locality were amalgamated into one school. For 40 years there were no problems and everything worked beautifully but all of a sudden these changes were made. My grandchildren attend the school. Unfortunately, after a service being continuously provided for 40 years in the parish, due to the changes that were made here, parents of the children have been told that they should send their children to a different parish because that school is nearer. That is crazy stuff as everyone will agree who knows the loyalty that people have to their parishes, particularly in rural areas. While I am not talking about all rural areas, people tend to be very loyal to their parishes. There is religious loyalty because one receives the holy sacraments of baptism, first communion and confirmation in one's parish church. All of that has gone on for generations and the same applies to hurling, football, soccer of whatever sport one plays. Unfortunately, at the stroke of a pen we, as politicians, changed the criteria in 2010 or whenever. Therefore, after three generations have availed of school transport, parents have been told they must send their children to their nearest schools. I measured the distance that obliged one family in the parish, with three children, to travel. It was 0.25 km and the family was told the children had to attend a school located outside of the parish. We all know that one's loyalty is to one's parish. The family was told this because of the new criteria and, unfortunately, siblings will be separated as a result. The older siblings can attend one school but the next lot must attend school in another parish, which is nearer in terms of kilometres but not in any other way. That is a crazy situation so we must review the matter. I do not blame the Department for this situation. It is us, the politicians, who must review the scheme. I ask the Minister and my own party to review the matter and I hope it will be reviewed shortly. I ask the Secretary General to comment.

Mr. Seán Ó Foghlú

I do not want to comment about individual situations but I will comment about the situation in principle.

If we were to say to Bus Éireann you can run bigger buses where there are not enough eligible pupils for them, that is a policy change that costs money. It can be done but it is a policy change that costs money, and it would have to be applied across the country and in all areas. We have to have a consistent national policy. Yes, that could be done. Yes, it could cost a lot of money because Bus Éireann run buses of different sizes at different times. Yes, it can be done but, yes, it could cost a lot of money.

In relation to the amalgamations, the policy view was taken arising from the value for money, VFM, review. There is a very good example in the VFM of a few Catholic schools that happen to be in the same Catholic parish, where parents were living closer to one school but only could get school transport to the school further away. To be honest, we cannot set a scheme in stone in relation to amalgamations which were made 50 years ago.

We did for 40 years.

Mr. Seán Ó Foghlú

We did for 40 years but we cannot set it in stone and it was reviewed.

The other point is this is about school transport. Parents can choose to send their children to other schools, if they wish. I know there are challenges on parents to get students to different schools in respect of transport and so on. This is not requiring them to attend school. Parents can choose which school to attend, obviously subject to there being places in schools. This is about the availability of school transport to support that. I draw that distinction because I think it is an important distinction.

If we introduced and kept the level of choice to allow people to go to somebody under the former closed or close school rule, as well as the closest school, which was the policy dilemma, we would then have a myriad of choice, and a myriad of choice in transport costs a huge amount of money. It is a reasonable policy to say that the State will support a child to go to his or her nearest primary school. If a parent wishes to choose for a child to go to a different primary school, that is a reasonable choice for a parent to make but it is a choice that parents can make and arrange themselves.

Does the Secretary General think parishes, particularly in rural Ireland, should be recognised in the criteria? I am not talking about parents who want to pick specialist schools for their children and want the State to pay for it. I am talking about parents sending their children to one primary school in a parish. The parents have no choice because there is only one primary school in the parish. After 40 years, the grandparents, parents and grandchildren, have all of a sudden been told that the option is closed. These people have a right to get the same service that they were promised in 1968 and enjoyed for 40 years. Unfortunately, politicians have changed the situation with the stroke of a pen. If people went to court and outlined that they always had access to the school then I think the Government would be bound by it.

Mr. Seán Ó Foghlú

Nobody is saying that they cannot attend school. It is the availability of a service.

I am talking about the school bus service, not an individual service.

Mr. Seán Ó Foghlú

The policy does not recognise parish boundaries of the Catholic Church. No.

I am not talking about the Catholic Church. I am talking about all churches.

Mr. Seán Ó Foghlú

Then you would be into a myriad of different boundaries, depending on what the religion was. I do not think that is a reasonable thing for the State to do.

I do not want to get into anything personal. In Kilkenny, there is another school of another faith that gets that privilege and students are being brought to the school. The situation has caused a lot of anxiety because one faith gets the service yet only students of that faith are transported to the school. That situation is wrong and it has caused a lot of problems in my area.

Mr. Seán Ó Foghlú

The scheme at primary level allows for children to attend the nearest school of their choice, whether it is multidenominational, Catholic, Protestant or Irish-medium. It is a reasonable policy that the State would support the provision of children to their nearest school of whichever those types they wish to attend.

I will move on to another matter. The Secretary General has stated that school transport cost €190 million in 2017. Was that value for money?

I want to discuss the surplus. The Secretary General has said that there will be no surplus in 2019. There was one in 2015, according to the report compiled by the Comptroller and Auditor General. To me, the term "surplus" sounds like a profit was made. It is a crying shame to have a surplus and a profit when a couple of hundred children have been omitted from the scheme. It is a pity that money could not be used to bring the children to school rather than have a surplus and profit. Does a surplus mean there was a profit?

Mr. Seán Ó Foghlú

I will answer first, Deputy, and then Mr. Kent can reply, if that is okay.

Mr. Seán Ó Foghlú

We have a transport management charge, which is part of the fees that we pay or the costs we pay to Bus Éireann but there is no profit. Everything is assigned. There was a reserve held, which was held by Bus Éireann and referred to in their accounts in latter years, which was assignable, on agreement by us, to certain costs. We made the call this year that we would not let the company retain that any more. That is no longer being retained and will not be retained by the end of 2018. There was no profit in the scheme. It is a scheme on the basis of cost recovery, in terms of expenditure.

Bus Éireann is rolling out the scheme and it has subcontracted a lot of buses from private individuals.

Is Bus Éireann making a profit running the scheme? It is being said that its coffers are a lot richer because of the roll-out of the bus scheme.

I want to go a step further. It is a monopoly when there is only one service provider. Would we get better value for money if we opened it up to private contractors? Bus Éireann is subcontracting them for the routes. The routes are given out, many of which I know, around Kilkenny and Carlow and everywhere else. Would the Department not get better value if it went directly to the subcontractors, put the routes out to tender and saw who came in with the best price? Would that not save us money at a cost of €190 million? When one has a monopoly and no-one to compete against, it does not sound like good business. The service level agreement that is being talked about was questioned by the Comptroller and Auditor General in his report up to 2015. I question it as well. If we even got a sample of putting it out to public auction to see who would come in at the best prices, we might get a better and cheaper service. I ask the Secretary General to comment.

Mr. Seán Ó Foghlú

I will take this first and then perhaps Mr. Kent can come in.

The Department engages Bus Éireann to look at the applicants, their routes, and tendering. Bus Éireann has a transport infrastructure management expertise, which is why we work with it to do this. Within that, nearly 83% of what it does is on the basis of procuring out. Some 83% of the money we give it is procured out. Bus Éireann does that efficiently and it follows public procurement in doing that.

How does the Department know this when it does not have anybody else doing this or competing for it? Could better value be got if it went out to a private contractor to provide the service, for example, for Kilkenny alone for 12 months? One could then let Bus Éireann and private contractors bid against it and one could see who came in with the best value.

Mr. Seán Ó Foghlú

Bus Éireann is not bidding to provide transport in Kilkenny but is working out the routes and then procuring for the majority of services externally.

Could a private contractor not do that as well?

Mr. Seán Ó Foghlú

It would take a national organiser to do it on that basis. There is no alternative national organiser that we see. The bulk of what Bus Éireann does is to outsource procurement, which is done to Government procurement standards. There is no question about the procurement by Bus Éireann of the services. I think it is very really helpful that the value for money question was confirmed by the Comptroller and Auditor General. We get updates and sign-offs on reports from Bus Éireann to confirm that this is the case. We are looking at other ways that we can confirm that this is the case. I am not saying that we just take it on its word forever but we have to look at it.

I do not see an alternative national organiser to step in and organise all of those services and to procure and to work it out. We are, however, undertaking the audit of routes and when we look at that, which I referred to in my opening statement, we can then see if that informs any other policy choices. Of course, there are policy choices. At the moment our very strong policy option is to work with Bus Éireann as the route provider providing that it is outsourcing the vast majority of the service, as it does. The private sector is hugely involved in school transport.

I do not think that is the point that I am trying to make. Bus Éireann are running the system for the Department. Could the Department of Education and Skills not run the system directly and put it out to tender without Bus Éireann? It is a second layer of bureaucracy that could be avoided with better value for money. I am just a lay person asking these questions. I am a businessman and farmer as well, and when I am trying to get a price, I put it out to two or three people to see which is the best price. That is how I work my business and try to get value for money.

Mr. Seán Ó Foghlú

I do not believe the Department should do the route work. There is a transport expertise that is unique to Bus Éireann. There is route design, ticketing, and a whole range of things with which we, as a Department, do not want to be involved. We have set up agencies to provide State examinations and to do the work of the National Council for Special Education, NCSE. We set up one on education welfare that is now within Tusla under the Department of Children and Youth Affairs. I do not believe the Department itself should be undertaking that work. Given the extent to which Bus Éireann outsources in the first place, it is the company's transport management expertise that is vital and very important to us.

On value for money, we have to ensure that we understand all of the costs and that we are on top of all of the costs, and its accountants are signing off on these, and we are checking as appropriate. That is part of the service level agreement that we have discussed, along with a number of other matters.

Can I ask Bus Éireann to comment on that?

Mr. Stephen Kent

There are two aspects to this. The Deputy asked about value for money and whether we are making a profit. First, 90% of the routes that we operate are put out to tender and procured in complete compliance with EU guidelines. Anybody who gets to operate them will have won them on a competitive basis. Second, 83% of all of the costs associated with the delivery of this scheme at the moment go back to the contractors. They come through the Department, they pass through us and they go out there. This company has been through a radical transformation, as the Deputy may be aware, even in the past couple of years, and it continues to take on board a lot of the findings that we have. We have a transport management charge that tries to recover the indirect costs. It has fallen almost every year. It has fallen from €11.2 million and is part of the transformation that we tried to do again last year. It will be of the order this year of €10.5 million of costs. That goes to cover all of the indirect costs that surround and go into the business. We try to deliver and utilise it to get as many double trips into the business as we can into every single route. That is an important point.

What does Mr. Kent mean by a double route? Please explain.

Mr. Stephen Kent

It is a double trip. One might get the same bus to operate a run to the primary school in the morning and to do the post-primary as well.

They do two runs in the morning and two in the evening.

That is primary and secondary.

Mr. Stephen Kent

That leads in certain instances to more capacity on the first bus and less on the second. From our experience, it is still better value and cheaper to the State to do that rather than contracting two separate vehicles and different contractors to do it. There is value delivered on that. We continue to try to utilise the capacity. Even though, as the Deputy states, there is concessionary use there, we try to ensure that where we take it in, that there is a contribution coming back into the value of the route. Those students are having to pay in to utilise it and that contributes to the value of it. What we are doing is that we never stop. We have a new management team here with a school transport officer just in place and what we are undertaking is a full structural review within our business as to who is delivering it.

We have delivered a lot of the services directly ourselves with our own Bus Éireann fleet and drivers, supported by a lot of clerical administrative staff. We are now looking at the full needs of the scheme in conjunction with the Department. In particular, as we have recognised that as special education needs have grown, some of the assistance we must do in that regard has to grow. One does not see that cost coming up. If anything, one can see that everything we are charging through what is called the school transport management charge, which is almost a misnomer because it is a recovery of all the indirect costs of providing the service, is coming down year on year since 2008. To the Deputy's point, I can categorically state that we operate this on a cost-recovery basis. There is no profit in this for us at present. That is another matter for us, but that is within the scheme. Where there has been a surplus from one year to the next, it is identified, completely ring-fenced and brought to the Department-----

Where does this surplus go? Does it go back to the taxpayer or does Bus Éireann keep it?

Mr. Stephen Kent

It goes back to the Department at the Department's discretion.

Am I finished already?

Time flies. The Deputy might get back the second time.

Just on the Comptroller and Auditor General, 80%-----

Can I just clarify that point? Does the surplus go back to the Department?

Mr. Stephen Kent

Yes, we have to return the surplus to the Department if there is any surplus in any one time. That is the way it operates. The Comptroller and Auditor General report identified a surplus and it has gone back. Sometimes, as I have said here, depending on where we are, that surplus has been used, if the Department agrees, where we have needed to invest in a technology system or in more customer service support systems. We bring that to the Department and it decides whether we are allowed to do it.

I have to stop cutting across Mr. Kent because my time is nearly up.

This is your last question.

The only comment-----

Mr. Seán Ó Foghlú

I can clarify the answer, if that is okay. That surplus has returned to the Department this year. It netted off this year for the first time. Previously it was held by Bus Éireann on an annual basis. It has been netted off and returned to us for the first time this year.

Parents are tearing their hair out as they try to get their children to school. The surplus that is handed back should be utilised to look after parents who are in need of transport. In 2015, the level of spare capacity was 18%. Almost 20% of capacity was available in 2015. What was the situation in 2017? What is the situation in 2018? Given that we have the situation that we have, it is extraordinary that 20% of capacity is not being utilised. The 2015 figure I mentioned came from the Comptroller and Auditor General.

Ms Miriam Flynn

I would like to explain what constitutes spare capacity. Mr. Kent and Mr. Ó Foghlú have touched on this. We try to ensure we get the maximum utilisation out of all vehicles. Approximately 95% of Bus Éireann vehicles operate more than one trip, morning and evening. The same can be said of more than 60% of contractors. Even though there may be spare capacity on one of the trips, the Department is still getting a more cost-effective network and better value for money. I assure the committee that where capacity exists on a particular route, it is fully utilised to meet the demand that exists for concessionary transport on that route. If there is demand for concessionary transport, any spare places are allocated on that basis. This year, we probably have the highest number of concessionary pupils travelling. The total number is approximately 28,400. We aim to try to utilise capacity as best we can. We also have to look at capacity in the context of the value for money it provides and the utilisation we get out of the individual vehicles. I would like to touch on one other point, which is that there will always be an element of spare capacity. If 35 eligible children present for travel, one has to procure a 50-seater vehicle. There will always be cases in which a certain element of spare capacity exists anyway. The key priority for us is to look at this issue in the context of the amount of utilisation we can get out of the vehicle and the cost that the State would incur if a separate vehicle had to be procured. The two issues of utilisation and cost-efficiency are looked at in tandem.

Some parents in Kilkenny have conducted a survey on the matter of seat utilisation. The hoarding of seats is a big issue in rural Ireland, where I come from. I am talking about seats in respect of which tickets have been allocated. I have received answers on this from Bus Éireann on several occasions. Seats are being allocated but are not being used; they are being hoarded. The survey to which I refer was conducted for a month earlier this year on the bus that brings children from Paulstown to Kilkenny. It was found that on every day of the survey, 11 seats were available on the bus - going in and coming home - and seven children were left on the side of the road. The parents did this survey themselves. The 11 seats that were not being used were being hoarded, perhaps by parents who were bringing their children to school on their way to work. Perhaps they keep these seats for rainy days on which they cannot bring their children to school. Something should be done about such terrible practices. Seven children are being passed and left on the side of the road, even though there are 11 empty seats on the bus from Paulstown to Kilkenny. I am just giving an example. I do not mean to mention my own area all the time. It is a crying disgrace to see 11 seats being left empty as the bus goes in and out, while seven children are left on the side of the road. This survey was carried out over the course of a month. It found that on average, ten or 11 seats were empty every single day. Bus Éireann or the Department should wake up and do something about this. If a seat is not used over a period of two or three weeks, it should be taken off the person who is not using it. Some allowances can be made. Parents are keeping these seats to use them on a rainy day when they are not going into Kilkenny for a work day or something like that. I am not saying I know what the situation is. It is a disgrace that 11 seats were continuously available for a month without being used, while seven children were left on the side of the road. Something should be done about it.

Okay. I am moving on to the next Deputy.

No, I want an answer to that.

Mr. Seán Ó Foghlú

I can answer that.

I know I am going to be told that the seats are allocated as they first become available. That is not the answer I want.

The Deputy should set out the answer he wants.

I want to hear that the seats are going to be utilised. That is what I want.

Mr. Seán Ó Foghlú

There is a big child safety issue here. I fully accept we have a problem because children do not use the seats fully. I am not going to do a Ryanair job on school transport. I am not going to over-allocate the seats and perhaps have a child standing at the side of the road.

The Deputy's question was not about over-allocating. He said that the Department has no method of knowing whether a ticket for a seat that has been allocated to someone is being used. We are not suggesting that the Department should over-allocate. We are saying that if the Department had a system that allowed it to gather evidence of seats not being used, and it transpired after a full term that a certain seat had never been used-----

I am not talking about over-allocation.

No, we are not talking about that at all.

I am talking about usage.

Has the Department looked at this phenomenon?

Mr. Seán Ó Foghlú

We have examined it, but we have not found a way to address it. Different children use buses on different days, rather than not using them at all. That is the issue. It is possible that there are seats that are not used, perhaps because a sick child has been at home for a period of time.

I have mentioned a bus on which ten or 11 seats-----

Mr. Seán Ó Foghlú

The volume of interaction required to manage that precisely means it would get very interventionist.

Perhaps it would be possible to solve this problem using the technology that has been mentioned. If the Department has looked at this issue, perhaps it can send us an information note on what it has discovered to help us to understand how it was teased out. Perhaps these issues cannot be known for sure until a way is found to check the pass as each student goes in.

We have to swipe in when we come in here every day. Modern technology should allow this to be done simply on a bus. I press a button every day to show I am here. Modern technology and computers-----

I am going on to the-----

Mr. Seán Ó Foghlú

I remind Deputy Aylward that children can be at home from school because they are sick-----

Yes, we appreciate that.

Mr. Seán Ó Foghlú

-----or for many other reasons. A high level of interaction with the school is required.

I am going on to Deputy Connolly.

Will I get back in again?

Mr. Seán Ó Foghlú

We will come back to the Deputy.

Mr. Ó Foghlú has said that this has been looked at. The Department must have some documents, having considered the complex issues involved. The Department might share with us the benefits of what it has looked at. I appreciate that difficulties might arise if every person going to school had to present his or her ticket each day. Kids lose their schoolbags, not to mind their tickets. I know it is always going to be hard to measure. If the Department has looked at these issues, perhaps it can provide us with the evidence it has gathered. I call Deputy Connolly.

The witnesses are welcome. I thank them for all the information. I congratulate Bus Éireann on being the first group to come before us having complied with all procurement rules. I have not seen that previously. Well done. I am aware that Bus Éireann is not audited by the Comptroller and Auditor General. I thank its representatives for their co-operation. The officials from the Department are present to discuss their oversight of the scheme. It is a great scheme. I know there are operational difficulties on the ground, but I will leave them for the moment and look at what we are here for. The Chairman might advise when I have two minutes left because I want to ask a practical question that relates to Connemara.

Having got the congratulations out of the way, and having referred to the essential nature of the service, I must mention that the report is damning in respect of the Department's oversight. I realise that things have moved on since then. I suggest we should look at the conclusions in the report. Even though this is ostensibly a cost-based service, the report identifies serious flaws in the recovery of costs, particularly the management charge, which I will come to. Oversight reporting requirements were weak, there was no service level agreement, and forecasting was poor. The report makes three recommendations, within which there are a number of elements. What do the officials from the Department have to say about the serious flaws in the recovery of costs? I understand what Bus Éireann has said. The witnesses can correct me if I am wrong in my understanding that the management charge was fixed at 13% of the direct costs, regardless. It was capped at that level. There was a surplus arising from that year after year. The figure for "accumulated service" was €11.2 million when the report was compiled, but it had decreased to €6 million last year. I might be wrong, but I think it was recommended that this should be eliminated on the basis that there was no adequate explanation from the Department of how it was fixed and so on. Mr. McCarthy might correct me if I am wrong when I say the recommendation was to get rid of it. I understand it is gone now. Where has it gone to? How did it happen? If it was correctly done on a cost recovery basis, how was this charge allowed? Where has it gone to? I understand it has gone this year as a result of the special report. Is that right? It did not go on foot of any action from the Department.

Mr. Seán Ó Foghlú

I will start by responding to the question the Deputy asked about Bus Éireann and the Comptroller and Auditor General. Some members of the committee will recall a session we had about school transport four or five years ago.

Arising from that session, we indicated that we would welcome the Comptroller and Auditor General going into Bus Éireann to determine whether that was desirable. That was the genesis of the report.

We decided to have a very good look at value for money in school transport in the final part of the past decade. We concluded that we needed some rule changes on efficient routes, which were adopted by Government.

Mr. Ó Foghlú-----

Mr. Seán Ó Foghlú

Deputy Connolly asked where it came from, so I am trying to explain-----

I am talking about the fixed charge.

Mr. Seán Ó Foghlú

I am going to come to that now. We also focused on the fixed charge. We carried out a detailed report on the fixed charge at that time as well. We concluded that the best way to reduce the fixed charge was to cap it. Previously we had a cheap seat for every child, which meant that we did not have spare capacity. When we moved away from that, the extent of the charge meant that reserves were building up, from which Bus Éireann was occasionally able to purchase buses with our agreement. The company purchased computer equipment, dealt with other matters, improved their mapping of routes and so on.

I am not questioning how it was used. I accept that it was probably used for the good of the service. It is now gone. It has been highlighted that this surplus was not reported in the Department's statements. I refer to the paper record and the justification for it.

Mr. Seán Ó Foghlú

It arose from the arrangement we had. We looked at the value for money represented by having a seat for every child because the reserve was building up. We agreed an allocation from it, and we worked on the basis of allowing Bus Éireann to keep it from year to year. We had discussions internally and with the Department of Public Expenditure and Reform. In parallel with the work of the Comptroller and Auditor General, we decided that we did not wish Bus Éireann to retain it from year to year and that we would fund any costs on an agreed basis in a year. That is the basis on which we are proceeding. It was public knowledge. We had talked about it openly at this committee. We recorded it in our accounts in 2017. It is in Bus Éireann's accounts as well.

Has that direct management charge gone?

Mr. Seán Ó Foghlú

No. I refer to keeping a surplus on it. There are direct costs which are paid for directly. The monitoring charge includes a mixture of some direct costs we should pay for directly, which we are working through with Bus Éireann, and some indirect apportioned costs. It is a combination of those things that are-----

As such, the 13% management charge has been kept. It is still in existence. The surplus is gone.

Mr. Seán Ó Foghlú

Yes. There is a management charge which is well below 13%.

This is an area that has been the subject of many reviews. I read one review from 2016 that refers to 11 reports since 1977. We have more reports. It has been subject to significant analysis. I wish to raise the Department's supervision and the lack of a service level agreement. The opening statement said that there is a service level agreement and it is now under review. When did that agreement come into play?

Mr. Seán Ó Foghlú

The service level agreement came into place for the previous school year. It was for 2017-18. We have extended and changed it for 2018-19. We want to improve it further.

Why did that not come in sooner? An essential service covering so many pupils had no service level agreement. My time is limited, but I note that the Comptroller and Auditor General has itemised the lack of oversight in his report. He specifies what should be there. Why did that not happen sooner?

Mr. Seán Ó Foghlú

The issues that we covered in the service level agreement were covered in the interaction and regular meetings with and annual returns from Bus Éireann. However, they were not comprehensively provided for in a service level agreement and it was fully appropriate to do that.

There were no minutes. Has that been rectified?

Mr. Seán Ó Foghlú

Absolutely.

Has all of that been rectified?

Mr. Seán Ó Foghlú

Yes.

Are there quarterly or monthly meetings?

Mr. Seán Ó Foghlú

Monthly meetings take place most months. There are also quarterly meetings, which are of a different kind.

I wish to discuss the spare capacity. I have read the reports and I understand the balance. It is difficult. Is it correct that the number of eligible students has reduced significantly from 2007? Overall we are catering for 117,000 pupils per year. What percentage of that is made up of eligible students?

Mr. Stephen Kent

Some 28,000-----

Some 28,000 are concessionary and the rest are eligible. The concessionary students pay a fee depending on whether it is primary or secondary. The Department has spare capacity. Apparently that has increased significantly, according to the Comptroller and Auditor General. Perhaps I am wrong and that has changed since his report.

Mr. Seán Ó Foghlú

The report says that the proportion of the capacity used by eligible students has declined.

I understand that. The number of eligible students has declined. The proportion of concessionary students has increased. Is that correct?

Mr. Seán Ó Foghlú

Yes.

However, the spare capacity on the buses has also increased. Is that correct?

Mr. Seán Ó Foghlú

In the Comptroller and Auditor General's report, the concessionary students were not fully included in the capacity. Is that correct?

Mr. Seamus McCarthy

No-----

I refer to the residual capacity.

Mr. Seamus McCarthy

There is a reference to-----

I refer to the residual capacity for each of the past two years.

Mr. Seamus McCarthy

In 2007, the estimated residual capacity was 24%. It has increased to 35%, taking the concessionary pupils into account.

Mr. Stephen Kent

Our latest view suggests that it is riding at approximately 33% at the moment.

Is that not significant?

Mr. Stephen Kent

Of course we try to fill all the buses, but it is demand-led. When we procure services, there are sometimes different vehicle types. Whether it is a 44-seat or a 52-seat bus can sometimes depend on the locality being served. Part and parcel of that is that where there has been demand, particularly for concessionary seats, we will try to make sure that every seat is occupied. We also try to take into account the mixed nature of bus types we use. There is a combination of singles, 14-seaters, mid-size vehicles and bigger buses.

Mr. Stephen Kent

We try to deploy them as efficiently as we can every year. The issue that continues to confront us is that the closing date for this is around 27 July. We are also trying to get everything else in place for the beginning of the school year in September, five to six weeks later. Until we know exactly where the demand will emerge every year, we almost have to evaluate it on a year-to-year basis. To cater for that, particularly in the case of any mix or change in demand, we retender the contract. As I said, 20% of all of the service is retendered to make sure we are getting efficiency and value. Second, all of the routes continue to be reviewed. At this point we have made it clear that if there is any audit requirement, or if any way can be found to improve efficiency and utilisation, we will work with anybody who wants to review that with us. We will be completely open and co-operative on that.

The 2016 report recommended a reduction in fleet because of the residual capacity. I refer to the review of the concessionary charges. Is that correct?

Mr. Stephen Kent

Yes.

That has not happened. I am thinking of climate change and the necessity of buses on roads and the reduction of car usage. I have not seen that mentioned anywhere in any of the documents. Climate change has to be one of the criteria taken into account in any value for money analysis .

Ms Miriam Flynn

If I may clarify, the point I was making earlier about spare capacity and utilisation is linked. We try to get the maximum utilisation out of a vehicle. We may require a 50-seat vehicle to operate a post-primary trip with 44 children. That bus can do a primary run which may have only 25 children on it. We will try to utilise that vehicle because it is more cost-effective.

Unfortunately, it has an adverse effect on spare capacity numbers but it affords a greater level of efficiency and is far more cost-effective from a value-for-money and a departmental perspective. When one looks at the figures in isolation, it is the multiple runs where the level of spare capacity is higher. Where one vehicle is doing a single run, the levels of spare capacity are much lower.

I understand that and the nuances involved. There has to be some new and imaginative way of looking at this and I understand the Department is open to that.

On climate change, we want more people to travel by bus. That is essential. On the other hand, there are practicalities involved. I refer to the situation in Galway, about which I want to make a general point. Children go to school, and they have tickets. If they go home at 4 p.m. or thereafter, they miss all of the after-school activities. A letter was written to us in respect of this matter and we were asked if the children could use their tickets on regular buses. In this case, it is Carraroe, ag gabháil siar do dtí Ceantar na nOileán. Those children have a choice of missing after-school activities and going home on the school bus or, with the permission of Bus Éireann, using their tickets on regular buses which are passing back towards Carraroe in any event. However, they cannot do the latter. Am I making my point clearly enough?

Mr. Stephen Kent

Yes. Unfortunately, it would not only be our consent that would be required because one is talking about the scheduled services that are operated under the supervision of the National Transport Authority, which determines the fares and sets the fare strategy in respect of those services. We collect the revenue in the context of how those fares are set. In an ideal world, if we had integrated tickets, we all agree they might work on those services. An integrated ticket would recognise revenue on a particular trip and then revenue on another trip. Perhaps that is something we can aspire to but at the moment it is not possible.

We are beyond aspiring to it. We have major changes to make in the context of climate change. We are talking here about one child but the circumstances involved are reflective of those of quite a number of people. The person who wrote that letter stated that there are over 20 students involved. Are we going to obliged 20 people to drive their children home in cars or jeeps simply because we are waiting for an ideal time when there will be integrated tickets in place?

Mr. Seán Ó Foghlú

I referred to the balance between social policy and cost but that is also an example of where we would be creating 20 empty seats a couple of days a week on a bus. Children may choose not to take the school bus; they may take a public bus and pay for it later. The issue is that there is a public service. Whether there is space on it, I do not know. The issue is that whether the State should pay for the two seats. The first seat on the school service and the second seat on the public bus, or is it possible to rotate seats so that, potentially, somebody else could use the school bus seat. That is very difficult to manage on a day-to-day basis.

I understand the operational difficulties involved. As a society, we have no choice but to face these practical problems in the context of climate change. It makes no sense for 20 families to put jeeps and cars on the road so that their children can go to after-school activities, when a half-empty bus-----

Mr. Seán Ó Foghlú

They can still get on that bus-----

No, they cannot. In this particular case, the school bus has gone.

Mr. Seán Ó Foghlú

They can get on a public bus, if there is a public bus. It is just the issue then as to whether the State pays for them.

That is being a bit disingenuous. They have paid-----

Mr. Seán Ó Foghlú

It is not disingenuous if the Deputy is stating that the alternative is for people to get in cars and drive them when there is a public service available. The way the Deputy has described it, there is a public service on that route. The issue is whether the State pays for them to get on to that bus.

I wish to make one further point on the route review. A number of reports were recommended in the chapter and Mr. Ó Foghlu stated earlier that, in terms of the route review-----

Mr. Seán Ó Foghlú

We are looking at three counties. We have done an initial digitalisation with Bus Éireann and we have engaged a company to examine that. The company in question will look at the routes, at the issue we have been discussing and at whether the double tendering for the double route has been effective. All of those issues will be examined. It is an external challenge to Bus Éireann's expertise in the context of its transport management. This will be the first time we have done it. We are going to trial it first in three counties and, depending on the outcome, we are considering taking it further.

Was that tendered for or how did the Department get it? Is that an independent company?

Mr. Stephen Kent

It is an independent company.

Which three counties are involved?

That is what I asked.

Mr. Richard Dolan

Galway, Mayo and Roscommon.

They are all together.

Mr. Richard Dolan

The point is-----

How does the Chairman mean they are all together?

They are contiguous.

Mr. Richard Dolan

They are beside each other.

What about the south east?

Mr. Dolan is going to cover the point I was going to raise because he will have some people from one county covering the boundary. That was going to be an obvious problem if the Department was going to proceed strictly county by county. The Department is covering students going from one village to the nearest village in the next county.

Mr. Richard Dolan

Absolutely. There are some urban and many rural areas involved.

I understand there is the reason to cluster in that way.

I wish to make a final comment on climate change. We have no choice. I have mentioned 11 reviews since 1977; that is to ignore some of the other reviews. At some point, when we talk about social responsibility in respect of this service, climate change has to be factored into any of these reviews, particularly in the context of capacity. It has to be a feature. I do not hear that from Mr. Ó Foghlú.

Mr. Seán Ó Foghlú

I talked about balancing costs with social policy. The latter includes policy regarding climate change. We are obviously responsible for school transport. Climate change in a broader transport responsibility. It is the responsibility of the Department of Transport, Tourism and Sport. It is taken into account in a very big way-----

It is each Department-----

Mr. Seán Ó Foghlú

-----in the planning framework.

-----it is across Government.

Mr. Seán Ó Foghlú

The policy responsibility for public transport is with the Department of Transport, Tourism and Sport and it is taken account of in the development plan and in Project Ireland 2040, which has major regard to climate change.

If there is time, Deputy Connolly will be able to come back in. I call Deputy Jonathan O'Brien.

I have a couple of questions but I want to follow up on the management charge and the surpluses in order that I can better understand what is involved. It is stated on page 27 of the Comptroller and Auditor General's report that €11.2 million was the accumulated closing balance surplus for 2015. What is it currently? I know it went back to the Department for the first time this year. How much went back to the Department?

Mr. Tom Delaney

Some €6.7 million went back.

The closing balance surplus for 2015 was €11.2 million and now it is €6.7 million. The surplus has decreased. Do we know how that occurred? Is it possible to obtain some indication in that regard? The reason I ask is because it was €8.1 million in 2011 and every year thereafter the closing balance surplus was increasing-----

Mr. Seán Ó Foghlú

The itemised expenditure can be provided to the Deputy. We can talk him through it. In 2017, there was expenditure on ESRI mapping and on the special educational needs application system. In 2016, there was expenditure on the fleet and on an IT Trapeze system. the latter was also an expenditure item in 2015. In addition, there was expenditure on the Trapeze system and some overtime in 2014. We can itemise the expenditure.

Can it be provided to the committee?

Mr. Seán Ó Foghlú

Absolutely.

A decision has been taken that any unused surplus will go back to the Department every year and will not be held on account by Bus Éireann. Is that correct?

Mr. Seán Ó Foghlú

That is correct.

For the past number of years, the unused surplus was held by Bus Éireann. I presume there is interest accruing on that because it is held in a bank account somewhere. Is that included in the unused surplus?

Mr. Tom Delaney

The €6.7 million at the end of last year would have been the surplus.

Would that have included the interest that had accrued in recent years?

Mr. Tom Delaney

There was no interest accruing on it.

How does Mr. Delaney mean that there was no interest accruing on it?

Mr. Tom Delaney

Essentially, the €6.7 million was a balance due back to the Department and held by Bus Éireann. We did not make any formal calculation in respect of any interest that might or not have been payable on it.

Let me get this straight. Every year there is a surplus. In 2011, the surplus was €8.1 million. I presume that was held in a bank account somewhere. Where is the surplus held? Perhaps the Comptroller and Auditor General can assist me.

Mr. Seamus McCarthy

My understanding of it is that it would be part of the cashflow in CIÉ as opposed to being a separate fund.

Mr. Seán Ó Foghlú

Our understanding is that it was identified separately and held by CIÉ. That is the assurance we got from CIÉ and Bus Éireann.

Okay, If I have a surplus of €8.9 million at the end of the year, I will be keeping it somewhere.

It is not mine but, with the agreement of the Department, I can use it to offset some costs. If I am holding it somewhere, surely interest is accruing on it. Perhaps the Comptroller and Auditor General can help me with this point. The figure increases every year, but are we being told that it does not include interest that has accrued year on year?

Mr. Tom Delaney

That is right. The figure that is stated does not include interest.

Mr. Seamus McCarthy

As I understand it, there was no agreement that moneys would be held. There was no provision for interest to be charged on any figure like that. These are the figures that just wash out of the funding arrangement that was in place dating back to-----

Would that be normal?

Mr. Seamus McCarthy

One would certainly expect that, if somebody was holding funds on behalf of another agency, there would be a clear understanding of the basis on which that funding was being held. If the organisation holding the funds was using them, an interest element should accrue. However, it is the responsibility of the Department to ensure that, if its funds are held, it gets an interest element.

There was no agreement.

Mr. Seán Ó Foghlú

We did not have an agreement on that. We had an agreement that the company would hold it for usage and every usage of it was agreed, but we did not have an agreement in respect of interest.

Is it possible to work out how much potential revenue in terms of interest accrued the State has lost as a result of this agreement?

Mr. Seamus McCarthy

One would have to find a basis for agreeing what the interest rate would be in that situation.

Mr. Seán Ó Foghlú

Some interest rates are negative at the moment.

Is CIÉ in an overdraft situation?

Mr. Tom Delaney

No, it is cash positive.

It would not have been used to reduce an overdraft.

Mr. Tom Delaney

No. There would have been a very low interest rate, if that.

That is interesting. Regarding running costs, page 54 of the Comptroller and Auditor General's report contains a copy of the 1975 agreement. I am seeking clarification ahead of some of my questions. The report provides a breakdown of the running costs - maintenance, servicing, accident repairs, periodic overhauls, lubricants, tyres, fuel, etc. - as well as tax paid on the buses. Do these costs just relate to vehicles that are being used full time?

Mr. Tom Delaney

All of the direct costs that are outlined basically relate to the provision of the service directly either through Bus Éireann vehicles or contractors.

In the case of a contractor, I presume that it is not the only use of his or her vehicle.

Mr. Tom Delaney

That is correct.

The contractor is free to use it in other instances as well. Is it correct to assume the taxes paid on that vehicle form part of the contract? We pay for the vehicle's tyres and servicing, but the contractor can use it for more than school transport.

Mr. Tom Delaney

No.

Mr. Seán Ó Foghlú

The private contractor just provides the vehicle in full. The costs outlined are for the Bus Éireann provision directly.

That was my question. These figures only relate to the service that is provided by-----

Mr. Tom Delaney

The Bus Éireann fleet. Exactly.

That answers that.

In its investigation, the European Commission found that this scheme was not compatible with state aid rules. We disagreed. To be honest, I support that disagreement because there is a social element to this service. The Department has been engaging with the Commission since 2014 on future implementation measures. Will Mr. Ó Foghlú update us on those engagements?

Mr. Seán Ó Foghlú

There are two different EU cases, but they are linked. From our Department's point of view, we have updated the Commission regarding the organisation of Bus Éireann and indicated that it is our agreed intention to ensure at a stage in the future that the school transport element of Bus Éireann is clearly identifiable within that company. We are moving towards that, but there are further changes to ensure that it takes place. A benchmarking exercise is being undertaken and a methodology is being developed by Bus Éireann as regards the relative costs of its direct provision and its private contractor provision, a matter that the Deputy touched on in his previous question.

No penalties are involved. It was just an opinion.

Mr. Seán Ó Foghlú

While one can never be certain what an outcome will be, it is our understanding that we are advancing in the direction of agreement on the outcome.

When do we hope to reach a conclusion in the engagements?

Mr. Seán Ó Foghlú

We keep the Commission updated on developments and it comes to a conclusion. With these EU cases, I am not aware of a definitive timetable.

I wish to address the surplus again. Paragraph 3.10 on page 27 of the Comptroller and Auditor General's report reads, "Bus Éireann applied a total of €11.3 million in round sums to a category described as 'property charge'." What is that property charge? The report continues:

Furthermore, non-recurrent charges applied by Bus Éireann against the unused surplus and accepted by the Department since 2011 were

- €3 million for 'future pensions for school bus drivers' [that is explanatory enough]

- €3.4 million as a 'contribution to capital investment'.

I presume the €3.4 million relates to the purchasing of new vehicles, or does it-----

Mr. Tom Delaney

That relates to operational systems for the planning and scheduling of services.

What was the total cost?

Mr. Tom Delaney

It was €2.6 million, with some other technological pieces on top.

Is it possible to get a breakdown of the €3.4 million? Will Bus Éireann provide it to the committee?

Mr. Tom Delaney

Absolutely.

Mr. Seán Ó Foghlú

That is part of the breakdown that we have committed to already.

What is the property charge?

Mr. Tom Delaney

Basically, it is all of the properties within which the schools' staff or vehicles are sitting. In using those buildings, there is an opportunity cost of rent forgone. It is calculated at an agreed rate.

Will Mr. Delaney start again, please?

Mr. Tom Delaney

There are three businesses in the Bus Éireann structure - PSO services, Expressway services and school services - and a wide range of properties across Ireland. Based on the amount of space used by schools at each property, be it in the yard, maintenance section or office, a split was done and a charge was arrived at with a view to what Bus Éireann or CIÉ would have got were those properties rented on the open market.

I will give an example. If I am wrong, Mr. Delaney should tell me. I am just trying to understand.

Mr. Tom Delaney

Sure.

If there is a bus depot and two buses are using part of it, are we saying that a property charge is applied to the Department on the basis that, if they were not school buses and Bus Éireann was renting that space out on the open market, it could get more?

Mr. Tom Delaney

I will take that example. If there are two school buses and two non-school buses and they occupy equal space in the yard, 50% of that space would be charged to the Department of Education and Skills at a rate.

Mr. Tom Delaney

The same would apply in an office. It would be based on the square footage that people, some of whom are with the schools, occupied.

We have three different businesses within Bus Éireann. We look at the space occupied by the people who are working on the schools-----

What was the property charge for 2017?

Mr. Tom Delaney

It was €1.3 million.

It was €2.5 million for 2011, 2012, 2013 and 2014. it was €1.3 million for 2015, 2016 and 2017. Is that correct?

Mr. Tom Delaney

Yes.

It decreased by 50%, more or less. How is that decrease explained? I presume the fleet has not decreased by 50%.

Mr. Tom Delaney

It has decreased quite a lot. I would have to get the exact figures but I think we had about 650 buses in the past and now we have just over 400. It has certainly decreased by a good chunk.

Mr. Seán Ó Foghlú

We have a value for money policy of reducing the Bus Éireann fleet. It has been reduced. The portion outsourced to contractors through procurement has increased significantly. It is a matter for dialogue with Bus Éireann about what the right level will be. As the Deputy noted, on a number of occasions, we have supported the purchase of buses by Bus Éireann.

Is that explanation satisfactory to Mr. McCarthy?

Mr. Seamus McCarthy

What drew our attention to the figure was it was a round figure. It is a notional figure. It has some bearing in reality. Buses have to be parked somewhere. There has to be security and so on. When we asked for an explanation about why it was precisely €2.5 million, we did not get a detailed explanation for it. It goes back to the work that has been done over the years looking at how we arrive at these figures and how we know we are recovering the costs incurred. There is an element of guesstimation or apportionment going on there. All of that has to be-----

While we would not be able to get a breakdown in terms of-----

Mr. Seamus McCarthy

We did not get a breakdown of the €2.5 million.

Why was that? Was it not forthcoming? Was the information not available?

Mr. Seamus McCarthy

It did not appear to be available.

The information is not available. Surely if the property charge is €2.5 million, there is a breakdown.

Mr. Stephen Kent

On that point, there was an exchange between us and the Department. One of the notes we provided to the Department is on our estimation that we had allocated approximately 84,000 sq. m to offices and depots when we were asked to do that. It is something that would be picked up as part of an annual review of how much is being utilised depending on how many staff are in different locations. We have clerical staff in place in 16 locations in Ireland. We operate 11 depots throughout Ireland. We try to continually review the number in the fleet and how many people are in different places to determine if it is reasonable. It is probably a reasonable number as opposed to something that is scientifically apportioned. That is how we got to it. It is a reasonable number that was developed in conjunction with the Department.

My time is up but it is something I might come back to.

Mr. Seán Ó Foghlú

This is an important line of interrogation.

Mr. Seán Ó Foghlú

Apologies.

The interrogation is coming next, possibly.

Mr. Seán Ó Foghlú

To be fair, I meant an interrogation of the figures. I was not at all implying the Deputy was interrogating. We have had a further independent report on the management charge. This is an example of part of the issue. As part of our detailed work with Bus Éireann - the chief executive has just referred to an example of the information flows - we will seek to satisfy ourselves to an increased-----

Was that the FGS report or was it just the one on the methodology?

Mr. Seán Ó Foghlú

We had an RSM report which was completed in March 2018. It was a follow-up to the FGS report and it has identified this issue.

None of the recommendations in the FGS report was implemented.

Mr. Seán Ó Foghlú

The FGS report highlighted the level of the management charge and we prioritised reducing the management charge. We have succeeded in doing that with the agreement of Bus Éireann.

I will come back in for a second round of questioning. The interrogation will start now.

I was watching proceedings on the monitor in my office. I may have missed some stuff so if the Chairman tells me any of my questions have been dealt with I will move on and consult the record.

Is any of the transport outsourced or does Bus Éireann do it all?

Mr. Seán Ó Foghlú

Of its income, 83% is outsourced to contractors.

That is high. Does the fact it is outsourced incur any additional cost to the State?

Mr. Seán Ó Foghlú

Yes. The tendering, safety checks and inspections are all costs on the State as a result of it being provided. If it was provided by Bus Éireann directly, there would still be safety and inspection costs.

Is it because we do not have the fleet?

Mr. Seán Ó Foghlú

No, it is a policy call to outsource.

It is a policy call.

Mr. Seán Ó Foghlú

Yes.

What is the benefit?

Mr. Seán Ó Foghlú

We want to have as much of the school transport provision tendered for by Bus Éireann with a reserve within Bus Éireann and we feel the best value for money comes from Bus Éireann procuring externally. It would be a different matter if Bus Éireann was to provide all the provision itself. It would be an arrangement of a different nature. It is not the arrangement we seek to have.

Would it be cheaper?

Mr. Seán Ó Foghlú

I am not sure. I do not believe it would be cheaper. We are ensuring we get value for money by-----

Has the Comptroller and Auditor General examined that?

Mr. Seamus McCarthy

I have not taken a view on it. A value for money examination has been undertaken of the service on the basis of the way it is currently organised. It did not look at the issue of whether it should be contracted out or done as a direct service by Bus Éireann. The question that arises with Bus Éireann is it is the service provider of last resort. Having that underpinning of a contracted-out service-----

That must build morale in Bus Éireann.

Mr. Seamus McCarthy

Sorry.

That must build morale in Bus Éireann.

Mr. Seamus McCarthy

I think the-----

The service provider of last resort.

Mr. Seamus McCarthy

If one recognises that a small contractor may not be able to fulfil the service, it is for a public service body to say it will be there if the person it has contracted out to is not there to fulfil the service.

It would stand to reason that if a company with scale could deliver the service throughout the entire country-----

Mr. Seamus McCarthy

A company of scale though.

I thought Bus Éireann was a company of scale.

Ms Miriam Flynn

May I take up on that point?

Ms Miriam Flynn

What we look at is the requirements of the scheme and Bus Éireann operates primarily large vehicles. There is a requirement as a result of evolving needs in various locations to have a mix available of smaller vehicles either because of suitability of the roads or the level of demand.

There might be nothing to stop us doing that if we chose to do it.

Ms Miriam Flynn

What it offers at the moment is the flexibility to procure vehicles of different sizes in the market.

That leads to the next question. It is something we should look at because if one is dealing with one operator, there is only one set of management and vehicles to deal with and one maintenance and health and safety strategy and so on. It is an alternative to tendering each time and going in to see if Marc MacSharry, the bus operator in Sligo, has everything he needs from a safety and organisational perspective. While there would certainly be initial capital cost in making sure the fleet was appropriate to the demand, it would be worthy of examination. Is it safe to say the scheme is designed totally based on demand? We will see what is looked for next year and then we will put a series of tenders together that will deliver for those children.

Mr. Seán Ó Foghlú

No. It is based on incremental change. Obviously the scheme is based on demand but the amount of change year to year is still minimal. Bus Éireann has a policy of tendering for routes at least once every five years.

I was thinking about where we have capacity issues in larger cities. We have a housing crisis. It is replicated in urban centres around the country. Mr. Ó Foghlú will know from parliamentary questions and representations we make to him about the smaller schools that are under pressure, where every year there is a child whose brother has a place on the school bus who cannot get one because there is a new way of measuring the route to the school which means it is not the closest school or whatever.

Bearing in mind the difficulties we have in many urban centres and in Dublin, and while there are always pressures to build new schools - I am aware of two new schools in Harold's Cross - has there been any cross-departmental analysis of the introduction of a more proactive transport scheme to try to encourage the repopulation of rural schools? Using transport as a tool might be of assistance in terms of housing and pressures in many of the urban centres. For example, school X with its facilities and infrastructure in a rural area could be built up to a viable number of students, which, in turn, would take pressure off the urban difficulties we are having in abundance throughout the country. Has any such analysis been conducted? Is there an aversion to examining something like that? I am guessing there has been no such analysis due to all of the other pressures on the Departments

Mr. Seán Ó Foghlú

We have based the policy on providing eligible children in general with transport to their nearest school subject to distance criteria rather than population moves or in trying to bring people out of their-----

I appreciate that such an analysis might be multi-departmental involving housing, environment, transport or education, but it might be useful and we could do worse than have a discussion about it to see if a proactive approach could be taken. A number of rural schools throughout the State are under pressure and from a political perspective any councillor, Deputy or Senator would be able to verify that this is the case. We have pressures in respect of many other issues, not least school places, housing and so on. Could using school transport in that way be worth looking at? I ask respectfully that in the cross-departmental forum and the Secretary General's-----

Mr. Seán Ó Foghlú

I will make two comments in response. First, I can recall a case of a second level school in the west where the patron had decided to close the school. The Department did an analysis, having regard to school transport costs. Notwithstanding that the school had 250 pupils, we calculated that it was more cost efficient and of more benefit to the local community to leave a second level school in the town. There was a Catholic patron at second level and it transferred the patronage to the local VEC, as it was at the time. Work like that can be done. At a very high level, we have Project Ireland 2040 and we have economic targets to develop populations in the regions in scale. I am on the project 2040 delivery board and a lot of work is being done to bring together perspectives from the different Departments to enable economic growth, including houses and jobs. Obviously, educational infrastructure will link to that in the regions. At a high level, there is a serious policy to seek to have diversity of economic growth and capital investment from the State to support that.

Is that a "Yes, we will look at that"?

Mr. Seán Ó Foghlú

Yes, that is being looked at. I have set out that it is the policy of the Government. We will consider the suggestion the Deputy has made. It can be looked at.

If it could because the other side of it relates to my constituency - but it will not be mine the next time - where schools in Bawnboy and Belturbet in Cavan are eing closed and the pupils moved to another school in the larger town of Ballyconnell. I wonder about the wisdom of these policies where on the other side of the policy house we have serious difficulties - and will have into the future - because of urban pressures.

The issue of the closest school criteria has jarred with me, and I raise the particular query due to an education grant aid query I had. With regard to the distance from one's house to the school or the university is Google Earth or Google Maps now the standard that the State or the Department embraces as the benchmark?

Mr. Seán Ó Foghlú

I will ask Bus Éireann to explain how it does the measurements for that.

Ms Miriam Flynn

Google Maps is a mapping system that we use and we map from the-----

What about when there is evidence and someone who drives the distance every day says "Google Maps is wrong" ?

Mr. Stephen Kent

The road needs to be traversable and if it is-----

What does that mean?

Mr. Stephen Kent

It means that one must be able to drive it.

Yes, but what if one can drive it and the mileage is less? I have come across instances when Google Maps has not been accurate. In the case of one particular grant scheme for a person - the details of which I will not go into - I toed and froed and was told that "Oh no, Google Maps says it so it is true." God, I would hate us to be using Google as a benchmark.

Mr. Stephen Kent

We use the tool to map. On top of that we have supervisors on the ground. They still have to undertake a safety check, they have to see if the route is manageable and-----

In my experience that is not happening. My experience - in writing - is that Google Maps says it and, therefore, it is the position.

Ms Miriam Flynn

There is an independent appeals process if there is a query-----

One can go through that but at the other end one is told that Google Maps is correct, but it is not.

Ms Miriam Flynn

That appeal system is in place, as I have said-----

We also have Ordnance Survey Ireland, OSI, and from my first year geography class I know how to take out a piece of thread and measure a distance. I do not need Google Maps. What is OSI doing if we are not using it as our benchmark? God knows one can Google anything and get any answer one wants. I suggest that it is poor practice to depend on Google Maps as the benchmark of the distance from A to B as a reason to refuse somebody a grant, when the practical reality is different on the ground. I do not believe that a supervisor is getting into a car and driving from Sean Fleming's door to Marc MacSharry's door and saying, "That is the distance"

Mr. Seán Ó Foghlú

Deputy I-----

Does that not happen? I thought the guys go out and measure the route and have the equivalent technology of a taxi meter to measure the distance to the nearest metre.

Ms Miriam Flynn

That is in supplementary cases where required. That happens when a person contests a measurement and we will use that technology as a backup, or we may be asked by the Department-----

Will Ms Flynn explain that system?

Ms Miriam Flynn

As I have said, it is used where someone is contesting a measurement. We have a backup facility where a supervisor will travel a route and verify the measurement. We will frequently be asked to provide that backup to the Department. These are areas we are looking at developing. We are doing work with Esri Ireland with regard to all our route mapping and we are also looking at trying to develop Eircode postcodes into the system. We are continually looking at ways to try to make it-----

Eircode postcodes too are not accurate. Putting the Eircode into a satnav will not bring a person to the door; it may bring one to the block.

Ms Miriam Flynn

We have to try to make sure we are measuring every case on a consistent basis. If it is an Eircode from a parent or a school-----

I might write to the Secretary General on the specific case and see if he could take a look at it.

What is the technology in the car? Is that equipment a milometer?

Ms Miriam Flynn

Backup equipment or-----

Can Ms Flynn explain more about this?

Ms Miriam Flynn

It is the equivalent of a taxi meter.

Will Ms Flynn please explain that? I know that when we checked them out, the guy said, "My system is more accurate". It is down to the metre in distance terms. He told us the measurement was 100% accurate. There must be a record of that. What technology is used?

Ms Miriam Flynn

The equivalent of a taxi meter is used as backup. We send that print off to the Department to verify the distance where we are requested to do so.

How many inspectors has Bus Éireann?

Ms Miriam Flynn

We have 36 inspectors nationwide and we try to have one in each location who is available for use.

Is the inspector sent out in contentious cases?

Ms Miriam Flynn

Yes.

That is all I wanted to establish.

Mr. Stephen Kent

I have been corrected so I apologise. We do something else with Google Maps, but I have a note to tell me that we base the measurement on OSI maps and road network data. That is the system which provides the data. We have a lot of work to do.

We should probably stop giving it as an answer in official refusals.

Mr. Stephen Kent

I have just corrected the record here.

I will write to the Secretary General about the individual case.

Is school transport the only transport in Ireland that does not have a service level agreement?

Mr. Seán Ó Foghlú

As it happens we have a service level agreement.

The press release from the committee yesterday said that there was no service level agreement but we have been corrected on that this morning. There was not an agreement at the time of the publication of the report but------

There is now, which is good news.

Mr. Seán Ó Foghlú

I accept that we put it in place for the 2017-18 school year first, which was the last school year.

That is progress. Are there any public transport services under the control of any Department other than the Department of Transport, Tourism and Sport?

Mr. Seán Ó Foghlú

I am not aware that we have any other public transport services under our aegis.

What about transport to the islands?

Mr. Seán Ó Foghlú

That is the responsibility of the Department of Culture, Heritage and the Gaeltacht.

Yes, but it is aviation.

We are discussing school bus transport.

I know that but I am not asking for the answer in Chinese.

Mr. Seán Ó Foghlú

I am only aware, from our Department's perspective, of the school transport system. Individual schools can do their own transport-----

Is there someone here from the Department of Transport, Tourism and Sport?

My understanding is that the Department is not responsible for aviation services to the islands, including Tory Island and the Aran Islands. Why is that not the responsibility of the Department of Transport, Tourism and Sport?

Ms Deirdre Hanlon

We deal with public transport systems generally throughout the country. Specifically, with regard to the islands, that is the responsibility of the Department that has responsibility for islands, whose full name I cannot recall.

Is it the Department of Rural Affairs and Community Development?

Ms Deirdre Hanlon

Yes, that Department leads in that particular area, rather than our Department.

In terms of the principle of subsidiarity and the Department's expertise in transport and aviation, would it not be better for the Department of Transport, Tourism and Sport to be responsible for it?

Ms Deirdre Hanlon

The allocation of functions between different Departments is a matter for the Taoiseach. It is for him to decide to which Minister to allocate responsibility. It is my understanding that it would follow on from that.

If we wanted, as a committee, to see transport to the islands under the Department of Transport, Tourism and Sport's remit, we should approach the Taoiseach. Is that correct?

Ms Deirdre Hanlon

To answer Deputy MacSharry's question as to whether a function should be reassigned from another Department to our Department, our Department deals with public transport services on road and rail. We deal with that through a range of agencies. The services to the islands are probably more specialised and have a very particular community sense to them. Therefore, it is the Department that leads around those areas that is responsible. The decision has been that its understanding and expertise around community issues and decisions is probably the more significant issue that determines how it has been decided to make that allocation.

That is a good answer although I respectfully disagree. As a committee, we should ask the Department of the Taoiseach to move this to the Department of Transport, Tourism and Sport because the Department of Rural Affairs and Community Development is not overrun with avionics engineers. How many legal cases have been taken against Bus Éireann by children or their families?

Mr. Seán Ó Foghlú

There are no legal cases involving the Department of Education and Skills and school transport of which we are aware.

If there was an accident or if a child slipped, who would be liable?

Mr. Seán Ó Foghlú

I referred specifically to the Department but it is possible there are cases involving Bus Éireann.

Are there cases involving Bus Éireann?

Mr. Stephen Kent

I do not have that information to hand but can supply it to the Deputy later.

It would be interesting for us to know whether there are cases and to get an idea of the legal costs associated with those cases. Are they handled in-house, by a legal firm or is the State Claims Agency involved?

The clerk will formally request an information note on that.

The Comptroller and Auditor General does not audit Bus Éireann. Is that correct?

Mr. Seamus McCarthy

That is correct

I appreciate that is not up to the Comptroller and Auditor General to decide which bodies he audits but would it be better if he audited Bus Éireann in the context of providing oversight in this area?

Mr. Seamus McCarthy

It is a very different type of organisation from most of the organisations that we audit. There is probably a policy angle to it as well in that there are other service companies, including the ESB, Bord Gáis and so on, that we do not audit. They have a customer charging regime, as is the case with CIÉ. I am not looking for extra work.

I know that the Comptroller and Auditor General is not looking for extra work. Indeed, he has enough to do already but I ask the question in the context of his office being able to provide this committee with the picture that it needs. In the context of the commercial mandate of Bus Éireann and so forth, is the Comptroller and Auditor General in a position to give us the picture that we want, given that one part of the equation is subject to audit but a very significant part of it is not?

Mr. Seamus McCarthy

I would obviously try to give the committee the assurance it needs around the expenditure by the Department of Transport, Tourism and Sport. To the extent that it is making payments, my focus would be on ensuring that it has systems in place that allow it to give the assurance. To a certain extent, that is what we are doing with the school transport special report.

I am told that the accounting arrangements between Bus Éireann and the Department of Transport, Tourism and Sport have been in place since 1975 and have not been updated.

Mr. Seamus McCarthy

That is correct.

What are the implications of that? I am not fully up to date with international accounting standards but are there any implications of which we should be aware? Do the accounting arrangements need to be updated? Are there systems that have moved on since then? Are we behind the curve with anything?

Mr. Seamus McCarthy

In terms of a good understanding of the cost base for the provision of the service, the 1975 agreement is out of date. There are certain aspects of it for which we never got an explanation, including, for instance, why a 13% add-on for management costs was ever appropriate. Part of the recommendation there was that there needs to be a better understanding of what makes up that charge, why it should be what it is and so on. Work has been done over the past number of years to try to get a better fix on the costs. We noted that the assurance that was being given on the account that is produced under the 1975 agreement was an assurance that the account was produced in the manner required under that agreement. It was not an assurance that this is an account of the cost of the service, which is what the Department is moving towards.

A review is under way. Is that correct?

Mr. Seán Ó Foghlú

We have put in place quite a number of measures already, including the service level agreement, the financial updates and the key performance indicators. Equally, we are conducting a review of routes in three counties and we will explore the possibility of updating the accounting relationship too, as part of our work. We will improve the information flows on all aspects of the costs, some direct and some indirect.

Great. Happy Christmas and thank you.

I have a few quick questions before Deputy Aylward comes in. Are all of the drivers Garda vetted, including contractor drivers?

Mr. Seán Ó Foghlú

Yes.

Are the escorts vetted?

Mr. Seán Ó Foghlú

Yes.

Does that complicate matters during the summer in terms of new drivers and so on?

Mr. Seán Ó Foghlú

It particularly complicates the special needs scheme in terms of escorts and taxis.

That is the question I am asking. If a parent is the escort, does he or she have to be Garda vetted?

Mr. Seán Ó Foghlú

Yes, as far as we know.

That says a lot.

Mr. Seán Ó Foghlú

There could be other children using the service too.

I understand that. Garda vetting is required. To return to an earlier point, the Department leaves it until very late in the year to close the scheme to applications. I know that is done to give people as much time to apply as possible but it causes terrible problems in a short six to eight week period. Why does the Department leave it so late? Why does it not move the closing date back by a month, to June?

Mr. Seán Ó Foghlú

We tried to close the schemes in April but it does not work.

When is the closing date now?

Mr. Seán Ó Foghlú

The closing date is April for applications and July for payments. To be honest, the real difficulty we have is that the closing dates are not really observed.

By whom? Is it by the Department?

Mr. Seán Ó Foghlú

No, by applicants and by people who may be supporting their applications.

The price they pay for being late is not getting a place on the bus.

Mr. Seán Ó Foghlú

We need to move to a better online system.

Can applications be made online?

Mr. Seán Ó Foghlú

Yes. This is not like the Central Applications Office, CAO, system. We need to move it to be understood to be like that but only in the case of general applications because the needs of children with special education needs are different and can arise at short notice. One of the things we are looking at is how the system can be more harsh in regard to such applications. More generally, we are regulating more around applications for entrance to schools and so on.

In regard to the Bus Éireann owned vehicles, what happens to them during the school holidays and how many of them still bear the bus scoile logo?

Mr. Stephen Kent

They are maintained during the summer and other periods when they are not in use.

Could they not be used? The private contractors use their vehicles 52 weeks of the year. How many school buses has the Department purchased in the last five to ten years?

Mr. Stephen Kent

Twenty.

The Department is buying very few vehicles.

Mr. Stephen Kent

Yes.

Mr. Seán Ó Foghlú

Previously there was a cascading of older vehicles but that is not under way any more.

Mr. Stephen Kent

We used to take the buses that were bought traditionally through CIE and more latterly by the NTA. There was an opportunity for the State to cascade vehicles that reached a certain stage into school transport activity.

The oldest vehicles are used for school transport.

Mr. Stephen Kent

It is a case of putting back into service vehicles not suitable for general use. In more recent years, as the NTA replenishes fleet on the PSO side, typically it is purchasing double-deck vehicles or a different type of vehicle that may not be suitable for rural roads. For example, the Expressway vehicles are 64 seaters and, again, would be appropriate for this type of work.

Is it only a matter of time before there is none of them left?

Mr. Stephen Kent

We will soon enter into dialogue on our needs for the scheme.

How many of those vehicles are currently on the road?

Mr. Stephen Kent

We have approximately 420 buses that we service directly with our own drivers.

Do they all bear the school bus livery?

Mr. Stephen Kent

Yes. There are older vehicles but they are Bus Éireann designated vehicles.

Aside from the livery, why can the buses not be used for the other 20 weeks of year? It makes no sense to have buses locked up for that length of time.

Mr. Stephen Kent

A lot of the PSO buses are fitted out in a particular way. The NTA vehicles are fitted with a particular ticket machine and there are regulations in place in regard to those buses in terms of fit-out, wheelchair access and so on, which would still be useful on that fleet but mostly it is about the ticketing and the vehicle type.

The ticketing issue does not arise in regard to the school bus.

Mr. Stephen Kent

No, not in the school bus. We have utilised some school buses for special events and so on but we cannot deploy them for regular PSO work because the PSO work under the contract specifies that a vehicle must be of particular age and a particular ticket type, ticket machine, etc. For example, it must be able to recognise a Leap card.

As I see it, the State, through the Department, has invested in 400 buses that can only be used for 33 weeks of the year. That makes no business sense to either the Department, Bus Éireann or the taxpayer. Does Mr. Kent understand my point? For example, Bus Éireann could not afford to keep other buses locked up for 20 weeks of the year. It makes no sense. What percentage of buses is provided by the private sector?

Mr. Tom Delaney

It is 90%.

Mr. Seán Ó Foghlú

It is 90% of the routes.

Do the witnesses anticipate that percentage will increase as the current fleet ages and becomes unsafe?

Mr. Stephen Kent

It will be a decision for the Department. Previously, we provided 10% by direct provision.

Can Bus Éireann not just buy a regular bus which can be used for school transport for 30 weeks or the year and then more generally for the remainder of the year?

Mr. Seán Ó Foghlú

It would have to consult the Department on the matter.

I cannot understand why taxpayers' resources are being locked up in a garage for 20 plus weeks every year. It does not make sense.

Mr. Seán Ó Foghlú

There are a couple of issues arising. The policy is that no school bus owned by Bus Éireann can be more than 20 years old. If we use them more, we might have to bring the timeframe down.

Would that not be a good idea in safety terms?

Mr. Seán Ó Foghlú

We would then have to purchase buses more often because they would be no longer cascading in. We are in policy discussions with Bus Éireann around the issue.

We have already been told the cost per annum in passenger terms of operating the 400 buses. What is the cost to Bus Éireann versus the cost to the contractors? Which is the cheapest? For example, the Comptroller and Auditor General said that the cost in 2015 was on average €1,800 per head. What is the amount for the most recent year?

Mr. Stephen Kent

It is probably in the realm of a 15% to 20% differential depending on how one calculates the costs and what one is benchmarking the price to. When making the comparison one should be comparing similar type maintenance, similar kilometres, etc. In terms of the direct provision, as will have been noted by the Comptroller and Auditor General, it has always been at a slight premium in terms of what we pay relative to the market. To a large extent, it is the cost of using our own staff, our own vehicles and our own facilities.

What Bus Éireann provides internally is up to 20% more expensive than what is charged by the average private contractor?

Mr. Seán Ó Foghlú

We did some work on this in the value for money review and we have a contested comparison between private and public.

What does that mean?

Mr. Seán Ó Foghlú

Bus Éireann was not fully happy with how we did it but we did it.

Who was not happy?

Mr. Seán Ó Foghlú

Bus Éireann.

How long ago was that?

Mr. Seán Ó Foghlú

It was 2010. I referred to work we are doing with the Commission.

What commission?

Mr. Seán Ó Foghlú

The European Commission. I referred to it earlier. Bus Éireann is working on a methodology to undertake a comparison. The comparisons referenced by the chief executive are entirely valid but the issue is how one takes account of all of the other Bus Éireann costs in working out the comparison of costs.

I presume the Department's objective is to maintain the contract with Bus Éireann and allow it to subcontract.

Mr. Seán Ó Foghlú

That is the current policy.

It goes without saying that the Department is working to that objective. There is no point beating around the bush on that. It is the policy most people would expect. Nobody would want to see an English or Portuguese company getting the contract for school buses in Connemara.

Mr. Seán Ó Foghlú

As stated, transport organisation is a key part of it.

On average, the difference is contested at 20%. Are there regional cost differences in regard to route servicing in, for example, Meath versus Kerry? I do not want to hear that everywhere is different. I am asking about comparable routes.

Ms Miriam Flynn

The key is that routes are put out to public procurement such that it is market conditions that determine costs by county.

I understand that. I am asking about the outcome of the process. Bus Éireann must know on average the cost of similar routes across the country.

Mr. Seán Ó Foghlú

Yes.

If there is a lack of competition in a particular region and strong competition in another, what is the difference in cost?

Mr. Seán Ó Foghlú

We see it in particular around taxi provision.

I want to deal with the buses for now. Where are the regional differences? Do the witnesses have that information? As the Committee of Public Accounts, we are trying to find out if we are getting value for money. There are lots of activities in Irish life in respect of which we know the cost, including the cost of surfacing a kilometre of road in one county versus another county, which is subject to tender but there can be crazy variations. Is Bus Éireann experiencing similar variations? Are there parts of the country where there is not a lot of competition and in which it suits operators not to have too much competition?

Other operators can enter the market. Where is the most expensive and least efficient area?

Mr. Stephen Kent

It is partly demand led. In the past year, it has sometimes been difficult to procure vehicles and provide contractors in certain parts of the country. That is part of the reason for the discussion on whether direct provision is needed. Even though we might go to tender, post to tender and invite participants, if we do not get the response we need, we must figure out how to meet the needs of the scheme.

Were there many cases this summer where Bus Éireann was unable to get an acceptable contractor to fill a route for this school year and it had to use its own bus? How often does that happen on the thousands of routes?

Ms Miriam Flynn

A combination of issues would arise. If it is possible for us to use our own bus, we will do so, but there are situations where if we do not get additional tenders, we may have to put a route out through direct award. That would all be done-----

What does Ms Flynn mean by "direct award"?

Ms Miriam Flynn

It may go to the existing contractor if, after a route goes out to procurement, there are no other compliant tenders. It would operate under a derogation on that basis. There are such situations, although I do not have the exact details of the number of routes that we tendered for and where there may not have been a compliant tender. We can arrange to submit that information through the Department.

I raised the issue because the witnesses mentioned it as the reason a public resource was needed to fill the gap. However, when I asked about the size of the gap, they told me that they did not have that information. Do the witnesses follow me?

Mr. Stephen Kent

Yes. We would have to give the committee the precise numbers in particular regions. There were instances this year in Cork and parts of the GDA-----

The greater Dublin area.

Mr. Stephen Kent

-----where the scale of demand was difficult for us to deliver. However, we meet that demand each year. It depends on whether that is an issue that-----

There must be trends. Historically, Bus Éireann probably knows where there will be strong competition and where it will be lucky to get a contractor. In the latter situation, does the contractor effectively name his or her price?

Ms Miriam Flynn

No.

I know he or she does not name it, but the contractor knows the business and that there is no one else.

Ms Miriam Flynn

We would always go through a best and final offer as part of our procurement process.

Ms Miriam Flynn

What we call a BAFO process, which is the best and final offer. Where a price would be perceived to be high, we would always revert to the contractor to discuss the details of the offer and seek a further pricing schedule from him or her. This is all part of our compliance with procurement guidelines and is what happens every year on the 20% of routes that are tendered.

Mr. Stephen Kent

May I say something?

Yes, but does Mr. Kent understand from where my questions are coming?

Mr. Stephen Kent

It is EU procurement law and it should be fair and equitable. We would not like to prejudice any particular region with any commercial sensitivity, as we are trying to get the best price out of that market.

It is commercially sensitive information and Bus Éireann might not want to release it.

Mr. Stephen Kent

Absolutely.

We will only take it that far so, but are there regions where similar types of service are provided albeit with a variation of 20% or 30% compared with other regions? I am not asking our witnesses to name the regions, but does that happen? It must happen where there is strong competition.

Ms Miriam Flynn

It is very much determined by the local market conditions.

No. The witnesses are missing my-----

Ms Miriam Flynn

That is the case in any tender situation.

I am not asking about how Bus Éireann reaches a price. We know what the price is based on, but I have moved beyond that point. Having got its price via the proper procedure, are there regions that consistently have higher prices than other regions with similar routes? I will not ask the witnesses to name them, as they will claim that they might be giving a competitive advantage or disadvantage to either side, but what are the variations in the cost per mile per student? I presume Bus Éireann has that figure.

Ms Miriam Flynn

We have the average cost by vehicle type by county. It varies, but I will not mention-----

It took me a long time just to get one of the witnesses to say that.

Ms Miriam Flynn

What we have said is that it varies and is subject to the prevailing market conditions.

We know why. I just want to know the outcome, that being, the figure. Can Bus Éireann send us information on the variations without identifying the regions? After asking my questions, I still have no sense of the variations in the average price that market conditions dictate in different regions. Some places must be below the average price while others must be above it. If the witnesses do not know that information, they should not be here. They do know it. I am just trying to extract it from them without breaching commercial sensitivities so that we can have an indication of whether there is value for money. That is all.

Mr. Seamus McCarthy

This relates to issues like capacity utilisation, the design of routes, the mix of the fleet and so on. If the company does not have the information on a local and route-by-route basis, we cannot be assured that valued for money is being delivered. That is why the-----

We have a report before us. I just want to know the variation if the average price per student per mile travelled in one county is X, less than X in another county and more than X in a third. I am not asking the witnesses to disclose contractors or counties, as they might-----

Mr. Stephen Kent

That is fair enough. One would expect variability in any market. We are hesitant because we do not want to prejudice this.

I am making it clear that we do not want to know the regions. Just give us the range in variations. It could all be in the same county for all I know. I am not asking the witnesses to breach any commercial sensitivity, but we cannot have a notion of whether there is value for money if we cannot even get comparative percentages.

Mr. Stephen Kent

It should be said that it is not all purely about cost, even though that is a significant part of it.

Naturally.

Mr. Stephen Kent

It is also about quality, compliance, safety and standards. Those are all of the elements that we take into consideration.

Surely those are at least the minimum everywhere.

Mr. Stephen Kent

We award contracts every year, but they cannot be awarded where, for example, there is non-compliance. We have strict compliance criteria if a contractor is to win a tender. An award is not based solely on price.

I accept that.

Do we know the national average cost per pupil?

We were told that it was €1,800 in 2015. The witnesses might find my next question to be a weird one, but I am thinking of the youngsters on the buses. What is the longest single trip and what is the most time a student must spend on a bus? What is the longest route?

Ms Miriam Flynn

I do not know off the top of my head, but I would be happy to-----

Some routes are short.

Mr. Seamus McCarthy

There were two questions back to back. How early does the child have to be at the bus stop?

We are all showing our age. Deputy Aylward mentioned his time on school buses. When I was on a school bus, I had to be dropped off at school at 8.15 a.m. because the same bus had to do another run.

Mr. Seán Ó Foghlú

We have guidelines in that regard. There is a travelling and waiting time maximum of an hour and a half.

The Department must know the maximum times.

Mr. Seán Ó Foghlú

Yes.

Will the Department send us the maximum times and distances individually? It has guidelines. In the interests of safety, a child cannot be on a bus for an hour and a quarter in the morning and the same in the evening. Maybe it does happen.

Mr. Seán Ó Foghlú

If the child is travelling a long distance.

The health and safety of students are factors and that is a long time. The average cost per pupil was approximately €1,800. What is the average cost for children with special educational needs? It must be a multiple of the other figure, given that there must be escorts, drivers, specific routes from door to school and so on. What is that average?

Mr. Seán Ó Foghlú

Between €7,000 and €9,000 depending on the escort.

I see that. Page 12 of the briefing note supplied to us mentions "STG". What does that mean?

Mr. Richard Dolan

Special transport grant.

In 2017, that amounted to €2.754 million, escorts cost €25.371 million and the special educational needs contractors cost €63.668 million. That comes to more than €90 million for the 12,000 students, which is well over €7,000. All of those children with special needs must get to school, but where does the Department draw the line between offering the grant to the parents to provide their own transport and providing transport itself? If it costs €8,000 per year on average to operate this system, where does the Department decide the cut-off point is? What grant does it award? It is based on distance. What are the minimum and maximum grants?

Mr. Richard Dolan

I am not sure what the minimum and maximum are, but I can get the Chairman that information. We have a process for allocating transport for children with special needs on a case-by-case basis.

The application will come to us, signed off by the National Council for Special Education, NCSE. We will then contact Bus Éireann to see if a route is currently available. There could be a special needs school transport vehicle going by the house, in which case we will just put the child on it, possibly at no additional cost or a small additional cost. If we calculate that the grant would be cheaper than amending a route then we will offer the parents a grant, but often they cannot take it because both are working, so it is not all about economics and it is addressed on each child case by case.

Mr. Dolan just said the grant is offered. What are the minimum and maximum levels of grant? I thought those figures would be known.

Mr. Richard Dolan

It is in or around €3,000 but I do not know the exact figure.

When I looked at the figure of €8,000 I was surprised to hear the individual grant is less than half of that. It has led to the situation where even when long distances are involved some parents feel the grant is not sufficient. If it is in the region of €3,000 but the Department is paying €8,000 for somebody to go with a contractor on a bus, I can understand the reason some parents would be reluctant to take it up if it is in the region of €3,000. I have met parents who said it would not keep a car on the road not to mind paying the petrol.

Mr. Richard Dolan

The current rate of grant is 39 cent per kilometre for the first 6,437 km.

That is a lovely answer. Mr. Dolan can send me the figure later.

Mr. Richard Dolan

Yes, I will send you a figure, Chairman. You are right that the grant does work out cheaper, certainly when one considers providing a single vehicle. The grant would be a lot lower than the cost of providing a vehicle.

Do many parents get offered a grant but do not take it up?

Mr. Richard Dolan

More and more, we are seeing parents not taking the grant because both parents are working.

And it is not a high figure relative to the cost involved. One has to drop a child to school, come home and then go back a few hours later. Four journeys are involved.

Mr. Richard Dolan

There is such a variance. A lot of parents like dropping their child to school.

I know that.

Mr. Richard Dolan

It is hard to use generalisations for the special needs scheme.

I am only looking for averages.

Mr. Richard Dolan

We can certainly send you those, Chairman.

Mr. Seán Ó Foghlú

We are reviewing special education with the NCSE. We have to be very sensitive. You have highlighted some of the challenges, Chairman, in the sense that the cost for special educational needs is nearly 50% of the overall cost of the scheme.

Based on the figures I have seen, it is nearly €90 million.

Mr. Seán Ó Foghlú

The cost is €90 million out of €190 million, so it is nearly 50%.

What per cent of the students are covered?

Mr. Seán Ó Foghlú

It is 10%.

We all understand the situation. We want to get the children to school. Escorts must also be provided.

Mr. Seán Ó Foghlú

The overall spend in the Department on special education needs has increased in the past ten years from €0.8 billion to €1.8 billion. That is an increase of €1 billion in the special education area. The cost has more than doubled in the past ten years.

The percentage spent on special education transport is roughly the same. The increases mirror each other.

Mr. Seán Ó Foghlú

Yes.

I compliment the Department on its provision for special needs. It is a fantastic service. I am aware of it from a person in my family. The Department is rolling out a great service.

We must have been hardier in my day because I used to be on a bus for an hour and a half to two and a half hours. We were hardier in the 1970s than nowadays. I did not know there were restrictions on time. At the same time, we were damn glad to get the bus.

In a case where the bus is full and there are no tickets available if anyone is even an hour late in paying, he or she is finished for the year. I was involved in several cases where families forgot to pay over a weekend, or in one case it was only an hour late, and they were excluded for the year because they did not pay on time. There was no appeal system. Those who were late were just ruled out for the whole year until the following year. Most of them learned from that and they paid the following year.

Parents are frustrated by the notification system. They might be told on a Friday evening that even though the school is open on Monday no bus would be available. That is frustrating for parents and people in general. Working parents must make alternative arrangements. An early warning system should be in place to warn parents, for example, a month in advance, that children on concessionary tickets will not get a place on the bus. Something must be done about that.

In effect, there is no appeals system. I have been through it on several occasions. An inspector comes out and makes a decision and that is the end of the story. He might come out a second time if one contacts him. The inspector covering my area is based in Waterford. However, there is never a change. Whatever decision is made is upheld and there is no come-back on it. In one case there was a third of a kilometre involved between two schools in adjacent parishes. I did the journey myself in the car based on where the children were let off the bus in the evening and the distances were equal. Even though I went to the inspector there was no give whatsoever. Three generations of a family had been to the school concerned. The family was told to go into a new parish for the sake of a third of a kilometre even though where the children were being dropped off meant it was the same distance between both schools but no one would listen. That was the end of the story. The provision of a place on a school bus was ruled out.

Another case concerning health and safety has been going on for years. The Garda was contacted by parents as the bus was turning at a dangerous junction. We appealed it on several occasions. The inspector came out two or three times and said the bus would continue to turn at that point. I thought it was very cruel that they did not take the safety aspect of where they were turning into consideration. People were trying to drop children off on a bad bend in the road, and they were waiting for them with no place to park but they got no hop on that one. I do not think the appeals system is working. A better system should be in place for parents and politicians.

I have called on the Minister of State, Deputy Halligan, to amend the rules governing the school transport scheme which state that, routes will not be extended or altered, additional vehicles will not be introduced, nor will larger vehicles or extra trips using existing vehicles be provided to cater for children travelling on a concessionary basis, to ensure who apply for a concessionary ticket can be accommodated. I put the same question to the Department and Bus Éireann. From an operational point of view, would Bus Éireann be open to amending the rule and would there be a significant additional cost associated with amending the rule?

Mr. Seán Ó Foghlú

It is a policy political question and it is not for Bus Éireann to comment. I did not fully understand but I think Deputy Aylward asked if we could put a bigger bus on routes.

That could be one solution.

Mr. Seán Ó Foghlú

The answer to that is that of course the rules can be changed but there are costs associated with it. In that instance someone would already have tendered and received a tender to provide a smaller bus.

Do the witnesses from Bus Éireann have any comment to make?

Mr. Stephen Kent

I would prefer not to because it is a policy decision.

Ms Miriam Flynn

Policy is exclusively a matter for the Department.

I am just asking the witnesses for their opinion from an operational cost point of view.

Mr. Stephen Kent

We will seek to service any and all demand if funding is made available.

I understand that. It is up to us here in Dáil Eireann to change the rules. I am asking the witnesses because I have asked the Minister. I have even asked my party to make it part of the confidence and supply arrangement. I am looking for a solution for the small number of students who are excluded. I know it is unfair to ask the witnesses as they are only implementing the laws we make. I understand that. I have been told that every year. However, when I have the opportunity I ask the witnesses as well for their point of view.

I want to ask a couple of questions about claims, which is a direct cost that is covered by the Department. If there is a compensation claim against a Bus Éireann driver or bus, is the cost covered by the Department?

Mr. Tom Delaney

We have provisions for claims in our accounts, which are charged in the direct costs.

Is there a cap on that or how does it work? If there was a total of €10 million in claims this year, for example, is that all recoverable by the Department or is there a cap in place that allows for only a percentage of the costs to be recouped?

How does it work?

Mr. Tom Delaney

It is managed on our behalf by CIÉ. If the Deputy wants specifics, we will have to revert with those details. There are thresholds within the management of claims.

Does the Department have any information on this issue?

Mr. Seán Ó Foghlú

There were claims totalling €153,000 in 2016 and €370,000 in 2017. The amount of claims in 2018 is expected to be €402,000.

That is covered by the transport management charge.

Mr. Seán Ó Foghlú

Yes. There is also-----

Mr. Tom Delaney

The transport management charge covers the management of the claims rather than the total cost.

I was asking about the full cost of the claims.

Mr. Seán Ó Foghlú

There is an insurance and claims direct cost in the direct cost scheme. That came to €789,000 in 2017 and has varied between €700,000 and €900,000 annually from 2013 to date.

Those costs are fully covered by the Department, including engineers' fees, doctors' fees and whatever else is needed. It is managed by CIÉ. Does CIÉ fight the case and hire its own solicitors and barristers or does the State Claims Agency have any role in that regard?

Mr. Tom Delaney

CIÉ manages claims across all of our transport facilities. Obviously, strategy depends on the individual case. Some go to the Personal Injuries Assessment Board. It depends on the nature of the claim.

How many of the claims are settled out of court and how many go to court?

Mr. Tom Delaney

I do not have those figures with me but I am happy to revert to the committee in that regard as well as on the matter raised earlier.

Mr. Delaney should send a note to the committee.

If one is not responsible for the costs of a claim, one may not fight it as vigorously as would be the case if one were picking up the bill. It is my understanding the Department has no role in the claims even though it foots the bill.

Mr. Tom Delaney

That is a valid point. We will revert with further details. It is fair to say that there is a significant amount of stewardship of claims within CIÉ. There are monthly meetings to go through the various aspects of claims. It is a very rigorous process and has been so for 20 years or more.

Does Mr. McCarthy examine whether we are getting value for money in that regard? Is that within his remit?

Mr. Seamus McCarthy

That would be too great a level of detail. In any event, I do not examine the accounts of CIÉ or Bus Éireann.

Mr. McCarthy examines the accounts of the Department and would be aware of the headline figure. Is that what is presented by the Department?

Mr. Seamus McCarthy

The cost of the service is reported. The Deputy makes the valid point that the Department should interrogate those figures to determine what makes up the direct costs.

I ask that we be provided with a breakdown of the types of claims, if possible. How many relate to accidents on buses or involving third parties? The Department should give consideration to that because it does not know how vigorously claims for which it is picking up the tab are being contested. That information might be of interest to the Department.

Mr. Seán Ó Foghlú

It is one of the areas on which we want to get further information. Obviously, Bus Éireann is part of CIÉ and CIÉ has a duty to follow up. We do not think there is anything inappropriate going on but it is entirely appropriate that we consider this in more detail.

Mr. Stephen Kent

For the record, Bus Éireann is not passive in terms of managing claims. We have monthly meetings at which the risk register is considered. We meet representatives of CIÉ and the claims are presented to us and we interrogate them. A management committee reviews every case to decide whether it is appropriate to fight the case or consider a settlement. There is a significant amount of rigour by the CIÉ investigations team and secondary investigation teams to ensure that nothing untoward is being done.

I acknowledge that. I do not suggest that Bus Éireann would take a passive approach to contesting claims but if it is not picking up the tab, these things could happen subconsciously. It would be a good exercise to compare these cases against others that are taken against the company in circumstances where it is footing the bill. That might be an interesting analysis.

It was mentioned that the number of vehicles has fallen from approximately 600 to approximately 400. I presume those are CIÉ vehicles.

Mr. Tom Delaney

They are Bus Éireann vehicles.

Has the number of private contractors increased along with the increase in the total number of vehicles?

Mr. Stephen Kent

Yes.

Is there a reason for that? Does Bus Éireann not have sufficient vehicles or does it relate to the size or type of vehicles needed? Is it due to the required increase in the taxi service?

Mr. Stephen Kent

It is partly due to decisions made by the Department on the replacement of services which we provided directly. For several years there has been a policy of contracting out services where demand had diminished. Typically, we directly employed part-time school bus drivers. As each retired, a decision was made on whether to replace the driver or contract out the service. In recent years, more services have been contracted out than new drivers hired.

Bus Éireann school bus drivers are not being replaced on retirement. Rather, the services are subcontracted to the private sector.

Mr. Stephen Kent

Discussions are ongoing in that regard. The issue relates to the vehicles as well as the drivers. As was explained, there has been a long-term issue as the traditional practice of cascading from road passenger vehicles into schools is probably no longer feasible. We need to decide whether to replace vehicles and direct provision at current levels or at a level which will satisfy the market going forward. That is a funding dialogue which we are entering with the Department.

Is there a figure for the annual cost of those drivers' pensions? Some €3 million for future pensions for school bus drivers was set aside against the surplus. What does that €3 million cover? Does it cover the next five years or ten years? How many drivers does it cover?

Mr. Tom Delaney

We have a certain amount of money set aside on our balance sheet for future ex gratia payments to drivers on their retirement.

That is all recouped. The Department picks up that tab.

Mr. Tom Delaney

Absolutely.

At this stage, I can safely say we have concluded our discussion. I thank the witnesses from the Departments of Education and Skills and Transport, Tourism and Sport and Bus Éireann. I thank them for the material that has been provided to the committee. We made some requests for information which Bus Éireann or one of the Departments will send directly to the committee secretariat in writing. I thank the Comptroller and Auditor General and his staff. I hope the witnesses and members have a happy Christmas and wish them all the best for the new year.

The witnesses withdrew.
The committee adjourned at 1.30 p.m. sine die.