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Dáil Éireann debate -
Thursday, 30 May 2013

Vol. 805 No. 3

Topical Issue Debate

Fee Paying Schools

I thank the Ceann Comhairle for selecting this Topical Issue. It arises from a request by many constituents of mine, and many families around the country, for the Government to explain its policy on fee-charging schools. These constituents object to the recent decision by the Government to increase the pupil-teacher ratio in selected schools, which they feel have been singled out. They are referred to as fee-charging schools. There are 55 such schools in Ireland with more than 25,000 students currently attending them.

The Government is increasing the pupil-teacher ratio from 20:1 to 23:1 starting in September 2013. My constituents contend that the Labour Party is putting significant pressure on Fine Gael to increase that ratio further by 2015, given the publicly stated policy to withdraw all public funding from fee-charging schools.

The constituents have highlighted a number of areas of concern, including the mandate. Neither in the 2011 manifestos of Fine Gael and the Labour Party, nor in the programme for Government 2011-2016, are there references to an increase in the pupil-teacher ratio for the small group of schools singled out for attention - as they contend - in such an inequitable manner. They have asked us to explain from whom the Fine Gael and Labour parties received their election mandate for these recent actions.

Under the heading "The Economics of Education", they point out that the independent report from PwC in 2011 concluded that there is a saving to the State for each student enrolled in a free-charging school. Without getting into the specifics, the key point is that the parents of students attending fee-paying schools reduce the cost to the State and the rest of the tax-paying population by contributing to the cost of educating their children.

If ten of the 55 schools were to close - which is not an unrealistic assumption, given the recent trend - that would affect 5,000 students. Can the Government indicate what would be the increased cost to the State over a six-year period, including salaries, capitation grants and other school financial supports? Bearing in mind that those students would transfer to schools with a pupil-teacher ratio of 20, what would be the cost if all 55 schools closed?

The Government has announced 275 major schools building projects as part of a €2 billion investment programme to address the 70,000 additional students coming through the system up to 2018. This includes 43 new and 65 large extensions to second-level schools. Given that the increased capacity being developed is not intended to accommodate students coming into the system due to the closure of these schools, can the Minister of State advise whether these factors are now being considered? What would be the potential shortfall in capacity, as well as the additional capital cost, if ten of the 55 schools closed?

The representations also cover employment. The 55 schools in the fee-paying sector employ approximately 600 additional teachers and 600 other persons across a range of services, including administration, catering, facilities management. That is beyond what would be employed in a non-fee charging school. This amounts to 1,200 valuable direct jobs and probably the same number in indirect employment in what is a damaged economy. These jobs are sustained through the fees paid by parents across all these schools. What is the policy in attempting to protect the employment of these people in the context of 430,000 unemployed on the live register? What has been the reaction of the teachers' unions to this policy direction which threatens their members' jobs?

These schools have their own facilities and share them with GAA clubs, community groups, and other neighbouring sports clubs. If these schools were to close it would make a very big dent in the amenities provided by them across the country.

On behalf of my colleague the Minister for Education and Skills, Deputy Ruairí Quinn, I thank Deputy Mathews for giving me an opportunity to outline to the House the position concerning the issue he has raised.

This Government has protected frontline services in schools to the greatest extent possible in the recent budget, and there will be no reduction in teacher numbers in primary schools and in free second-level schools for the 2013-14 school year as a result of the budget. The DEIS scheme for disadvantaged schools is also fully protected with no overall changes to staffing levels or funding as a result of the budget.

At post-primary level and in order to promote fairness in funding second-level schools, a two-point increase in the pupil-teacher ratio in fee-charging second-level schools will be introduced in September 2013. Currently, 55 schools out of 723 post-primary schools are charging fees ranging from €2,550 to €10,065 for day pupils.

The State pays the salaries of one teacher for every 21 pupils in these schools compared with one teacher for every 19 pupils in schools in the free education scheme. A ratio of 18.25 pupils to one teacher, applies in DEIS schools. This will rise to 23:1 in fee-charging schools from September 2013. However, these schools have the resources, through fees charged, to employ teachers privately, an option which is not available to schools in the free education scheme. A report on the analysis of the tuition income of fee-charging schools carried out by the Department of Education and Skills was recently published and shows that the schools in question have €81 million in discretionary income that schools in the free scheme do not have. The report contains no policy proposals at this stage. However, even after the budget changes are implemented, the discretionary income available to these schools will still be quite considerable.

There are some concerns within the Church of Ireland community on the recent budget measure affecting fee-charging schools. This Government recognises the importance of ensuring that students from a Protestant or reformed church background can attend a school that reflects their denominational ethos while at the same time ensuring that funding arrangements are in accordance with the provisions of the Constitution. How best to sustain education provision for widely dispersed and small local communities presents as a particular challenge, especially in any locality where enrolment is declining to single figures. The Government is intent on fostering pluralism in school provision. Supporting small communities including minorities in maintaining their schools is part of that policy.

Regarding the fee-charging Protestant schools, an arrangement exists whereby funding is provided by the Department of Education and Skills to the Secondary Education Committee, SEC, an organisation run by the churches involved in managing the Protestant secondary schools. The SEC then disburses funds to the Protestant fee-charging schools on behalf of pupils who would otherwise have difficulty with the cost of fees and who, in the absence of such financial support, would be unable to attend a second-level school of a reformed church or Protestant ethos. Funding amounts to €6.5 million annually. This fund ensures that necessitous Protestant children can attend a school of their choice.

The Minister for Education and Skills and the relevant Department officials will continue to engage with the relevant education sector stakeholders, including the Church of Ireland and boards of education, regarding education provision for all areas.

I want to go over the broad statistical parameters. There are 55 fee-paying schools, comprising 32 Roman Catholic, 20 Protestant, two interdenominational and one Jewish. If ten of those schools were to close, 5,000 students would be affected. The cost for a student in a fee-paying school is €4,500 per year, but €8,000 per year in a non-fee-paying school. There is an immediate jump up there that would be a big dent in the State's finances. The format to date has been the most successful public private partnership in Ireland over the years. To start revisiting, dismantling or weakening it would be a backward step. The constituents feel this, and make their case very well. We should put a brake on this and revisit the fundamental fabric of what is going on here.

One cannot sufficiently emphasise that the facilities of many of these schools are shared throughout the communities with clubs, local communities, sports clubs, swimming pools etc. That is a very important non-measurable advantage for society. If ten schools were to close, there would be a very big impact of at least 1,200 direct employees suffering job losses and maybe a further 1,200 in indirect losses. I ask the Minister to revisit these matters with a very acute mind and multidimensional understanding of the situation. From a political point of view the 25,000 students have 50,000 parents and probably a cohort of 150,000 past pupils who value the schools and would not like to see them damaged or undermined in any way. That is a large population of electorate who will be affected.

Since Donogh O'Malley introduced the free secondary schools scheme back in the 1960s it has been the overarching policy of the State to provide free secondary school education to all students. My view, shared by the Minister, is that the scarce resources available should be deployed in a manner that ensures we have the broadest possible level of provision across the board for all students and that we should try to ensure as best we can equality of input and opportunity for all students across the country irrespective of where they are or what the income of their families may be. There is a cost to the State in providing fee-charging schools entering the free scheme, and this has come up in a study mentioned by Deputy Mathews. I do not know if there is any question of schools closing as the Deputy suggested. Where fee-charging schools enter into the free scheme I respectfully suggest to the House that the cost that has been suggested as being associated with such a move has been greatly exaggerated in some reports.

At a time of reduced resources we must prioritise where valuable State resources would be focused and the Minister for Education and Skills has signalled, through these budget measures, that his focus must be on schools that do not have an income stream available to them, as the fee-charging schools do.

Central Bank of Ireland Investigations

This issue relates to an ongoing investigation by the Central Bank of Ireland into the mis-selling of payment protection insurance, PPI, policies to a range of customers over a long number of years potentially. People were sold products that they were never eligible to benefit from. Categories include self-employed people, farmers and people close to retirement when the product was sold to them. Without putting a tooth in it, their money was stolen from them because they were sold products they could never possibly benefit from. I welcome the ongoing Central Bank investigation but it is moving too slowly and I will outline my reasons for saying that.

The investigation is dealing with PPI products that were sold to customers in July 2007. The firms involved who sold them their products have written to approximately 13,000 customers who were sold the products in one particular month, July 2007. If it continues to move at that pace, where they take it month by month, many of the people affected will be waiting a very long time to have any justice or recourse on this issue. It is potentially a very significant issue. Some 340,000 PPI policies were sold since 2007 so it is a very significant issue. In the UK the authorities are ahead of Ireland in resolving the issue. It will cost billions of euro, and in the UK it could potentially cost £14 billion or £15 billion, so it must be resolved.

Why does the review deal only with products sold by firms since July 2007? Are we saying there was no incidence of the misselling of PPI policies before July 2007? I do not believe that. There are two issues relevant to the Financial Services Ombudsman, FSO. One is the current six-year rule whereby a person can submit a complaint to the FSO in respect of a product sold in the last six years. If one takes the example of people who bought the product in July 2007, they have only until July of this year, two months' time, to submit a complaint to the FSO. One of my concerns is that if those people do not get any satisfaction from the firm that sold them the product, the clock is ticking very quickly. Another reform we propose in that area, which the Minister is taking on board through a Central Bank Bill, is to allow the FSO to publish the complaints records of individual financial institutions.

What is the timetable for the conclusion of this investigation? It is going on since 2011. It was broadened in 2012 and now, in May 2013, the firms involved are writing to one very small group of customers who bought the product in one month, July 2007.

At that pace, people who bought the product in 2009 and 2010 will be waiting a considerable period for the investigation to be concluded.

I will leave my opening remarks at that. This is about the mis-selling of products. It is essential that the people affected get justice and a relevant form of restitution, whether through compensation, a refund of their money or the adaptation of the scheme to make it suitable for them. In addition, the firms involved which, in my view, knowingly mis-sold these products to thousands of customers should be punished and fines should be levied accordingly. This is the very type of practice that unfortunately prevailed in Ireland for far too long. It needs to be faced up to and I welcome the investigation. However, I want it to be concluded quickly and have tangible results from which people can benefit.

I thank Deputy McGrath for raising this important issue.

I have been advised by the Central Bank that it is conducting an ongoing investigation into the sale of payment protection insurance, or PPI, by firms from July 2007. In September 2012 the Central Bank broadened its investigation to include a number of other banks and credit institutions. Approximately 340,000 PPI policies have been sold by banks or credit institutions since 2007. The Central Bank issued an update on its ongoing investigation into the sales of payment protection insurance policies on 17 May 2013. Ten firms are currently undertaking reviews of their payment protection insurance sales. At the request of the Central Bank, the firms previously informed all their customers included in the PPI sales review of their intention to provide updates to them as the review progresses. The firms have commenced writing to their customers who purchased PPI in July 2007 to inform them of the outcome of the review as it relates to their situation. Approximately 13,000 customers have received letters in the last two weeks. The Central Bank is advising customers who receive a letter and who have any questions to contact their banks or credit institutions directly.

It is too early at this stage to comment on either the number of consumers who will receive refunds or the total amount to be refunded. Some firms may be able to indicate to their July 2007 customers how much they will receive but the majority will not until customers have decided whether they wish to have restitution or to keep the policy subject to further suitability assessment. The Central Bank will make a statement at the conclusion of the overall process.

Throughout 2013, firms will continue to conduct the review and will directly contact all other PPI customers included in the review with the outcome of the ongoing review. The Central Bank will continue to require firms to take an orderly, co-ordinated and consistent approach to the review and will monitor progress on an ongoing basis with the firms involved and with the independent third party overseers who were appointed at the request of the Central Bank. The Central Bank's update on its ongoing investigation into the sale of payment protection insurance is available on the website www.centralbank.ie.

On the issue more generally, the Central Bank's consumer protection code is applicable to all entities regulated by the Central Bank. These regulated entities include State-supported banks and financial institutions. The code requires, among other things, that a regulated entity must ensure that in all its dealings with customers and within the context of its authorisation it acts honestly, fairly and professionally in the best interests of its customers and the integrity of the market and with due skill, care and diligence in the best interests of its customers. Any breach of the code may be considered under the Central Bank's administrative sanctions procedure. In addition, as the House will be aware, the Financial Services Ombudsman was set up to adjudicate on unresolved disputes between complainants and financial service providers in an independent and impartial manner.

I thank the Minister of State for his reply, although unfortunately it is, verbatim, the reply to a parliamentary question I submitted recently. I do not blame the Minister of State for that because it is what he was provided with by the Department of Finance.

The essential issue is that of the 340,000 products sold since July 2007, the evidence is that an unknown quantum were mis-sold. There is an ongoing formal investigation and the firms involved are dealing with the products that were sold in July 2007. We are told there is an independent third party overseeing the process. However, the problem is that, under existing legislation, if people do not get the recourse they require through the Central Bank investigation, the six-year rule will exclude many of them from applying to the Financial Services Ombudsman. The Minister has stated he is open to introducing the principle of discoverability, such as exists in the United Kingdom. That means it is only from the date a person learns that a product was mis-sold that the clock starts ticking. It is important that the Government implement that reform as quickly as possible.

This issue has been highlighted on RTE's consumer programme and The Sunday Times has been running an ongoing campaign on it. It is a genuine issue and at its heart there are people who, when hard times hit them, when their businesses folded or they became ill and were no longer able to work, thought to themselves, "Well, I'm fine, because I've been paying into a payment protection policy. I'll just ring them up and they'll ensure I continue to have a reasonable standard of living." However, such people were then told by the companies concerned that even though they had been paying into the fund for a number of years they were not actually eligible for or entitled to any payment. In basic terms, that is the issue. These people deserve justice and deserve to be compensated. Small changes would ensure most of them can be accommodated and I ask the Minister of State to bring those points to the Minister for Finance.

I will certainly bring the points the Deputy raised to the Minister for Finance, Deputy Noonan. Deputy McGrath referred, correctly, to the constraints that exist from a legal point of view in regard to the bringing of claims in general, not only in this area. The statute of limitations confines the bringing of claims to particular limitation periods, as the Deputy will know. Presumably an amendment would be required for change in this area. In general, time limits on litigation make sense because they ensure that potential litigants or defendants can have some level of certainty as to their exposure. That is a general proposition. When awful cases such as these arise, however, they point us in the direction of the constraints that exist in law and it may well be that a case could be made. The Law Reform Commission has looked at this issue on a number of occasions and we also have the principle of discoverability in regard to the bringing of claims in personal injury actions, where the law has been changed to allow for it. Therefore, there may be a case. The Deputy is fully aware of this issue, as is the Minister. However, I will relay the comments of the Deputy to the Minister. This is an extremely difficult and terrible situation, faced by very many people.

Community Enterprise Centres

Mayfield Community Enterprise Limited, which was established in 2001, was responsible for co-ordinating and administering community employment schemes within the Mayfield area. The Minister of State may be familiar with the local community through his party colleague, the Minister of State, Deputy Kathleen Lynch. This is an area of high unemployment, in which there has been much social deprivation in the past. Thankfully, in the past 12 years, through the CE schemes, the workers and the various host groups, much work has been done to transform the community. A lot of good work continues to be done right up to today.

It came as a bit of a shock yesterday, therefore, when the host groups were called to a meeting to be informed that the impending retirement of the supervisor for the Mayfield area is due to take place in September. At the meeting people were told that a recommendation is going to the manager and the principal officer of FÁS that the position not be filled. In effect, this means that Mayfield Community Enterprise Limited will cease to exist, and the supervision, administration and the operation of the CE workers in the community will be transferred to other areas. Two are going to Military Hill, ten to Blackpool and nine to the North Mall CE umbrella group of CE schemes. This is obviously of concern to the local host groups and the communities. One of the advantages of having a supervisor within the Mayfield community is that such a person has built up a great knowledge of the local community and has a good relationship with the host groups. There is a fear that if the supervisor is taken out and not replaced, with the enterprise to be co-ordinated and administered by CE groups outside the Mayfield community area, there will be a detrimental impact on the provision of CE schemes.

Just in case anybody is worried, I stress that there is no indication or talk of a reduction in the number of CE scheme workers. I want to make that clear because I do not want people who hear this debate to be fearful that there will be a reduction in numbers. That is not what is being proposed, but what is proposed is that the vacancy for supervisor not be filled.

There is general concern that something which worked well for 12 years is now being stripped back and people do not understand the rationale behind the change. The only conclusion they can reach is that it is a cost cutting exercise and this is a cause for genuine fear in the local community. I ask the Minister for Social Protection to rethink this recommendation before it is put to FÁS manager and to seriously consider filling the supervisory position when it becomes vacant in September.

I thank Deputy Jonathan O'Brien for raising this issue and commend him on the measured manner in which he outlined his concerns.

Mayfield Community Enterprises Ltd. is a company that operates a community employment, CE, scheme based in the Mayfield area on the north side of Cork city. Currently there are 21 participants on this scheme spread among ten different community organisations and groups. The nature of the work undertaken by the participants ranges from child care and care of the elderly to maintenance of community and sporting facilities.

This scheme is fully funded by the Department of Social Protection. The CE supervisor on the scheme will reach retirement age in September of this year and the Department is examining the possibility, on operational cost grounds, of not replacing this position and instead amalgamating the scheme into several other CE schemes which operate in this area of the city. Such a move would have no impact whatsoever on the number of participants or on the services provided to the local community through this scheme. All participants on the scheme would remain in their current positions in existing organisations but would operate under the auspices of a different CE scheme. Such a proposal, which has been successfully implemented on a number of occasions in Cork and other counties, has the advantage of allowing all existing CE participants to continue their placements in their existing organisations while allowing the Department to operate the schemes more cost effectively. The Department has met with the board of the Mayfield Community Enterprises Ltd. to advise it of its intentions and has agreed to a further meeting with the board in the coming weeks to further discuss this proposal. I am sure this meeting will provide an opportunity for elaborating the concerns expressed by the Deputy.

It is important to stress there is no threat to the numbers because people became fearful of cuts when they heard the news that the supervisor position will not be refilled and that administration will be transferred to other CE schemes. One of the advantages of the scheme as it currently stands is that the supervisor has direct contact with host groups. I appreciate that the Department will engage in further meetings with the board but it is also important that it sits down with host groups, community leaders and associations which work closely with the current supervisor to outline exactly what is being proposed. The perception exists that it is the beginning of the end for CE schemes in that area. I do not believe that is the case but people's fears need to be addressed and it would be beneficial were the Department to meet not only the board, but also the CE scheme workers and their host groups. I ask the Minister of State to give a commitment that such an engagement will be entered into before the current supervisor retires in September.

I will relay the Deputy's suggestion to the Minister for Social Protection and ensure she is made aware of the issues raised.

Insurance Coverage

I am grateful for the opportunity to raise this matter. My colleagues, Deputies Dara Murphy and Jim Daly, as well as several Dublin based Deputies have also been in contact with the Office of Public Works and the Irish Insurance Federation regarding the issue of homes that have been flooded and can no longer access any form of insurance. As I have raised the matter with the Minister of State, Deputy White, on previous occasions, I will be brief in rehearsing the two issues arising. First, the constituents whom I represent understand that the premiums they will be asked to pay could reflect the increased risk of flooding to their homes, but they find it difficult to accept that they cannot get any flood insurance whatsoever. Second, the State is funding infrastructure throughout the country to protect communities from the risk of flooding. Insurance companies reflect this infrastructure in the premiums they charge in those communities. In effect, the State is providing support to the insurance industry but communities which are not protected by flood prevention infrastructure - I am also seeking to fix this - are given no support from the insurance industry. A question of fairness arises if the insurance industry is not recognising the State's investment in certain communities to prevent flooding and, in many cases, refusing to provide flood insurance at any price. Even homes that have never experienced flooding are unable to get flood insurance because they are located near areas that were flooded.

I acknowledge that the Minister of State at the Department of Finance, Deputy Brian Hayes, is doing considerable work in this area and is seeking to advance negotiations. I would be grateful if we could get an update on the current status of these negotiations.

On behalf of the Minister of State at the Department of Finance, Deputy Brian Hayes, I thank Deputy Donohoe for raising this issue and commend him on the work he and others have been doing to address it. I am happy to provide an update on developments since the Deputy last raised this matter in February.

I am aware that the issue of obtaining flood insurance cover continues to create difficulty for people in certain locations, either in terms of the review of household insurance premiums or where their existing insurance companies indicate they will no longer provide such flood cover specifically. The Irish Insurance Federation, IIF, has repeatedly assured the OPW that the incidence of such difficulties remains at a low level and that only 2% of insurance policies nationally are involved. None the less, 2% of households represents a significant number of affected people and the Government is anxious to address the problem for this reason.

In February, the Deputy was updated on the establishment of a working group comprising the OPW, the IIF and representatives of the main household insurance companies operating in the Irish market to consider and address this issue. It is important that the nature and purpose of this group and the role of the OPW in this process are clearly understood. The OPW has no role or function in relation to the oversight or regulation of the insurance industry or of insurance matters generally. It is important to state this because there may be some misconception about the nature of the OPW's engagement with the IIF in regard to flood insurance cover. The discussions which are currently ongoing between the OPW, the IIF and the insurance companies have a specific focus and are solely concerned with agreeing a basis on which information can be provided to the insurance industry on flood relief schemes completed by the OPW and the standard of protection offered by those schemes.

The working group has made solid progress towards reaching agreement on a data sharing platform which will allow the insurance industry to take proper account of the levels of capital investment in flood protection measures over several decades by the OPW when assessing flood risk in localities where such flood measures have been completed. A considerable number of technical issues have had to be addressed but it is important that all such matters are addressed in a comprehensive way to ensure that the system of data exchange is robust, reliable and sustainable. The information is being provided in a readily accessible GIS format which will show in digital map files the areas benefiting from completed flood defence works. The initial focus of the group's work is the provision of information on schemes which provide protection for the one in 100 year flood.

Last April the Minister of State, Deputy Brian Hayes, had a very constructive meeting with the new chief executive officer of the Irish Insurance Federation. The new CEO confirmed his commitment to the process under way and ensuring the working group established between the Office of Public Works and the Irish Insurance Federation agreed to a memorandum of understanding to guide present and future interaction between the insurance industry and the OPW on communications on completed flood defence works. The OPW is satisfied that the insurance industry is engaging constructively and positively in this process and there is a strong willingness to reach agreement on a sustainable system of information exchange. Ultimately, it is a matter for the insurance companies to decide how they will use the information provided on completed flood defence works. As part of the process, they are committing to take the information into account in their assessment of risk. It is hoped this will facilitate the provision of flood cover in all areas protected by completed schemes.

The Minister of State looks forward to the completion of the work of the OPW-IIF working group in the near future and expresses his appreciation of the effort the IIP has put into this co-operative exchange in recent months. The level of information available to the insurance industry on flood risk throughout the country will be greatly enhanced with the thorough and robust mapping of the country's watercourses for flood risk under the national catchment flood risk assessment and management, CFRAM, programme. In time, it is expected proper assessment of flood risk by the insurance industry will be based on firm evidence based and verifiable assessments.

I remind the Deputy of the avenues available to those having difficulty, with complaints or queries in seeking insurance cover through the Irish Insurance Federation's free insurance information service. In addition, the Financial Services Ombudsman deals independently with unresolved complaints from consumers about their individual dealings with all financial service providers.

I thank the Minister of State for his response and welcome the change of tone evident in it. His response acknowledges that progress is being made and the insurance industry is engaging constructively and positively in this process. It is important to highlight this, as we must tackle this issue.

I ask the Minister of State to relay to the Office of Public Works my concern about the benchmarking of the infrastructural work the office is required to do. While I understand the need for such benchmarking, in Dublin city the lead provider of flood relief infrastructure is Dublin City Council rather than the Office of Public Works. This may also be the case in other Dublin local authority areas. The Office of Public Works tends to be responsible for such provision outside the capital. Dublin City Council is constructing flood prevention works to the same standard as those provided by the Office of Public Works. However, the Minister of State's reply makes explicit reference only to the Office of Public Works. I ask that the Office of Public Works examine this issue to ensure the work required in Dublin is done to the standard required by the office. Perhaps the Office of Public Works could check works carried out by Dublin City Council or other State bodies to ensure it is satisfied that they are done to the required standard.

I again thank the Deputy for raising this issue and the additional insights he provided in his rejoinder. I will ensure the comments he made on the position on Dublin City Council which I did not fully appreciate until now are relayed to the Office of Public Works. I am sure the Minister of State, Deputy Brian Hayes, will ensure they are taken on board in the work being done.

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