The Department of Education and Science requires a Supplementary Estimate of €47 million this year and I welcome this opportunity to meet the members of the select committee to discuss the matter. The Supplementary Estimate is mainly required to meet additional superannuation and pay costs, and to obtain approval for some other smaller supplementaries and additional receipts. Approval for additional gross spending of €132 million is being sought but I am declaring savings of just over €72 million on a number of subheads, as well as seeking approval for extra receipts likely to account for an additional €13 million, resulting in a net supplementary requirement of €47 million.
I will now outline in more detail the basis for the amounts sought in the case of the individual elements of the supplementary. I am seeking a supplementary of €1.36 million under miscellaneous subhead B17. This is to meet the costs of further education courses undertaken in Northern Ireland by students from the South. As a new service, this requires Dáil approval and so I would like to explain the background.
Notification was received in July last from the Department of Employment and Learning in Northern Ireland that students who are resident in the South but attending further education courses in the North are ineligible for funding under their Department's residency requirements. The net effect of that Department's decision would have been that southern resident students would have been required to pay a fee to access further education courses in the North.
I was of the view that such a fundamental change at such short notice to the existing arrangements, which had applied for a number of years, could cause serious difficulties for the students concerned. In view of the extremely short timeframe and the fact students were in the process of applying to and registering with further education colleges, we decided an urgent interim solution was required.
A decision in principle was taken in August 2006 by my Department and the Department of Enterprise, Trade and Employment that, subject to Dáil approval, a joint once-off contribution would be made to the Department of Employment and Learning in Northern Ireland in respect of southern resident students attending further education courses in colleges of further education in Northern Ireland for the 2006-07 academic year. Accordingly, and subject to certain details being finalised, Dáil approval is now being sought in the Supplementary Estimates for this payment of €1.36 million by my Department to the Department of Employment and Learning in accordance with this agreement.
In taking this course of action, it was recognised it would be necessary subsequently to resolve the conflicting legal opinion on both sides about whether charging southern students would be in conformity with EU regulations. Accordingly, the payment is being made as a once-off good faith gesture to ensure the previous arrangements would remain unaltered for the 2006-07 academic year, and students would not be charged fees. A matching contribution of £1.5 million will be made by the Department of Employment and Learning. As part of this process it is also envisaged, in the event of not being able to find resolution to the differing legal opinions, that we will have recourse to the European Commission for an opinion. Discussions are ongoing with a view to ensuring clarity in this area before the next academic year.
The Supplementary Estimate of €27.6 million under subhead C1, for which I am now seeking approval, is in respect of additional costs which have arisen in regard to primary teacher salaries. The additional funding is necessary to enable my Department to continue to honour the commitment to the provision of additional resources for disadvantaged pupils, children with special needs and newcomer pupils, to reduce the pupil-teacher ratio and to reduce class sizes. Additional funding is also required to meet the cost of arrears owed to casual and non-casual teachers under the Protection of Employees (Part-Time Work) Act 2001.
Since 1997, almost 7,000 additional primary teaching posts have been created. Provision had been made in the 2006 Estimates for additional posts to continue the Government's unprecedented investment in primary education. However, an additional €10 million is required to meet the full cost of posts created over the course of the 2005-06 school year and during the current school year. An additional €17.6 million is also required to meet the cost of arrears owed to casual and non-casual teachers. These arrears arose as a result of the implementation of the terms of the Protection of Employees (Part-Time Work) Act 2001, which has been effective from December 2001.
A Supplementary Estimate of €56 million for subheads C11 and D4 is in respect of additional pension and lump sum costs which cannot be met from the original allocation in the Estimates. Over recent years the annual number of teacher retirements has in general shown a marked increase, and we have experienced some difficulty with the estimated and actual number of retirements. The number of annual retirements of teachers who will reach age 65 is relatively easy to predict, although the number will of course vary from year to year. In recent years these compulsory retirements have accounted for between 11% and 18% of annual retirements. It is much more difficult to predict the numbers who will retire on a voluntary basis, and this category generally accounts for the majority of annual retirements. We can experience an increase when a particular pay event occurs and this can be followed by a decline.
Teachers may retire voluntarily at any time from age 55 to age 65 provided they have the requisite service. A teacher is normally required to give three months prior notice to the school. Many retire on completion of the necessary service for maximum pension — 40 years. Other teachers opt to retire when they have achieved the minimum thresholds for retirement. Teachers aged 55 may retire immediately they have completed 35 years reckonable service, while those aged 60 or over may retire on pension provided they have completed a minimum of two years pensionable service. Taking these factors into account, precise estimation of the numbers who may retire in any year is difficult.
Over the period 2000-06, annual voluntary retirements have ranged from 39% to 60% of overall retirements. The actual yearly number of these voluntary retirements has likewise fluctuated from a low of 309 to a high of 745. In view of the estimating difficulties, it has been agreed with the Department of Finance to conduct an in-depth study to facilitate better predictions of future voluntary retirements.
The purpose of subhead D7 is to recoup to local authorities the cost of pensions and retirement gratuities paid by them to former education sector staff employed by the institutes of technology and vocational education committees under the vocational teachers' superannuation scheme and the education sector superannuation scheme. As details of ages, salary levels and so on are not readily available to my Department, it is not possible to project with certainty the number of pensions from year to year. A supplementary allocation of €16 million is being sought for subhead D7 to meet the expected additional costs that will arise from the number of additional pensions and gratuities being greater than provided for in the original Estimate.
I am seeking an additional €47,000 in respect of subhead E3 which deals with the expenses of the Higher Education Authority. As a grant-in-aid subhead, I am required to obtain Dáil approval for any increase in the subhead. This sum of €47,000 is required to cover the costs of a recently sanctioned increase in the level of fees paid to members of State boards.
Subhead E4 is another grant-in-aid subhead which again requires Dáil approval for any increase. I am seeking an additional allocation of €31.5 million, mainly to cover the costs of a number of pay awards to staff in the higher education sector. The funds in this subhead are allocated to the Higher Education Authority for disbursement to the institutions of higher education designated under the Higher Education Authority Act 1971 in respect of their current expenditure.
A sum of €31.5 million is being sought by way of Supplementary Estimate to cover costs which have arisen in 2006 which cannot be met from within the existing allocation. An additional €9.8 million is required in respect of pay awards, including arrears, to the grades of professors and academic dental consultants. An amount of €17.8 million is required to pay for pay increases and arrears to technicians. These awards were approved recently with arrears, including benchmarking arrears, going back to the year 2000. The Towards 2016 pay increase due from 1 December 2006 will cost in the region of €1.8 million. An additional amount of €2.1 million is required to meet the additional costs of pensions, including lump sum payments.
I am also seeking an increase in the level of appropriations-in-aid to be applied to the Education and Science Vote. The increase comprises €25 million in additional ESF funds and €8 million in pay related receipts, partially offset by the non-receipt of €20 million dormant account funds, resulting in a request for a net increase in appropriations-in-aid of €13 million. The anticipated ESF increase is due to increased ESF claims submitted by my Department. The amount of EU aid to be brought in under this subhead in 2006 was just over €44 million.
ESF claims in the amount of €88.23 million were submitted to the ESF managing authority by my Department in September 2006. Not all of this amount will be received, but my Department expects to receive payments from the European Commission amounting to approximately €69 million before the end of 2006. Additional pay related receipts of €8 million, for which I am now seeking approval, are in respect of increased superannuation contributions for primary teachers and increased recoupment of secondment costs at primary level. In addition, €20 million in receipts will not be received from the dormant account fund as projects have not reached the stage where funding is approved.
As I indicated earlier, I am also declaring savings under several subheads and I will explain briefly the position in each case. In the case of subhead B19, which relates to the Commission to Inquire into Child Abuse, I am declaring savings of a little more than €20 million. While the commission has commenced the examination and payment of legal costs associated with its investigation, it has not to date reached agreement on the bulk of these costs. This resulted in a significant saving on the budget allocation for 2006. It is likely that the finalisation of these costs will not be fully achieved in 2007 and will continue into 2008.
The various measures under the 2006 educational disadvantage dormant accounts programme are still being finalised and rolled out. Following this process, Government approval will be sought for the lists of applicants recommended for funding under each measure, in accordance with the provisions of the Dormant Accounts Act. Consequently, no expenditure will be incurred during 2006. The net impact of dormant accounts on the Department's Vote, therefore, is nil. This is because any moneys disbursed from subhead B26 are matched by receipts from the National Treasury Management Agency in the same fiscal year. As I indicated, these will not be received in 2006. It is important to bear in mind, however, that the amount of €20 million will be available to fund approved projects in 2007.
An additional €32 million was included in this year's Estimate to meet the cost of arrears owed to casual and non-casual teachers. These arrears arise as a result of the implementation of the terms of the Protection of Employees (Part-Time Work) Act 2001, which is effective from December 2001. Trained casual and non-casual post-primary teachers who work more than 150 hours are entitled to be paid at their personal scale point for work exceeding these limits. The expected cost of the arrears owed to these teachers will not now be paid out during 2006. Instead, they will be paid at an early stage in 2007, thereby providing a saving of €32 million in 2006.
The co-funding of the national digital research centre, NDRC, was to be made from this subhead in 2006, in conjunction with the Department of Enterprise, Trade and Employment and the Department of Communications, Marine and National Resources. The amount of Exchequer funding required for the operation of the NDRC is €1.5 million for 2006, which amounts to €500,000 from each of the three Departments involved. The Department of Communications, Marine and National Resources has sufficient funding to cover the cost for the three Departments in 2006. Accordingly, my Department is declaring a saving of €500,000 under this subhead.
I have outlined the reasons for my Department's Supplementary Estimate. The bulk of it is required to cover the demand led area of superannuation payments, costs of additional primary teachers and some pay increases not provided in the original Estimates. I hope I have explained the reasons for the additional sums required, as well as the basis for the small number of savings. I commend the Supplementary Estimate to the committee and will be pleased to respond to any question members may have.
