I thank the Chairman and members of the committee, for the opportunity to meet the committee to discuss my Department's requirement for a technical, or token, Supplementary Estimate of €1,000 for this year.
I should make it clear at the outset that approval is not being sought for the allocation of any additional current or capital expenditure on my Vote. In overall terms, I am pleased to report that expenditure in 2010 will be managed within the voted provision. Rather, I am seeking approval, by way of a token Supplementary Estimate, for my Department to transfer capital expenditure between certain subheads and, on the current side, to allow me to provide for additional expenditure on the student support scheme by offsetting savings and underspending that have arisen on other subheads.
On capital spending there will be a saving of €62 million, for reasons that I will shortly explain, on subhead F1, which provides for the building, equipping and furnishing of national schools. I propose to allocate €42 million of this saving towards additional capital expenditure on third level institutions, subhead F3, with the remaining €20 million re-allocated towards expenditure on schools information and communications technologies, under subhead B18.
With regard to current expenditure, demand-led pressures have meant that the original allocation for expenditure on student support payments, under subhead El, is insufficient to meet the cost of these payments this year. I am, therefore, seeking to allocate a further €43 million to that subhead, which will come from underspending on residential institutions redress, subhead B12, on the Commission on Child Abuse, subhead B19, and from savings on FÁS training and integration supports, subhead G2.
I would now like to explain in some more detail the reasons additional funding is required for some subheads and to outline the savings and underspending that have been made available to compensate.
I refer first to subhead El, student support - current expenditure. This subhead meets the costs of awards made by the local authorities and the VECs under the three third level student maintenance grant schemes. They are the higher education grants, vocational education committees' scholarships and the third level maintenance grants for trainees schemes. In addition to these schemes, the subhead meets the cost of providing maintenance grants to students attending post-leaving certificate courses. An additional €43 million is required on top of the original allocation of just over €324 million. There are several reasons behind this requirement. These include providing for a 21% increase in grant-holders in 2009-10 over the previous year, the fact that people are remaining in full-time education for longer periods and progressing to post-graduate levels, along with a large number of people entering post-graduate education following loss of employment. There has also been an increase in the number of persons qualifying for the higher special rate of grant. This includes persons whose financial position changes during the academic year and who are entitled to request a review of their grant payment under the scheme's change of circumstances provision.
Subhead B18 is for the schools information and communication technologies activities - capital expenditure. This subhead provides funding for the Department's policy of integrating information and communications technologies into first and second level education. The additional requirement of €20 million, on top of the original allocation of €43 million, is necessary to provide a second ICT infrastructure grant to post-primary schools and a one-off grant to the post-leaving certificate sector.
This additional allocation will assist in the advancement of the implementation of the €150 million plan for smart schools and demonstrates the Government's commitment to the smart economy at school level. It will build on the allocations already made and will ensure that post-primary schools are in a position to prioritise equipment for use in the teaching of project maths, as well as approaching the overall equipment baseline of a teaching computer and a digital projector for every classroom. Particular emphasis will be placed on ensuring that post-primary schools are enabled to benefit from high speed broadband capability.
Subhead F3 is for the third level capital programme - capital expenditure. This subhead provides for the building grants and capital costs for universities and colleges, institutes of technology and designated institutions of higher education. Up until May of this year, it provided the capital element of expenditure on the programme for research in third level institutions, PRTLI, when it was transferred to the Department of Enterprise, Trade and Innovation. An increase of €42 million on the original allocation for this subhead of just under €127 million is sought.
I again make it clear that in proposing this Supplementary Estimate I do not seek additional capital and therefore I am not making further demands on the Exchequer.Instead I am merely seeking the approval of this committee and the House to agree to an internal re-distribution of already voted funding within my Department's overall capital envelope for use within the higher education sector. This re-distribution will allow my Department to continue with an existing grant scheme that targets capital to higher education institutions to enable them address a wide range of necessary improvement works including health and safety works on a devolved basis. In addition, the funding will provide access to an investment programme that will enable institutions to deal with the replacement, upgrading and renewal of equipment.
I now refer to subhead B12, which is for residential institutions redress - current expenditure. This subhead provides for the payment of awards under the redress scheme and related expenses of the Residential Institutions Redress Board. Projected underspending of €10 million on the allocation of just over €53 million is being forecast, which is due in the main to the number of awards being processed being less than estimated for. A number of incomplete applications on hands and the lack of documentation required to process such applications is also delaying the board's efforts to complete the process in all cases.
Subhead B19 provides for the administration and legal costs of the Commission to Inquire into Child Abuse. The underspending of €12 million, out of an original allocation of just under €16 million, arose because not as many bills were received by the commission as were estimated for. Another factor is the scale of the task and the complexities that relate to the negotiation process, in particular to ensure that only reasonable costs are paid. Previous experience has shown that a critical examination of individual legal bills by the commission has resulted in a significant reduction from the sums being claimed by the legal representatives.
The purpose of subhead G2 is to fund FÁS to provide training for those seeking employment, training for those in employment and to provide support for the integration of those furthest from the labour market into the labour market. Training for the unemployed comprises of a range of programmes that are aimed at giving clients with lower level skills the foundation necessary to allow them enter the labour market or progress to more advanced specific skills development. It is also aimed at providing specific competencies to trainees who have good basic education or skill levels. Training for the employed includes the apprenticeship programme and in-company training to assist workers to adjust to the rapidly changing economic environment. The local employment service, LES, which is also funded by this subhead, focuses on the provision of services to those most disadvantaged in the labour market as a direct response to the local context within which it operates.
The total FÁS budget for training for 2010 amounts to €426 million and a saving of €21 million will be achieved in respect of subhead G2. Savings will be achieved in the area of apprenticeship due to a reduction in demand due to the downturn in the construction sector. Price savings have been achieved on the training allowances paid to the unemployed, which are linked to a person's social welfare entitlement, due to the changing profile of trainees. Savings have also been achieved in respect of the procurement of contracted training as a result of new framework contracts being put in place. Planned expenditure for 2010 in respect of the majority of FÁS training programmes for the unemployed is expected to be made by the end of the year.
Subhead F1 funds the building, equipment and furnishing of national schools. A range of sub-programmes are funded by the subhead and these include large-scale projects, site acquisitions, the summer works scheme, emergency works, additional accommodation which schools can opt to deliver as permanent buildings or as prefab purchases, the minor works grant, the finalisation of the permanent accommodation and small schools schemes, furniture and equipment grants, the water conservation and energy efficiency schemes, asbestos and radon remediation schemes and miscellaneous items. All these sub-programmes have been funded throughout 2010 from the F1 subhead according to planned expenditure or demand led applications as appropriate. A saving of €62 million is now being declared on this subhead. The total allocation under the subhead in 2010 amounted to €378.8 million, including a carryover of €72 million from 2009. The full amount of the carryover has been spent.
Expenditure on the various sub-programmes within the subhead has progressed throughout 2010 in line with expectation, with the exception of the large-scale projects and, to a lesser extent, site acquisitions. This has been a very challenging year to ensure that capital moneys that have been allocated are spent, due to the reduction in construction prices for school buildings since the height of the boom. In this regard contract prices are sometimes now up to 40% lower than at their highest point, and a significant proportion of this is an additional reduction on 2009 average prices.
There are further difficulties within the construction industry linked to very low tender prices which are leading to delays. For example, confirmation of the availability of a bond prior to a contract being awarded is taking much more time. Second, there are increasing examples of contractors, sub-contractors and other professionals associated with school building projects going out of business while they are engaged on school projects.
While the Department has deliberately advanced some additional major projects to tender stage faster than was initially planned, the need to ensure value for money through public procurement processes means that the lead-in time for moving projects on-site results in difficulties in replacing projects that are delayed.
There are more than 200 devolved grants to the value of €30 million that have been approved for schools but where, over six months later, the school authority has not made any claim to draw down the funding. The Department has contacted a number of schools in this category and understands that the difficulties they are experiencing are similar to the difficulties being experienced by the Department on the large-scale projects. These include difficulties in the development of the design and delays in securing appropriate local authority planning permission.
The overall result is that there has been some softening of expenditure in some elements of the schools capital budget which is reflected in the expenditure to date, particularly in respect of large-scale projects. The overall result is that there has been some softening of expenditure in some elements of the schools capital budget which is reflected in the expenditure to date, particularly in respect of large scale projects. An amount of €62 million will not be expended this year. The Supplementary Estimate will facilitate the transfer of this sum to other capital areas in the Department where urgent and pressing needs can be addressed in 2010. Of the total, €20 million will transfer to the schools ICT programme, while the balance will be transferred to the third level sector.
I hope I have clearly explained the reasoning behind the technical Supplementary Estimate of €1,000 that I am now seeking for this year. This has been another very challenging year in terms of the scale of cost pressures on the education Vote, allied to the very significant deterioration of the wider economic picture. As a consequence, I have been very conscious of the need to minimise the impact of those unavoidable cost pressures on the overall Exchequer in these difficult times. I am pleased to be able to state that this has been achieved as a result of prudent management of the overall Vote allocation throughout the year.