We have the supplementary estimates for the year ending 31 December 1996. We will conclude the consideration of these at 10.20 a.m. to allow for attendance at the Order of Business. Is that agreed? Agreed. I welcome the Minister for Finance and Mr. Murphy from the Department of Finance, to the meeting.
Estimates 1996.
Vote 10 — Office of Public Works [Supplementary].
Vote 13 — Office of the Attorney General [Supplementary].
Vote 21 — Civil Service Commission [Supplementary].
There are three votes involved. The gross amount required under Vote 10 — Office of Public Works — is £17.861 million but this is partly offset by savings of approximately £6.761 million, so the net requirement is £11.1 million.
The main increases are in respect of the Purchase of Sites and Buildings, subhead D, and the Zoological Society of Ireland, subhead M. The original application for the purchase of sites and buildings was £500,000. Expenditure is now expected to be £15.581 million.
The Office of Public Works is always interested, subject to the availability of funds and the agreement of satisfactory terms, in buying properties which are held on long leases because of the long-term saving to the Exchequer.
Four main acquisitions are budgeted for in the revised estimate:
(1) Nos. 7/8 Merrion Square occupied by Bord na Gaeilge.
(2) Goldsmith House, Pearse Street, occupied by the Department of Social Welfare.
(3) The Bord Iascaigh Mhara headquarters in Dun Laoghaire.
(4) The offices of the permanent representative to the European Union in Brussels.
There is a brief description of the various properties which I do not propose to read but I recommend all of these acquisitions as they make eminently good sense.
In respect of the new system of accountancy which operates within the EU a commitment to a hire purchase agreement of, for instance, £5 million spread over 10 years is, in terms of accrual accountancy, deemed to be a £5 million liability taken on in the year in which the hire purchase or mortgage agreement is signed. There is no off balance sheet saving as there was in the past.
Vote 13 refers to the Office of the Attorney General. We are looking for a supplementary estimate of £2.35 million. This Vote includes the office of the Chief State Solicitor and the Law Reform Commission. The two elements of these supplementary estimates are fees to counsel and general legal expenses incurred by the State. The bulk of the additional expenditure, £1.7 million, is required under subhead C General Legal Expenses, where the original estimate was £1.35 million. This excess has occurred because substantial costs were awarded against the State during 1996.
Vote 16 refers to the Civil Service Commission, a supplementary estimate of £130,000. The need for the additional expenditure has arisen mainly because the number of competitions for appointments, both on the Civil Service Commission side and the Local Appointments Commission side of the office, has been greater than expected. Initiatives taken by the Civil Service Commission in the context of the Government's Strategic Management Initiative in developing new selection and recruitment methods to the highest professional standards have also necessitated additional expenditure.
The Minister said that the main reason for the purchases is they were long-term leases. How long were the leases?
The lease in Brussels was 20 years. The rental figure, as far as I remember, was approximately £500,000 per annum. Bord na Gaeilge had a much longer lease which was due for renewal and there was some exposed liability.
Does the committee wish Mr. Murphy to give a technical explanation?
Yes.
Mr. Murphy
The BIM leases were also 35-year leases initially. They are some years old now. The main point about BIM was the structural and dilapidation claims which might be made against the tenant under the lease. We have not only avoided a lease payment but we have also avoided future bills.
All of these are occupied by the Civil Service or semi-State bodies. Will that continue?
Yes, the operational arrangements will continue. The property relationship of the State to the building in question has been changed from a leasehold relationship to an owner/occupier one.
I welcome the £500,000 that the Minister gave to Fota which is in my parish and I would welcome another £500,000 next year. It is a worthwhile project.
It is conditional on John Mulvihill being re-elected.
Then we will not get it.
Was the question of decentralisation of these Departments considered before the purchase? They were on long leases but each of the three Departments could be decentralised.
No. The Deputy will have heard on this morning's radio news that there has been higher than expected returns on taxation and so we have more money than expected. There was also a saving of approximately £11 million within this Vote. The combination of these gave us the opportunity to acquire the leasehold interest in a number of properties and that has driven this supplementary estimate. The Department of Social Welfare is decentralised across a range of locations and there are no plans for further decentralisation.
The BIM headquarters has been in Dun Laoghaire for some time and there is no proposal to move Bord na Gaeilge out of Merrion Square.
Do any of the buildings need refurbishment?
Not at the moment.
What are the implications regarding rates? The State does not pay rates directly whereas the owners up to now have paid rates to the local authority. Will money be lost to the local authorities?
It depends on the nature of the lease. If the BIM leasehold interest required the occupant to pay rent and rates as would be the norm, the State's exemption would apply. In this case I do not think the semi-State body is exempt. We can check that. I would presume a commercial semi-State body is required to pay rates and, therefore, there would be no additional implications.
Is it agreed that the committee recommends the supplementary estimate to the House? Agreed. We will now deal with the Office of the Attorney General. The committee recommended that consideration should be given to having counsel on staff in order to save money. We also suggested that there might be a State claims manager to co-ordinate legal claims against the State across all agencies and Departments. We were shocked at the way these matters can get out of control. Have these aspects of the committee's report been considered?
Yes and I thank the committee for their deliberations. Our minds are working in a similar direction. Extra staff will be made available and we are discussing it with the Attorney General's Office and his associated offices. It may appear that the cost of legal fees to contractors compared with salaried staff is expensive. However, the accumulated liabilities of pension entitlements plus the possible requirement of legal expertise for one aspect of work which may be current for a specific period, have to be taken into account.
Law, like many other professions, is becoming increasingly highly specialised. The apparent extra additional cost for fees as against permanent staff may, when the full actuarial analysis is done, not be that great. For example, the decision to hire a 21 year old primary school teacher, assuming a healthy life span, represents a capital investment of £800,000 based on a salary of less than £20,000 per annum. If a teacher is required for ten years, the difference between hiring someone temporary and permanent can be of that magnitude. That is just doing the arithmetic of a salary up to the age of 60 years and assuming a 15 or 20 year survival rate.
That is interesting. I would like to see the figures worked out. When I was Chairman of the Committee of Public Accounts, I noticed that the employment of salaried staff counsel in Britain meant that the Scott tribunal, which was approximate to our beef tribunal, cost a fraction of ours.
I think the beef tribunal was sui generis. I do not think anyone anticipated that it would run for that length of time. The level of fees struck by the Attorney General at the time, with the agreement of the other institutions of the State, were at a higher level than had been the case. The beef tribunal has set a level of cost which has given concern to everybody, including those in the Attorney General’s Office.
What are the daily fees being paid to counsel now?
Mr. Hamilton will give a technical breakdown of that.
Mr. Hamilton
What sort of case is the Chairman talking about?
In the beef tribunal, we were paying £1,800 a day in certain cases.
Mr. Hamilton
That was the highest figure for senior counsel in the beef tribunal, which was the daily refresher rate. That would be appropriate in serious constitutional cases; it is an exceptionally high type of fee.
For normal court cases what is the daily fee?
Mr. Hamilton
It varies on the importance of the case and the seniority of the counsel. The lowest rate for junior counsel in a relatively run of the mill case would be £300 daily.
What is the highest rate for senior counsel?
Mr. Hamilton
In very exceptional constitutional cases, it may approach £2,000; in personal injury cases it will depend on the value of the claim. Roughly speaking, the figure for senior counsel works out at around 1 to 1.5 per cent of the claim. That would be comparable to what is paid by insurance companies to their counsel.
Are we considering having counsel on staff to handle these cases?
The question of staffing in the Attorney General's Office is under consideration but it is against a background where I have now fixed, with the agreement of the Government, the establishment size of the Civil Service, and that will include the Offices of the Attorney General and the Chief State Solicitor. If there is a need for extra work to be done for a particular period we have the option of contract staff. This is being considered in both offices because of the increasing legal workload. We are concerned to ensure cost effective value for money and, at the same time, getting the quality of professional legal services we require as a State.
Is there any advance on establishing the post of a State claims manager to co-ordinate claims against local authorities, health boards and State companies, where the State is clearly being exploited?
Yes, the working group at an advanced stage. There is also a memorandum for Government at an advanced stage of preparation. In principle we are looking at the concept of establishing a claims agency which will co-ordinate the exposure of the State at national and local levels to various injury and related types of claims, of which you and I, from our previous membership of Dublin Corporation, are acutely aware. This will be managed in a manner that would minimise the incidence of such claims through better safety standards, combined with a more effective and efficient management.
Report of Select Committee.
As there are no questions on the Civil Service Commission Estimate, I propose the following draft report:
The Select Committee on Finance and General Affairs has considered Supplementary Estimates for the Public Services for the service of the year ending 31 December 1996 in respect of the following Votes:
Vote 10 — Office of Public Works;
Vote 13 — Office of the Attorney General;
Vote 21 — Civil Service Commission.
The Supplementary Estimates are hereby reported to Dáil Éireann.
Report agreed to.
Ordered to report to the Dáil accordingly.
The Select Committee went into private session.