Select Sub-Committee on Public Expenditure and Reform debate -
Tuesday, 3 Dec 2013

Vote 18 - Shared Services (Supplementary)

Chairman

As we have a quorum, the meeting is in public session. Apologies have been received from Deputy Dara Murphy.

We are dealing with No. 1 Supplementary Estimate - Vote 18 [Shared Services], Department of Public Expenditure and Reform. The Dáil, by order of 26 November 2013, referred Supplementary Estimate - Vote 18 [Shared Services] to the Select Sub-Committee on Public Expenditure and Reform, pursuant to Standing Orders 82A(3)(c) and (6)(a) and 159(3) for the select sub-committee to report back to the Dáil by no later than 12 December.

I welcome the Minister for Public Expenditure and Reform, Deputy Brendan Howlin, and his officials. I invite the Minister to make his opening statement.

Minister for Public Expenditure and Reform (Deputy Brendan Howlin)

I thank the Chairman and committee for facilitating consideration of this technical Supplementary Estimate.

Vote 18 provides for the salaries and expenses of running the shared services projects, including Peoplepoint, payroll and financial management. Those are three that we have set out. 2013 was the first year of the Vote and, following Government approval, certain projects have transitioned from design stage into implementation.

As part of the implementation phase, the Office of Government Chief Information Officer entered negotiations with suppliers for the provision of licences for the IT equipment. The result of these negotiations is that certain licences have been purchased on a once-off basis rather than annual payments. These licence costs are deemed to be of a capital nature and the costs will be depreciated over the useful life of the equipment in the appropriations accounts of the Department.

The approval of the committee is sought for this technical supplement to reclassify current budget into capital. It is important to note that no additional budget is sought and the Vote will return a saving to the Exchequer at the end of the year. For the information of the committee, we expect the saving to about €4 million.

Chairman

To summarise what the Minister said, this is a once-off payment and it will involve €1,000 from what I understand.

Deputy Brendan Howlin

We always put in a sum of €1,000 but there is actually no money involved.

Chairman

I will make sure that the electricity bill for the meeting does not exceed the cost of the Estimate. Therefore, I imagine it will be very short.

Deputy Sean Fleming

I apologise for being a little late. On the Peoplepoint and payroll shared services projects, I am aware there were significant initial costs involved in the setting up of the projects in the first year. I understand from what I have heard across the public service there are set-up costs for projects for the first two years and then they start to save money from year 3 onwards. From where will the savings come? In terms of the way I see the public service operating, people will migrate to this section, millions of euro has been spent on the section and then it will provide savings but there will only be savings if there are fewer staff in another part of the organisation. If something similar was happening in the private sector, and I am not recommending this, there would be fewer staff in the organisation in the long term. From where will the savings come in the line Departments in respect of which services are being shared through this central body, if the numbers continue to remain the same?

Deputy Brendan Howlin

To give the Deputy a specific example in regard to Peoplepoint, it is currently providing services to 13 organisations. It is expanding quicker than we expected and 40 more are to transition between now and the end of next year. At that point the forecasted savings are reckoned to be of the order of €12.5 million per annum. From where do those savings come is the Deputy's question. It is due to a reduction of 149 full-time equivalent staff working in transactional human resource activities. There is a range of efficiencies to be achieved in that instead of approximately 60 organisations doing their own human resource management, we will have one human resource management section - Peoplepoint, a stand-alone section with everybody in it specifically trained in human resources. We have that resource to deal with all those organisations and we will do that with 149 fewer people.

Deputy Sean Fleming

I understand that. Perhaps I was not clear in putting my question. Take any of the organisations whose function is transferred to Peoplepoint and, say, five people were involved in the payroll in that section-----

Deputy Brendan Howlin

Peoplepoint is the human resource management service; payroll is a different shared service.

Deputy Sean Fleming

I am making the same point, irrespective of which service I give as an example. Let us say five people are dealing with human resources or payroll in an organisation and those functions are transferred to Peoplepoint or payroll shared services, those five people are no longer required to do that work in the organisation as it is now being done centrally. Those five people will be subsumed somewhere else in the organisation to do other work, perhaps because a person has left some other section. Where is the saving in that exercise? It is not as if there are five fewer people in the public service. As those five people are now doing some other work, where is the saving?

Deputy Brendan Howlin

The idea is that each Department and agency of the State operates on an employment control framework and, therefore, there are set ceilings of numbers. If there are people who do no move to the new Peoplepoint service, they are available for redeployment to cover retirements and the normal churn or turnover of staff. They are within the employment control frameworks that we have and we are fixing to save this quantum of staff through Peoplepoint alone. There will be more through the payroll shared centre as I have explained. Peoplepoint is one single centre in Clonskeagh. I do not know if the Deputy has had a chance to go out and have a look at it but it would be worth his while to do that. We have made a decision on the payroll shared service. We are going to have three in that respect because that was the most efficient way of doing it.

We had three in operation because that was the most efficient way of doing it. We have more than three now and we will migrate the work into them. They will make savings when they are fully operational. They are behind Peoplepoint, which was the first.

Deputy Sean Fleming

This will lead to a saving if the employment control framework for the relevant organisation is reduced by the number of staff now doing the work. Does that happen? Is the employment control framework reduced by the number of staff that used to be in the section? If so, there are fewer staff members.

Deputy Brendan Howlin

Yes, that is how it works.

Deputy Sean Fleming

Is there a specific reduction?

Deputy Brendan Howlin

We target the numbers.

Deputy Sean Fleming

The Minister does not have information about the 13 organisations now up and running. Perhaps the Minister can send information to the committee secretariat. Can the Minister give us an example of how the employment control framework has been reduced?

Deputy Brendan Howlin

I will be back before the week after next to deal with the Estimate. We will go through it in some detail at that meeting.

Deputy Sean Fleming

We are dealing with HR issues and the HR function will be administering sick pay arrangements from 1 January. Will the counting of the clock be made retrospective? The most fundamental thing we learned is that legislation cannot be made retrospective. It cannot be backdated and it does not happen with tax. We see the counting of the clock in respect of sick days is going back a number of years. That runs against everything we have ever been told.

Deputy Brendan Howlin

I thought Deputy Sean Fleming was in favour of these reforms.

Deputy Sean Fleming

I am only teasing out the issue with the Minister.

Deputy Brendan Howlin

We are well beyond the scope of this technical Supplementary Estimate.

Chairman

We will indulge the Minister because the meeting will finish after this.

Deputy Sean Fleming

This is the last point but it is connected to the topic.

Deputy Brendan Howlin

I will appear before the committee to deal with that legislation, which has not yet passed through the Dáil.

Deputy Sean Fleming

Is this the legislation dealing with sick pay?

Deputy Brendan Howlin

Yes. It has passed the Seanad.

Deputy Sean Fleming

Was the measure on sick pay included in the legislation?

Deputy Brendan Howlin

Yes.

Deputy Sean Fleming

Report Stage will be taken on Thursday according to an e-mail I got this afternoon. We will resume discussion on the issue then.

Chairman

I thank the Minister's officials for assisting us in our consideration of the Supplementary Estimate.