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Wednesday, 12 Feb 2014

Written Answers Nos. 46-63

Living City Initiative

Questions (46)

Billy Kelleher

Question:

46. Deputy Billy Kelleher asked the Minister for Finance the progress of the roll-out of the Living City Initiative; when the designated areas will be identified by local authorities; when the ministerial order will be moved for commencement; and if he will make a statement on the matter. [7106/14]

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Written answers

I announced in my Budget Statement that the Living City Initiative, which was enacted in the Finance Act 2013, would be extended to now include the cities of Dublin, Cork, Galway and Kilkenny as well the original target cities of Limerick and Waterford. The inclusion of these four cities within the Initiative followed the results of a thorough independent ex ante cost benefit analysis.

The Initiative will target certain areas of these six cities, particularly those areas which are most in need of regeneration. Those designated areas will be decided upon following consultations with the relevant local authorities and other Government agencies. These consultations have just commenced. It is not yet possible to estimate the number of properties which might be eligible in any of the cities but I have made it clear that I do not see this as a wide-spread Initiative, as it is targeted at those areas which are most in need of attention.

The submission to the European Commission seeking State Aid approval will also be issued shortly. A commencement order will be signed when EU approval is received.

VAT Rate Application

Questions (47)

Derek Nolan

Question:

47. Deputy Derek Nolan asked the Minister for Finance if he will broaden the remit of those businesses which benefit under the special VAT rate of 9% for bus operators working in the tourism industry; and if he will make a statement on the matter. [6975/14]

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Written answers

The transport of passengers and their accompanying baggage is exempt from VAT. This includes services provided by the coach and bus sector. This means that a person who provides a bus or coach service does not register for VAT and does not charge VAT on the supply of their services.  This also includes the hiring of a bus or coach with a driver.  Persons who are exempt from VAT cannot recover VAT on goods and services, such as fuel, tyres and mechanic charges, used for the purposes of the person's coach service.

VAT law in Ireland must comply with the EU VAT Directive.  As passenger transport was exempt in Ireland on 1 January 1978, it is possible under the VAT Directive to continue to apply that exemption.  With regard to broadening the 9% VAT rate so that it applies to transport services supplied by bus operators working in the tourism industry, I would point out that while it is possible under the EU VAT Directive to introduce VAT on passenger transport services, Ireland has traditionally exempted this service and this reduces the cost of passenger transport for the users of the service.

Tax Rebates

Questions (48)

Derek Nolan

Question:

48. Deputy Derek Nolan asked the Minister for Finance if he will allow bus operators working in the tourism industry to avail of a rebate on diesel charges similar to that applicable to airlines and ferry companies; and if he will make a statement on the matter. [6976/14]

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Written answers

I am advised by the Revenue Commissioners who have responsibility for the collection of mineral oil products tax that any rebate on mineral oil tax under national law must conform to the requirements of the EU Energy Tax Directive. That Directive obliges all member states to exempt jet fuel used by airlines and fuel used by shipping in Community waters from duty, but does not allow for a similar exception to be applied to fuel used by road transport operators.  The Directive does, however, allow Ireland and other member states to give a rebate on diesel used by road transport operators and I introduced the Diesel Rebate Scheme last year on that basis.  

The Diesel Rebate Scheme enables qualifying transport operators to claim a repayment of part of the mineral oil tax paid on auto-diesel purchased in the State for use in qualifying vehicles in the course of business.  The amount of the repayment will vary in accordance with the average price at which auto-diesel is available for purchase in the State during a repayment period, subject to a maximum of 7.5 cent per litre.  The rebate rate applicable for the current repayment period is 6.2 cent per litre.  Full details of the scheme are available at www.revenue.ie.

Departmental Bodies

Questions (49)

Michael McNamara

Question:

49. Deputy Michael McNamara asked the Minister for Finance if he will provide a list of bodies under the aegis of his Department in respect of Government policy for which he is responsible for answering parliamentary questions pursuant to Standing Order 34. [7001/14]

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Written answers

In response to the Deputy's question the following table contains a list of bodies under the aegis of the Department for which the Minister answers Parliamentary Questions pursuant to Standing Order 34.

Name  of  Body

National Treasury Management Agency 

National Treasury Management  Agency Advisory Committee

National Pensions Reserve Fund (NPRF)

National Pensions Reserve Fund Commission

National Development Finance Agency (NDFA)

State Claims Agency Policy Committee

New Economy and Recovery Authority (NewERA)

National Asset  Management Agency

Financial Services Ombudsman

Irish Financial Services Appeals Tribunal

Credit Union Restructuring Board (ReBo)

Central Bank

Irish Fiscal Advisory Council

Credit Review Office

Social  Finance Foundation

 

Note (i) the National Treasury Management Agency  is known as the State Claims Agency when performing the functions of the State Claims Agency and (ii) the New Economy and Recovery Authority (NewERA) has been established within the National Treasury Management Agency (NTMA).

With regard to the Irish Fiscal Advisory Council I am responsible for answering questions concerning my functions (primarily appointment of Members and terms and conditions of Members and staff) under the Fiscal Responsibilities Acts 2012 and 2013. The Acts provide for the full independence of the Council in the performance of its functions.

Ministerial Appointments

Questions (50)

Michael McNamara

Question:

50. Deputy Michael McNamara asked the Minister for Finance if he will provide a list of bodies to which he has the authority to appoint board members. [7016/14]

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Written answers

In response to the Deputy's question the following is a list of bodies to which I may appoint board members.

Name  of  Body

National Treasury Management  Agency Advisory Committee

State Claims Agency Policy  Committee

National Pensions Reserve Fund Commission

National Development Finance Agency (NDFA)

Financial Services Ombudsman

National Asset  Management Agency

Irish Financial Services Appeals Tribunal

Credit Union Restructuring Board (ReBo)

Central Bank Commission

Irish Fiscal Advisory Council

Disabled Drivers Medical Board of Appeal *

Social  Finance Foundation**

 

*Disabled Drivers Medical Board of Appeal appointments are made on foot of recommendation from the Minister of Health.  

**Appointments to the board of the Social Finance Foundation are made on approval of the Minister for Finance.

Local Authority Functions

Questions (51)

Kevin Humphreys

Question:

51. Deputy Kevin Humphreys asked the Minister for Finance if he will provide a list of all specific new powers or functions conferred on local authorities by legislation under his area since June 2009 and a reference to the specific section or regulation in each case; and if he will make a statement on the matter. [7031/14]

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Written answers

The following powers or functions have been conferred on local authorities by legislation introduced by the Department of Finance since June 2009:

1. Sections 19 to 21 of the Finance (Local Property Tax) Act 2012 (as amended) confer a power on local authorities to vary the basic rate of Local Property Tax by + or - 15%. These provisions are due to commence with effect from July 2014.  

2. Section 152 (2) of the Finance (Local Property Tax) Act 2012 (as amended) provides that for the purposes of administering the Local Property Tax the Revenue Commissioners may request the assistance of a local authority in identifying residential properties in its functional area and in verifying the accuracy of any information it holds in relation to such properties.

3. Section 156 (6) of the Finance (Local Property Tax) Act 2012 (as amended) provides that the local authority shall notify the Revenue Commissioners in writing of the address of the property and the name and address of the owner (within the meaning of the Act of 2011) of the property where the local authority is satisfied that all or any part of a liability to the household charge in respect of a resident property situation in the functional area of the local authority has not been discharged before 1 July 2013. 

National Debt

Questions (52)

Lucinda Creighton

Question:

52. Deputy Lucinda Creighton asked the Minister for Finance if he will estimate the total annual savings to the State under debt servicing costs if the interest charged on Ireland's EFSF, EFSM and bilateral loans to the UK, Denmark and Sweden were reduced by 0.5%; if he will provide an estimate of the total annual savings to the State under debt servicing costs from the first year of maturity of the EFSF, EFSM and bilateral loans to the UK, Denmark and Sweden if an extension of maturities to 50 years were provided on all these loans; and if he will make a statement on the matter. [7041/14]

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Written answers

I am informed by the NTMA that a reduction of 50 basis points in the interest rates charged by the EFSF, EFSM, UK, Sweden and Denmark would result in savings on debt service costs of €5 million per annum for every one billion euro outstanding during any particular year.  However, it should be noted that the Government has already negotiated the removal of the interest rate margins on the EFSF, EFSM and UK loans to Ireland which, taken together, account for nearly all of the EU programme debt. Therefore, any cut to the interest rate from these lenders would result in an interest rate below their respective cost of funds and in effect represent a subsidy to Ireland.

The NTMA also inform me that an extension of maturities to 50 years on all EFSF, EFSM and bilateral loans from the UK, Sweden and Denmark may result in debt service savings to the extent that the interest rate on these loans would be below the replacement interest rate costs when they eventually mature over the coming years and decades. However, it is not possible to give a meaningful estimate of the replacement interest rate costs due to the protracted period of time involved and it should be noted that in general terms the EFSF and EFSM are currently in a position to borrow money at lower interest rates than Ireland can independently borrow at for similar maturities.

Budget Consultation Process

Questions (53)

Michael Healy-Rae

Question:

53. Deputy Michael Healy-Rae asked the Minister for Finance his views on correspondence (details supplied) regarding representation for pensioners organisations in decision-making processes; and if he will make a statement on the matter. [7059/14]

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Written answers

In my 2014 Budget speech, I stated that the 0.6% levy on pension fund assets would end this year but that I was introducing an additional levy of 0.15% for 2014 and 2015, in order among other reasons, to continue to help fund the Jobs Initiative which is being successful in creating and maintaining employment in the areas affected by the measures in the Initiative.

Individuals and organisations have every right, of course, to question Government policy and to seek to influence that policy in the usual way through transparent verbal and written representation. In the context of taxation policy, for example, I receive many representations, particularly but not exclusively, in the lead-in to the annual Budget and Finance Bill processes. I also meet with quite a number of representative organisations as part of these processes. In these various ways, I am made very aware of the issues of concern, including the issues around the impact of the levy on pension fund assets.

I am not clear from the details supplied with the question what form of influence on the decision-making process is being recommended in relation, for example, to tax policy. Clearly, decisions on tax policy are matters for the Government to make having considered, among other things, the views and concerns expressed by interested parties in the manner I have outlined.

Universal Social Charge Exemptions

Questions (54)

Terence Flanagan

Question:

54. Deputy Terence Flanagan asked the Minister for Finance if all couples are exempt from paying the universal social charge regardless of which spouse is over 70 years (details supplied); and if he will make a statement on the matter. [7064/14]

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Written answers

All individuals are liable to pay the Universal Social Charge (USC) if their gross liable income exceeds the threshold of €10,036 per annum.  Each spouse or civil partner is treated individually for the year. The concept of joint assessment for a couple does not apply in relation to the USC. The amount of USC payable will depend on the individual's age and the amount of his or her income.

The standard rates of USC are:

- 2% on the first €10,036;

- 4% on the next €5,980; and

- 7% on the balance.

 Individuals aged 70 years or over, whose aggregate income for the year is €60,000 or less, will only pay USC at a maximum rate of 4%, that is, the first €10,036 of liable income is chargeable to USC at 2% and the balance of liable income is chargeable at 4%.  Social welfare payments are not liable to USC. Individuals in possession of a full medical card whose aggregate liable income for the year is €60,000 or less also only pay USC at a maximum rate of 4%.  The first €10,036 is payable at 2% and the balance is payable at 4%.  

In relation to the case referred to by the Deputy, I am advised by the Revenue Commissioners that their records show that the individual in question has been in possession of a medical card since 2013.  As her income is less than €60,000, USC is payable at 2% on the first €10,036, with the balance charged at 4%.  In 2012, the person in question was liable to pay USC at standard rates as Revenue records indicate that she was not in possession of a medical card at that time.  If she was in possession of a medical card in 2012, she should notify the Fingal Revenue District and her USC liability for 2012 will be reviewed.

In the case of the individual's husband, Revenue records show that his liable income does not exceed the threshold of €10,036 per annum. Accordingly, he is exempt from USC.

Disabled Drivers and Passengers Scheme

Questions (55)

Áine Collins

Question:

55. Deputy Áine Collins asked the Minister for Finance if he will direct the Revenue Commissioners to be flexible on a case-by-case basis in their approach to the type of vehicle, particularly the engine size criteria, as the current regulation of 2,000 cc does not suit certain specific applicants, that is, farmers who need 3 litres plus engines to enable them to participate to some extent in family farm work. [7105/14]

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Written answers

I assume the Deputy to be referring to the Disabled Drivers and Passengers Tax Concession scheme. The criteria relating to the engine size of a vehicle and the relief available for vehicles which qualify under the Disabled Drivers Passenger Scheme have been in place since 1989.  The purpose of the scheme is to provide for ways in which people with a physical disability can become more mobile. It is considered that the present limit of 2000 cc is sufficient to allow for an extensive choice of vehicle for a driver with a disability. The limit is 4000 cc in the case of a passenger with a disability.

Given the scale and scope of the scheme, any possible changes can only be made after careful consideration and with regard to the existing and prospective cost of the scheme and the available resources.

VAT Rate Application

Questions (56, 57, 58, 59, 60)

Gerry Adams

Question:

56. Deputy Gerry Adams asked the Minister for Finance the VAT and other taxes or duties that apply in respect of the selling of coffins within the State. [7144/14]

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Gerry Adams

Question:

57. Deputy Gerry Adams asked the Minister for Finance the VAT and other taxes or duties that apply in respect of undertakers within the State and the purchase of coffins. [7145/14]

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Gerry Adams

Question:

58. Deputy Gerry Adams asked the Minister for Finance the VAT or any other taxes or duties payable on the importation of coffins from Northern Ireland. [7146/14]

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Gerry Adams

Question:

59. Deputy Gerry Adams asked the Minister for Finance if his Department has carried out any investigation into allegations of non-payment of VAT, tax or other duties on the sale of coffins from Northern Ireland or outside the EU. [7147/14]

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Gerry Adams

Question:

60. Deputy Gerry Adams asked the Minister for Finance the checks that are carried out to ensure that all VAT, taxes or other duties on the sale or purchase of coffins are properly collected. [7148/14]

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Written answers

I propose to take Questions Nos. 56 to 60, inclusive, together.

The supply of coffins within the State is liable to VAT at the standard rate, which is currently 23%. However, the supply of a coffin by a funeral undertaker as part of a funeral service is exempt from VAT. Funeral undertaking includes transportation of the body before and after it has been placed in the coffin, organisation of the funeral, organisation of the grave opening, embalming services, supply of a coffin or an urn, management and use of funeral homes, provision of hearses and conveyances for mourners and provision of ancillaries such as wreaths and flowers. All of these items will be included in the funeral account issued by the undertaker to the family of the deceased. Where a business is exempt from VAT this means that they do not charge VAT on the supply of their services but also means they cannot claim VAT deductibility on their business inputs. In the case of funeral undertakers, they will be charged VAT on some of their business inputs, such as coffins, urns, wreaths and flowers, but they are not entitled to recover the VAT paid on those items.

Where a funeral undertaker makes intra-Community acquisitions of goods, including coffins, from suppliers in other EU Member States, including Northern Ireland, and the value of the acquisitions exceeds a threshold of €41,000 in any 12 month period, that undertaker must register and self-account for Irish VAT at the standard rate on the coffins acquired.  Where a funeral undertaker's intra-Community acquisitions is less than the €41,000 threshold, the suppliers in the other EU Member States should charge VAT at the appropriate VAT rate in their Member State on their supplies to that undertaker.  The VAT rules in relation to intra-Community acquisitions and thresholds are contained in the VAT Directive with which Member States must comply.  In addition, suppliers of goods to taxable persons in other Member States must provide details of such supplies of goods on periodic VIES returns, details of which are supplied to the Member State in which the taxable person acquiring the goods is established.

With regard to allegations of non-payment of VAT on the acquisition of coffins from Northern Ireland or outside the EU, the taxes and duties regimes are placed under the care and management of the Revenue Commissioners and my Department does not, therefore, carry out checks or investigations of the nature mentioned.  As regards the allegations referred to by the Deputy, if the Deputy has information specific to tax evasion in the undertaking sector, or related sectors, I suggest that it be referred to Revenue. However, for reasons of confidentiality, I understand that Revenue will not be in a position to provide feedback on information received in relation to individual persons or businesses.

On a more general note, I am informed by Revenue that they are fully aware of the unfair competitive advantage to be gained by those businesses that do not fulfil their tax obligations. Revenue's tax compliance programmes are under constant review to ensure that they are focussed on the areas of greatest risk, including risks from the shadow/hidden economy.

Tax Reliefs Availability

Questions (61)

Ciaran Lynch

Question:

61. Deputy Ciarán Lynch asked the Minister for Finance if he has considered offering tax relief incentives to encourage householders and business owners to undertake flood prevention works to protect their premises from future weather events; and if he will make a statement on the matter. [7168/14]

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Written answers

While there are no existing "direct" tax incentive schemes specifically relating to expenditure by property-owners on flood prevention works, there are a number of provisions in the Tax Acts which might, depending on the owner's circumstances and the nature of the work on which the expenditure is incurred, provide a measure of relief in respect of such expenditure.

The Home Renovation Incentive, introduced in the recent Finance Act, provides for tax relief for homeowners by way of a tax credit at 13.5% of qualifying expenditure incurred on repair, renovation or improvement work carried out on a homeowner's only or main residence. The Incentive runs to the end of 2015. However, where planning permission for qualifying works is required and is in place before 31 December 2015, any work carried out between 1 January 2016 and 31 March 2016 will qualify for the relief. Expenditure of a revenue nature and interest on borrowings incurred for the purposes of a trade may be deductible in computing taxable trading profits.

In relation to rental property, section 97(2)(e) of the TCA 1997 provides for a deduction in computing taxable rent in respect of interest incurred on borrowed money used to improve the property. (In the case of residential property, the deduction is restricted to 75% of the interest). Wear and tear allowances (generally 12.5% over 8 years) may be due in respect of capital expenditure incurred on the provision of machinery or plant for the purposes of a trade or in relation to the letting of furnished residential property.

I have no plans to introduce any specific measures in respect of flood prevention works.

Pensions Levy

Questions (62)

Finian McGrath

Question:

62. Deputy Finian McGrath asked the Minister for Finance the position regarding levies on ESB pensions (details supplied); and if he will make a statement on the matter. [7198/14]

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Written answers

The pension fund levy is a matter under my responsibility. I announced in my Budget 2014 speech that the 0.6% Pension Fund Levy introduced to fund the Jobs Initiative in 2011 will be abolished from the 31st of December 2014. I have, however, introduced an additional levy on pension funds at 0.15% for 2014 and 2015. I am doing this to, among other things, continue to help fund the Jobs Initiative.

The reduced VAT rate of 9% on tourism and certain other services was one of the very significant and successful measures introduced by the Jobs Initiative. It was due to end in 2013. In my Budget 2014 speech I announced the continuation of the reduced 9% VAT rate. I also announced that the Air Travel Tax is being reduced to zero with effect from 1 April 2014. The 9% VAT rate has helped to create 15,000 new jobs as well as protecting existing jobs. Since the Budget announcement about the reduction in the Air Travel Tax, airlines have announced the opening up of new routes resulting in significant increases in passenger numbers with the associated increase in tourism activity and employment. The additional 0.15% levy for 2014 and 2015 will also be used to help make provision for potential State liabilities which may emerge from pre-existing or future pension fund difficulties although funds from the levy will not be hypothecated or specifically set aside for this purpose. The Government has decided that such liabilities will be met by the Exchequer as they arise.

The chargeable persons for the pension fund levy are the trustees or other persons (including insurance companies) with responsibility for the management of the assets of the pension schemes or plans. The payment of the levy is treated as a necessary expense of a pension scheme and the trustees or insurer, as appropriate, are entitled, where they decide to do so, to adjust current or prospective benefits payable under a scheme to take account of the levy. It is up to the trustees to decide whether and how the levy should be passed on and who should be impacted and to what extent, given the particular circumstances of the pension schemes for which they are responsible. However, should the option of reducing scheme benefits be taken, in no case may the reduction in an individual member's or class of member's benefits exceed the member's or class of member's share of the levy.

I am advised by the Minister for Social Protection that in developing the measures contained in the Social Welfare and Pensions Act (No.2) 2013, consideration was given to imposing an obligation on employers to secure a minimum level of funding before a scheme could be wound up and to the provision of a pension protection scheme. Defined benefit pension schemes in Ireland are set up and maintained by employers on a voluntary basis. There has never been a statutory obligation on employers under Irish law to contribute to their pension scheme (although schemes rules can place some level of obligation). Most defined benefit pension schemes in Ireland were established under a trust deed. As part of the process of establishing each occupational pension scheme, an employer undertakes to be bound by the rules of the scheme and to undertake certain liabilities and duties defined therein. The position around the employers and employees contribution obligation in a trust deed varies from deed to deed.

Employers have, by and large, made great efforts to support and deliver on the promise made to scheme members. This process is generally managed through dialogue between trustees, employers and members, where efforts are made to reach agreement regarding the steps that must be taken to secure scheme viability which may include a mix of measures such as increased employer/member contributions, longer working and amended benefits. Given the uncertainties as to the overall impact and potential for unintended consequences of applying an obligation on an employer to secure a minimum level of scheme funding in the event of the wind up of a scheme, it was not considered appropriate to make provision for such a legislative obligation.

I am further advised by the Minister for Social Protection that while some countries with very large defined benefit markets provide pension protection schemes it was considered that such an approach was not appropriate for the Irish pensions market. The Social Welfare and Pensions (No.2) Act 2013, provides that, in the event of the wind up of an underfunded pension scheme where the employer is insolvent, the State  guarantees that existing pension benefits will be protected to a level of 50%, with pensions of €12,000 or less being 100% protected.  The Pension Board is actively engaged with the schemes which do not meet the scheme funding requirement in order to assist these schemes, particularly schemes in a weak funding position achieve a more sustainable funding position.  

The overriding priority in this area is to ensure that pensioners and members of pension schemes are protected and the future viability and sustainability of their schemes is ensured and made safer. The Minister for Social Protection informs me that it is normal practice for her officials to engage with representatives of stakeholders in relation to any substantial change to the Pensions Act. The consultation process which preceded the publication of the Social Welfare and Pensions (No. 2) Bill, 2013 included engagement with representatives of pensioners, the pensions industry, employers and trade unions. Written submissions were also sought from these stakeholder groups.

The Minister for Social Protection also advises that any consideration of a restructure of pension scheme benefits under section 50 of the Pensions Act must comply with the provisions in the Pensions Act and with guidance issued by the Pensions Board. This guidance makes provision for the notification of all pensioners in advance of any application to the Pensions Board to restructure scheme benefits. In such circumstances a pensioner will have at least one month to make a submission to the trustees of the scheme in relation to such a proposal. The Pensions Board must be satisfied that all the provisions in the guidance are complied with before the Board will consider issuing a notice to restructure scheme benefits.

The matter of representation by pensioner groups in consideration of a change to scheme benefits might also be considered in a broader industrial relations context. This is a matter for my colleague, the Minister for Jobs, Enterprise and Innovation and the Minister for Social Protection has referred this matter to him for consideration.

Weight of Schoolbags

Questions (63)

Anne Ferris

Question:

63. Deputy Anne Ferris asked the Minister for Education and Skills his views on the concerns of parents that children's schoolbags are too heavy because of the weight of books; the action his Department will take in consultation with the Department of Children and Youth Affairs; and if he will make a statement on the matter. [7151/14]

View answer

Written answers

My Department issued circulars to all primary and post-primary schools in 2005 to highlight the potential health hazard of overweight schoolbags and to outline a range of local measures that could be put in place to help alleviate the problem. The circulars referred to the recommendations of the previously published report of the Working Group on the Weight of School Bags. This report acknowledged that many of the solutions to this issue belong at local school level and made various recommendations in this regard, such as optimum use of storage facilities, developing pupil organisation skills and timetabling. It is a matter for each individual school to determine which particular measures are most suited to its individual circumstances and to how the school concerned organises teaching and learning. The circulars (PC 13/05 and M35/05) and the report of the Working Group on the Weight of School Bags are available on my Department's website at www.education.ie.

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