Léim ar aghaidh chuig an bpríomhábhar

Thursday, 11 Nov 2021

Business of Committee

The agenda for this section of the meeting is as follows: minutes of our previous meeting, accounts and financial statements, correspondence, work programme, and any other business. We will then go into private session to consider a draft report from the Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach on the process and procedures for the determination and review of senior executives’ remuneration in the public service. In accordance with the agreement between the aforementioned joint committee and this committee, we have the opportunity to forward our views on the draft report to the joint committee.

The first item of business is the minutes of our meeting on 4 November. Do members wish to raise any issue? No. Are the minutes agreed? Agreed. As usual, the minutes will be published on the committee's web page.

The second item is the accounts and financial statements. Members should note that seven sets of financial statements and accounts were laid before the Dáil between 1 November and 5 November 2021. I will ask the Comptroller and Auditor General to address these before inviting members to comment.

Mr. Seamus McCarthy

Of the financial statements that have been presented and that are now publicly available in the Oireachtas Library, the first relates to the Health and Social Care Professionals Council. The statements are from 2020 and received a qualified audit opinion. Like a number of health sector bodies, the accounts give a true and fair view except that they account for the costs of retirement benefit entitlements of staff only as they become payable. This is as a result of a direction of the Minister that they account in that way. Otherwise, as I said, the accounts give a true and fair view.

The second set of statements are from the Technological University of Dublin, TU Dublin, for 2019-2020. These received a clear audit opinion but I draw attention to non-compliance with procurement rules. My recollection is that there was expenditure of approximately €1.7 million with 19 suppliers that did not conform to the appropriate procurement procedure.

The third set of financial statements and accounts are from the Private Security Authority, PSA, for 2020 which received a clear audit opinion. The fourth set are from Bord Bia for 2020 and also received a clear audit opinion. Number five on the list is the Commission for Regulation of Utilities, CRU. These are actually the 2019 financial statements and members may recall that last week the 2020 accounts were presented. There was a problem with the version and I could not submit the accounts for 2019. They have been relaid and, just for the record, they received a clear audit opinion. Number six on the list is the Aquaculture Licences Appeals Board for 2020 and its accounts also received a clear audit opinion. Finally, the 2020 accounts from the Marine Institute also received a clear audit opinion.

Do any members wish to comment on any of those financial statements? No. The accounts and statements are noted and agreed. As usual, the list of accounts and financial statements submitted will be published as part of our minutes.

The next item on our agenda is correspondence. As previously agreed, items that were not flagged for discussion for this meeting will continue to be dealt with in accordance with the proposed actions that have been circulated, and decisions taken by the committee in relation to correspondence are recorded in the minutes of the committee’s meetings and published on the committee’s web page. Seven items of correspondence have been flagged in the category of correspondence from Accounting Officers and Ministers as a follow-up to previous meetings of this committee. The first is No. 854 B from Ms Orlaigh Quinn, Secretary General of the Department of Enterprise, Trade and Employment ,dated 27 October 2021, regarding data centres and their implications for Ireland's electricity grid. This response arises from an enquiry we made following consideration of a previous item of correspondence from the Tánaiste on this issue. The committee requested clarity as to the specific analysis that has been undertaken in respect of growing energy demand due to data centre investments. The Secretary General states such analysis has been undertaken by bodies responsible for the management and regulation of our electricity market, namely, EirGrid and the Commission for Regulation of Utilities, and provides hyperlinks to those analyses. Also provided is the Government statement on the role of data centres in Ireland’s enterprise strategy. Deputy Catherine Murphy flagged this item.

I merely wanted to suggest that we send this on to the relevant sectoral committee, namely, the Joint Committee on Environment and Climate Action, which may find it useful.

I am happy to do that.

The next item is No. 855, from Mr. David Gunning, chief officer, National Paediatric Hospital Development Board, dated 29 October 2021, providing information requested by the committee in regard to the new children's hospital, including the impact of construction inflation costs, which we discussed briefly some time ago; the number of design changes since the beginning of the project; lessons learned from the planning phase; and the PwC independent review on the escalation of costs. Detailed information is provided in regard to the contractual provisions regarding inflation. Essentially, the new children’s hospital construction contract permits the contractor to recover the cost of tender inflation in excess of 4%, and this provision came into effect in August 2019. The inflation payment from the State to the main contractor, including VAT, for the period August to December 2019 was €1.6 million, and a further €1.5 million was paid out for the period of January to December 2020.

On the lessons learned from the planning phase of the project in terms of the procurement process, the contract and related controls, the chief officer states that the form of contract used was the standard Office of Government Procurement public works contract for employer design, with some elements of the works contract modified to meet the two-stage procurement requirements of the project. He also states that the process was overseen by a third party. The chief officer goes on to state that, in regard to lessons learned from the procurement process and the public works contract, the PwC report sets out two recommendations regarding future large capital projects for which Government Departments are responsible. No information is provided on whether the procurement process used was, in hindsight, the most appropriate to deliver value for money for the State, or whether any lessons have been learned from a project for which the costs have significantly escalated, and one for which, despite the best efforts of this committee, we do not know the final cost or date of completion.

This has been flagged by Deputies Catherine Murphy and Imelda Munster, and by myself. I call Deputy Murphy.

I am looking for a number of things. We need to look for more up-to-date information, up to the end of 2021, in regard to inflation and projected inflation. We know that 4% is the threshold and there is a problem once it goes beyond that. Has forecasting been undertaken in the context of further rises in inflation and are there projections for 2022? One of the reasons this has overrun in time is because the contractor did not provide sufficient staff on the site, and it was done on a month-by-month basis in the early stages and deadlines were missed. That is something we addressed when the hospital board were in here and it is acknowledged that it was a problem. Can we ask them about the number of staff or the number of people who are actually on-site, and if the targets are still being missed or whether that has improved? The longer this goes on, the bigger the risk in regard to inflation, particularly now that we are in a time of increased inflation, in particular construction inflation. Can we seek an update on the contractor claims? Members might recall that some of them were at a mediation stage. We also need to know if the moratorium on the High Court actions is still in place. Those would be my main asks in regard to what we should go back and seek.

It is incredibly difficult to deal with this when we have not been given the report that was done in that we are trying to anticipate things without having the firm ground of responding to the findings in that report. Those are the issues that come to mind immediately.

As Deputy Munster is not present, I will come in. With regard to the contract, it is set out that, to date, 135 of 170 contractor design packages have been approved, and that information is given under the list of design changes. A figure was mentioned at one stage of up to 700 potentially, as I recall, and a figure of 400 was given for those they were supposed to be working through. What I want to analyse from that is where the discrepancy is between the figures we were given here by the board, when they were in last year, and the figures that are there now.

In terms of the project, it is said the procurement process for the contract commenced in 2015 and the form of contract used was a standard Office of Government Procurement public works contract for employer design, with some elements of the work contract modified to meet a two-stage procurement process. That does not tell us an awful lot. It is a long-winded description but it does not tell us exactly how that works. It states the evaluation of the tender submission was carried out using the most economically advantageous tender criteria in line with the Office of Government Procurement's capital works framework and the National Paediatric Hospital Development Board’s tender evaluation procedures. It was to be overseen by an independent third party and, presumably, they brought in a consultancy firm to oversee that. We need more information about the two-stage nature of that contract. It is obviously one of the things that allowed for the potential for a huge price increase in terms of the overall cost. We should ask them about point 3 in their letter, which caught my eye yesterday when I was reading it. While they give a long-winded description, it does not really tell us anything and it is just a form of words. They should explain why that is. In addition, this two-stage procurement process is left very much open-ended in terms of price for the second stage. Where has that model been used before?

As Deputy Murphy said, we are left second-guessing much of this because we do not have the report and we do not have the timeline. In the absence of clear information, it would appear the second phase was left very much open-ended in terms of cost and the price increases that could happen. We need more detailed information around that. I will ask the Clerk to request that from them.

I call Deputy Carthy.

In respect of the issues pertaining to the impact of construction inflation on the cost of the project, I agree with Deputy Catherine Murphy that we need to get an analysis of what that is going to mean in 2022. I note that today EUROSTAT has indicated that Irish price inflation is set to breach 5% for the first time since the financial crash. Obviously, that is having a big impact on many things but it could also have a big impact on the Exchequer in regard to this project, which is already seeing the inflated costs which we have dealt with in detail. It is crucial that we get a breakdown from the Department on whether there will be a significant increase in cost as a result of that inflation rate. I request that we contact the Department on this in the first instance, as well as the board.

From the hearing when they were in-----

We still have not received the report. If the Chairman recalls-----

We will come to that shortly. In their previous visit here, on that whole issue of the second phase of the tender, pricing, price inflation and what kind of procedures and rules are around that, we were never able to get a clear answer.

On the Deputy’s point, we should write to the Secretary General of the Department of Health and ask where the report is. We should point out it is unacceptable that it is almost a year since the Committee of Public Accounts sent an invite to the development board and the Department of Health to come in here in this regard.

We delayed it. We wanted them to come before the committee immediately after Christmas but we put it back to February because the report was not ready. It has been spun along since then. At this point, if the committee is agreeable, we should write to the Secretary General and ask for the report to be furnished. If it is not furnished, we should ask for an explanation as to why not. That the Department reviewing it is not an acceptable answer at this stage. How long does it take to review it?

The last time we had correspondence we were told not even to discuss it and not to discuss timelines or to speculate on it. We were pretty much told that we were not going to get it. This morning, we had a discussion with the Department of Transport. It has big projects on the way. The very least we would want to do is learn some lessons from the mistakes of the past. The Chair has made a point about the two-stage process. This was really where a large amount of the extra expenditure arose. We were told if it went out to tender again it would just delay it. It was not feasible to do the two phases and have a proper tendering process on the second phase. This type of information is very important for understanding what can go wrong and where we can keep an eye on other very large-scale projects. I accept there is a new spending code but process is important. Part of the reason I asked about the number of staff on the site is that in a scenario where there is construction inflation, it could be way beyond 5%. The longer this goes on, the more the contractor can gain from it in theory. It is very important that we are given information on exactly how it is progressing. If there is any slippage in the number of people on site it adds to the exposure and to the price. This is why this particular aspect of it is so important.

We will include this question. It is highly relevant with regard to construction inflation and the shortage of building workers. They are tied in. Is there a time limit? There does not appear to be a time limit for the work to be completed. That is my memory of it. There is nothing whereby it has to be completed by 2022 or 2023 as far as I am aware. I am open to correction.

I think we were told on the previous occasion that the expectation was 2024 and that it was significantly behind.

That is right. That was the expectation.

The thing is it can only go as fast as the number of people on site working on the project.

We will seek answers to these questions. If it is agreeable to the committee, we will also write to Mr. Watt, the Secretary General of the Department of Health, requesting a copy of the report. We should mention in the correspondence that if there are sections that are considered to be highly confidential due to commercial sensitivity, they can be redacted and the report can be sent to us with those redactions.

At some point we should get the price of all the black ink the State owns because we get a lot of reports that are obliterated.

On 18 October, we sought a timeline on when the Department of Health's value for money review of the nursing homes support scheme would be published. That was one issue. We also sought a timeline outlining when the committee can expect to receive the report prepared by the National Paediatric Hospital Development Board, which outlines progress on the national paediatric hospital project to date, including analysis of the final cost. We will note that we have not received a response to the letter we sent on 18 October. We will add in the additional points. I find it totally unacceptable. Here is the biggest capital project and not alone can the Committee of Public Accounts not get answers to our questions but we cannot even get the Department to respond. It is totally unacceptable.

There is an issue with regard to all building projects getting staff. People from Cork, Kerry and Limerick are working on building projects in Dublin. This is having a knock-on effect in their areas. We need to find out the stage at which the hospital is. Is it 25%, 30% or 35% complete? The big problem we have now is that there are a lot of subcontractors doing electrical work, plumbing work and all of the infrastructure that has to be put in internally. Are there particular delays in individual areas? In some areas there is a shortage of equipment. What issues are arising in this regard? It is important that we get an indication on the challenges.

I thank Deputy Burke. We will look for this.

No. 856 is from the Secretary General of the Department of Justice, dated 29 October 2021. It provides information requested by the committee on the Garda Síochána Ombudsman Commission, GSOC. This arose from correspondence we received from GSOC, which raised concerns regarding its resourcing and increasing caseload. The Secretary General states that the Department works closely to support GSOC and that GSOC's budget increased by 18% in the period since 2016. The correspondence states that following engagement with GSOC this year, it was agreed that GSOC could incur costs in the region of another €300,000 in 2021, which the Secretary General states would allow GSOC to address the immediate needs identified in the correspondence with this committee. In relation to 2022, GSOC has been allocated an additional €2.1 million. Is it agreed to note and publish this correspondence? Agreed. Deputies Carthy and Catherine Murphy have flagged this item.

I find the letter from the Department of Justice interesting. It reiterates GSOC's mission to provide efficient, fair and independent oversight. Any of us who have had engagement with people going through the GSOC process could not appropriate the word "efficient" to the process. It can be very long and drawn out. I would argue that in many cases the GSOC process is used by the Department to avoid having to answer questions. While it is in the process of GSOC, Ministers, the Garda and the Department all refuse to address issues. It was particularly frustrating when GSOC was dealing with the Shane O'Farrell case.

I know GSOC is in our work plan. There have been revelations that GSOC has written to 400 people to state their investigations will be impacted. We will take this to mean they will be delayed as a result of what is essentially unofficial strike action by senior gardaí. It is important that we get an appraisal from GSOC as to the specific implications this will have on its workload and timelines. Can we ask GSOC to respond to the Department's letter on whether it is satisfied that it has the necessary resources to carry out its work efficiently? The following is at the Chair's discretion. Do we have the competency to write to An Garda Síochána to get a response to the suggestion that the actions of some of its members are delaying the work of GSOC?

On the same point, the final paragraph on the front page of the correspondence states that in July this year there was agreement that the Department would manage overall funding within the Vote in order that GSOC could incur additional expenditure in the region of €300,000 in 2021. It states this additional funding would enable GSOC to address the immediate needs identified in the committee's letter, including a number of key investigations.

Does the additional amount address the current industrial relations issue? It is an industrial relations issue. Where is that at? Where is that to be resolved? Some of the letters that went out to which Deputy Carthy referred indicated that the Statute of Limitations would apply and that the investigation could terminate without conclusion due to the Statute of Limitations. I share the concern about answering questions. A question of mine was disallowed on 9 November? I asked the Minister for Justice had she directed the ombudsman commission in the context of examination of Garda practice, policy and procedure, to examine the memorandum of understanding that exists between GSOC and An Garda Síochána in relation to information sharing and if she was satisfied that it was functioning as intended. I was told that the Minister has no responsibility in that regard. I find it hard to accept that is the case because the Minister can intervene for a review. The Minister talks to the Garda Commissioner all the time. She must have a relationship with GSOC too. I do not hold with the idea that the Minister can be totally removed. It is quite difficult to figure this out. You cannot blame an organisation if it does not have the resources to do the job. We saw that in a freedom of information request that Mr. Ken Foxe followed up on relating to the provision of members of the Garda for some of the investigations. It took a long time for the required Garda members to be provided to GSOC to conduct investigations. The last thing anyone wants is to get to where so much time and energy has been put into something and then it does not proceed because they do not have the resources and they run into an issue with the Statute of Limitations. There is a range of concerns around what exactly that €300,000 allows to happen. We need to go back on that. Does it address the current industrial relations issues? Where do those industrial relations issues reside? Are they in the Workplace Relations Commission, WRC, or in An Garda Síochána? I am not sure to whom that question should be addressed. Those are questions that are worth pursuing and there may be others after we get a response.

Will Deputy Carthy propose the areas that committee shall seek information on in its correspondence? What does he think we need?

There are two items of correspondence, potentially. One is to GSOC seeking a response to the letter from the Department as to whether it is satisfied that it has the resources to carry out its work efficiently. It should also outline the basis of the action that has resulted the letters being sent out. We should also write to An Garda Síochána seeking an update on that action and its impact on GSOC.

We have to be careful, obviously. We cannot become involved in the industrial relations issue -----

I am not suggesting that. It is only to see -----

We can seek an update from the Commissioner on that. Are we happy enough with that?

No. 859 is from Mr. Martin Whelan, head of public affairs and communications, National Treasury Management Agency, NTMA, dated 1 November. It provides information requested by the committee arising from our meeting with the NTMA on 7 October. The NTMA also acts as the State Claims Agency. The correspondence includes a breakdown, by sector, of the 12,175 claims against the State active at the end of 2020. These are categorised under the clinical indemnity scheme and the general indemnity scheme. The total estimated outstanding liability is over €4 billion. A breakdown of how much each tribunal involving the NTMA has cost to date is also provided. These include the Moriarty, Mahon, disclosures, Morris and Smithwick tribunals. In total, third-party legal cost claims amount to over €132 million while the cost of agreed claims stands at €59.3 million, so that is almost €200 million between the two. Other information provided includes details of special dividends relating to New Economic and Recovery Authority, NewERA, projects, and that as of end-September 2021, damages amounting to €1.53 million had been paid by the State Claims Agency in respect of the national screening service, or CervicalCheck, cases.

This item has been flagged by Deputy Catherine Murphy. Can we agree to note and publish it?

That is very useful correspondence. I tend to look for the small print and I did that for the table on the second page, which includes active claims and the general indemnity scheme. At the very bottom, under the table, it says that the Irish Prison Service figures include 1,852 lack of in-cell sanitation mass claims. If that is removed from the estimated outstanding liability, what would the liability then be? Does the figure of 2,399 include the 1,852 claims? I presume it does, or does the figure count it as one, as a mass claim? Can we seek clarification on that figure and ask what extent of estimated liability that the €85.82 million relates to?

On the second point, the breakdown of how much tribunals involving the NTMA, including the Moriarty, tribunal, it gives the amount claimed and the cost of claims but underneath it states the above table relates only to third-party legal costs. We need the total figure. Can we ask for that? It may be that the third-party costs are equal or more than the very large amount that we were already notified. That would be an important figure for us to look for.

I had two queries. One related to the Prison Service and the 2,399 active claims. The Deputy made the point about the claims relating to in-cell sanitation. I propose that we look for information on how many of those claims are from staff working in the Prison Service.

Second, there are 728 active claims with An Garda Síochána with an outstanding liability of €48.29 million. I would ask the question of the State Claims Agency as to whether that relates to 728 individuals or if not, how many individuals does it relate to. If there are 728, that seems like a very high figure in a policing service that has about 14,800 members. That would mean that more than one in 20 has a claim against the State.

It may not just be members of the Garda, it may also be members of the public.

Yes, that is why we should seek clarification on whether they are all staff, and to see the number of staff that are involved in it. It would seem to be very high.

I support those proposals from the Chairman and Deputy Murphy. The stand-out figures in the correspondence are those relating to claims regarding our health services. The figures paid over the past five years in medical negligence claims amount to almost €322 million. Active claims relating to the HSE are almost 50% of claims, just under 3,830, with an estimated outstanding liability of €595 million. Obviously, we cannot go into the merits or otherwise of those claims and the awards that have been made, but it appears fairly self-evident that if we could improve the situation with regard to claims being made and awarded with our health services, we could deliver a significant saving, not only to the State but also to every insurance customer in the State. Without a specific proposal around how we could do that, will the Comptroller and Auditor General indicate whether or not he has come across anything in his deliberations that could point to a potential way of reducing the numbers of claims, and reaching those savings, or whether his office would be willing to examine this matter further in the coming period?

Mr. Seamus McCarthy

I have reported previously in relation to the State Claims Agency. I am considering revisiting the issue for next year and particularly with an emphasis on the kind of feedback that is given by the State Claims Agency, given its experience of processing claims and making settlements, to look at what kind of information goes back to the public bodies and how they are advised to try to avoid claims into the future. I do not know if this addresses Deputy Carthy's interest. Certainly, I can engage with the committee again on that and the parameters of it, if the Deputy wishes.

That would be very helpful. Perhaps the previous report could be circulated again, particularly for newer members of the committee.

Mr. Seamus McCarthy

It is from 2012 but having reviewed it recently it is probably still relevant and useful in the context of the framework of issues that arise in relation to management of claims.

On the questions about the number of claims in the Irish Prison Service and An Garda Síochána cases, there is further information in relation to the claims outstanding at the end of each year in a note to the appropriation accounts. It might be useful to review that before the committee writes to the Department or to An Garda Síochána in relation to the claims and breakdown of those. I have the Garda Síochána appropriation account opened here. They divide the claims numbers between claims by members of An Garda Síochána and employees of An Garda Síochána on the one hand, and civil claims by members of the public. Certainly, in the latter case there are probably 320 claims by members of the public and then it lists some 180 claims by members and employees of An Garda Síochána. The figure given here is a bit higher and that raises a question for me as to why there would be a discrepancy.

My interpretation of the figures relating to the Irish Prison Service is that they are counting each of the claims as an individual claim although they are probably being handled as a group claim, or at least a class of claims, so that whatever settlement is made the terms of the settlement would be similar for each of the claimants.

There was a question also about the tribunals' figures. My reading of the small print, together with the table, is that these are the third-party legal costs claims that were being handled by the State Claims Agency. The legal costs of State bodies and of the tribunals would be charged to the relevant Votes. The State Claims Agency is only dealing with third-party claims. As I read it here, these are cases that have been settled by the State Claims Agency to the end of September 2021. I do not know this is helpful to Deputy Murphy.

If that is the case, one would need to gather the information from the individual Votes and combine it with those figures to get the complete picture.

Mr. Seamus McCarthy

That is relatively easy to do because there is a cumulating figure for each of the tribunals for all the expenses that were incurred by the individual tribunals up to the end of 2020. There might be double counting because some of these claims expenses would have been passed back to the Department. The best place to get a handle on the total costs of an individual tribunal is to look at that note in the relevant accounts.

I understand that for next year it is estimated that some €540 million will be paid out in claims right across the board. On the payment of claims, one of the biggest problems in the context of medical negligence is the actuarial figures for what amount of money needs to be invested in order to provide the level of care that the injured party may require into the future. It is not only about care, however, it is also the cost of living and so on. If, for example, a large sum is paid out today and the person passes away in 12 months, two years or three years, that money then has been paid by the State. The question is whether or not we should be looking at a system, such as in other countries, whereby an assessment is made of needs of the person and there would be an annual payment as opposed to a lump sum payment. Should Ireland be looking at that system? We have a huge problem now in relation to the current level of claims pending and the cost that is going to be incurred, and whether or not it would be better to look at it in a more logical way of assisting people on a yearly basis. Has this ever been looked at?

We can put that query to the National Treasury Management Agency, NTMA.

Mr. Seamus McCarthy

My recollection is that there is provision in law for periodic payment awards to be made. I cannot remember the particular reason why it has not been implemented as envisaged. There was some hold up in it. Whether it is a legal or a technical issue I cannot recall. Certainly, the Department need-----

I am aware they are paying out advance payments, for instance in the medical negligence cases where it is clear that the family does need the support to provide the level of care, and then there is a hold off in relation to what the final award should be, on the basis of seeing how the person progresses over a period of three to four years. There is an issue with the amount having to paid out. Before, when one invested money it created an annual income. Now, if money is put into the bank one is penalised. There is that difficulty too. Even if an award of a substantial sum is made, we must ask how this sum is then managed in order to provide the level of support required. There are now a whole lot of complications. It raises the question of whether we should now be looking at a better system for dealing with this.

This is an issue that the previous Committee of Public Accounts dealt with on several occasions.

The State Claims Agency appeared before us recently. The main area is the one that Deputy Carthy alluded to, namely, the HSE. Most of the very expensive claims relate to accidents at birth. We see settlements weekly. No amount would ever be compensation for the person who might have been and his or her resultant quality of life had that accident not happened.

One of the ways of dealing with this matter more cost efficiently was to be the open disclosure process as opposed to a protracted legal approach. Interestingly, the State Claims Agency told us that the pandemic had changed the situation significantly, in that there was a greater likelihood that people would pursue mediated settlements as opposed to court settlements. Individual solicitors were giving that advice because going through the courts had grown more difficult. As such, it appears that it is at the level of solicitors as opposed to the agency that there is movement. The agency said that it had encouraged that. The figures seem to suggest that, but it was at the level of the legal profession that movement was slower.

If there is a speedier and less legalistic resolution, it has the benefit of cutting costs on the legal side. This is one of the matters we need to keep pursuing to ensure a more efficient and less legalistic approach. We need to understand what the impediment is - we have not quite got to it - and what can be done to improve it.

According to the figures we have been given, there is a contingent liability in this regard. Will Mr. McCarthy address it? It relates to the HSE in particular. From memory, the contingent liability is a multiple of the liability that is captured in the second column.

Mr. Seamus McCarthy

I believe the Deputy is referring to the first table on screen. My understanding is that that €4 billion is the estimated outstanding liability. It is the figure that will appear in the State Claims Agency's closure note in the annual statements. The HSE would report in its financial statements the outstanding liability figure under the clinical indemnity scheme and part of the general indemnity scheme. In 2020, I believe the HSE reported a figure of €3.3 billion or €3.4 billion. The annual payment would be smaller. I believe it was €450 million or so in 2020, which is the evidence that was given, and that is in the financial statements of the State Claims Agency for 2020.

Four years ago, the estimate was approximately €2 billion. In a short time, the contingent liability has almost doubled. My understanding is that next year's estimate alone is approximately €540 million across various claims. For how many more years will the figure continue to climb?

Mr. Seamus McCarthy

I believe it was in the 2015 annual report on the National Treasury Management Agency, NTMA, accounts that I drew attention to a court judgment that year that changed the discount rate that was used in calculating the awards exactly as the Deputy described. It was noted that it had a significant impact on the level of liabilities, but the level of liabilities has continued to increase since then. My understanding is that the discount rate has not changed further; rather, the increase has had to do with the number of claims and the seriousness with which the courts are determining there are compensations to be paid. There is a combination of factors, but the trend is upward. It is a very significant number. That is part of the reason I want to examine the matter again for my 2021 report.

I thank Mr. McCarthy. Some of the issue has been clarified. Is it agreed that we write to the NTMA regarding the annualised payments? Mr. McCarthy has clarified that there is provision for it in law.

Mr. Seamus McCarthy

It is referred to as a periodic payment. It is like an annuity that would be paid on a weekly or monthly basis as required rather than an individual lump sum that goes into a ward of court management situation.

I wish to ask a question in respect of wards of court. Normally, their funds are lodged in banks and earned interest. In light of the penalties being imposed by banks on deposits, though, how are they being managed now?

Mr. Seamus McCarthy

I do not know offhand. I do not audit the wards of court fund. That is a matter for the accountant of the High Court. The High Court produces an annual report, though, so it should be quite easy for the secretariat to get a copy of it and draft a note for the Deputy.

I thank Mr. McCarthy.

Regarding the improvement under the open disclosure process during Covid, and in light of the change that happened very much on the Law Library's end, it might be worth asking the State Claims Agency what engagement it is having with the legal profession to drive home the importance of taking the open disclosure route. There was a major difference. The rate jumped to 30% plus from 23%. The lack of available court opportunities seemed to drive it. That was a revelation.

We will ask that question.

Next is No. 861 from Mr. John Hogan, Secretary General of the Department of Finance, dated 21 October, providing information requested by the committee regarding the special liquidation of the Irish Bank Resolution Corporation, IBRC. Following consideration of previous correspondence on this matter from the Department, namely, No. 718, the committee requested details of the checks and balances in place within the Department over value for money auditing of each line of expenditure in respect of liquidation fees, including a breakdown of fees and clarification as to whether fees would continue to increase the longer the process went on. The Secretary General states that there has been a high level of oversight by the Department since the process commenced in 2013, including procedures to monitor and oversee the costs and fees incurred in the liquidation, regular formal meetings between senior officials from the shareholding and financial advisory division and the special liquidators, and frequent communication between the shareholding and financial advisory division and special liquidators across a range of issues as they arise.

The Department also sets out the reports that the special liquidators routinely supply and states that in 2019 the Department commissioned an independent review of similar liquidations globally, which provided it with an independent analysis of other liquidations of a similar scale, allowing comparisons and benchmarking with the IBRC special liquidation, particularly in regard to costs. The findings of that report are set out in the correspondence.

The Secretary General goes on to note that as stated in the latest progress report the timeframe for the final wind-up of IBRC has been extended to 2024. This is attributed to the impact of the pandemic and delays in court proceedings. The impact of the pandemic on asset values and the need to ensure the optimal timing for asset sales are also noted. In regard to costs, over the remaining timeline of the liquidation, the special liquidators have forecasted total further fees of between €26 million and €33 million. This will bring the total fees incurred over the duration of the liquidation from 2013 to 2024 from €320 million to €327 million. This includes costs should the process not conclude until 2024.

The Secretary General states that the priority outcome from the liquidation is to maximise the return to the State and that any decisions regarding the timeline will be subject to that objective.

Deputies Carthy and Catherine Murphy flagged this matter. I call Deputy Carthy.

I have a number of queries with regard to the logic that the Department has asserted as to the reason for the extension of the completion of the liquidation. The Department has very usefully outlined the potential losses in asset value if the assets were to be disposed of by the end of this year, next year, 2023 and 2024 and the additional holding costs that would incur. On the holding costs above original projections, these are set out for 2021, 2022, 2023 and 2024 as €2 million, €7 million, €18 million and €26.5 million, respectively. I would like clarity on the discrepancy in that regard. According to the Department, the holding cost for 2022 would be €5 million more than the cost for 2021. The difference between 2022 and 2023 is €11 million and between 2023 and 2024, it is €8.5 million. There does not appear to be any logical fix in how much each year of delay would cost.

Unless somebody can tell me otherwise, I presume that when we are talking about asset realisation, we are, for the most part, talking about properties. It appears to be an almost a gamble strategy to suggest that the difference in assets value at the end of this year, taking into account how high property prices are currently, will be less than what it will be at the end of 2024. If anything, it would be hoped that the market might have cooled in the meantime, but the Department is expecting that the value of these properties will increase to the value of €189 million. That is a fairly big statement. It is the basis on which the Department has agreed to spend an additional €26.5 million in holding costs. I would like further clarification from the Department as to how, and on what basis, it is assuming these asset values will increase to that level.

It was stated that the many of the remaining assets are in the hospitality, office and retail sectors and that it will not come as a surprise that the special liquidators have advised that the assets value were significantly negatively impacted by Covid-19. That may be the case, but some would argue that that has been almost completely reversed. The property pages show the price of property, depending on where it is located, is at an all-time high. It would be useful if the Department could set out for us the basis on which it expects such a large increase in asset value over the specified timeframe that merits the expenditure of almost €30 million extra in holding costs.

Every one of us wants the State to end up with the maximum return. The criticism of some of the early sales in regard to NAMA was that many of us felt it was a fire sale in that properties were sold when the market as at rock bottom as opposed to when we had a rising market. In being critical of that, we equally need to argue that we need to get the maximum here. It is a balancing act in terms of the cost and the rising cost of the liquidation and what can be realised from what remains. We do not have enough information to make that assessment. We have some generalities in regard to what is yet to be disposed of. It might be useful to get some sort of a quantum as to what is within each category such that we have a better idea. We need to also know what the net return is. I accept these can only be forecasts. This is the biggest liquidation in the history of the State. It is hoped we will never again have another as big as it. The criticism in recent years has been around the level of oversight. The Department has oversight in this regard. There is no committee of oversight, which was something that a former members of this committee constantly raised the need for in order that we could keep an eye on this process. A bit more information is needed regarding the various scenarios, including what is to be disposed of and the quantum in each of the categories yet to be disposed of. Without that information, we are only guessing at where the values might rise or be static. We need to get that information in the first instance. The net estimated return is the type of information that would be of value to us as well.

We will request that information, along with the clarification sought by Deputy Carthy on the increase in asset value.

No. 870B is from Mr. Ken Spratt, Secretary General, Department of Transport, dated 05 November 2021 providing information requested by the committee regarding detailed notes of expenditure. As set out in the correspondence expenditure for the MetroLink from March 2018 to October 2021 is €70 million, expenditure for DART+ from 2016 to October 2021 is €41.3 million, and expenditure for BusConnects from 2018 to 2020 is €76.7 million. The all-Ireland strategic rail review is to be completed by quarter 2, 2020, which is the information sought by Deputy Carthy. These matters are on the agenda for our meeting this morning with the Department of Transport. I understand Deputy Catherine Murphy wants to comment on this correspondence.

This, too, is useful correspondence, but we also need to know from the Department the amount that has been spent on the DART tunnel aspect of the project, which up to 2018, was in the region of €50 million, and given that that project has been postponed until 2042, if it is anticipated that at that stage any of the information arising from that spend of €50 million, will be reused.

It is proposed to note and publish that correspondence. Is that agreed? Agreed. That concludes our consideration of correspondence for today.

The next item on our agenda is the work programme. Last week, we agreed our work programme to the end of the year. The meeting schedule, which is reflected in the work programme circulated for today's meeting, is revised as follows: Department of Enterprise, Trade and Employment, 18 November; Department of Tourism, Culture, Arts, Gaeltacht, Sport and Media, 25 November; Revenue Commissioners, 2 December; Department of Social Protection, 9 December; and Department of Health, 16 December. We agreed to revisit the work programme for the new year later this month. As nobody wishes to raise anything related to the work programme, that concludes our consideration of same. Does any member wish to raise any other matter before we go into private session? No. As agreed, we will now go into private session. At our next meeting on 18 November, we will engage with the Department of Enterprise, Trade and Employment.

The committee went into private session at 2.41 p.m. and adjourned at 3.07 p.m. until 9.30 a.m. on Thursday, 18 November 2021.