Vol. 490 No. 4
4 Mr. Shatter asked the Minister for Health and Children the steps, if any, taken by him to date regarding the appointment of a permanent chief executive by the VHI; and his views on whether it is acceptable that a consultant acting as temporary chief executive costs £250,000 per annum. [10387/98]
The post of chief executive of the VHI is currently being filled, on an acting basis, under a consultancy agreement between the VHI Board and Price Waterhouse. This arrangement dates back to late January 1997 and was implemented in the absence of the board finding a replacement for the chief executive who resigned with effect from 18 October 1996. My predecessor was informed by the previous board chairman of the arrangements made to fill the post on an acting basis. Therefore, this was the situation when I took office. That arrangement was extended to January 1997 by the current board chairman, in tandem with efforts made by the board to fill the post on a substantive basis.
The Deputy will be aware that at the end of last year the board endeavoured to fill the post on a substantive basis. However, the Government was unable to accede to the level of remuneration the board proposed to attach to the position in view of wider implications relating to the remuneration of chief executives of commercial State bodies. It was the Government's view, in the interests of the orderly assessment and setting of remuneration rates for chief executives of State bodies, that the VHI post should be dealt with in the context of its response to the Report of the Review Body on Higher Remuneration in the Public Sector, known as the Buckley report. In the circumstances the board continued with arrangement to fill the position on an acting basis for the time being.
Regarding the Buckley report, the Government has decided that the basic salary of chief executives of commercial State bodies, including the VHI, will be determined on a co-ordinated basis and taking account of rates applicable across the private sector for jobs of comparable size. Hay Management Consultants have been appointed by the Minister for Finance as the pay consultants for this purpose. Their analysis will result in proposals being submitted by the Minister for Finance to the Government as to the rate to be approved for each commercial body.
The review body's recommendations in relation to commercial State bodies also addressed the issue of performance-related pay and the nature of contracts. These issues will be dealt with by the Government when they are considering the proposals of the Minister for Finance in relation to rates of remuneration.
The revised arrangements being put in place will provide considered parameters as regards remuneration of the chief executive within which the VHI Board can implement its wish to fill the post on a substantive basis.
Will the Minister agree it is bizarre that the Government turned down the appointment of a chief executive at a salary of £150,000 a year and that it supports the continuation of a consultant acting as chief executive at a cost of £250,000 a year, which does not seem to remotely accord with the Government's pay approach to State bodies? Will the Minister indicate when he expects the Government will be in a position to allow for the putting in place by the Voluntary Health Insurance Board of a permanent chief executive?
I agree it is unfortunate that we have been unable, at a time when the board sought to get a person they believed would be capable of doing the job, to provide the level of remuneration that would have enabled him to accept it, given the Government guidelines which have been in existence under successive Administrations. As a former Minister in another Department I was in a position to appoint people to chief executive positions in different circumstances, for example, to Telecom Éireann and Aer Lingus. The Government has made a decision in relation to this matter under which I abide by and operate. It is important to try to sort the matter out as soon as possible. The Minister for Finance will be producing a detailed review of the parameters set out in the initial reply in the next few months, given that the modified Buckley report was adopted by the Government about a month ago.
In the meantime, the consultancy arrangements have not in any way impeded the working of the VHI. Its position has improved during the period of the consultancies. I accept it is not satisfactory in the long-term and that it is important to try to get a chief executive in situ as soon as possible. I assure the Deputy that the board continues to try to obtain a post which will meet the current guidelines of the Department of Finance. Recently we were unfortunate in not obtaining such a person who, for various reasons, was not available despite the fact that the subcommittee of the board of the VHI dealing with this matter would like to have recruited such a person. I accept it is necessary to resolve the situation as soon as possible as Government policy issues are involved. I assure the Deputy we are not awaiting the outcome and that we are pursuing possibilities to see if it can be resolved as quickly as possible.
Will the Minister receive the Government guidelines by the end of June or will it be autumn or 1999? Does he accept that what is happening is making a nonsense of the Government's rejection in December of the nomination of the Voluntary Health Insurance Board because of the pay issue? Does he also accept that, if the consultant is retained for another 12 months at the current level of pay, it is driving a coach and four through any pay restraint approach? Finally, does he accept that it is in the interests of the VHI to have a permanent, full-time executive available to it as opposed to a consultant working part-time on a salary of £100,000, which is in excess of the suggested salary for the original appointee?
It was the Government's considered view that the sanctioning of the appointment based on the remuneration rates suggested, which were in excess of existing Government guidelines, would have long-term ramifications, not only for the company but for the semi-State sector. For that reason, it was not open to the Government to accept the proposed appointment. The current situation is not running a coach and four through the guidelines as it is a temporary position, although it is lasting longer than I or my predecessor would have liked to have contemplated in the beginning. However, there are difficulties in this area; we need to employ the right person. The hiring of the consultant has worked in management terms, but I agree that it is in the long-term interests of the VHI to employ a person in a permanent capacity. I expect an appointment will be made this year and the Minister for Finance is aware of my views on this matter in terms of its urgency.
