Chapter 2 — Finance

Negotiations on capitation payments 1957 and 1969

Two case studies outline the very different circumstances leading to the 1957 and 1969 increases. The earlier, 1957, negotiations were typical whereas the later increase was exceptional. The Minister for Education and some of his officials met with a deputation representing the Resident Managers’ Association. The deputation sought an increase of 40/- in the grant to a combined rate of £3.10 per head per week. They argued that, owing to cost of living increases, the standard of diet and clothing for the children entrusted to their care had fallen much below what was required and that the buildings and accommodation facilities were in need of renovation.

The Department then wrote to the Department of Finance supporting the claim and requesting a minimum increase of £1 in the weekly capitation grant by the Department and in that of local authorities. This was estimated to involve extra State expenditure of £121,000 (on top of the existing figure of about £400,000) in a full year. Education admitted that there had been an approximate increase of only 1/6th in the cost of living during the period since the previous increase. However, the size of the suggested increase was supported by: the steady decline in the number of committals to the schools with no corresponding fall in overhead expenses; the increases in wages of employees in the preceding four years; the need for greater effort to brighten the lives of children; and the modernising of certain facilities in the schools. In January 1958, the Department of Finance sanctioned an increase of 15/- in the State capitation rate for Industrial and Reformatory Schools with a corresponding increase in the local authority contribution.

By 1967, when another increase was sought, circumstances had changed. The religious Orders were described as ‘gravely dissatisfied’ with the last increase and it appears that threats had been made about closing all the schools. The Department believed that this was not such a remote possibility as might be thought and that it would, if it happened, constitute a ‘national disaster’ because the cost of maintaining children would at least be doubled; for in Great Britain and Northern Ireland, the cost was some three or four times the cost in Ireland. In those circumstances, the Department recommended that a substantial interim increase was warranted, even pending the outcome of the Kennedy Report, of 21/- per week. The Department of Finance’s response, in February 1968, was that the proposed increase was disproportionate and also untimely, while the system was being examined by Kennedy. Nevertheless, as an exceptional measure, Finance was agreeable to a 15/- increase.

The Department of Education submitted: Records of the Department of Finance which were discovered to the Commission indicate that in June 1969, the then Minister for Finance, Mr Charles Haughey, had met with a group known as the Friends of Industrial Schools and indicated that he would authorise a doubling of the capitation grant in respect of children in industrial schools. The Department of Finance subsequently notified the Department of Education of the Minister’s decision.. The Department of Education records also indicate that the then Taoiseach, Jack Lynch, inquired from the Department about the capitation grant prior to its doubling and was informed of its increase in letters from the Department respectively dated 19 September 1969 and 24 October 1969.

Themes in the negotiations

Many of the same themes recurred in each of the negotiations between the 1940s and the 1970s. The Resident Managers emphasised the increasing cost of living and made comparisons with British and Northern Irish fees, and with prisons or private schools. As discussed above, the Department responded by asking for detailed accounts from the schools, justifying the request by the need to persuade the Department of Finance of the case for the increase.

Through the 1950s further causes of strain on the schools’ finances were drawn to the Department’s attention. The major factors were the decline in the number of children, increases in wages of lay staff and the need for repair of premises that were often nearly a century old. The figures for all the schools were as follows. Total capacity: 7,484 Residents: 5,227 Committed: 4,662 Others: 565 Percentage occupancy: 70%

At least as early as September 1955, the Department of Finance raised the reasonable suggestion of closing one-third of the schools in order to allow the remaining schools to operate at full capacity and become financially viable.

The minutes of a meeting on 20th November 1955 between the Minister for Education with his officials and five representatives of the schools stated: The Secretary said ‘that Ireland was very fortunate to have religious communities in charge of these schools’. He wondered whether a partial solution would be for some of the schools to be closed. From a social point of view, he said, the falling number was a very good thing....

Two years later, however, in a letter to the Department dated 18th June 1957, the Managers’ Association wrote: The Managers have had a desperate struggle to keep the Schools open but they cannot be expected to accept children unless sufficient funds are made available.

It is against this historical background that the question of the adequacy of the State funding of the institutions has to be approached.

Department of Education’s attitude to level of funding

The Department of Education, in its detailed submissions to the Committee, accepted that the schools were badly funded by the State. The Department’s position down through the years was generally sympathetic to the pleas of the institutions through the Resident Managers’ Association for increases in the capitation grant. The situation in the 1960s brought matters to a head. Numbers were falling dramatically and with that income was dropping.

An internal Departmental memorandum dated 5th June 1963 outlined the situation: The pressure for an increase in grants arises mainly from the falling numbers and chiefly from the senior boys schools. In all the convent schools I have visited it appears that they would be quite satisfied with the rate of grant provided that the schools were kept nearly full, but many of the schools are less than half full. With many of their overheads fixed the institutions would be uneconomic but in many of the convent industrial schools the deficit is obviously met by the surpluses on national and post-primary schools run in conjunction with the industrial schools, the whole being run as one institution. None of the senior boys schools has any other grant-winning institution attached and they find themselves therefore unable to compensate for the falling numbers and increased grants are therefore necessary in their cases.

This same memo pointed out that ‘the element if any for the maintenance and improvement of buildings was too small’. The buildings were old and in need of repair and modernisation, and the Department had begun to pay a contribution to help the Orders carry out necessary work.

The dwindling funds caused by falling numbers worsened because of the failure to rationalise the system and close most of the schools as was suggested as early as 1955 by the Department of Finance. A letter dated December 1964 to the Department of Finance backed the Resident Managers and asked for more funds rather than school closures: We are satisfied that the present grants are insufficient to meet the current expenditure of the schools and very many of them, if not the vast majority, can subsist only by meeting the continuing deficits from income from other activities of the communities or by charitable donations or by accumulating debt, the last mentioned occurring even in schools conducted by nuns who are noted for prudent management. Further expenditure in the schools is confined to bare necessities as their incomes will not allow of any of the many improvements deemed necessary by this Department... It should also be borne in mind that the school premises have all been provided free of cost to the State and in the matter of structural improvements or repairs they qualify for State aid on the day-school portion of the premises only. It had been claimed in the past that the capitation grants contained some unspecified element in respect of buildings maintenance but such, in fact, was not the case. These institutions have been treated so parsimoniously by the State that there is now grave danger that the goodwill of the religious orders concerned will be lost and it is unnecessary to indicate the enormous extra cost which will be involved were they to give up the work and be replaced by lay staff.

The letter ended: In all these circumstances the Minister is satisfied that an increase of £1 a week in the capitation is less than that warranted but is the minimum that can reasonably be offered and it is suggested that the entire cost, estimated not to exceed £155,000 should be borne on the exchequer.