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Ireland's political and cultural magazine
— October – November 2013
T
HE School Transport Scheme is a
public-private partnership with Bus
Éireann working with , private
operators throughout the country,
employing, it says, around , people. But,
it is in effect a monopoly which has dramati-
cally abused its dominant position for nearly
fifty years.
In the Department of Education
initiated free transport for post-primary
schoolchildren. It was a progressive initiative
thought up by the Minister, Donogh O’Malley,
requiring that €. million be paid to CIÉ for
the first year to perform “matters of a purely
transport nature”. CIÉ exacted a profit of %
on top of their specified costs and it was a
good earner for them, indeed the only area
of growth in the company.
In CIÉ realised that if Ireland joined
the EEC then this profit would be seen as sub-
sidy and would not be allowed. They called
in the consultants McKinsey & Co.
£, later, and with a typical s-
era delay until just in time for a
common European transport policy, CIÉ took
the advice and got rid of the word ‘profit’ by
Bus-iness as usual
Bus Éireann cynically avoids
competition for Ireland’s
laughable school-transport
system. By Tim Doyle
NEWS
SPECIAL
Secondary Education
putting in a zero in the profit box while they
simultaneously dropped some charges and
introduced a new charge, happily called an
“administration charge”.
For many years the charge was % of
the costs of running the scheme. The %
figure is derived in what now seems a strange
way, as follows. In its report McKinsey – in
the s remember, said “of every £ of
provincial bus passengers’ revenue, . new
pence goes to the subsidisation of the rail-
ways…” CIÉ rounded it off to %, yielding
the figure in the bill it gave to the Department
for the Scheme in . In Bus Éireann
was formed when CIÉ was split up into three
companies, but the % to “subsidise the
railways” remained. The trains had disap-
peared but not the charge. Orwellian.
In , new consultants, RSM Farrell
Grant Sparks (FGS), were engaged and rec-
ommended an end to the percentage charge.
As part of the process FGS could have consid-
ered a previous report , by Hyland Consultants,
commissioned in that told them back
then that the % “could well be lower”.
In it was finally scrapped and
replaced with a fixed charge.
In the cost of School Transport was
€ million, the highest per student in the
world. It was % higher per student than in
Northern Ireland. Bus Éireann got paid €.
million directly for its administration charge
but for % fewer children being taken to
school. The severe reduction in passengers is
probably caused by the introduction of new
charges of up to € per school
child per year for the use of the
Free School Transport Scheme.
In reality, Bus Éireann charged
the Department % more per
child than the previous year,
though Bus Éireann’s annual bill-
like ‘Statement of Account’ implies
that the cost to the Department of
the scheme dropped by just over
% for the financial year .
Nevertheless, Bus Éireann claims
to have reduced the overall cost
of the scheme to the State by over
€ million since , while
increasing the number of serv-
ices, particularly for children
with special needs. It believes it
is “the only body in Ireland with
the skills, experience and capa-
bility to operate the Scheme in an
effective manner”.
A Value for Money Review
was published in by the
Department of Education and
Skills.It examined the ‘efficient
and effective” implementation
of the scheme. It showed that the
maintenance of the school bus
fleet of buses used by Bus
Éireann cost €. per kilome-
tre (not including the %) and
that the standard of maintenance was in line
with that of school transport bus services in
Northern Ireland. No better no worse. In
Northern Ireland the maintenance charges
are only €. cents per kilometres for the
school bus service. This difference amounts
to some € million per year. Bus Éireann
buses are ancient and have a value of proba-
bly €-, each yet the Department pays
Bus Éireann over €, per year to main-
tain each of them.
Over the years Bus Éireann has denied that
it makes a profit from School Transport. It
has denied it to the EEC and the EU, to the
Transport Committee of the Oireachtas and
to the Department of Education. Recently it
denied it to the High Court. The Department’s
Secretary General told the Oireachtas Public
Accounts Committee PAC in February that
“my interpretation of this would be that they
are getting their costs back plus this €.
million they get for their costs incurred in
managing it. So if they can manage it within
the €. million they would make a profit
and if they can’t, they wouldn’t.
The Department’s Assistant Secretary, Seán
O’ Foghlú. who headed the scheme conceded
to PAC that the Department does not in fact
get a copy of the profit and loss accounts for
school transport. When PAC asked for a let-
ter of assurance from the auditors,
PriceWaterhouseCoopers that no
profit is made, Mr Ó Foghlú said
it would see if it could oblige. Mr
Ó Foghlú said it would take a week.
That was in February…
The PAC chairman, John
McGuinness asked if, in the event
of termination of the arrange-
ment there was a € million
‘disengagement cost’. Although
Mr Ó Foghlú said he was “not
aware that there is an actual
agreement in place”, in fact the
Department did agree a € mil-
lion termination charge with Bus
Éireann and told the Department
it had done so.
Every year in its Annual
Report, up to , Bus Éireann
described the school-transport
scheme as being run on a “cost
recovery basis”. It didn’t make a
profit but recuperated its costs.
In the words ‘cost recov-
ery basis’ was dropped by Bus
Éireann without explanation.
The “contract”, to quote Bus
Eireann’s own Annual Report,
has been running for years.
It has never been put out to pub-
lic tender. The Department of
Education has never examined the profit
and loss accounts for school transport. The
auditors, PriceWaterhouse-Coopers rely on
the Directors of Bus Éireann to supply them
with the honest and correct numbers on the
allocation of costs before signing off on the
annual ‘Statement of Account’ which is in fact
an only partly-audited bill.
It should be remembered that the
Department’s record is not one of prudence
when spending public money. It financed
other infamous state institutions such as the
Industrial Schools, the Magdalene Laundries
educational institutions considered in the
Ferns Report. The public has a right that the
Department of Education to do its job prop-
erly – not cover up.
The overpayments in school transport are
colossal at some € million per year.
It appears that the School Transport
scheme is run essentially for the benefit of
‘Their buses
are ancient
and have
a value of
probably
€2-3,000
each, yet
the Dept of
Education
pay Bus
éireann
over
€20,000
per year to
maintain
them
“
— October – November 2013
NEWS seCOndary eduCaTiOn sPeCial
Bus Éireann and its employees, before any
consideration is given to the needs of school
children.
The Department of Education and Bus
Éireann were recently challenged
in court to put this old con-
tract out to public tender. They
refused and, like guilty school
children, told the court – among
other things that:
“It is not a contract…we do not
make a profit”…“there are no
termination provisions”…“Bus
Éireann engages in tendering
for each subcontracted school
bus route”…“it is the oppo-
site of a normal commercial
transaction”…The Department
“exercises over” Bus Éireann “a
control which is similar to that
which it exercises over its own
departments”…“There is no
cross subsidisation”…“We do not
seek to make a profit…we are not
caught”...“It is a non-profit-making contract
and therefore it is not a contract”…“Student
Transport Scheme Ltd (STS) have no inter-
est in the contract…STS Limited couldn’t
do it even if it went to tender”…Bus Éireann
“knows nothing” of a court case (some four
weeks after the Department of Education and
Skills was served with proceedings.
It appeared the lawyers for Bus Éireann
had never seen the separate man-
agement profit and loss accounts
for school transport and so were
not really in a position to say there
is no profit.
The Department of Education
and Bus Éireann won the court
case in October , partly
because not all relevant evidence
was before the court. Not long
afterwards, documents began to
appear such as one showing the
significance of the FGS report
that encouraged the Department
to look for a € million discount
on the Scheme (not disclosed), the
existence of a Department report
that showed the € million ter-
mination cost (not disclosed) and
a number of Department reports
for the Department of Finance that described
the Scheme as a contract (not disclosed).
The appeal will be heard some time in the
next months. Along with the €,
already paid to the High Court STS is facing
a call for €, more for the Supreme
Court appeal. Nearly half a million euros
and not an inch closer to the real truth. This
author is about to file his defence in a defa-
mation case Bus Éireann has taken against
him for what it says are allegations of bully-
ing, bribery and bias in the administration
of school transport and for what it says is
an allegation of Bus Éireann misleading the
courts.
Meanwhile, IC Bus – a potential share-
holder in the tender company, famous for
designing the unique yellow buses – is build-
ing a school-bus-manufacturing facility in
China when they might have constructed it
in Ireland creating up to , jobs.
The Irish Bus operators, as John
McGuinness TD put it, “are being bullied off
the field by Bus Éireann”.
As Enda Kenny said recently “Ireland is
open for business”, though closed in this case
to competition.
Tim Doyle is Managing Director of Student
Transport Scheme Ltd (STS), a consortium made
up of Irish bus operators and American bus
companies taking a legal case against the State
over its failure to put the country’s school bus
network contract out to tender.
In 2012
the cost
of School
Transport
was €160
million, the
highest per
student in
the world
“
have been
made
