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Croke Park savings methodology 'came from Finance'

Consultants Grant Thornton have confirmed that controversial methods that led to claimed savings achieved under the Croke Park deal being "inflated", were included in documentation they received from the Government.

A new letter sent by Grant Thornton to Robert Watt, Secretary General in the Department of Public Expenditure and Reform, states the methodology which came from the Department of Finance was included in documents from Minister Simon Coveney's Department of Agriculture.

Mr Coveney's Department in turn ignored that methodology in order, the minister said, to give "accurate figures".

The consultants, in their new letter, conclude that Mr Coveney and his department's decision to ignore the methodology and present the lower and more accurate savings levels was a "positive statement".

Controversy erupted last month when the report by Grant Thornton was raised at the Public Accounts Committee by Fine Gael TD Eoghan Murphy.

Both Mr Murphy and his chairman John McGuinness suggested that savings achieved under the Croke Park deal appeared to be "inflated" by as much as 40 per cent.

The suggestion drew a furious response from Public Expenditure Minister Brendan Howlin and the chair of the Implementation Body PJ Fitzpatrick.

They strongly denied any inflation of savings took place.

However, it has now emerged in the letter from the consultants to Mr Howlin's most senior official that the Department of Finance methodology for calculating savings was included in documentation received by them.

Mr Foster's letter, obtained by the Sunday Independent, said: "The Department of Agriculture provided us with significant documentation which included the methodology of calculations of overheads referable to the guidelines issued in connection with the calculations," Mr Foster wrote.

"The fact the Department of Agriculture did not use the methodology but calculated the savings at a lesser amount was a positive statement as it gives a more accurate reflection of the savings," he added.

In its report, Grant Thornton said that on foot of a formula from the Department of Finance, the Department of Agriculture was meant to add a 40 per cent premium to non-pay savings when they were being calculated.

"In accordance with the Department of Finance methodology, non-pay savings should be estimated by the addition of 40 per cent to total salary cost, which in this case is 40 per cent of total annual savings," the report stated.

If it had used the Department of Finance methodology the Department of Agriculture's non-pay "savings" would have been calculated at €17.7m since the start of the Croke Park deal until March 2012.

But Agriculture considered that this method would have given an "excessive" final figure .

Rather, the Department of Agriculture concluded it had saved only €6.1m in non-pay savings in the first two years of Croke Park.

Explaining his reason for ignoring the Department of Finance methodology, Mr Coveney said his department was merely "being accurate".

At the PAC, Mr Fitzpatrick said: "They were the guidelines laid down by the department and we had to follow them."

However, at the height of the controversy Mr Fitzpatrick later stated that in the compilation of their report, his body used the revised lower estimate of €6.1m from Mr Coveney and not the higher €17.7m figure, as outlined by the Finance guidelines.

Mr Howlin's department has repeatedly insisted the savings are accurate and that any suggestion to the contrary is inaccurate.

"Savings figures are not over-estimated and are an accurate reflection of the savings made," his spokeswoman said.

Sunday Independent