7.83 The Committee are of the view that it is inappropriate for voluntary organizations to continue to accumulate surpluses from unspent subventions particularly as such organizations may have the use of other income through fund raising or from donations. The Committee recommend that a clawback system for recovering any overpayment of the salary element of the subvention be investigated.
7.84 Paragraphs 84-87. Overpayments of subventions to non-profit-making day nurseries arising from the granting of an automatic 5% subvention. Commenting on the Director of Audit's report, the Director of Social Welfare said that the White Paper on Primary Education and Pre-primary Services published in July 1981 stated that 'the Government intends to retain an element of direct financial assistance by providing registered non-profit-making child care centres with a subvention equivalent to 5% of the approved fee based on the approved capacity.' She maintained that the subvention was designed to help agencies meet recurrent costs which could be affected not just by fluctuations in enrolment, but also by unexpected price escalations, replacement of staff eligible for higher salaries etc. This intention. was reflected in the relevant Finance Committee agenda item. Whilst the Director of Audit considered that the subvention should be used to cover only the effect on fee income of fluctuations in enrolment during the year, she believed that this restriction was not intended although fluctuations in enrolment might have been a major consideration in the original decision to grant the subvention. With reference to the Director of Audit's comment on the high enrolment figures, it was true that average enrolment during the year was high, but about 25% of all day nurseries had enrolments below full capacity at one time or another, enrolment being lowest in the summer months. She believed that most day nurseries, particularly the smaller ones, did experience cash-flow problems. In her view, the Director of Audit's proposal to replace the subvention by what was in effect a means-tested advance might cause administrative problems both for the nursery operators and her department.
7.85 On the question of the unintended subsidies to the parents of children, who were not eligible for fee assistance attending non-profit-making day nurseries, the Director of Social Welfare said that fee assistance in 1984-85 amounted to some $40 million and the amount of unintended subsidies estimated by the Director of Audit was only $0.76 million or 1.9% of the fee assistance. The net cumulative surpluses from all sources for day nurseries amounted to $4.6 million as at 31 August 1985. These surpluses were used to lower the fees approved for the academic year starting from 1 September 1985. This might not otherwise have been possible. There was no evidence that the 5% subvention encouraged operators to be complacent about their enrolment figures. The existence of the subvention had done much to ensure smooth implementation and acceptance of the new fee assistance scheme. However while the Director of Social Welfare was opposed to any change at present both on policy and practical grounds she was prepared to review the scheme at the end of 1986-87 by which time it would have been in operation for five years.
7.86 Conclusion and Recommendations. The Committee note the explanations by the Director of Social Welfare and that a review of the present system of granting an automatic 5% subvention to non-profit-making day nurseries is planned at the end of 1986-87 by which time there will be five years' experience of its operation. The Committee wish to be informed of the outcome of the review.
7.87 Paragraphs 88-96. Delays in the fitting out of welfare premises in public housing estates. Commenting on the Director of Audit's report, the Director of Social Welfare said that the question of premises not being brought into operation for social welfare services as quickly as might be desired had been a matter of concern to all the Government departments involved for many years. She was confident that in future the remedial measures referred to in the Director of Audit's report, coupled with the early endorsement of the three-year rolling programme of projects to be entrusted to the Housing Department's main contractors, would bring the welfare premises in public housing estates into operation more quickly than at present. The advice of the Subventions and Lotteries Fund Advisory Committee on the rolling programme would be sought very soon. As mentioned in the Director of Audit's report, 25 projects in newly completed estates had already been entrusted to the maintenance contractors of the Housing Department, and she now expected these to be completed rapidly.
7.88 On being asked whether there was any progress in the protracted discussions between the voluntary agencies and the Social Welfare Department referred to in paragraph 92 of the Director of Audit's report, the Director of Social Welfare replied that goodwill had been maintained between the voluntary organizations and her department. With the various remedial measures already devised, in particular the use of standards for the 'core' services, the scope for disagreement should be reduced.
7.89 In response to the Committee's enquiry as to the present position of those projects which were behind target on 31 March 1985 and had not been included in the pilot scheme, the Director of Social Welfare said that the six-month target referred to in the Director of Audit's report was an ideal target. It was not possible to achieve this target under the old arrangements, other than in very rare cases where the agencies were able to fund the projects from their own resources. The number of projects funded by the Lotteries Fund had increased very substantially over the years without a matching increase in her staff resources. Nevertheless she was satisfied that the action already taken to resolve the problems would reduce the backlog and in future bring services into operation at the target date of six months after the completion of the estates.
7.90 Conclusions and Recommendations. The Committee endorse the action already taken by the Government to resolve the problem of delays in the fitting out of welfare premises in public housing estates. This action includes the establishment of fitting-out standards, the entrustment of new projects to the Housing Authority's main contractors and the introduction of a pilot scheme for outstanding projects in already constructed housing estates to be entrusted to the Housing Authority's term maintenance contractors.
7.91 The Committee recommend that prompt and efficient action be taken to establish standards for the 'core' services in all types of public housing estates.
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