An investigation into the issuance of encroachment permits between December 2012 and March 2013

On 25 August 2014, the Auditor General was requested to investigate the encroachment permits issued during the period immediately preceding the 2013 general election. According to media coverage cited in the request, 100 permits were issued during the last two months of the previous administration, when Government usually issued 150 permits on an annual basis. In light of these concerns, the National Audit Office (NAO) analysed the frequency of permits issued during the period 1 December 2012 to 8 March 2013 by comparison with other periods, as well as the regularity of such permits.

In addressing the first objective of this audit, the NAO limited its review to new encroachment permits issued during the period under review. This was motivated by the fact that permits up for renewal were automatically issued by the Department, subject to the payment of dues, requiring no other intervention whatsoever. The NAO established that the number of permits issued between December 2012 and March 2013 was 25. The approval of encroachments was contingent on the nature of the permit requested and in this context, the NAO noted that, out of the 25 permits issued, 13 were authorised by the then Minister for Fair Competition, Small Business and Consumers, while the remaining 12 were sanctioned by the Government Property Department (GPD) and other public sector entities. Eleven permits were issued between 23 February and 8 March 2013, with seven permits issued between 4 March and 8 March 2013. Out of these eleven permits, eight were authorised by the Minister.

Drawing comparisons with other periods, the NAO established that nine permits were issued between December 2010 and March 2011, twenty permits in the corresponding 2011/2012 months, and six in 2013/2014, as against the 25 permits issued in 2012/2013.

The second objective of this audit entailed the determination of the regularity, or otherwise, of permits issued during the period December 2012 to March 2013. The NAO noted that an element of discretion was exercised in establishing encroachment fees, with the GPD, at times, applying rates that were below the minimum threshold set for permits relating to particular categories. Fees charged, once established, remain unaltered despite successive renewals of the permit. The GPD’s failure to address this matter inevitably results in the unfair application of rates, with establishments bearing similar characteristics and requesting similar permits being charged significantly different rates, merely due to the date when the permit was first issued.

In the case of permits issued for the placing of tables and chairs, the NAO had reservations about the standard rate applied, as it failed to take into consideration various factors that determine the profitability, or otherwise, of the site. The GPD charged a flat rate of €23 per metre squared per annum. Furthermore, although applicants were required to submit MEPA clearance with respect to particular permits, the GPD issued the relevant permits even in cases when such approval was not provided.