Government will seek to prioritise Covid, Brexit and existing services – McGrath

The Government’s budgetary strategy for next year will be to prioritise crisis management measures to deal Covid-19 and Brexit while maintaining existing levels of service in core spending programmes, according to the Minister for Public Expenditure.

Michael McGrath will tell the Oireachtas Budget Oversight Committee on Thursday that before new policy measures in areas such as health and housing are taken into account, there will be an increase in spending of €3 billion.

In an opening statement to the committee he says that this will comprise €2 billion in current expenditure and €1 billion in capital expenditure.

However of the €2 billion earmarked for increased current expenditure, €1.1 billion is already committed to deal with demographics and to meet carryover costs arising from measures introduced in previous years and public service pay agreements.

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“In relation to capital expenditure, we will also ensure that the increase in capital investment set out in the National Development Plan is implemented in order to support the recovery in the economy. This would see core gross voted capital expenditure of almost €9.2 billion next year, an increase of almost €1 billion on the gross voted expenditure amount set out for this year .”

Mr McGrath will tell the committee that “ensuring the provision of the necessary funding to support our citizens and public services, in particular the health service, over the next phase of the Covid-19 pandemic will be the key priority in Budget 2021”.

He will suggest the costs involved next year will be “significant” but are also subject to considerable uncertainty.

The Minister will say that while the Government already provided an additional €2 billion to the health service this year to deal with the impact of Covid-19, the total cost could ultimately be €3 billion more than originally planned at the start of the year.

Mr McGrath will say given that the challenges posed by Covid-19 will continue into 2021, the health service will be a priority area in the budget next week.

He will say there is "extensive engagement with the Department of Health and the HSE as we seek to arrive at a workable, sustainable and comprehensive allocation for the Department of Health that can help build the necessary capacity and resilience into our health system".

The Minister will also say that the additional cost of re-opening schools and colleges against the backdrop of Covid-19 was about €500 million.

“With 38,000 employers registered for the Employment Wage Subsidy Scheme, the Revenue Commissioners are to make payments this week to 31,700 of these employers in respect of 335,000 employees. In addition, with over 200,000 recipients of the pandemic unemployment payment this week, before the nationwide Level 3 restrictions were introduced, this indicates the scale of the challenge faced by workers and their employers.

“With the additional funding required for Health and Social Protection amounting to over €12 billion in aggregate this year, as we continue to live with the virus and manage any resurgences through 2021, the funding required for our health service and for income and employment supports will remain significant next year and also subject to a degree of uncertainty that would need to be reflected in the estimated expenditure amounts for next year,” he will say.