THE DEPARTMENT of Finance has issued an edict to all other departments barring them from signing any contracts for capital projects worth more than €5 million without its direct sanction.
The order was issued by the secretary general at the Department of Finance, David Doyle, to all other secretaries general last week, and came into force on February 11th, The Irish Timesunderstands.
In addition to requiring sanction for individual projects, government departments have also been told they must produce a quarterly list in advance of projects that they wish to progress.
The radical change has been made to ensure that departments have money left in their accounts later this year to pay for capital projects that will create the maximum number of jobs.
Without it, the Department of Finance feared that departments, which have enjoyed considerable freedoms within an overall budget over the last decade, would sign up to contracts that would eliminate room for manoeuvre.
However, the change will sharply increase the Department of Finance’s control over government spending and could delay some projects, sources in other departments fear.
Despite the change, Government sources insisted last night that “priority projects” will go ahead, and insisted that “periodic pauses” had taken place in the past to ensure that control was kept over spending.
In 2007, then minister for finance Brian Cowen introduced in the budget new rules demanding a cost-benefit analysis for all capital projects that cost €30 million and over to complete.
The Department of Finance was particularly concerned at the escalation in the cost of grants to farmers to install improved sewerage tanks to capture farm waste, a scheme which is now hundreds of millions of euro over budget.
Earlier this week, Minister for Finance Brian Lenihan went ahead with a plan to defer the payment of some of the grants until 2010, or 2011, despite protests from farming organisations.
In an indication of the projects to be favoured in future, he shifted €150 million to fund extra school buildings and the national insulation grants scheme being organised by Minister for Energy Eamon Ryan.
Construction prices were falling significantly, he said, adding that the Government would be able to get the same number of projects completed this year as last year: “We are getting a bigger result from capital funding,” he said.
Over the last decade, departments had become accustomed to getting guarantees on budgets three and five years into the future: “Now, I doubt they know what they will have this year,” one source last night.