Overspend on pay rises and pensions costs €1.5bn

Health, education, social protection worst at sticking to their allocation in last three years

Barry Cowen, Fianna Fáil’s public spending spokesman, said the scale of overspending shows Fine Gael ‘can no longer lecture anyone on fiscal matters’.  Photograph: iStock

Barry Cowen, Fianna Fáil’s public spending spokesman, said the scale of overspending shows Fine Gael ‘can no longer lecture anyone on fiscal matters’. Photograph: iStock

 

The three worst government departments for keeping to their budget have blamed pay rises, pensions and Christmas allowances for overspends costing the taxpayer more than €1.5 billion over the last three years.

The Department of Health ran up €850 million in surplus spending, over and above its original budgets, in 2017 and 2018, latest figures released by Minister for Finance Paschal Donohoe show.

The department cited compensation pay-outs as a significant factor.

The Department of Education’s overspend reached €442 million over the past three years, while the Department of Employment Affairs and Social Protection needed supplementary budgets totalling €258 million over the same period.

Department of Housing overruns tipped €230 million while the Garda ran up €113 million in excess spending.

The figures were disclosed in response to a parliamentary question by Fine Gael TD Bernard Durkan, who asked Mr Donohoe about the extent to which government departments “have disregarded public expenditure requirements” since 2016.

Mr Donohoe said the need for supplementary estimates can arise for a number of reasons, including policy decisions, timing issues and overspends.

Health spending has continued to escalate above budget limits, prompting concerns in the Department of Public Expenditure that greater control is needed within the Department of Health and the Health Service Executive.

Latest figures from the Department of Health show a financial deficit in the HSE of just under €170 million at the end of May this year.

Barry Cowen, Fianna Fáil’s public spending spokesman, said the scale of overspending shows Fine Gael “can no longer lecture anyone on fiscal matters”.

Spending ceilings

“Despite what they would like us to believe, the facts show a different story,” he said. Mr Cowen said the spending ceilings introduced by 2014 are “meaningless” because the Government “simply ignores them”.

Despite huge overspending in areas such as health, the country “is not seeing any tangible benefit on the ground”, he added.

A spokeswoman for the Department of Health said it was given €450 million in additional funding in 2017, before getting a further €195 million in “supplementary” spending. More than €175 million of its initial additional funding went on pay and pension costs while €27 million was taken up by cases before the State Claims Agency (SCA), she said.

Of the €195 million “supplementary” overspend the same year, €75 million went towards the “acceleration of the restoration of pay under the Lansdowne Road Agreement” while another €50 million was needed for the SCA.

For 2018, 45 per cent of the additional funding provided for in the budget was needed for pay restoration which resulted in “a very modest increase for services, and the consequent need for a further supplementary estimate”.

“When account is taken of pay restoration, costs associated with the SCA and other demand-led areas, there is a reason for the level of increased expenditure year on year,” the spokeswoman said.

“Further, the nature of the health service is such that the normal budget management levers available to other sectors, such as reduction of services, are simply not available to us and consequently, overruns can and do occur.”

Additional expenditure

The Department of Education said its need for additional expenditure over the past three years was “primarily related to the funding of pensions, which was a public sector-wide issue”.

There was also €72 million needed for “contingency provisions related to the treatment and timing of receipts, rather than expenditure”, a spokesman said.

The department said it returned around €154 million to the exchequer over the three-year period.

The Department of Employment Affairs and Social Protection said it restored the payment of a Christmas bonus to long-term social welfare recipients over recent years. The cost was not included in the revised estimates as the decision to pay the bonus in any particular year is made in the October budget, said a spokeswoman.

“The respective costs of the Christmas bonus in the years 2016-2018 was €220 million, €219 million and €260 million,” she added.