Secret memo from Bruton warned of £60m budget overrun

Minister for finance ordered cabinet colleagues to take ‘firm action’, 1986 files show

John Bruton, seen here with taoiseach  Garret FitzGerald, warned of “serious emerging excesses”. Photograph: Pat Langan

John Bruton, seen here with taoiseach Garret FitzGerald, warned of “serious emerging excesses”. Photograph: Pat Langan

 

Minister for finance John Bruton wrote to ministers in May ordering them to confirm their plans to deal with the expected shortfall in tax revenue.

In a secret memo to the government at the end of the previous month, the minister had warned of the emergence of a potential budget overrun for 1986 of up to £60 million.

He believed it to be “absolutely essential to the credibility of this year’s budgetary targets, and also to ensure a manageable budgetary position for 1987, that firm action be taken now to correct emerging imbalances”.

Mr Bruton wrote that the longer this was delayed, the “more severe will be the measures required”.

He said all ministers should be directed to take “energetic measures” to ensure their spending was kept within approved limits.

‘Unusually difficult’

A letter to minister for social welfare Gemma Hussey on the department’s files said the budgetary position for 1987 was going to be “unusually difficult”, since the full effect of a shortfall in insurance levies, retention tax and the cost of income tax concessions in the 1986 budget would come into the reckoning.

The budget figures projected an overrun of some £30 million for social welfare that year.

“By acting to avert the prospective 1986 overrun we will take a first important step to make the 1987 problem more manageable,” he wrote.

“After my first budget trends report, the government decided that all ministers should act to live within their budget allocations, and identify savings. The response has been derisory; the total savings identified amount to only £6 million. We will have to do far better than that if we are not to have a massive overrun.”

In her response on May 14th, Ms Hussey said it was “simply not possible” for her department to take administrative action to ensure that expenditure was kept within the published allocations.

Garda overtime

Following his engagement with ministers, Mr Bruton asked the government in a memo on May 28th to direct a number of ministers not to exceed their budget provisions.

He proposed that the minister for justice Alan Dukes should be directed to ensure that any overrun on Garda overtime payments did not exceed £3.5 million and that prison officers’ overtime should not exceed £1.5 million.

Mr Bruton’s memo said there were “serious emerging excesses” in the current budget deficit of £95 million and on the Exchequer borrowing requirement of £109 million which would, if not corrected, result in “much the worst slippage on budget targets since the government came into office in 1982”.