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Budget-busting HSE continues to make money men bristle despite efforts to rein in spending

Department of Health told it was ‘imperative’ spending remained within allocation – but there was little surprise when it didn’t

Minister for Public Expenditure Paschal Donohoe and Minister for Health Stephen Donnelly. File photograph: Gareth Chaney/Collins
Minister for Public Expenditure Paschal Donohoe and Minister for Health Stephen Donnelly. File photograph: Gareth Chaney/Collins
Martin Wall's picture
Martin Wall
Mon May 20 2024 - 20:32

It is “imperative” that, with an unprecedented €22.8 billion in exchequer funding, the health system delivers within allocation, the Department of Public Expenditure insisted to the Department of Health at the beginning of the year.

However, in early May when the Department of Health secretary general Robert Watt told an Oireachtas committee that health spending was running more than €500 million over budget for the first four months and that supplementary funding would be needed, few seemed terribly surprised.

Sinn Féin health spokesman David Cullinane said his party had warned last October that the health service had not received sufficient funding and this had “quickly materialised”.

HSE chief Bernard Gloster last autumn made no secret of his view that the 2024 health budget was inadequate and indicated the HSE could record a deficit of up to €1.5 billion.

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It is also well known that Minister for Health Stephen Donnelly had sought an additional €2 billion but, after the budget horse trading, ended up with just over €700 million.

After the €500 million overspend figure was confirmed, a senior health service figure told The Irish Times that the Government had been warned there just was not enough money allocated.

In the Department of Public Expenditure, it is understood there is concern that the level of spending recorded in the first few months is usually associated more with the end of the year as winter approaches.

This view is disputed in the health sector, where senior figures argue that the greatest level of unscheduled demand in the system tends to come after Christmas.

[ Health spending €500 million over budget in first four months of the year, Oireachtas committee hears ]

Of course, there are always tensions between those responsible for the purse strings and those charged with running one of the largest areas of Government expenditure.

A decade ago there were rows between minister for public expenditure Brendan Howlin and minister for health James Reilly over health spending.

The Department of Public Expenditure also fought an ultimately successful battle to kill off Reilly’s flagship health reform programme – a system of universal health insurance – on the grounds of affordability.

The Department of Public Expenditure has consistently believed the health service needs to get a firmer grip on spending – which has exceeded the allocated budget on eight of the last nine years – as well as on recruitment.

Donnelly has publicly acknowledged that the HSE last year took on about 2,000 staff for whom there was no approved budget, leading to the current embargo on recruitment. The Coalition party leaders will now decide on options for resolving this issue over unauthorised recruitment.

The Minister for Public Expenditure, Paschal Donohoe, told a press conference last week that unauthorised recruitment was always “a really significant concern because it is not funded for the year it happens or for the years afterwards”.

“That only makes our spending decisions and expenditure planning harder.”

However, in health there is a view that the Department of Public Expenditure does not acknowledge the costs of dealing with an increasing and ageing population, the need for greater staffing levels and more expensive drugs. They argue the investment has seen life expectancy in Ireland – at over 82 years – increasing.

[ Billions in extra health funding not leading to higher activity in hospitals, report finds ]

Last November the Government approved an additional €1 billion to deal with a health overrun. But correspondence from the Department of Public Expenditure to the Department of Health at the end of January suggests tensions over budget management remained. It pointed to “ineffective” HSE measures to control growth in administrative personnel and that targeted savings on agency staff and overtime had “not materialised”.

Perhaps most significantly, it contended that “despite a Government decision, setting out clear arrangements and expectations”, the Department of Health had not delivered memorandums on expenditure for the second and third quarters last year. It maintained that two meetings of the Health Budget Oversight Group (HBOG) of officials had had to be postponed as key documents were not provided in advance.

“These draft memorandums were subject to consultation between the departments and given various delays in agreeing the Q2 and Q3 memorandums it was decided, with the Department of Public Expenditure, that a combined Q2, Q3 and Q4 memorandum be presented to Government.”

It said monthly financial reporting was provided to HBOG and regular updates were given to other bodies such as the Cabinet Committee on Health.

It said industrial action in the HSE had left the health service unable to provide the full level of documentation to the HBOG.

“However, the department continued to provide monthly financial reporting, using other available information such as HSE weekly cash drawdowns and monthly returns as well as information from monthly performance discussions with the HSE finance team.”