Tensions are building in Government in relation to overspending in the Department of Education. With teacher conferences taking place the week, the Minister, Hildergarde Naughton, is arguing that a higher base needs to be set for spending in the area, given rising costs and increased demand. Meanwhile, Minister for Public Expenditure, Jack Chambers and his officials are concerned about the Department again running over budget this year, to the tune of at least €600 million.
Departmental overspending is nothing new under this Government or its predecessor. The Irish Fiscal Advisory Council (Ifac) has consistently warned that department’s not sticking to their annual budget is a key problem in Ireland’s public finances. Year after year, bail-outs are passed by the Dáil for overspending departments in December, funded by excess corporate tax receipts.
As the Department of Education is now doing, the arguments made by overspending departments usually relate to demand for services being higher than anticipated – particularly where this can be unpredictable, such as in the health service – and rising costs. In recent years unprecedented events, such as Covid-19 or the war in Ukraine, have also necessitated higher spending.
The issue has come to a head this year because Chambers is trying to clamp down on departments increasing their spending beyond the limits set down in the budget. This is part of a medium-term strategy announced by the Government last December, which aims to keep annual spending growth at 6 per cent, a level far ahead of most other EU countries and of inflation.
RM Block
There is no doubt that the rising population and demand for improved services have put pressure on departments in recent years. But the level of resources being spent on public services has also risen sharply – total spending is up over 40 per cent since 2019.
Annual budget figures have been seen by departments as guidelines rather than limits. And there is no sense of departments looking to save money in one area to allow more to be spent in another. As a result, there are concerns that the increases seen in spending have not fed through to a commensurate improvement in service levels.
The Department of Education faces pressures in areas such as special needs and classroom size. Teachers this week will not be slow to look for extra resources. But questions must be asked about the frequent overruns by the department. For example, the key issues causing the latest problem were surely evident before last October’s budget.
With byelections approaching, there is unlikely to be any clamp down. The odds are that come December there will be again be supplementary estimates passed to account for overspending departments. And the Government will hope that strong corporate taxes will again pay the bill.
