There is something more than little performative about the latest round of belt-tightening in the health service. Just over four months into the year, the service is over budget and says it will pause recruitment to non-frontline roles.
There is nothing new about this. Almost every year without fail the health service requires a supplementary budget. Last year it received a top up of € 2.1 billion on its initial Budget day allocation of € 25.8 billion.
The notion that its 2026 budget of € 27.4 billion – €500 million below last year’s outcome – would be sufficient seems heroically optimistic with inflation officially forecast at around 2 per cent before the current spike in energy prices.
This is not to say that HSE management should not make every effort to cut costs and stay within budget, as chief executive Anne O’Connor is trying to do. But a pattern of chronic overspending means that management ultimatums lack credibility.
RM Block
Breaking this cycle would require a shift in the collective political mindset that seems unlikely. Instead of being seen as a prudent effort to rein in costs, measures such as the moratorium on non-core recruitment announced this week are seen as an opportunity for self-serving attacks on the Government by the Opposition and its own supporters alike. The presumption – which has proved correct in recent years – is that money will be found somewhere.
The same lack of credibility undermines the warnings that current overspending may jeopardise reductions in college fees later this year.
The Government’s ability to counter its credibility deficit on spending restraint is hampered by two things. The first is the robust state of the national finances. The most recent set of exchequer returns show taxes running more than €1 billion ahead of last year. The Department of Finance’s forecasts see the economy growing strongly despite various headwinds. The reality is that - for the time being - the money is there.
The second and more significant obstacle is the lack of political will to take prudent but unpopular decisions. The two key finance portfolios are held by relatively inexperienced and young politicians. One of them – Simon Harris, Minister for Finance and leader of Fine Gael – is impulsive and prone to following his populist instincts. The other – Jack Chambers, who holds the Public Expenditure ministerial brief on behalf of Fianna Fáil – is something of an unknown quantity.
Both are under pressure from their own backbenchers to keep the purse strings loose, Harris in particular. The coming byelections will likely add to the pressure. Neither can afford to lose sight of the fact that the strength of their grip on public spending will determine both their and the State’s future.
