Ministers are set to clash today over a projected €1 billion overrun in the Department of Health which has complicated Budget 2024 talks as they enter a crucial phase.
A meeting of the Government’s Cabinet Committee on Health will take place this afternoon where Minister for Health Stephen Donnelly will likely be asked to account for significant budgetary overruns in the HSE amid rising tension with the Department of Public Expenditure.
Last week, The Irish Times reported that senior officials believe a projected €1 billion overrun in the Department of Health will now limit Mr Donnelly’s room for manoeuvre in budgetary negotiations. However, he is expected to argue that demand in the health service has shot up and that inflation in health has seriously affected electricity and fuel costs, as well as drugs and transport costs.
A senior source said there is a view in the Department of Public Expenditure that billions of euro in extra funding has been given to the Department of Health in recent years and that spending must be reined in. There is an expectation that the overspend will now lead to “a difficult budget negotiation”, a source said on Sunday.
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Health officials have privately argued that significant extra demand in the health service has put spending under pressure. According to HSE figures, attendances at emergency departments of those aged 75 and older were up 21 per cent in comparison to 2019, while admissions from emergency departments to hospitals of those aged 75 and older were up 15 per cent.
The emerging financial issues have weakened Mr Donnelly’s hand in budget negotiations, but Coalition figures are also acutely aware that a general election could take place next year and that extra funding will have to be forthcoming to avoid accusations of underinvestment.
HSE chief executive Bernard Gloster indicated on Sunday that its overspend could reach €1 billion by the end of the year.
Mr Gloster said the €700 million overrun was correct as of the end of July. He stressed that the HSE always ran a deficit and required a budget supplement.
He blamed inflation and “additional demand which was beyond what was projected and that’s the same for every health care system in the world” as the principal reasons for the overrun.
In addition, he admitted that there was a control issue about how budgets are managed within the HSE.
“We are going to need substantial assistance towards the end of this year and into next year,” he told RTÉ's News at One programme.
Meanwhile, Government figures are also understood to be preparing for a separate significant bill to pay for accommodating Ukrainian refugees and other asylum seekers next year, placing further strain on budget plans. A new public sector pay deal will also have to be factored in.
The three party leaders will meet Minister for Finance Michael McGrath and Minister for Public Expenditure Paschal Donohoe today to discuss the possible final shape of Budget 2024, while bilateral meetings with Ministers will continue throughout the week. Welfare increases of between €10 and €12 are on the cards, alongside one or two energy credits that could be worth between €100 and €150. A series of other one-off welfare payments are also under consideration.
A two-pronged tax package could see the standard rate cut-off point increased by between €1,000 and €1,500, if not more, while Ministers are also mulling cuts to the universal social charge. Supports for businesses struggling with energy costs are expected. Third-level students could also once again benefit from a €1,000 cut to the student contribution fee, while those using public transport will likely benefit from an extended 20 per cent discount on travel prices.
