Government departments that exceed agreed budgets will face new sanctions, including closer supervision by officials from the Department of Public Expenditure and new programmes being put on hold.
Offending departments may also face the blocking of Government memos until they obtain the agreement of public expenditure officials about future spending plans.
The moves – likely to prove contentious among Ministers – come after Minister for Public Expenditure Jack Chambers confirmed a new levy on all departments to pay for a projected €600 million overspend in the Department of Education.
In addition, there are also spending pressures emerging in the Health Service Executive, with The Irish Times reporting last week that the agency was already €250 million over budget after the first quarter of the year. The HSE announced measures, including a freeze on hiring non-frontline staff, to restrict the projected overspend and has begun to seek savings internally.
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It is understood that a new expenditure control framework will shortly be finalised by the Department of Public Expenditure. Government departments which exceed their budgets will be placed on a point in the framework, depending on the scale of their overspending, and controls will be eased or intensified, depending on whether the overspend is brought under control.
On Sunday, Chambers said that continuing overspending would limit the Government’s ability to improve services in childcare and disability in the future.
He said there was agreement among his colleagues that the Coalition needed to control overspending so that it can “achieve new deliverables in terms of childcare, enhanced disability services or other areas for 2027”.
The levy to pay for the extra education spending will vary from department to department, it is understood, with some areas – including social protection expenditure, health service pay, housing and justice pay – exempted. The percentage of budget that each department will have to raise through “efficiencies” will vary, but will average 0.5 per cent.
Chambers said the levy will range from 0.1 per cent of budgets in some departments to 1.4 per cent in others.
The introduction of the levy is causing some unease among Ministers, some of whom see themselves as being penalised for the sins of others. The cash amounts will vary between departments, depending on the size of their budget. Some departments will be asked to find savings of tens of millions of euros, but others will be asked for more substantial sums.
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Meanwhile, HSE chief executive Anne O’Connor last week placed three of its regions – covering a large part of the country – into “financial escalation”, which involved the introduction of restrictions on recruitment and greater scrutiny over spending.
The regions were obliged to submit new saving plans by last Thursday.
In addition, O’Connor is seeking a schedule of discretionary spending, which is to be paused or curtailed, to be submitted by the regions to HSE headquarters by Thursday, May 14th.
By Friday, HSE regions have to provide updated projections on their end-of -year financial position. The region covering parts of Dublin down to the South East said it had submitted its new saving plan last Thursday. It did not set out details.
HSE Dublin and South East said it had a budget deficit in the year to date of €37.4 million, representing a 5.7 per cent level of variance.
The HSE Dublin and South East region said “immediate and decisive actions are being taken across the region to control spending within approved levels through stronger financial controls”.
The HSE region covering other parts of Dublin and the Midlands – which was also placed in financial escalation – said it was putting in place measures, including tighter controls on agency and temporary staffing, enhanced approval processes for recruitment and expenditure and a pause on discretionary non-pay spending.
“Frontline and critical service roles will continue to be prioritised,” it said.
