Vol. 287 No. 1
asked the Minister for Health the action he intends to take to ensure continued service to the people within the Eastern Health Board region in view of the financial predicament that the board find themselves in; and if he will make a statement on the matter.
21.
asked the Minister for Health if he is aware that the Eastern Health Board are in a serious overdraft situation; and if he will take steps to ensure that they get sufficient finances to avoid large overdrafts which add to the financial burden of ratepayers and taxpayers.
With the permission of the Ceann Comhairle, I propose to take Questions Nos. 20 and 21 together.
I assume that the Deputies have in mind the question of borrowing which was discussed at a meeting of the Eastern Health Board on 7th January, 1976.
Temporary borrowing by way of overdraft is a normal feature of financing revenue and capital expenditure, pending full recoupment by way of Exchequer grants or loans in respect of approved expenditure. Because of the substantial rise in the total expenditures of health boards during 1975, and because I was unable to fund increases in costs until the House passed the Supplementary Estimate of £36.725 million last November, the overdraft limits of health boards had to be increased temporarily. While the overdraft level for the Eastern Health Board had reached a figure of over £9 million in November, this figure was reduced through the making of substantial payments to the board, so that at the end of 1975, the overdraft level had been reduced to about £5½ million.
The question of the current level and the type of borrowing which the board consider it necessary to raise from their bankers is at present being discussed between my Department and officers of the board. I expect that this issue will be resolved in the near future but I would stress to the House that the issues which arise in no way affect the solvency of the Eastern Health Board.
What is the Minister's thinking with regard to transferring this overdraft into a term loan which will result in an increase of 1½ per cent on the standard rate of interest to be paid, which is a savage burden to impose on the Eastern Health Board?
Is the Deputy suggesting that the borrowing will cost 1½ per cent more?
On a term loan, yes. I understand that—I ask the Minister to clarify the matter for me —at the moment they are on an overdraft which the bankers want to transfer from the direct bank into their finance corporations, which will be a term loan and which will be at 1½ per cent higher interest rate. Are they the facts?
The Department and the Eastern Health Board will discuss the possibility of funding by way of loan rather than by overdraft, which can be called in at any time, in other words, a term loan.
Will this mean that a higher interest rate will have to be paid by the Eastern Health Board?
That will be negotiated.
Could the Minister tell us the interest rate being charged on overdrafts? The suggestion is that the interest rate will increase substantially with this term loan. This is the worry. The overdraft is at a normal interest rate but the term loan is far in excess of that. This is what is creating the biggest burden for the health board.
As I said before, this will be the subject of discussion in order to try to facilitate the Eastern Health Board and not to make their obligation so binding as it would be with an overdraft rather than a term loan.
Is the overdraft necessitated because they do not receive their grants in time from the Department?
The practice has been that there would be 95 per cent recoupment but there were unusual circumstances last year in increases in prices and increases in wages. The delay was—I can take a certain amount of blame for this—that the Supplementary Estimate enabling me to make a substantial grant to the Eastern Health Board was not passed until November.
Surely in view of the fact that the health board have so much business with the banks the onus is on the banks to provide this overdraft. The problem is with the banks not with the Department. The banks are not giving out the money. They want to switch to term loans at higher interest rates. There is a lot of money involved with the business they do with all the health boards.
This is becoming a debate now.
I am sure Deputy O'Connell knows better than that, being a member of the health board the same as I am. Will the Minister agree that there has been a consistent £5 million plus owed in overdraft by the Eastern Health Board to the banks and that this is caused by lack of funds coming from the Department and is also caused because when the Eastern Health Board put forward their budget the Minister saw fit——
The Deputy seems to be imparting information rather than seeking it.
I am asking the Minister if he agrees that this is the reason?
I am passing on to the next question. A brief supplementary.
Would the Minister not agree that because of this static £5 million owed by the Department to the Eastern Health Board and also because the Minister's budgeting was incorrect whereas the budgeting of the Eastern Health Board was more correct we then had to wait until the end of November for more money and pay a high interest rate on it?
I would not agree because apart from inflation and increases in wages and salaries there was a certain amount of unauthorised expenditure.
Will the Minister let me know——
There are a number of Deputies offering. We cannot have a debate on this matter.
How much money is owed by the Minister's Department at the latest available date to the Eastern Health Board?
That seems to be a separate question.
It has nothing to do with this question. Will the Deputy put down a question next week?
Order. Will Deputy Murphy please resume his seat?
More money is being devoted to the health boards than there was in 1972-73.
Order.
The Minister should pay the bills.
I am not a member of the Eastern Health Board and I thought it was better to give way to a member of that body. The Minister referred to £5½ million. Is it not true that before Easter this will be in excess of £7 million, that the banks are getting fed up financing this under the present loan conditions and are insisting that unless the Minister pays his grants speedily and helps them to keep a better financial situation they will charge a greater rate of interest, which will be a disadvantage to the scheme, the taxpayers and the ratepayers?
I am not so aware. They will get another allocation within a short time.
Question No. 22.
I do not know anybody who——
I have called Question No. 22.
One would imagine that this was the first time the health boards had worked on an overdraft. They have done it for years—since their establishment.
Question No. 22.
In 1972-73 £173 million was spent for non-capital health purposes. In 1975, £233 million was spent, an increase of 117 per cent spent by the Exchequer on the health services.
How much was paid in interest?
Much more money is now being devoted to health in real and money terms than in 1972-73.
Order. Next question, please.
