Parliamentary Budget Office publishes analysis of HSE budget process

The PBO concluded:

• The framework of accountability to the Dáil in respect of HSE expenditure is highly complex and technical. Greater clarity as to how the overall framework operates and of each component of it would offer opportunities to enhance the oversight and scrutiny role of the Dáil and its committees.
• Key to improving this accountability framework is through greater consistency of the different performance, budgetary and accounting documents prepared by the HSE and the Department of Health. This would help compare and/or combine these documents to improve the effectiveness of the Oireachtas’ oversight/scrutiny role.

The Director of the Parliamentary Budget Office, Annette Connolly, said:

“Given the excess of expenditure over profile of some €300 million on the Health Vote so far in 2018, understanding the relationship between this Vote and the HSE’s budget is essential for Oireachtas oversight. Our analysis highlights that the link between the monies voted by the Dáil and HSE expenditure is difficult to navigate. It also illustrates that the budgetary documents produced by the HSE at the start of the year cannot be taken as a complete statement of the financial needs of divisions within the HSE. Expenditure is frequently transferred between service areas throughout the year, so that the end-of-year allocations differ significantly from those at the start of the year.”

The paper analyses how the make-up of the HSE’s National Service Plan changed between 2011 and 2018. During this period, the net annual current expenditure allocation (1) of the Health Service increased from €12.9 billion to €14.6 billion. (2) The significance of the net allocation in the National Service Plan is that this is the figure which must be met from the Exchequer, i.e. the grant from the Department of Health. However, HSE gross current expenditure increased to €16.1 billion in the same period. (3)

Prior to 2015, the HSE had its own Vote, i.e. separate from the Health Vote. This Vote was dis-established in 2014, and the programmes within the HSE Vote were transferred to the Vote of the Department of Health. One impact of the dis-establishment is that a substantial gap now exists between the monies voted by the Dáil for the HSE and the actual amount the HSE spends each year. This is because substantial HSE income no longer is visible within the Estimates process. This was a necessary consequence of dis-establishing the HSE’s own Vote, yet it shows that changes to any element of the governance framework for Ireland’s health service can have wide-ranging effects. In this case, the dis-establishment of the HSE’s Vote (aimed at increasing the accountability of the HSE to the Department of Health) added to the complexity of interrogating the total gross current expenditure in Ireland’s public health system.

The complexity of this financial framework makes the Dáil’s oversight role for health expenditure extremely difficult, and demands a level of technical knowledge. The Department of Health and the HSE have taken measures to improve this framework – e.g. the indicative appendices in the Revised Estimates for Public Services provide a breakdown of some of the Voted Expenditure under the service areas of the HSE. In addition, the HSE is currently expected to implement a ‘Single National Integrated Financial Management and Procurement System’. Therefore, centralising the processing of financial and procurement data onto a single system, rather than the range of systems used today, should allow for much more detailed and accurate presentation of data to Dáil Eireann. However, pending the implementation of this system, the key element for effective accountability is up-to-date reporting of financial and performance information, and continued improvement of the presentation of information in the Revised Estimates for Public Services and Appropriations Account.

Read the full report here.

1. This net figure is arrived at by deducting the income received by both the voluntary and statutory system from the total gross figure in the National Service Plan. In 2018, this income is estimated to be €1.97 billion.
2. Figures for 2011-2014 modified to remove Child & Family services, which were transferred to TUSLA after 2014.
3. The nominal gross current expenditure of the HSE in 2018 is €16.5 billion. However, when internal financial transfers (comprised mostly of income to remitted to Hospitals from the Primary Care Reimbursement Scheme, and income remitted to Community Health Organisations from the Fair Deal Scheme) is accounted for the adjusted gross amount is €16.1 billion. 

About the Parliamentary Budget Office

Established in August 2017, the Parliamentary Budget Office is a key source of financial and budgetary intelligence for Members of the Oireachtas and in particular for the Dáil Committee on Budgetary Oversight as it conducts ex-ante scrutiny on budgetary matters. It is an independent specialist unit within the Houses of Oireachtas Service.

The need for the office was identified by the OECD in its review of budget oversight by the Irish Parliament. The Oireachtas Sub-Committee on Dáil Reform, in its final report in May 2016, recommended that the office be established.

It has recently published Briefings for Members on incorporating climate considerations into the budget process, analysis of the 2018 Spending Review, Active Labour Market Policies, the Common Agricultural Policy and a wide range of other areas. All these notes and papers are available on the PBO’s section of the Houses of the Oireachtas website.