I presume the members can hear me okay. I am grateful for the invitation to attend today’s meeting to discuss the HSE annual report and financial statements for 2020, and other matters. I am joined today by my colleagues: Ms Anne O’Connor, chief operations officer; Mr. Stephen Mulvany, chief financial officer; Mr. John Swords, national director of procurement; and Ms Mairéad Dolan, assistant chief financial officer.
We have submitted information and documentation to the committee in advance of the meeting and I will therefore confine my opening remarks to the following issues, starting with the Covid-19 pandemic in 2020. Covid-19 was declared a pandemic by the World Health Organization on 11 March 2020, by which time the HSE had already initiated emergency management protocols and had convened its national crisis management team.
We set up several very large work programmes, advancing each one at pace and in parallel.
In the face of the most difficult market conditions imaginable our procurement team set about ensuring that we had enough PPE and hospital equipment. From an effective standstill position, we built a national testing and contact tracing service and, latterly, an exceptionally efficient national vaccination programme. We also prepared our hospitals to meet the additional demand, while safeguarding essential services. Finally, we entered into agreements with private hospitals and with GPs to support our acute and community services when we were in surge.
All areas of health and social care were impacted as a result of the pandemic. The committee will recall that in March 2020, on the advice of NPHET all non-essential surgery, procedures and other non-essential services were curtailed. This necessary decision was not without consequences for people, but it did allow the health system to care for patients falling seriously ill with Covid-19.
I am immensely proud of the commitment and the courage shown by our staff during this pandemic. Any perception that the HSE is slow or reluctant to change has clearly been demonstrated not to be the case. Our healthcare workers were enthusiastic adopters of new initiatives to protect our patients and the public. There has been some commentary that Covid-19 masked an underlying resistance to change in the health service. On the contrary, I believe that it brought out the best in all our teams in terms of flexibility, agility and adapting to change at pace. Front-line staff in particular bore witness to the tragedy of lives abruptly cut short by this pandemic. Very sadly, cherished colleagues also succumbed to the virus in the course of helping others. More than 5,135 people have died in Ireland as a result of Covid-19 and that is a sobering statistic indeed.
In terms of the financial outturn for 2020, the Covid-19 pandemic placed significant pressure on funding and expenditure during 2020. The HSE's overall reported income for 2020 of €20.265 billion includes once-off net additional funding allocation of just over €2.3 billion, of which just over €2.1 billion was used to cover 2020 Covid-19 costs, with the remaining €200 million allocated to winter plan funding. The additional funding has been used across a number of key areas and initiatives, most of which continue to be fundamental to the Covid-19 response, including: testing and contact tracing; GP Covid-19 response; the temporary payment assistance scheme, TAPS, for private nursing homes; the purchasing of private hospital capacity; the procurement of PPE and vital medical supplies; winter planning initiatives and activities; and capital costs in respect of testing centres, step-down facilities and enabling works to curtail Covid transmission. The HSE's annual financial statements for 2020 record a final audited revenue income and expenditure surplus of €200.7 million.
A major element of HSE expenditure in 2020 related to the successful sourcing of vital PPE supplies. The cost of this PPE exceeded €900 million, of which €738 million was charged to the income and expenditure account in 2020. Included in this charge is a figure of €374 million related to the write-down to net realisable value of year-end stocks, including the write-off regarding future obsolescence of protective suits.
On the implementation of the 2021 National Service Plan, NSP, the 2021 NSP for the HSE was published on 24 February 2021 with increased funding of €3.5 billion, 21% up on 2019. This included an additional €1.68 billion for Covid-related costs. The remaining €1.8 billion represented an underlying increase of 10.6% in core health spending compared to 2020, which is well ahead of the average annual increase of 7.3% received across the years 2016 to 2020. A total of €1.1 billion of this additional investment will deliver permanent and enduring improvements in healthcare arising from the Sláintecare reform programme.
In terms of the summary financial position for 2021, the general Government planning assumptions for budget 2021 was level 3 across the country in terms of Covid-19 restrictions or better, for the full year, and no vaccination programme. The detailed targets within NSP 2021 were largely set in that context. The revenue financial position at the end of June 2021 shows a year-to-date deficit of just over €190 million or 1.9%, with a significant element of this being driven by the direct impacts of the third surge.
In summary terms, Covid-19 and the cost of responding to it has been significantly higher than planned for and this has, to a large extent, caused and been offset by regrettable delays in our capacity to progress with developments to permanently strengthen the health service. These developments will continue to be progressed to the end of 2021 and into 2022.
The cyberattack on the 14 May had a profound effect on the delivery of services across the HSE, and coupled with Covid-19, has put further pressure on our efforts to deliver new service developments. Based on the first six months data and a preliminary view of draft July data, the HSE remains on course to achieve a substantial break-even by the end 2021 on our overall revenue budget.
Subject to relevant assumptions, this would be the third year in a row that the HSE has operated within or marginally below its budget, having delivered small surpluses in both 2019 and 2020.
Service planning for 2022 will be significantly more complex than in previous years. Services have been reconfigured in response to the Covid-19 crisis and it is as yet unclear in some areas what the effect of Covid-19 will be on the overall capacity levels of HSE services in 2022. It is likely that many of the initiatives put in place in response to Covid will need to be continued for a variety of reasons in 2022.
I assure the members of this committee of the HSE’s commitment to implementing all aspects of Sláintecare. The board and the executive are united in our determination to realise Sláintecare's vision of a single-tier health service and social healthcare system where everyone has equitable access to services based on need and not ability to pay.