I will give detailed opening remarks on the Supplementary Estimate but before I do, seeing as we are at the health committee, I wish to take the opportunity to acknowledge the extraordinary work done by our healthcare workers over the past few days in response to the horrific attacks on three children and their carer on Thursday and in caring for others who got injured during the subsequent protests and riots. I had the honour of meeting with our healthcare workers in the emergency departments and intensive care units in Temple Street and the Mater earlier this week.
It is fair to say that these are healthcare professionals who are used to seeing pretty tough things coming through their doors and dealing with tough situations in the context of patients. They see serious injuries and deal with the aftermath of road traffic accidents and many difficult things on a daily basis. Despite that, and everything they see and do for all of us, they found Thursday very difficult. They found the nature of the attacks hard. They responded magnificently. Between the different hospitals, they worked together flawlessly.
I spoke to many of our international workers in the two hospitals. They are shook by what happened. They were worried leaving the hospitals on Thursday night. I know several of them were harassed on their way home. An Garda Síochána responded superbly to several hospitals where they were concerned, and our healthcare workers were full of praise for the Garda response in helping them to keep the hospitals and patients safe. I put that on record. To the people who were on our streets chanting "Foreigners go home" and in the context of some of the vile social media messages and posts we saw such as someone declaring we were "at war", I wonder with whom we are at war. With our international healthcare workers? Children's Health Ireland at Temple Street, where the children were cared for, has people of 65 nationalities working there; Irish, of course, being just one of those.
We are very fortunate to have healthcare workers from all over the world. As I said in the Dáil last night, and I hope committee members do not mind me saying it here, I send a very clear message to all of our international workers that they are always welcome in Ireland. I know colleagues on this committee and the Minister of State, Deputy Butler, will do so as well. These workers are hugely valued for everything they do on our behalf every day, and we are very lucky to have them. Long may they stay in Ireland and continue to come here. Those on the streets chanting those racist slogans about people going home to other countries should know that were their wish to come true, we would have to shut down every hospital. Whenever these very same people shouting their racist slogans need hospital care - as, inevitably, we all do, or our children, parents, or brothers and sisters do - they will be cared for by fantastic international healthcare workers. I just want to acknowledge that it was a difficult few days for our healthcare workers.
Moving on, I thank the select committee for the opportunity to bring the Supplementary Estimate for Vote 38 before it. I am seeking total additional funding for this year of €1.034 billion. The Supplementary Estimate comprises €913.5 million for HSE core current expenditure, €121 million for HSE Covid-19 current expenditure and €22 million for capital expenditure, which is offset by €22 million in savings on expenditure by the Department in other non-HSE agencies. It should be noted that the Supplementary Estimate requirement is €1.034 billion on a gross basis. I have agreed with the Minister for Public Expenditure, National Development Plan Delivery and Reform, that €70 million in capital funding, that will be unspent at end of this year, can be carried forward into next year. This means that the net cash draw down by the health Vote for this year will be €964.4 million above the original allocation.
The health sector has experienced significant increases in demand across all areas, averaging volume increases between 5% and 10%, particularly in our hospitals. This increase in demand is driven largely by demographic changes; in particular population growth which has outstripped previous projections, as well as the fact that the proportion of the population over 65 has also increased placing increased demands and therefore costs on the health sector. The second driver of the deficits is the impact of inflation on the health sector, with the non-pay acute deficit comprising approximately two thirds of the overall deficit. Inflation in the health sector is significantly more than the headline inflation rate projected by ESRI of 5% for this year, being an average rate of 10% across the non-pay acute areas, and significantly higher in areas such as medical and surgical supplies where we are seeing 17% inflation. Notwithstanding the above, I remain committed to strengthening the performance management relationship between the HSE and my Department, and to improving overall financial performance.
I will now set out the items making up this year’s Supplementary Estimate. Subhead 1 deals with net pension costs of €67 million. Pensions is an area that is difficult to predict with accuracy as it is demand-led and once people make a decision to retire, they are entitled to claim their superannuation benefits. As well as the demand element, the additional €67 million is required to fund projected pension spend to year end and as a result of the demand-led nature of this expenditure, the public sector pay deal, and a reduction in retained superannuation contributions as a consequence of the single public service pension scheme.
Subhead J1 - HSE, including service development - refers to the additional €694 million required. This subhead covers all the main HSE core operations service areas, including acute hospitals, primary care, social inclusion, palliative care, mental health, older persons, community services as well as national and support services. I am also joined by the Minister of State, Deputy Butler, here today, who, as colleagues will be aware, has delegated responsibilities across mental health and older persons. Subhead J1 requires a Supplementary Estimate of €693.5 million for this year. This comprises €1,031.4 million of additional expenditure, offset by a €311 million movement in HSE cash and working capital, and €26.8 million related to transfers to Vote 40, Department of Community, Equality, Disability, Integration and Youth.
While there are deficits across a range of core services, the majority of the ask, €988 million, relates to our acute hospitals. These deficits in core services are offset somewhat by other operations expenditure which is forecast to be in surplus by €113 million. This primarily comprises an underspend in the office of the chief clinical officer, of €55 million, an underspend in the national support services of another €59 million. The support services surplus partially reflects the fact that funding held centrally by the HSE, for certain measures such as new developments, has yet to be allocated out to the relevant service areas. When this budget is distributed, the surplus in support services will be lower, and the deficits in those service areas will be somewhat reduced.
Under subhead J2 - HSE Covid-19 actions - €121 million additional is required. Covid-19 expenditure requires a Supplementary Estimate of €121 million. This is driven by expenditure in acute and community settings. Costs associated with the continuation of specific Covid-19 response measures across service areas in acute and community settings are estimated at €260 million. This is offset by savings in other lines of Covid expenditure such as PPE, test and tracing and vaccinations. Such responses in acute and community settings were implemented in the initial phase of the pandemic based on public health and infection prevention and control guidance. Projected 2023 expenditure on embedded Covid-19 response measures across acute and community settings is €260 million against a funding allocation of €48 million, leading to a Supplementary Estimate of €212 million. This is offset by savings in other lines of Covid-19 expenditure such as PPE, test and tracing and vaccinations, to bring the overall requirement to €121 million. Based on the outcome of a review of Covid-19 expenditure in acute and community, a significantly reduced allocation of core funding has been made in 2024. It should be noted that the overall projected spend of €685 million is significantly lower than the €1.8 billion spent on Covid-19 in 2022 and the €2.5 billion spent in both 2020 and 2021.
The allocation under subhead K4 - payments to the State Claims Agency re clinical negligence - is €75 million. The supplementary requirement of the SCA for this year is €75 million and the final allocation of €510 million can be attributed to an increase in the number of claims and an increase in the value of settlements awarded, particularly claims arising due to catastrophic birth injury. Some €75 million is required to fund the total cost of claims which will be settled in respect of 2023.
Subhead L1 relates to the primary care reimbursement service and local demand-led schemes at €109 million. The primary care reimbursement service, PCRS. administers a number of demand-led schemes such as the general medical services schemes, community demand-led schemes, and the national drug management scheme. A projected shortfall in PCRS funding of €40 million is related to overspends on these areas, which have been partially offset by surpluses in the hepatitis C programme and smaller surpluses on other schemes.
The local demand-led schemes deficit of €69 million is largely attributable to a combination of the increase in demographics - therefore increased activity under the eligibility schemes - and price inflation predominantly across high-tech medicines, the long-term illness scheme and hardship medicines. Subhead M2 is capital of €22 million. Supplementary capital funding of €21.7 million has been provided in respect of the Department of Health-HSE Brexit capital apportionment for the OPW phase one and phase two projects which relate to storage facilities in Dublin and Rosslare ports and Dublin Airport. This supplementary funding is based on figures presented to my Department by the OPW and is eligible for reimbursement under the EU Brexit Adjustment Reserve, BAR, fund.
In closing, 2023 has seen a surge in post-pandemic patient demand. The amount sought would bring the total expenditure in 2023 to €22.393 billion. The value of this investment in delivering crucial services to people is immeasurable. I now seek the committee’s approval to the Supplementary Estimates of €1.034 billion for Vote 38.
