I propose to take Questions Nos. 107 and 128 together.
The overall Budgetary Strategy for 2021 will focus on prioritising crisis management measures to address the challenges posed by Covid-19 and Brexit while preserving and maintaining existing levels of service within core expenditure programmes.
Ensuring the provision of the necessary funding to support our citizens and key public services over the next phase of the COVID-19 pandemic will be the key priority in Budget 2021. In light of this, work is ongoing in assessing the impact of Covid-19 costs in 2021. Consequently, there is a range of potential expenditure requirements that need to be worked through in detail. At this stage, on a no policy change basis, and assuming an improved position in relation to employment next year based on the latest macroeconomic projections, it is estimated that there could be a cost of approximately €9 billion in relation to Covid-19 expenditure reflecting:
- the carryover costs of the July stimulus programme;
- significant expenditure on automatic stabilisers including job-seekers payments and related supports;- ongoing costs in health to deal with Covid-19;
- the carryover costs relating to both the Roadmap for Reopening Schools, and to the package of supports to enable further and higher education students to return to college;
- And the ongoing requirement to fund public transport while employees continue to be encouraged to work from home.
Further details will be set out in detail in the 2021 Expenditure Report. It should be noted that these pressures will be dealt with separately from core expenditure increases and given their scale, will form a significant part of budgetary package.
In relation to core expenditure programmes, €70.4 billion in gross voted expenditure was allocated to Departments in the Revised Estimates for Public Services (REV) 2020 published in December 2019. At this stage it is planned that the Budget Estimates for 2021 will include an increase of approximately €3 billion in this core expenditure, comprising:
- €2 billion in current expenditure
- €1 billion in capital expenditure;
Of the €2 billion in current expenditure it is estimated that there are pre-commitments of €1.1 billion to be funded in relation to demographics, and to meet the carryover costs of prior year measures and of public service pay deals. Work is also ongoing in finalising these costs, and on the emerging core expenditure position for this year for this year. Outside of these expenditure pressures, it is estimated that there is an amount of €0.9 billion available to meet other day to day pressures on existing services across all areas of Government.
In relation to Capital expenditure, we will also ensure that the increase in capital investment set out in the National Development Plan is implemented in order to support the recovery in the economy. This would see core gross voted capital expenditure of almost €9.2 billion next year, an increase of almost €1 billion on the gross voted expenditure amount set out for this year in REV 2020.
Finally, Budget 2021 will also be prepared on the assumption that the trading relationship between the UK and EU will be on WTO terms in 2021. This will necessitate additional supports for the most affected sectors of the Irish economy next year. The costs associated with these supports will form an essential part of budgetary discussions and details of these costs will be set out in the 2021 Expenditure Report on Budget day.