As part of the medium term expenditure strategy, the Summer Economic Statement (SES) set out set out the budget package for each year to 2025, with the provision under this to meet the expected costs of delivering existing levels of service (ELS) set out in Table 2.1 of the Mid-Year Expenditure Report.
For Budget 2022, provision has been included for an additional €4.2 billion in core expenditure. €1.1 billion of this relates to increased capital expenditure under the National Development Plan with €3.1 billion relating to increased current expenditure, including €1 billion for new current expenditure measures. The remaining €2.1 billion of the current expenditure increase relates to the provision made for meeting the expected ELS costs across Departments, of which demographics is a component along with the costs of meeting pay agreements, carryover costs of previous year measures and other pressures on demand led schemes.
A different approach from previous years was adopted in the SES in relation to ELS costs, with the €2.1 billion provision for 2022 based on 3% of the current expenditure base. In previous years an amount was set aside for demographics in Health, Education, and Social Protection; the cost of pay deals; and the carryover of prior year Budget measures only. The 3% provision is based on budgets in previous years and an assessment of the position in advance of Budget 2022. This is a higher amount than would have been set out as “pre-committed” expenditure in previous years and provides a better overall reflection of the additional costs required to deliver existing services.
Work is continuing as Budget 2022 approaches to finalise details on the requirements for meeting ELS costs, including those related to demographics and disability, and allocation of this provision at Departmental and programme level.