Government to authorise new funding as €700m agreed in April runs out

A €700 million supplement to Government expenditure put in place last April to deal with emerging pressures has now been exhausted and additional funding will have to be made available.It is understood that Minister for Public Expenditure Jack Chambers told colleagues during discussions on the forthcoming Budget that the official ceiling on Government spending for the rest of the year would have to be raised again in the weeks ahead to pay for measures agreed by Cabinet over recent months.The Government agreed in April to raise official spending levels for the year by €700 million to €118.5 billion. Part of the additional funding was used to pay for the €600 million overrun in the education sector, with the balance coming from a levy imposed on all Government departments. READ MOREThe additional €700 million was also used to pay for fuel support measures under the Department of Transport and the Department of Agriculture which were introduced by the Government after the widespread protests last Easter at the increasing cost of diesel and petrol.Other decisions taken by Cabinet over recent months to provide additional money for the Department of Defence and for aid to Ukraine have meant there is insufficient funding available to pay for everything. Chambers is understood to have told Cabinet colleagues in discussions surrounding budgetary policy that the official spending ceiling for the year would have to be raised again in the weeks ahead.It is expected the Government will have to put in place a supplementary estimate for the health service, which is facing a deficit running potentially to about €1 billion.At the end of August, Government expenditure was running about €5 billion – or 7.5 per cent – in advance of the same time last year.[ Budget 2027 will not be able to address ‘all of the challenges’ facing Ireland, Minister saysOpens in new window ]Chambers has told Ministers they need to manage their spending within their official allocations over the remainder of the year.In addition to health, spending on social protection measures was about €100 million over target at the end of August. This has been linked to Carer’s Allowance payments and to those on the Live Register that were greater than the level anticipated. However, the greatest concern remains over finances in the HSE.The Dáil Public Accounts Committee was told on Thursday that the financial deficit in the health service could hit €1 billion by the end of the year.The Department of Health told the committee on Thursday that expenditure was running about 9 per cent ahead of last year. It said the Government had provided for a spending increase of about 5 per cent, but growth in expenditure was now running at close to double that rate.Chief financial officer Michael Lane said the HSE had recorded a deficit of €660 million in the eight months to the end of August. He said the HSE expected the deficit would be slowed down by control measures that had been put in place.[ Inside Budget 2027: ‘The meeting was brutal’ - the tensions on the road to new spending packageOpens in new window ]“It is quite likely we are going to be in excess of €750 million. But my assessment is that it won’t be €1 billion,” Lane said.In a briefing paper submitted to the committee in advance of the hearing, the HSE said “the [financial] challenge is increasingly structural rather than operational, reflecting the gap between funded service levels and the cost of delivering current activity and workforce requirements”.Enhanced expenditure controls set out in recent days for the HSE would see new restrictions on recruitment introduced and the need for prior approval by the HSE chief executive of any spending on non-clinical items to the value of more than €5,000.