Donohoe warns government departments that capital budgets won't be available to cover current expenditure overspends

The Departments of Social Protection and Department of Health are the two highest spending areas in Government

In previous years, Government departments would see their 'overall expenditure position improved because the capital budget wasn't spent', Public Expenditure Minister Paschal Donohoe said. 

Government departments are on track to use their full allocation of capital expenditure this year which means those funds won’t be available to cover any overspending in other areas, Public Expenditure Minister Paschal Donohoe has warned, as several are already experiencing cost overruns.

On Thursday, the Department of Public Expenditure and Reform published its mid-year expenditure report which detailed the spending by all the Government departments.

According to the report, as of the end of June, gross expenditure totalled €47.1bn which is approximately €1.5bn higher than the planned amount allocated.

Of that overspend, €1.4bn is in current expenditure with around €100m in capital expenditure.

The Departments of Social Protection and Health are the two highest spending areas in Government.

While spending by the Department of Social Protection is in line with expectations — an increase of 6.1% year-on-year due higher rates set out in the last budget — the Department of Health has overspent by €1.13bn with the report noting that the “majority of this overspend is in relation to the acute hospital area”.

Last month, the Government said it would allocate an additional €1.5bn to Health to cover the additional costs this year.

Speaking to reporters, Mr Donohoe said they have now reached an agreement with Health Minister Stephen Donnelly and the HSE for a two-year funding programme.

“That means for 2024 we expect their overall spending, when it comes to current spending, to be around €23bn and for next year, before any new budget measures are agreed, [they]will get €24.2bn,” he said.

“I’m confident that their current spending will be inside that level.”

Another department which has overspent during the first half of the year is the Department of Children, Equality, Disability, Integration and Youth. According to the report, it overspent by €195m with the primary driver being expenditure on “international protection accommodation services, specialist community based disability services, and Tusla”.

Other departments which have overspent include the Education, €124m over allocation, and Transport, €56m over.

When it comes to capital expenditure, Mr Donohoe said all government departments are “at least in line with their profile spending on capital expenditure”.

In previous years, departments would have used underspends in capital expenditure to offset overruns in current expenditure.

Mr Donohoe said this meant that the department’s “overall expenditure position improved because the capital budget wasn’t spent”.

“That’s clearly not going to be the case this year. Very few government departments, if any, will register an underspend,” he said.

In terms of capital expenditure overspending, the Department of Housing has spent €1.12bn more during the first half of the year compared to the same period last year.

The report said this is due to a ramping up of a number of housing schemes.