Devil yet to emerge for €1.5bn of cuts

ARE almost €1.5 billion worth of vague cuts buried in Brian Lenihan’s budget a pipe dream to cod international observers or a schedule of sleeping attacks which will bite slowly throughout the year?

Despite a lengthy list of fresh sources of financial heartache for workers and welfare recipients spelled out in Tuesday’s speech, the Finance Minister attributed the bulk of the cuts in current spending to measures devoid of detail.

The Government has claimed its budget would result in a drop of €2.07bn in day-to-day spending, out of a total package of €6bn.

However, €1.474bn of this has been tied to unspecific commitments, administrative savings and ambitious promises to squeeze more from each department.

Inspection of the fine print at the back of the budget appendices reveals some of the cuts people can expect, but they do not spell out €1.474bn of stealth savings flagged there.

The full extent of other measures are not even evident until the formal tables for voted expenditure are broken down.

In the health area, the summary of budget measures claimed that €390m could be saved through “demand-led schemes, drug costs and professional payments”.

It did not identify what policy decisions would be made to achieve this level of adjustment or the volume of cuts Government estimates will be made in the administration of the Health Service Executive.

The small print in the voted table for the HSE showed:

n€180m will be cut from the budgets of voluntary hospitals.

n€334m will be saved by cutting back on the medical card schemes.

nThe four HSE regional areas will be asked to supply services for budgets which are €414m less the are currently spending.

Similarly loose targets are listed for all other departments, indicating the extent to which savings can be estimated were arbitrarily arrived at rather than rooted in specific measures.

Most departments and state agencies attributed a portion of next year’s savings to reduced spending on postal services, telephones and office supplies.

But the scope varies wildly. In Enterprise and Trade it is to fall by 28%, at the Department of Health it will be culled by 23%. Justice expects to take €1.9m off its €5.3m bill. Meanwhile, Tourism and Culture sees the potential for just 7% savings and Defence does not expect to squeeze any money from this sector.

It suggests much of the precise measures have not been finalised.

On Tuesday night, Mr Lenihan said the administrative savings were a realistic target and incorporated a number of defined policy options.

He cited the example of cuts to the schools’ capitation grants as being among the €160m full year saving in administration efficiencies at the Department of Education.

However, in the department’s tables, the 5% capitation drop is listed separately and accounts for €22m in its own right.

It all means at least €1.474bn of savings are unlikely to surface until at least after next year’s general election.