Government warns departments on runaway spending ahead of Budget 2026

Cabinet warned runaway overspending across health, housing, and education could limit new policies in Budget 2026 without major savings

Public expenditure minister Jack Chambers warned fellow ministers that high levels of supplementary estimates seen in recent years are unsustainable and must not be continued. Picture: Conor McCabe Photography.

Senior government ministers have been warned about runaway spending in their departments, with the public expenditure minister saying large bailouts cannot be continued.

The Cabinet has heard there are “significant” pressures on spending and ministers have been told to make savings and efficiencies within their budgets.

Specific warnings have been issued to the departments of housing, education, health, and children about overspending. Gross spending, at the end of August, is €5bn higher than it was for the same period in 2024, with the Department of Health alone running €1bn overbudget.

The overruns are likely to place limits on any new policies or measures the Government seeks to introduce as part of Budget 2026.

Public expenditure minister Jack Chambers warned fellow ministers that high levels of supplementary estimates seen in recent years are unsustainable and must not be continued.

Every year, the Government effectively gives a financial bailout to departments that breach their spending allocation to ensure they have enough money to get to the end of the year. These are typically provided in November, after the budget process has been complete.

Ministers have also been told of some exceptional costs in 2026, including those related to Ireland taking on the EU presidency.

'Sing for their supper'

The latest warning comes after discussions took place surrounding Budget 2026, with concerns that ministers may need to fight to keep their existing level of service funding. Additional funding is typically baked into the budget every year in order to meet demographic and service growth.

One senior source said Mr Chambers and the Department of Public Expenditure have advised that they will be “changing the approach” to the existing level of service funding and that ministers will have to “justify and make a business case” for their budgets.

The source described the change of approach as dramatic and said people will be made to “sing for their supper”. While there are calls for efficiencies and reform within departmental budgets, this is not expected to impact October's budget.

Social welfare

Meanwhile, official talks between Government ministers surrounding Budget 2026 are now underway, with just two weeks to go until the package is unveiled.

Fine Gael is pressing for a change in how social welfare payments are increased, with a move away from increasing payments like Jobseekers’ Allowance at the same rate as the State pension.

One Government source indicated other social welfare payments, such as fuel allowance, will be considered for either increases or expansion in October’s budget.

The Coalition may opt to “widen the net” on such payments, or increase the payment level.