Mr. Paul Reid:

I thank the Chairman and members for the invitation to attend today’s meeting to discuss the HSE’s financial statements 2021. The Chairman has already introduced my colleagues, so in the interests of time, I will not repeat the introductions. A briefing paper was submitted to the committee in advance of today’s meeting. Accordingly, I will confine my remarks to a number of specific matters, the first of which is the annual financial statement for 2021 and the financial outturn.

The HSE’s 2021 audited and published annual financial statements reported a revenue income and expenditure deficit of €195 million, as advised to the committee in May 2022. This deficit is due to the pressures arising from the ongoing Covid-19 response, resulting in an excess of Covid costs over available Covid funding. This includes expenditure in relation to the vaccination programme as well as test and trace costs which were key to the HSE pandemic response. In arriving at the net deficit of €195 million, the Covid deficit was substantially offset by a surplus arising on core non-Covid activities which was due to the regrettable suppression of core activity and associated delays in progressing new developments, largely driven by the pandemic and our need to respond effectively to it. Over the two years of the pandemic in 2020 and 2021 the HSE will have recorded a combined revenue surplus of €5 million, or a combined surplus of €65 million over the three years 2019 to 2021.

The Comptroller and Auditor General’s report on the HSE’s 2021 annual financial statement has indicated that these financial statements are properly presented in line with the appropriate accounting standards. The Comptroller and Auditor General has referenced a number of matters which I will focus on briefly today including losses related to procurement of PPE, non-compliant procurement and the cyberattack. The statement of internal control which forms part of the financial statements and which is a requirement of the code of practice of the Department of Public Expenditure and Reform details the management action that is under way within the HSE to respond to these matters. As the committee has received briefings on these items previously, I am happy to respond to any questions during the course of today’s meeting.

The draft revenue income and expenditure financial position at the end of July 2022 shows a year-to-date deficit of €731.4 million or 6.26%. Over 80% of this deficit or €608.2 million is driven by the direct impact of Covid-19, with the remaining €123.2 million driven by core non-Covid-related costs. However, when account is take of Covid–19 related costs, acute income, bad debts and price per nursing unit, PNU, cost of care issues which are embedded in core services, this variance reduces to approximately €50 million in the year to date. This expected reduction in the core deficit excludes costs such as State Claims Agency and the impact of the restoration of pre-Haddington Road working hours. The HSE has developed a financial management plan for the second half of 2022 to co-ordinate a set of required actions to achieve a break-even position on core activities by the end of 2022, notwithstanding the issues I have just referenced..

It is estimated that the total cost of Covid-19 expenditure in 2022 will be in the order of €2 billion which will result in a very significant Covid-19 deficit when compared to the allocated budget in the national service plan for 2022. There has been extensive engagement between the HSE and its funders in relation to the likely Covid-19 deficit and discussions are continuing with regard to supplementary funding.

In 2021 total mental health funding amounted to €1,099 million, representing an increased budget of €68 million or 6.5% on the previous year. Expenditure on mental health services in Community Healthcare Organisation, CHO, 4 was approximately €143 million, representing 12.5% of the overall mental health allocation in 2021. Total 2021 expenditure on mental health services in CHO 8 was €115 million, which is 10.5% of overall mental health funding last year. A detailed briefing has been provided to the committee regarding mental health expenditure in CHO 4 and CHO 8, and I am happy to respond to any questions arising in the course of today’s meeting.

The overall allocation of funding to mental health in 2022 is €1,159 million which is a further increase of €60 million or 5.4% over 2021. Since 2012 mental health funding has increased by €452 million or 64% overall, with €325 million of this relating to priority service enhancements. These targeted investments have been directed by national mental health policy as outlined in a Vision for Change, 2007, Connecting for Life, 2015, Sharing the Vision, 2020, and are also in line with the broader Sláintecare reform programme. The continued development of mental health services is aimed at modernising mental health services by building our workforce and investing in fit-for-purpose infrastructure; promoting positive mental health for everyone; providing accessible, comprehensive and community-based services where needed; and taking a person-centered approach supporting the recovery journey of each individual based on clinical advice and best practice as well as lived experience. The three-year implementation plan for Sharing the Vision launched earlier this year provides a clear road map for the continued enhancement of mental health services in Ireland. Implementation will be driven by a strong outcomes focus and a shared commitment to report on progress in an open and transparent manner.

That concludes my opening statement.