Mr. Robert Watt:

Good morning. I am very pleased to be here today to deal with the 2020 annual report, the appropriation accounts and the specific issues raised by the committee, as articulated. The Chairman mentioned the colleagues from the Department who are with me. Ms Louise McGirr cannot be here as she is at the Labour Court and the Workplace Relations Commission dealing with various industrial relations matters. She sends her apologies.

I have previously set out to this committee the main points of the 2020 accounts. I will not go through that again and it is already on the record. I know the committee has asked for information on the governance and oversight role of the Department. We have provided briefing detail on this and I look forward to discussing these issues. It would be helpful at this stage if I set out broadly how the Department conducts its oversight role in respect of our colleagues in the HSE.

As well as providing leadership and policy direction for the health sector, the Department has a key role in governance and performance oversight in the delivery of health and social services. The oversight arrangements for State agencies, including the HSE, are set out in the 2016 code of practice for the governance of State bodies. Reflecting the requirements in the code, the starting point for accountability between the Minister and the HSE is our oversight agreement. This written statement between the Minister for Health and the HSE sets out the terms of the relationship between us and the respective responsibilities of each party.

The Department conducts its oversight role through our Department of Health-HSE performance engagement model and I have provided the committee with more detailed briefing on how the model works in practice. Our oversight model is operational and working well. A key area of focus of our performance engagement model is on the financial performance of the HSE. I know the committee has a specific interest in the financial oversight role of the Department.

On the question of Exchequer funding for health expenditure, the Department of Health co-ordinates the Estimates process for all voted expenditure within current and capital subheads of the health Vote. This includes expenditure by the HSE and other funded agencies, as well as the requirements of the Department of Health itself. The Department works closely with the HSE to determine the level of new services and the associated levels of funding as part of the Estimates process. Based on this, the Minister negotiates a settlement, which is ultimately voted upon by the Oireachtas. This provides the basis of HSE's national service plan, which is submitted to the Minister for approval. The key performance indicators and targets set in the national service plan and the associated expenditure are then monitored by the Department during the year.

On the question of HSE financial performance, the Department is conducting its oversight role on a near daily basis throughout the year, both in a structured way and through more collaborative and informal channels. We have a formal detailed engagement between the Department and the HSE monthly, informed by a suite of reports to assess financial performance against targets and to identify any actions required. Where additional expenditure is incurred outside of the service plan process, such as during the Covid-19 pandemic, we have specific and detailed sanctioning and monitoring arrangements to ensure additional funding is required and that it is spent as intended. The Department of Public Expenditure and Reform also plays a significant role in monitoring financial performance through the health budget oversight group, which meets monthly.

There are strong oversight and governance systems in place to manage expenditure in the health sector throughout the budgetary cycle. Of course, as part of normal business in the Department of Health, we continuously seek to strengthen and improve the insight we have on HSE financial performance. It is widely understood that the current financial systems within the HSE need to be modernised. Delivering a new integrated financial management system, which will give better information on financial performance, is a very high priority for the HSE. Although this project will take several years to fully implement, new reporting capabilities have been introduced by the HSE in the interim, for example relating to Covid-19 expenditure and its working capital position.

In addition, the Department will address recommendations from the Parliamentary Budget Office and the OECD to restructure the health Vote to move to a programme budgeting model from 2024. This will support the implementation of regional health areas, RHAs.

I assure the committee that my Department continuously works with the HSE and other key stakeholders to improve the availability of information and data on financial and non-financial performance. This is a key focus of our day-to-day business in the Department and will be centre stage as we design and implement the new RHAs. The introduction of the RHAs gives us the opportunity to reform the way in which we fund the health service, including a pathway to implement population-based funding and multi-annual budgeting.

I look forward to working with and engaging with the committee on this.