Oireachtas Joint and Select Committees
Tuesday, 14 July 2026
Committee on Budgetary Oversight
Intended Impact of the Expenditure Control Process and Value for Money Obligations Circulars on the Budgetary Process: Discussion
2:00 am
Edward Timmins (Wicklow, Fine Gael)
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I ask everyone to turn off all mobile phones and devices or put them on silent mode.
Before we begin, I wish to explain some limitations to parliamentary privilege and the practice of the Houses as regards references witnesses make to other persons in their evidence. Witnesses are protected by absolute privilege in respect of the presentations they make to the committee. This means they have an absolute defence against any defamatory action for anything they say at the meeting. However, witnesses are expected not to abuse this privilege, and it is my duty as Chair to ensure this privilege is not abused. Therefore, if their statements are potentially defamatory in relation to an identifiable person or entity, they will be directed to discontinue their remarks. It is imperative they comply with any such direction.
I advise members of the constitutional requirement that they must be physically present within the confines of the Leinster House complex to participate in public meetings. In this regard, I ask members participating via Microsoft Teams that, prior to making their contribution to the meeting, they confirm they are on the grounds of the Leinster House campus.
Members are reminded of the long-standing parliamentary practice that they should not criticise or make charges against any person or entity by name or in such a way as to make him, her or it identifiable, or otherwise engage in speech that might be regarded as damaging to the good name of the person or entity. Therefore, if their statements are potentially defamatory in relation to an identifiable person or entity, I will direct them to discontinue their remarks. It is imperative they comply with any such direction.
Today marks engagement on the intended impact of the expenditure control process and value for money obligations circulars on the budgetary process. I welcome witnesses from the Department of Public Expenditure, Infrastructure, Public Service Reform and Digitalisation: Mr. Barry O'Brien, assistant secretary; Ms Niamh Callaghan, principal officer, expenditure policy division; and Ms Jessica Lawless, principal officer, expenditure policy division. The committee welcomes the opportunity to engage with the witnesses. I thank them for being here today.
I invite Mr. O'Brien to make his opening statement.
Mr. Barry O'Brien:
I thank the Cathaoirleach and members of the committee for the invitation to attend. By way of introduction, I am assistant secretary within the Department with responsibility for the expenditure policy division. I am joined by Ms Jessica Lawless, principal officer of the short-term expenditure policy unit, and Ms Niamh Callaghan, principal officer of the medium-term expenditure policy unit.
I am pleased to be here to discuss two important pieces of work that have been progressed by my Department over the past 12 months: Circular 18/2025 on value for money obligations; and Circular 21/2026 on expenditure control and escalation processes.
Before discussing these circulars in more detail, I will briefly outline our Department’s role. The Department's mission is to drive the delivery of better public services, living standards and infrastructure for the people of Ireland. The expenditure policy division has responsibility for developing and monitoring overall expenditure policy in line with Government objectives and agreed fiscal parameters, including the annual Estimates process and implementing the medium-term fiscal and structural plan.
The medium-term plan was agreed to and published by Government last December setting out expenditure ceilings to 2030. It will see expenditure increase to €147.3 billion to 2030, with continued investment in both capital and current spending. Over the period, the growth rate of expenditure will moderate to an average of 6% per annum compared to 9.4% over the years 2019 to 2024.
To support adherence to these ceilings, the Department establishes the rules and the governance frameworks to support Accounting Officers in discharging their responsibility to ensure effective delivery, value for money and accountability. These include the Code of Practice of the Governance of State Bodies, public financial procedures, infrastructure guidelines, public procurement guidelines and arrangements for the oversight of digital and IT projects and initiatives.
All of these guidelines emphasise the importance of delivering value for money with public funds. As the committee will be aware, the Department has published two circulars over the last year - Circular 18/2025 value for money obligations and Circular 21/2026 expenditure control and escalation process - to support the delivery of the medium-term fiscal and structural plan. Both circulars are examples of the Department's broader role in supporting good public financial management, strengthening accountability, and ensuring that public resources are used effectively and sustainably. These circulars are intended as practical tools to support better decision-making and stronger expenditure management across the public service.
In August 2025, the Department published Circular 18/2025 on value for money obligations. The circular sets out the roles and responsibilities of public bodies and officials in ensuring value for money. It also highlights the legislative framework and guidance that supports sound financial management and decision-making. In addition, the circular outlines the key frameworks that underpin the achievement of value for money and the legislative basis upon which they are founded. It emphasises that value for money must be actively pursued by all public servants at every level and that further fostering of a strong value for money culture is a fundamental part of the budgetary process, particularly when balancing competing priorities and making difficult spending decisions.
In May 2026, the Department published Circular 21/2026 on expenditure control and escalation processes. The circular establishes a formal and consistent approach to managing expenditure overruns by setting out nine phased escalation stages and processes. It also outlines the measures available to our Department where expenditure is at risk of breaching agreed ceilings. These include enhanced oversight arrangements, such as the establishment of a budgetary oversight group and, where necessary, the removal of delegated sanction. The circular also includes an annual employment and pay bill management plan to improve the sustainability of pay expenditure.
In the context of budget 2027, Departments will be required to set out their pay bill ceiling, their headcount ceiling, and the carryover costs of planned recruitment. This escalation process is intended to increase accountability, transparency and clarity on how spending pressures and overruns may be addressed. In doing so, it strengthens expenditure control and supports fiscal discipline across Government.
One key point that is emphasised throughout both circulars is that it is the responsibility of the Accounting Officer for each Department to ensure that they manage expenditure sustainably and in accordance with agreed allocations.
This responsibility is set out in legislation, including in sections 4 and 9 of the Public Service Management Act 1997. It is the responsibility of the Accounting Officer to ensure that internal audit arrangements and control mechanisms are in place to support financial scrutiny, and that value for money and efficiencies are taken into account in relation to the preparation and implementation of policy proposals.
I thank the committee for its invitation to discuss both circulars, and I look forward to engaging with any questions.
Edward Timmins (Wicklow, Fine Gael)
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I thank Mr. O'Brien very much. We will now open the meeting to questions from the members.
Mairéad Farrell (Galway West, Sinn Fein)
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Gabhaim buíochas le gach duine as teacht isteach inniu. We have been dealing with cost overruns for some time in this committee. As the witnesses will be aware, we had representatives from the Department of Education and Youth before us in relation to the overspending in that Department.
My first question concerns the efficiency and reform proposals. It is my understanding that these have been requested from each Department by the Department of public expenditure and that they are due this Friday, 17 July. The witnesses can obviously correct me if I am wrong about this. It is also my understanding that these documents will provide more clarity on what will happen within each Department. In the interests of transparency, especially for this committee, can the witnesses advise whether they will share those documents with this committee?
Mairéad Farrell (Galway West, Sinn Fein)
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Is that in relation to what the Departments will come back with?
Mairéad Farrell (Galway West, Sinn Fein)
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I am happy to put in FOI requests, but if the Department is happy to send the documentation to the committee directly, that would be good. Otherwise, I will put in FOI requests, whichever is easiest. Ideally, the information would be sent to the committee because then all the members can have a look at it.
It was very interesting when we had the representatives from the Department of Education and Youth before us. They had said the Department had projected that it was going to have an overspend to the tune of over €400 million, I think. The Department of public expenditure had been in regular contact with the Department ain this regard, and vice versa. On the back of that, I submitted parliamentary questions to each Department asking them to outline their forecasted overspending. This was just to get an idea of what these would be, especially for this committee. It turned out that the Department of education was not the only Department on track to go over its budget.
From the responses I received to those parliamentary questions, the Departments of health, justice, and social protection are also on track to overspend by millions of euro. Unlike the Department of education, though, and again the witnesses can correct me if I am incorrect, it appears to me that these Departments are not going to have their overspends covered. As part of these reforms and efficiencies, of course, these Departments are being asked to make cuts above and beyond their overspends. The witnesses can again correct me if I am wrong, because the reporting on all of this has been mismatched.
If we take the Department of Social Protection, for example, its response to the parliamentary question advised that it was running an €89 million overspend, while it has been asked to cut its budget by €6 million. The Department of Health is €400 million in the red, and it is being asked to cut €175 million. Can the witnesses explain exactly how this will work?
Mairéad Farrell (Galway West, Sinn Fein)
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It is okay. I was just trying to work out this piece.
Mr. Barry O'Brien:
We have asked the Departments to come back in the context of the budget negotiations because we have asked them to consider reforms and efficiencies. This builds on the work we did in the budget last year, where we also asked the Departments to look at reforms and efficiencies. We are now asking them to come forward with reforms and efficiencies in respect of budget 2027. Those reforms and efficiencies will be considered in the context of the budget discussions.
Mairéad Farrell (Galway West, Sinn Fein)
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I thank Mr. O’Brien for that clarity because it was reported differently, and that was my understanding. From our understanding, when we had the representatives of the Department of education before us, the idea for that Department at the time was to try to find efficiencies. There was an awareness that it might have needed more than it had been allocated. There was an attempt to try to find reforms and efficiencies. Obviously, then, that escalated. We are now in a position where the Department is projected to overspend huge sums.
At the moment, these different Departments are saying that they are expecting to be in the red this year in the context of their allocations. How exactly does the Department of public expenditure expect them to find that level of efficiency and reform by Friday?
Mairéad Farrell (Galway West, Sinn Fein)
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Is that 1.4% of what they were allocated? When we look at their current projected overspends, what percentage does it come to then?
Mr. Barry O'Brien:
It might be useful just to look at where we are with the overall spending this year across all of government, including the Departments. I might just take the opportunity to look at where we are in terms of the end-June position. We talked a little bit about the Fiscal Monitor the last time we were here, and it might be useful to check on where we are, because there is a mixed picture across government in terms of overspending and underspending.
Mairéad Farrell (Galway West, Sinn Fein)
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I am sure there is, but I am just talking about these Departments that are projecting, from the information I received in response to parliamentary questions, that they are already going to have overspends. Unless I am totally misunderstanding this, right, and I am genuinely trying to understand it, these Departments are projecting an overspend. This is what the responses to the parliamentary questions came back with. The Departments are projecting these overspends, so surely, they would need to find efficiencies to deal with this overspending as well as what has been added on in terms of what the Department of public expenditure is asking them to find efficiencies on. I just do not know if that is realistic.
Mr. Barry O'Brien:
All we have asked for to date are efficiencies in terms of the letter that issued to the Departments for the amounts we have asked for. In terms of the relevant Departments, it is a matter to be considered in the context of where we end up at the end-year position and for the Government to consider what the right approach will be.
Mairéad Farrell (Galway West, Sinn Fein)
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Am I correct, however, that these are efficiencies or cuts, whatever we want to call them, coming on top of what their overspends are? Surely the Department of public expenditure is not asking them to come forward with the extra amounts. The Department of Social Protection, for example, has overspending of €89 million.
Mairéad Farrell (Galway West, Sinn Fein)
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Okay.
Mairéad Farrell (Galway West, Sinn Fein)
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Yes. I am trying to learn.
Ms Jessica Lawless:
The figures for June, the half-year position, were published in the Fiscal Monitor on Friday, 3 July. At the overall level, the gross voted expenditure, at that point was €54.4 billion. This was about 1% behind the planned profiles that Departments had submitted to us for this year.
Mairéad Farrell (Galway West, Sinn Fein)
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Is that overall?
Ms Jessica Lawless:
That is at the aggregate level, yes. The vast majority of Departments are operating within their own plans and within profile. If we look at it in terms of current spending for the end of June, this was €48.1 billion, which was 6.8% ahead of the figure at the end of June last year. That increase was reflecting the measures implemented through the Departments of Social Protection and Health, disability services and additional school places for this year.
Compared to the profile, current spending is about 0.3%, in aggregate, ahead of where Departments had planned to be at this point in time. This is only occurring in four Vote groups at this point in the year. Those Vote groups are in social welfare, health, education and youth, and children and disabilities. We are seeing some level of offset in terms of the capital funding. Capital spending to the end of June was €6.3 billion, which, year on year, is an uplift of 8.2%. We do, typically, see a slower start at the beginning of the year in capital spending. It tends to ramp up as the year progresses. We usually see a bigger uplift in quarter four. Housing is the largest capital spending Department and drives the overall position.
Its capital spend is about €200 million, or 6.8% ahead of the same period last year. Overall capital spending is slightly behind profile but the majority of Vote groups with capital allocations are under profile to some extent to the end of June.
Mairéad Farrell (Galway West, Sinn Fein)
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I take the aggregate and all of that, but I am talking about the Departments that appear to be on course to have overruns and are asked to find efficiencies, cuts or whatever you want to call them at the same time, although it would appear, from the parliamentary question responses I got, that what they got was not sufficient to cover what they need to do. I am concerned that this will have an impact on public services. I think that is a fair concern to have.
From what we can see, I imagine there will be Supplementary Estimates later in the year for those, based on these projections. We are talking about such large sums that even if it is a small percentage, it will have an impact on public services. Health is €400 million in the red and it is being asked to make cuts. On top of cutting the overspend, I do not see how that will work out but we will see.
Mr. Barry O'Brien:
In respect of budget 2027, Departments are asked to look for efficiencies and reforms of the order of magnitude that we spoke about, but the overall level of spend will still be going up across government by the order of €7 billion. It will be increasing from €118.5 billion to €225.5 billion. There is a €5 billion increase in the overall ceiling for 2027. We will still see a large level of increased expenditure in budget 2027.
Edward Timmins (Wicklow, Fine Gael)
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We can come back to the Deputy later. I call Deputy Nash.
Gerald Nash (Louth, Labour)
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I thank the Chair. Ms Lawless said four Vote groups are over profile at the moment, as expressed in the fiscal monitor report in early July. Will she remind me what they are? How far ahead of profile are they at this time?
Ms Jessica Lawless:
One of the Vote groups, as mentioned, was the Department of Health. At the end of June, the Department of Health was recording an overspend of about €400 million. That is about 3.7% over the profile and about 7% over it year on year.
On the 2026 allocation for the Department of Health, the overall health allocation for this year is €27.4 billion. That is an uplift of 6.2% over the 2025 allocation. This represents a significant investment and continues a trend of substantial resourcing for the Department of Health. While health spending at the end of June was ahead of profile, the Department of public expenditure has been working very closely with the Department of Health to understand the drivers of the increase and in order to bring this expenditure back in line with the budget allocation, the HSE CEO has instructed all regions to introduce targeted and proportionate measures to bring spending back under control this year. These corrective actions will be required to yield quick results to bring that rate of growth in spending back to budget levels. If we compare the end-June position against the end-May position, we have seen some level of moderation in health expenditure growth. The areas that have been targeted are agency staffing and continued recruitment as key areas where we will be engaging and monitoring closely with the Department of Health.
Gerald Nash (Louth, Labour)
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In monetary terms, it stands at about €400 million. I got a desktop assessment of that. Given recent performance in the Department of Health and the HSE, the overspend there could, if unchecked, could head towards €1 billion by the end of the year. Would that be fair to say?
Gerald Nash (Louth, Labour)
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It is €400 million at the moment. Given recent past performance in the Department of Health in terms of the management of resources, that could very well head toward €1 billion by the end of the year if unchecked.
Ms Jessica Lawless:
I would point to the recent work, which is ongoing, between our Department, the Department of Health and the HSE and the instruction that has recently issued from the CEO of the HSE to the regions. There has been clear engagement and intent there around areas to be targeted. It is too early for us at this stage to pre-empt what the outcome of that action might be, so at this time we can just go by-----
Gerald Nash (Louth, Labour)
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Part of the new escalation process signed off by the Minister in recent months refers to the establishment of what is termed a budgetary oversight group where issues emerge and where those issues are not, in the view of the Department of public expenditure, being managed properly. Are any of the four Departments that Ms Lawless mentioned in terms of the Vote groups that are over or ahead of profile being managed by a budgetary oversight group?
Gerald Nash (Louth, Labour)
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Which ones? That is significant.
Ms Jessica Lawless:
The Departments of education, Health and Children, Disabilities and Equality are in enhanced governance and oversight arrangements. There is an education budgetary oversight group, a health budgetary oversight group and an enhanced governance group, which meets regularly with the Department of children as well, and there is closer engagement around these key issues where overruns or risks of overruns are detected.
Gerald Nash (Louth, Labour)
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There is a new budgetary oversight group that includes officials from Department of public expenditure-----
Gerald Nash (Louth, Labour)
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-----and senior officials in the Department of Health and the HSE managing this under these measures. It covers the Departments of Health, education and children and disabilities. Is that right?
Gerald Nash (Louth, Labour)
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They are under what might be described, for want of a better description, as special measures. That is interesting. Is it the case that at some point, according to the circular, delegated sanction could be removed if this continues? That would then prevent the Departments of Health, children and education from bringing memos to Cabinet, for example, that would involve additional expenditure that has not already been approved under their current funding envelopes, but we are not at that point yet.
Ms Jessica Lawless:
It is done on a case-by-case basis for each Vote group. Each individual situation is considered and the steps that are going to be implemented or actions to be taken are considered by the budgetary oversight group. In relation to the Department of education, some additional measures have been implemented there. That follows on from the additional funding that was provided to the Department in April. As yet, I am not aware of anything being withdrawn from health or children.
Gerald Nash (Louth, Labour)
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On the introduction of levies to offset or address the overspend in education, 17 July is the deadline expressed by the Department of public expenditure's Secretary General to other Secretaries General in recent weeks by which Departments will have to come back to the Department of public expenditure to make clear what measures they are taking to remain within profile and we will have a clearer picture then, by 17 July, of the nature of the levies, if I can describe them as such, that will be placed on individual Departments. We are approaching the eleventh hour. It is almost 17 July; that is Friday. How many Departments have come back and how many are outstanding whereby they have not made clear what actions they intend to take and what the levy will be be?
Gerald Nash (Louth, Labour)
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The date 17 July is a hard deadline. Is that right?
Gerald Nash (Louth, Labour)
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So, Ms Lawless expects all Departments to come back by Friday with their positions.
Gerald Nash (Louth, Labour)
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Is there any sense that date will pass and that there will be some outliers? Does Ms Lawless expect all Departments to abide by that and comply with it?
Gerald Nash (Louth, Labour)
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One of the points made in the most recent circular relates to what is termed an annual employment and pay bill management plan. The opening statement outlined that it was designed to improve the sustainability of pay expenditure. Mr. O’Brien went on to state, "In the context of budget 2027, Departments will be required to set out their pay bill ceiling, their headcount ceiling, and the carryover costs of planned recruitment."
Now it may not be for the witnesses to say, but it would be irresponsible of us not to say that this is probably having an impact on the Government's position on a potential successor to the public sector pay deal that expired in recent weeks. It is interesting that there would be an expectation from the Department of public expenditure and reform that individual Departments would go back and say what their expenditure ceiling is in terms of whole-time equivalents next year and the extent to which their pay bill will go, but we are in a vacuum at the moment because there is no sense at the minute. I do not believe it is a dance as described by some. This is serious. There is no successor to the previous public sector agreement that was negotiated. I will accept it if the witnesses say this is a political decision that will have to be made by a Minister. It is reasonable for public sector trade unions to have some sense of the Department of public expenditure's position in relation to the kinds of pay rises that could potentially be negotiated over the next couple of years.
If we do not have a public sector pay agreement - I do not want to anticipate one way or the other whether we will or we will not - there is an obvious risk to the public finances. A public sector pay agreement gives the Minister for public expenditure and reform some clarity, certainty and security about what the pay bill will be over the next two to three years. It is interesting that there is a requirement for Departments to come back with a clear view on their pay bill for next year and the number of whole-time equivalents that will be managed and employed by the Department, but we are still in a vacuum with a matter of weeks to go to the budget. It is an interesting context that cannot be ignored. It will be very difficult to extrapolate and to organise a budget for next year if there is no agreement. This is the point we are making. I appreciate is not necessarily under the aegis of the witnesses, as another part of the Department may be dealing with this and ultimately it may be a matter for the Minister, but it is a point that is worth making.
Cian O'Callaghan (Dublin Bay North, Social Democrats)
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Cuirim fáilte roimh na finnéithe chuig an gcoiste. Deputy Farrell was asking for information to be provided to the committee about the efficiency and reform proposals that are due in on 17 July. I think there was an answer saying that if we applied for that information under the Freedom of Information Act, it would be granted. On that request to provide the information to the committee, will the Department provide that to the committee without us having to go through the freedom of information process?
Cian O'Callaghan (Dublin Bay North, Social Democrats)
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I make this point as much to the Leas-Chathaoirleach as to the Department. We are the budgetary oversight committee of the Oireachtas, established to have oversight over all matters to do with the budgetary process. It is a very important role we have in the democratic system. It strikes me as very strange that we are meeting with the Department that is principally involved in the budgetary process requesting information that is clearly part of the public interest and part of the budgetary process and we are being told we can get it if we use freedom of information but other than that the Department may not provide the information to us as a request from the committee. That strikes me as exceptionally strange. I say to the Leas-Chathaoirleach of the committee that if that is the case, we need to as a committee take that up with the Department outside of this meeting because that does not strike me as the correct way for this committee, given our functions in the Oireachtas, to be dealt with. That is a comment for the Leas-Chathaoirleach, not for the witnesses. I will follow up after the meeting on that because that is very serious.
Edward Timmins (Wicklow, Fine Gael)
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I agree with the Deputy's sentiments. Heretofore, when we looked for information it was always 100% forthcoming and we have had fantastic co-operation. That is what we would expect and hope will be the case. We should use whatever mechanisms we have to make sure that happens.
Cian O'Callaghan (Dublin Bay North, Social Democrats)
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If that is the case, will we get this information we are requesting as a committee?
Cian O'Callaghan (Dublin Bay North, Social Democrats)
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Okay. It has come from several people that we want the information on the efficiency and reform proposals without having to through the freedom of information process. I thank Mr. O'Brien.
On the budgetary oversight groups for education, health, children and disability, is children and disability a budgetary oversight group or is that some sort of enhanced oversight? Was there a distinction being made there?
Cian O'Callaghan (Dublin Bay North, Social Democrats)
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Just so I understand, there are these phases 1 to 9 in the expenditure control and escalation process. Is it the case that for these three Departments it has entered phase 1 to 5, or do all these phases apply? Will the witnesses explain that please?
Ms Niamh Callaghan:
The phases are non-sequential and they are on a case-by-case basis. I will give the Deputy an example. All Departments are subject to phase 1 and phase 2, the letter of delegated sanction and expenditure monitoring reporting. Phases 3 and 4, risk identification and request for departmental plans, and supporting memos to the Government, are dealt with on a specific-issue basis as they arise if there is a specific memo to the Government that has to be assessed.
Cian O'Callaghan (Dublin Bay North, Social Democrats)
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Phases 3 and 4 do not apply specifically to these Departments about which we have been talking.
Ms Niamh Callaghan:
No. It would depend on the individual issue at hand. In the case of phase 5, which is the budget oversight group the Deputy mentioned, it applies to three Departments, namely, the Departments of Health, Education and Youth, and Children, Disability and Equality. Again, phases 6 and 7 are related to specific issues around sanctioning of specific new proposals and the withdrawal of delegated sanction for non-pay. The only Department subject to phase 8 is, as Ms Lawless mentioned earlier, the Department of education with the withdrawal of delegated sanction for the freeze on hiring of new administrative staff.
Cian O'Callaghan (Dublin Bay North, Social Democrats)
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Regarding the Department of education, one of the issues that has been raised for the increased costs and the overspend is around school transport. The briefing note that was prepared by the Department for the incoming Minister when he took office on school transport said:
Expenditure on the school transport scheme has increased dramatically in recent years with overspends growing progressively larger. Expenditure in 2025 will exceed €500 million. For comparison, 2019 expenditure on the same scheme was €290 million. As mentioned above, the prevalence of special education needs is increasing. This impacts school transport, students enrolled in a special class or a special school can have an automatic entitlement to free school transport accounting for 54% of expenditure.
It went on to say:
The review of the school transport scheme was completed and its recommendations were noted by Government. These recommendations proposed significant expansions to the scheme on a phased basis over the next five years. They voted for a number of issues with the report, the most substantial being they did not review the operation administration of the scheme by Bus Éireann and issues around fiscal sustainability. The Department of education must prioritise consistent overspends on the scheme prior to seeking any further expansions. Any expansions to the scheme must be fiscally sustainable.
Are these issues being worked through in the budgetary oversight group, or are they being dealt with elsewhere? What is the current status?
Ms Niamh Callaghan:
To give a sense of how budget oversight groups operate, they are between our Department and the respective Departments; in this case the Department of education. They are led at a senior level in the Department. There is monthly engagement. They focus on specific expenditure trends, they act as an early warning mechanism and they also report on agreed controls or spending efficiencies that have to be found. In the case of school transport, this would be discussed at the monthly meetings of the expenditure oversight group.
Cian O'Callaghan (Dublin Bay North, Social Democrats)
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Does the Department have specific concerns around the expenditure under the school transport scheme?
Cian O'Callaghan (Dublin Bay North, Social Democrats)
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Just in terms of the budgetary oversight group for these three Departments, when were they set up? How long have they been running? There was previously one in health.
Cian O'Callaghan (Dublin Bay North, Social Democrats)
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When was the group set up in the Department of Children, Disability and Equality?
Cian O'Callaghan (Dublin Bay North, Social Democrats)
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When will we see outcomes from the budgetary oversight group and that process? Are there minutes from those meetings? There were minutes previously from the budgetary oversight meetings in the Department of Health.
Cian O'Callaghan (Dublin Bay North, Social Democrats)
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Are they published yet? It has met three times. Have any minutes from that meeting been published?
Cian O'Callaghan (Dublin Bay North, Social Democrats)
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If they are published - the ones from the Department of health were published-----
Cian O'Callaghan (Dublin Bay North, Social Democrats)
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If the group has met three times why are there no minutes as of yet? I do not think there are any available online.
Cian O'Callaghan (Dublin Bay North, Social Democrats)
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Okay. Can the minutes of these meetings be provided to the committee? It was the practice in the past for the minutes to be available, publicly online, for the health group.
Cian O'Callaghan (Dublin Bay North, Social Democrats)
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So if they are not available online now, is that just a lapse?
Cian O'Callaghan (Dublin Bay North, Social Democrats)
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In terms of working through these issues on school transport, it is the case that they are being looked at by the budgetary oversight group but that is as much as the witnesses know?
Cian O'Callaghan (Dublin Bay North, Social Democrats)
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So just to be clear: the three witnesses are not on any of those budgetary oversight groups because they are not on the Votes, they are overseeing the Votes. Is that the case?
Cian O'Callaghan (Dublin Bay North, Social Democrats)
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The Competition and Consumer Protection Commission, CCPC, were before this committee recently and it said it found through an investigation that five school transport operators were recently found guilty – I am quoting from its opening statement – of rigging bids in a public tender competition following a CCPC investigation. Are there issues around that and could they be more widespread? Has that been looked at by the budgetary oversight group?
Cian O'Callaghan (Dublin Bay North, Social Democrats)
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Sure. How long will the budgetary oversight groups remain in place? Is it indefinitely or at what point might they complete their work?
Mr. Barry O'Brien:
So obviously the health one has been in place for a number of years. The other ones are more recent but it is examined on an as-needs basis. If the situation in terms of overruns and expenditure challenges diminishes across Departments there is obviously a decision to be made about not having an oversight committee.
Cian O'Callaghan (Dublin Bay North, Social Democrats)
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Who makes the decision to set them up?
Mr. Barry O'Brien:
Obviously there is a piece in the Department where we would advise the Minister and he would make the decisions. We provide the advice to the Minister on the various approaches. Everything within the overall framework is done within the sanction of the Minister, which is the legal power given to him by the Oireachtas. On each of those decision points the Minister is advised on a monthly basis of expenditure across all Departments and then there is also advice across the individual Departments on an ongoing basis.
Cian O'Callaghan (Dublin Bay North, Social Democrats)
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Is there a particular threshold in terms of budget overruns that needs to be met to warrant a budgetary oversight group or is it at the discretion of the Department and the Minister?
Cian O'Callaghan (Dublin Bay North, Social Democrats)
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Gabhaim buíochas.
Edward Timmins (Wicklow, Fine Gael)
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Would Deputy Neville like to go ahead?
Joe Neville (Kildare North, Fine Gael)
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I just came down for the cool air in the room compared to the rest of the building. I am just joking. I would like to take the opportunity to contribute. I was listening upstairs. I am very conscious of what we are trying to do here. It is a question for this committee of how we can imprint ourselves in the role. I am on the Committee of Public Accounts as well. A lot of the time on that committee we see the after effects of a lot of the issues that come from here. What we need to do is put in place what the witnesses are trying to put in place, which is the structures that ensure those issues do not happen.
I will use an example to illuminate the point. This Thursday at the Committee of Public Accounts we will have the National Transport Authority, NTA, and Irish Rail in to discuss the write-off of €50 million of needless expenditure because it was ultimately written off. What role would the Department of public expenditure have in that and what changes in the circulars would ensure this would not have happened or might not have happened if things had been done differently?
Joe Neville (Kildare North, Fine Gael)
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What it was is that Irish Rail spent €50 million on a system, which we could essentially call the brains of the operation of how the system runs, and it was going to be based in Heuston Station. Probably the best way of describing it is that it was going to be a nerve centre for Irish Rail. It spent €50 million on software and development costs that has ultimately been written off. The sum of €50 million is a significant amount. What, if any, is the role or remit of the Department of public expenditure if an individual agency or body is spending millions and it ultimately writes it off? Does it have any role? I am speaking about it rather than asking questions but one of the big things I have noticed since I came into Leinster House is that the Department of public expenditure gives out the money to one body, that body gives the money to the next body and by the time we all come into the Committee of Public Accounts four years later the people in the second body have all resigned, retired or jumped off the ship so we have no one to whom to ask questions and then the Department of public expenditure says it just gave the money to the other body. In this case, the Department gave the money to the NTA, the NTA gave it to Irish Rail, somebody in Irish Rail wasted €50 million; the person in Irish Rail is gone and the new CEO or CFO says it is terrible what happened and will ensure it does not happen again. Ultimately the Department of public expenditure says it just gave the money. No one is held accountable ultimately in the long run. How do we ensure that is not happening and will not happen again?
Joe Neville (Kildare North, Fine Gael)
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Mr. O'Brien can see the way I have marked it out.
Joe Neville (Kildare North, Fine Gael)
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We could think of a 100 cases, for example, if it was the OPW or somebody else.
Mr. Barry O'Brien:
We develop the overall expenditure policy in line with the agreed Government objectives. We provide tools to Departments to deliver on that policy agenda. We set up the public financial procedures, the code of practice for the Government and State bodies, infrastructure guidelines and procurement guidelines. What we try to do is ensure that those frameworks are as strong as possible. The current circular we have is very clear.
I spoke to the role of the Accounting Officer in the opening statement. I will just highlight some of the pieces that the Accounting Officer is responsible for because when it comes to accountability the role of the Accounting Officer is one that is set out very clearly in legislation.
Joe Neville (Kildare North, Fine Gael)
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Where is the Accounting Officer? Does Mr. O'Brien mean his own Accounting Officer in his own Department?
Mr. Barry O'Brien:
Each Department has an Accounting Officer and every Accounting Officer has responsibilities. I will just outline some of those. They have to ensure that all internal audit arrangements and control mechanisms are in place to support financial security. They have to require that all financial considerations, including value for money and efficiencies, are taken into account in relation to the preparation and implementation of policy proposals.
That includes bodies under the aegis of the Department, and they have to ensure that any expenditure is appropriately sanctioned by us. All expenditure has to be sanctioned by us. That sanction is set out in legislation, and most Departments operate under what is called a delegated sanction. We set out the broad frameworks and responsibilities that the Department has in a letter of delegated sanction, and there are number of letters of delegated sanctions that may be issued to a Department in a given year. The Departments are responsible for delivering and the Accounting Officer in the relevant Department is responsible to delivering to those standards and frameworks.
Joe Neville (Kildare North, Fine Gael)
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Yes, but at the same time, all too often we see where more money has been spent. We saw it within the OPW and the children's science centre. We have money being spent every year but we are coming no further to a conclusion. There are costs here and there. Ultimately, we have to ask who is responsible but a lot of the time there are people shrugging their shoulders, or ultimately probably no one says they are responsible because rarely does someone stand up in a room and say it was them. If we look at the children's hospital, what the hell happened there? Billions of euro have been spent, and we are still no closer to it opening. We could say that a Minister is ultimately accountable but someone in the Department should surely be monitoring those things. Does the Department of Public Expenditure, Infrastructure, Public Service Reform and Digitalisation have a role or does it say that is delegated to the Department of Health in this case?
Mr. Barry O'Brien:
The management of the expenditure is a matter for the relevant Accounting Officer in the relevant Department. The C and AG will do the appropriation account at the end of the annual cycle, and the relevant Accounting Officer is accountable to the public accounts committee in relation to that expenditure. That is the framework we have in terms of accountability and reporting mechanisms.
Joe Neville (Kildare North, Fine Gael)
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Does Mr. O'Brien feel that this is strong enough?
Joe Neville (Kildare North, Fine Gael)
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There is one thing to have a circular. A circular to me, and the witnesses can correct me if I am wrong, is like a statement of intention but are there processes, procedures and responsibilities behind it?
Ms Jessica Lawless:
I can maybe add to some of what Mr. O'Brien said. In terms of the role we have in developing the guidance, codes of practice and circulars, which are underpinned by legislation, the two circulars that we are here to talk about today, Circular 18/2025 on value for money obligations and Circular 21/2026, are very much focused on enhanced accountability and improved transparency. Circular 18/2025, the value for money obligations circular, conveyed instructions to Departments and offices regarding their value for money obligations on all civil and public servants, which are underpinned by legislation.
Joe Neville (Kildare North, Fine Gael)
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Under this legislation, could Ms Lawless imagine someone being sacked for not giving value for money or being wasteful? What are we talking about here? Could someone lose their job?
Ms Jessica Lawless:
There are legal requirements that are set out with regard to securing value for money, and they are set out clearly in the Ministers and Secretaries Act 1924 to 2011, which references that responsibilities of heads of Departments. The Comptroller and Auditor General (Amendment) Act 1993 is around roles and responsibilities as well and the obligations on the Secretaries General of Departments.
Joe Neville (Kildare North, Fine Gael)
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The one thing that I never hear about in here are the consequences. What are the consequences of not providing value for money? What are consequences for being wasteful? If there is no expenditure control and spending escalates, what are the consequences for those involved? I am not saying that there should always be consequences because ultimately we do not want people being fearful of making decisions and being tried for their actions. It is not about that but, at the same time, who is accountable? People push on and move on somewhere else to a different role, and all too often there are not enough consequences for a lot of these mistakes. Even the €2 billion that was spent on the hospital, has anyone really been held accountable for that? We all shrugged our shoulders, moved on and said that was a bad one.
Mr. Barry O'Brien:
What we are trying to help the committee with is around the legal frameworks we currently have in terms of accountability. These legal frameworks are all set out in legislation. The responsibilities and the reporting mechanism set out for the Accounting Officer are clear in terms of where they report back to.
Joe Neville (Kildare North, Fine Gael)
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Can they be judged on those bases? Does Mr. O'Brien feel they are strong enough in the circular?
Joe Neville (Kildare North, Fine Gael)
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Yes.
Mr. Barry O'Brien:
The policy set out in the circular is clear. It sets out nine phases. We can take the Deputy through some of the phases because it is useful to think about them. They are not sequential, and at any point in time some of the Departments will be in some of the phases and some will not be. It might just be helpful if we take the Deputy through some of those. Will Ms Callaghan take the Deputy through that particular piece around the different phases?
Ms Niamh Callaghan:
Phases 1 and 2 are around the letter of delegated sanction and enhanced expenditure monitoring and reporting, and all Departments are subject to those phases. In phases 3 and 4, we identify specific risks, and we request actions to be taken in the form of a departmental plan to address overruns. In phase 4, we engage with different Departments around memos to government. They are on a case-by-case specific issue basis. If there is a particular issue, it will go through those phases. Phase 5 relates to the creation of a budget oversight group, and we previously discussed that these are in place for three Departments. They involve significant monthly engagements on specific issues.
Joe Neville (Kildare North, Fine Gael)
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Does the Department have worked examples for all of those phases?
Joe Neville (Kildare North, Fine Gael)
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Does the Department have worked examples behind all of the phases that I can see after? Does the Department have an example of what causes phase 1 to kick in? Here is phase 2 this is what-----
Joe Neville (Kildare North, Fine Gael)
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All I am saying is that it is a bit like reading a textbook in school where there is a scenario with an example question. For example, in phase 1, someone has overspent by x or someone did not report this. Phase 2 is if they have not done it three times. Phase 3 kicks in when something else happens. All I mean is that somebody can see the phases in reality. What do they look like?
Mr. Barry O'Brien:
The Deputy's point is well made. I might just take the phase at the beginning and the phase at the end as two examples. Phase 1 talks about the delegated letter of sanction. Every Department receives a delegated letter of sanction on an annual basis in terms of what its spending is and what frameworks apply to it. That effectively applies to every Department. At the other end of the spectrum, it is a moratorium on recruitment, and no Department is currently in a moratorium on recruitment. In between, Ms Callaghan referenced the piece about the oversight committees that apply in a number of Departments, and a number of the other phases are on an issues basis, for example, if there are memos for Government and all these things are happening on an ongoing basis across the Department and across the relevant Departments.
Joe Neville (Kildare North, Fine Gael)
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A lot of this is quite complex. The Department is dealing with a lot of things on a day-to-day basis. It may all seem clear when the Department is dealing with it but we get it in snatches. We are not part of the formulation of any of those phases, and we have to ask questions to examine it. We have to take it that the Department is happy with it and that is why I asked for examples, so that we can get a better and clearer sense of it.
Joe Neville (Kildare North, Fine Gael)
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We can do is separately. We do not have to necessarily have to do it here. If we could sometimes see worked examples, it is not necessarily for the here and now but, for myself, there is no harm seeing it and then going away and studying it a bit more. I come up against these sorts of things in the Committee of Public Accounts. What I would like to see is where we misstepped, why something ended up happening and where we missed the call on the ladder when something should have happened. We can know where the mess up is but we need to identify how the misstep happened for that to happen. That is difficult if someone is a member of PAC or a committee like this when they only see things in snatches and do not get to see the full picture.
It is clear as mud. I know there is so much stuff in it.
Edward Timmins (Wicklow, Fine Gael)
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There is. I will come in now. The problem I have is that the circulars are very high level. I am sure they are well- thought-out and very relevant and important documents, but I am more interested in how we manage more detail and what the role of the Department of public expenditure is. If we think back to business and trying to manage costs and cost control, we have things like overtime reports, cost of agency staff, consultancy reports, key performance indicators, KPIs - we have a lot of KPIs coming but we do not necessarily want to get bogged down in them - measuring outputs and all these things that highlight weaknesses in Departments. I met someone the other day who told me about two nine-seater buses that are used to transport children with special educational needs to school. They leave a particular town and go to the same school carrying three or four children each. What is the incentive for that to be controlled?
I met a person an hour ago and raised with them the issue of the repetitive vetting that happens. One person was Garda vetted 41 times because he has to enter 40 different schools to do a job, namely take photographs. All those massive inefficiencies are happening. School transport is obviously the one that has got the headline. Mr. O'Brien has a really difficult job. He spoke about Accounting Officers. How is the Accounting Officer of the HSE, which has 130,000 or 140,000 employees, going to look at this. It is impossible. How can the Department filter it down? Can Mr. O'Brien demand that Departments compile these reports and overtime reports, or is he just relying on the quality of the people who will do cost control, namely the Accounting Officers, and the fact that they are going to put these detailed systems and checks in place and ensure they are done monthly? Should Mr. O'Brien be doing workshops with the various Departments and telling they what they should be doing?
Mr. Barry O'Brien:
What we try to do is make sure the frameworks we have for the Departments are really clear. We talked about the Accounting Officers. Obviously, the escalation framework and the value-for-money circular build on the work we have done across other elements of the process but we also try to publish clear indicators in terms of value for money across the different levels of documentation we have. As a result, when we are looking at the budget documentation, we have a clear emphasis on value for money. The emphasis is on expenditure. There is also a clear emphasis on reform. When we look at last year's budget booklet, what we see is a clear emphasis on reform across each Department. When we look at the Revised Estimates Volume, we obviously have a degree of detail that can be considered by each of the committees considering Revised Estimates when they are voting on the level of spend for each Department. There is, therefore, a huge degree of detail within what we produce. We produce a performance report at the at the end of the financial period that shows the relative performance in each Department. There is a statement in that report, which is signed off by each Accounting Officer, that tries to provide a level of the indicators at play in order that the stakeholders can give consideration to delivery across each of the sectors.
Edward Timmins (Wicklow, Fine Gael)
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Does Mr. O'Brien think there is enough line-by-line detail in our budget process for the Department of education or the Department of Health? That is a massive amount of information. In addition, is there enough detail regarding assumptions? From trying to dig into, I have seen that there is a slight lack of assumptions. If we are doing a budget or a business plan, we start with listing all our assumptions. The assumptions feed the budget. If we make adjustments to the assumptions, the budget changes. It works very neatly. Does Mr. O'Brien think there is enough detail set out in our budget? I know there is the 254-page document, but is there enough detail in the context of the budget and on the assumptions that underpin it? I would question that there is not enough information in the assumptions that underpin the figures.
Mr. Barry O'Brien:
We publish an awful lot of information across the whole-year process that speaks to exactly the issues about which the Leas-Chathaoirleach is talking. If we think about that process, we have the budget documentation, which stretches to over 200 pages. The Revised Estimates Volume includes a huge amount of detail. Individual Departments would provide the various committees with a further level of detail around all of that. Obviously, we have the performance report and then there is other work that is published on an ongoing basis. We also have the annual progress report that published in April every year. Furthermore, there is the summer economic statement that is issued each July. We talked a little about the fiscal monitor earlier. On a monthly basis, we publish the returns of expenditure across all the Departments at some level of detail. Then, we talked-----
Edward Timmins (Wicklow, Fine Gael)
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Does the Department monitor that on a monthly basis?
Edward Timmins (Wicklow, Fine Gael)
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Does the Department examine spending? Mr. O'Brien referred to value for money. I do not know if that phrase captures everything, because this is not just about value for money; it is also about whether money should be spent in the first place. Does the Department look for justification for spending rather than the trap of assuming that last year's spending will be repeated and that 6% or whatever will be added?
Mr. Barry O'Brien:
If we think of this year's budget, we are asking Departments to examine their reforms and efficiencies as the starting point for the budget conversation. That will be considered in the context of the budget. When Departments are spending money, we want to be clear about what we are getting for that money and we want to make sure that as much information as possible is provided on each of the areas involved. If I take the example of the pay and staffing strategy, which we started in last year's budget and which we are developing in the context of this year's budget, in terms of current spend, pay represents broadly one third of the total amount of current expenditure. Obviously, a key component is the level of recruitment and the types of recruitment we will have across each Department. We are trying to bring more focus to those areas in order to provide the level of detail required regarding what we are getting from the number of staff we have, and if there is an increase, what we will get from that.
Edward Timmins (Wicklow, Fine Gael)
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How does the Department create an incentive for someone who has a say over school transport, which is the example I gave earlier, where there are two buses running and they may both be running at one third capacity? Where does the incentive kick in? Is there an Accounting Officer somewhere who looks at that and asks why we are overspending and compares that to what it should be? Is it just an Accounting Officer who is trying to do his or her job? Where is the control? Where is the incentive?
Edward Timmins (Wicklow, Fine Gael)
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In a large organisation like the Department of education, how do the officials drill down to that level of detail? Are there sub-accounting officers or accountants who report to the Accounting Officers and who can be held accountable? I ask because the Accounting Officer in the Department of education is not going to have oversight of every school bus in every county.
Edward Timmins (Wicklow, Fine Gael)
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Does the Department work with other State bodies to control spending? I was pleasantly surprised when officials from the ombudsman commission were before us three weeks ago. The chairperson told us about how the commission has done very good work on bid rigging in the context of school transport. I asked him whether it has enough resources to check out other potential abuses in the area of tendering for the provision of services to the State. That body is very useful and helpful in controlling spending. Does the Department work or engage with such bodies? Are there other bodies like the ombudsman commission we could be using more to control spending?
Mr. Barry O'Brien:
We work with the range of Departments across government to try to ensure value for money and that spending is controlled. When we look at the escalation process, the nine phases we have set out give Departments clarity as to what we are trying to do and what their role is in managing the overall spend.
Edward Timmins (Wicklow, Fine Gael)
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Mr. O'Brien spoke about 6% growth up to 2030 and 9% up to 2024. Does he have a breakdown of the split between capital and current expenditure? I imagine capital expenditure would be slightly higher but I could be wrong. I imagine growth in current expenditure would be slightly lower than 6%.
Edward Timmins (Wicklow, Fine Gael)
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I am referring to the 6% growth in spending to 2030. Is that equally split between capital and current expenditure? We have often brought up the distinction between the two here in the committee. Capital expenditure is an investment. It is very different from current expenditure. Current expenditure on education is also an investment but, as with a business, investments are primarily capital expenditure. Businesses invest in machinery to get a return. While it is not exact, there is a distinction between the two.
Ms Niamh Callaghan:
Over the period 2026 to 2030, total expenditure is due to increase by an average of 6% per year. Current expenditure is due to increase by 5.9%. The ceilings for capital spending are in line with the national development plan. They are set to ensure that capital investment will be equal to 5% of national income for the rest of the decade. Capital and current spending are therefore broadly even. In percentage terms, capital expenditure has increased very substantially over the last few years. That investment is going to be maintained and increased further out to 2030.
Joe Neville (Kildare North, Fine Gael)
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I have a quick question on the phases. Where is the Department of education with the issues that arose in that regard? The Department went €671 million over its targeted budget. How does that work?
Ms Niamh Callaghan:
The Department of education is subject to a number of the phases. With regard to phase 5, a budget oversight group was established in April of this year. That has met three times. It is looking at the various issues in relation to spending trends in the Department. The Department is also subject to phase 8, under which delegated sanction for staffing is removed. This is just for administrative staffing in the Department and not front-line staffing. That was removed from 9 May 2025 for posts not including school principals, teaching posts and posts related to the provision of special needs education and supports. The Department is also subject to the different phases we have mentioned to which all Departments are subject. These include the streamlined delegated letter of sanction and enhanced expenditure monitoring and reporting. As Ms Lawless mentioned, we review Departments' spending trends in detail every month.
Joe Neville (Kildare North, Fine Gael)
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Is the Department of education the furthest along in the phases? Is it the most under-----
Joe Neville (Kildare North, Fine Gael)
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Could we say it has the highest ranking set of phases?
Joe Neville (Kildare North, Fine Gael)
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I do not want to say it is the worst behaved. I am genuinely trying to think of the right term. It is the Department the witnesses are most conscious of and are keeping the closest eye on.
Joe Neville (Kildare North, Fine Gael)
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Is it fair to say it has lost a lot of its independence as a Department?
Joe Neville (Kildare North, Fine Gael)
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The witnesses also have to keep a close eye on what the Department is doing.
Mr. Barry O'Brien:
The budget oversight group engages with the Department every month. That provides a level of oversight. The Department has to attend the meetings, explain policy and give a much greater level of information than would be the case under a clear delegated sanction arrangement. Some Departments do not have a budget oversight group and do not have that level of oversight.
Joe Neville (Kildare North, Fine Gael)
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A certain number of things have happened that the witnesses' Department were not comfortable with so it now has to chat to the Department of education every time that Department does something. When was the last time something like that happened? I know these circulars are relatively new but can the witnesses provide a previous example?
Ms Niamh Callaghan:
There is a long-established budget oversight group for the Department of Health, owing to the scale of that Department's expenditure. The Department of children and disability has been subject to an oversight group since the beginning of quarter 1 this year. More recently, the Department of education has been subject to such a group since April.
Joe Neville (Kildare North, Fine Gael)
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What did that Department do wrong?
Ms Niamh Callaghan:
There have been significant spending challenges in the Department of children and disability in relation to HSE spend in the disability sector. Quite a significant amount of additional expenditure is being provided for this year.
Joe Neville (Kildare North, Fine Gael)
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That is in addition to its budget.
Joe Neville (Kildare North, Fine Gael)
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That was this calendar year, 2026.
Joe Neville (Kildare North, Fine Gael)
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Did that arise from issues that were also there in 2025? Were they flagged ahead of the budget?
Ms Niamh Callaghan:
The Department received a substantial increase in funding for 2026. Part of the budget arrangements involved putting in place enhanced oversight arrangements to ensure that funding was being spent in the way it was intended to be spent when allocated. That is an ongoing process between our Department, the Department of children and the HSE.
Joe Neville (Kildare North, Fine Gael)
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My next question relates to the level of detail the Department gets into. We recently saw information about the Department of education's spending on transport. Deputy Timmins will correct me if I am wrong but I believe we saw a 35% increase in Department of education spending on transport.
Edward Timmins (Wicklow, Fine Gael)
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It was 34%.
Joe Neville (Kildare North, Fine Gael)
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It was 34%. Fair play. Does the Department look at lines like that and ask what is going on?
Joe Neville (Kildare North, Fine Gael)
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More than any other body, the Department would do that.
Ms Niamh Callaghan:
In recent meetings with the Department of educations, discussion has focused on expenditure positions to date this year, staffing levels in the Department, school transport, which the Deputy has mentioned, and reforms within special educational needs policy. Those are the types of issues discussed at more recent meetings.
Joe Neville (Kildare North, Fine Gael)
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I have one last thing to raise. I keep getting more minutes. This is great.
Edward Timmins (Wicklow, Fine Gael)
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I am going to put the Deputy in the red.
Joe Neville (Kildare North, Fine Gael)
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I might bring the Leas-Chathaoirleach to the Committee of Public Accounts. My final question is whether the Department has issues with the Department of education in respect of capital expenditure. Is it seeing the same issues with capital projects or are the problems more in current expenditure? I am talking about new schools and other new construction. Are we seeing issues there? I know costs are increasing in those areas. Is the Department seeing issues in that regard? If it is, will it be able to balance them?
Emergency works this summer might cost more than was hoped six months ago when the money was originally provided. How is the real-world situation balanced with the designated amount? Can this be done or does the Department just have to say that something cannot proceed?
Joe Neville (Kildare North, Fine Gael)
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Is Ms Callaghan seeing the same issues on the capital side or is all it all on the current side?
Joe Neville (Kildare North, Fine Gael)
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Ms Callaghan is being fair and open on that, so I am happy. I thank the Chair very much for the extra time.
Edward Timmins (Wicklow, Fine Gael)
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I thank the Deputy. I will ask just one question and then call Deputy Boyd Barrett.
The programme for Government sets out aspirations, plans and commitments. Does the Department build these into its projections? For example, there is a commitment on the part of the Government to reduce childcare costs to €200 per month over its lifetime. Is that kind of cost built into the projections? It was stated that there would be a 6% increase over the four years to 2030. Does the Department get into that level of detail? Does it take account of commitments that are set out in the programme for Government?
Mr. Barry O'Brien:
When the Government is setting the overall expenditure ceiling, it is informed by its programme for Government. The Government has set out the expenditure ceiling to 2030, with a focus on capital expenditure as part of that. It considers the programme for Government in the round in making its decision. We assist it in terms of costings for different sectors and different policies.
Edward Timmins (Wicklow, Fine Gael)
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So the Department takes cognisance of the programme for Government in its projections?
Edward Timmins (Wicklow, Fine Gael)
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I understand that. The Department has stated there is going to be an increase in expenditure of 6% per annum. I do not know whether that is an average over four years or an absolute 6% per annum until 2030.
Mr. O'Brien is able to give figures. He stated earlier that we will spend €125 billion if we go up from €117 billion, or by 6%, or whatever the figures were. When talking about the 6% growth, is that an overall figure and is the Department not really sure what it is going to be made up of?
Mr. Barry O'Brien:
What we did last year was set out a medium-term expenditure framework in July. That set out different levels of expenditure and what might be got for those. What we tried to do was inform the conversation around what you might get in terms of capital, recruitment, health and social protection for different levels of expenditure. That particular document, which we are happy to provide to the committee, sets out the levels of spending across different areas and what they look like together. When considering the budget, there are trade-offs to be made between sectors.
Edward Timmins (Wicklow, Fine Gael)
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That brings me back to my original point about assumptions. The Department does not put those assumptions in the medium-term fiscal framework, which we have seen and discussed at this committee. Does it contain assumptions at the level I refer to? For example, are our five-year projections built on the assumption that childcare costs are going to reduce to €200 per month, on the assumption that this is going to cost, let us say, €700 million to €900 million over the lifetime of the Government, and on how it will impact each year and the additional spending that will be used to subsidise that? Those assumptions are not set out, I am guessing. This goes back to my point about having more detail on assumptions when making projections.
Does Deputy Boyd Barrett wish to ask any questions?
Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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Yes. I am doing a big catch-up here because I was attending another meeting. I thank the Chair.
On the expenditure control and escalation process circular, are the ultimate sanctions not phases 8 and 9? Phase 8 is a freeze on the hiring of new administrative staff, and phase 9 is the introduction of a moratorium on all recruitment. Can a few instances be given of where this has happened or is happening?
Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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Has it ever happened?
Ms Niamh Callaghan:
The phases are non-sequential, and the phases a Department might be in work on a case-by-case basis. The Deputy mentioned phase 8, the withdrawal of delegated sanctions relating to a freeze on the hiring of new administrative staff. Delegated sanction for staffing in the Department of education was removed on 9 May 2025 for posts not including school principals, teaching posts and posts relating to the provision of special educational needs and supports. Phase 8 has been applied to the Department of education.
Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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Phase 8.
Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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Is that the only Department where it has ever happened?
Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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Prior to that, were there ever freezes in-----
Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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It is just so I understand this.
Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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Through the period of retrenchment.
Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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Okay. Was there a full moratorium in the Department of Health?
Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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Across the public service. I am just reminding myself. There might be a complete moratorium on hiring, in line with the escalation process, if there is an overspend in health, for example.
Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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When these overruns happen, is it generally because demand for services has been greater or because the cost of maintaining services has increased beyond what was expected? What are the reasons, in practice, for these overruns occurring?
Ms Niamh Callaghan:
There can be a range of reasons. Sometimes, new decisions are taken that require additional funding. There can be responses to unexpected events, and we have seen that frequently in recent years in responding to the pandemic, the rise in the cost of living and so on. There can also be higher demand for services or supports than was previously forecast, for a variety of reasons depending on the Department and the service being provided.
Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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By and large, it is not anybody's fault. Is that fair to say? There is extra demand that was not expected or there are unexpected events. The reason for asking is that we often hear a narrative about our having to deal with waste. Is it a matter of waste or is it simply that demand and need for the services have not been fully anticipated?
Ms Niamh Callaghan:
It is the duty of Departments to live within the allocations provided and to do so in a way that tries to deliver savings and efficiencies where possible. That has to be a cornerstone of budgeting on an ongoing basis. The escalation framework applies where there are risks of overspending on a certain scale, and actions in line with the escalation process have to be taken.
Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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Sure. I say sure, but if the problem is, for example, a very serious unexpected health emergency, does it mean that if the health service suddenly has to deal with something unanticipated, we could then start penalising people and imposing hiring freezes or moratoriums, even where it has been entirely justified to make a decision to expand the provision of services, or we need to, because the need is greater?
Ms Niamh Callaghan:
The different phases of the escalation framework are informed by the ongoing monitoring that our Department undertakes. There is a judgment call about the level of severity and fiscal risk involved before different phases are entered into in the escalation framework. If there are unexpected circumstances, they will be taken into account in terms of whether the Minister wants to escalate to the next phase.
Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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I am just trying to understand. If there is a legitimate need, then there is a legitimate need, or if unexpected things happen, then they happen and we say "Yes". Somebody has to step in to say that it is a legitimate need and something unexpected has happened, and we have to respond to it.
Do we get lots of instances where the overruns have nothing to do with those elements and instead involve people just spending money willy-nilly for the sake of it? That is what we are monitoring.
Mr. Barry O'Brien:
We have a medium-term expenditure fiscal strategy that clearly sets out the Government policy to 2030. The policy we are putting in place around that is trying to manage the overall expenditure within that envelope. Obviously, the Dáil has primacy in allocating money. That is set out in the Constitution, as the Deputy is well aware. It is then up to the individual Accounting Officers to deliver within that envelope. Everything we are putting in place is to deliver on the Government policy to 2030. We had a conversation with the Chair about the medium-term expenditure framework, which we published last year. That set out the different levels of service delivery for different levels of spend. I think we had three options in there for if you were spending €5 million, €7 million or €9 million per year and what you might get in terms of social protection, recruitment and capital spend. However, the Government has since published the medium-term expenditure ceilings to 2030. The capital ceilings have been set for the NDP.
Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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This is the 6% growth.
Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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Is that 6% taking inflation into account?
Richard Boyd Barrett (Dún Laoghaire, People Before Profit Alliance)
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I thank the witnesses.
Edward Timmins (Wicklow, Fine Gael)
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That concludes this session. I thank the witnesses for attending the meeting.