Thursday, 20 January 2022
Ceisteanna Eile – Other Questions
Capital Expenditure Programme
7. To ask the Minister for Public Expenditure and Reform the detail of the latest Exchequer figures which showed a record €9.9 billion in gross capital expenditure in 2021; the way the 2021 figure for spending under the national development plan will compare; and if he will make a statement on the matter. [2376/22]
Can the Minister set out the detail of the latest Exchequer figures, which show a record €9.9 billion in gross capital expenditure in 2021, and the way the 2021 figure for spending on our national development plan will compare, and will he make a statement on the matter?
Information on expenditure is published each month in the Fiscal Monitor, with the provisional end-December 2021 gross capital expenditure position recorded as €9.9 billion. A breakdown of both current and capital expenditure for each Department is set out on pages 19 and 20 of the Fiscal Monitor, published on 5 January this year.
The provisional data in the Fiscal Monitor indicate an increase in gross capital expenditure of just under €300 million or 3% above the expenditure level recorded in 2020. However, when account is taken of capital carryover from 2020 spent in 2021, the increase in capital spending compared to the prior year is over €600 million or 7%. This year-on-year increase was recorded in spite of the closure of non-essential construction activity between January and April last year.
The €9.9 billion figure includes a capital drawdown of approximately €820 million, which will be carried forward into this year. The gross capital expenditure of €9.9 billion when compared with the full allocation of €10.5 billion, including supplementary estimates, shows a provisional underspend of €580 million for 2021. In order to meet additional current expenditure costs, €360 million of this underspend was vired or transferred from capital to current expenditure by the Department of Housing, Local Government and Heritage. Adjusting for this virement, the underspend will be in the region of €220 million or approximately 2% of the 2021 allocation.
The review of the national development plan, NDP, was published last October and it sets out an Exchequer investment in capital allocations of €136 billion over the plan period out to 2030. The NDP also set out departmental allocations out to 2025, which will see them increasing to €13.6 billion or 5.1% of GNI*.
The Revised Estimates volume for this year has set out an overall capital allocation of €11.1 billion. When account is taken of the capital carryover from last year, this will leave almost €12 billion available to Departments for capital investment this year. That is a record budget of €12 billion in 2022 for capital investment.
I will refer back to the €580 million underspend. Is any review being carried out of the way public service contracts are processed? I refer particularly to the tendering process and the delay in the acceptance of the contract. In the last six or seven months we have had inflation in the building sector, which has caused its own problem about acceptance of tenders. Is any review being carried out in respect of those contract issues?
The outturn that we achieved in 2021 represented a strong performance, particularly in light of the fact that non-essential construction was closed for so long. My overall message is that, with a record budget of €12 billion in 2022, I want to see that money spent on new schools, our hospitals, climate action measures, public transport projects, road projects and so on.
Working with the Minister of State, Deputy Ossian Smyth, we have introduced changes in the area of procurement that recognise the reality of the existing inflationary pressures. Those pressures often present at the point where the tender is submitted and before the award of the contract. They often present during a live contract as well. As such, the ability to vary the price is an issue that we have addressed through a reduction in the period of the fixed-price contract and an improvement in the ability of contractors to recover unforeseen exceptional costs above a certain threshold.
I wish to ask about the carryover of projects. Does the Minister believe we can get many of the projects that were delayed completed by the end of 2022? What process is being put in place to ensure we can meet the targets that have been set out?
In my time in the Department, I have introduced new reporting requirements whereby the Departments with the largest capital budgets report directly to the Cabinet on their outturn from capital expenditure. It is an issue that I review regularly. I have emphasised the importance of and need to implement the public capital programme. This is money that we want to see spent. I will be monitoring the issue closely over the course of this year. If we see a scenario where significant underspends emerge in one area and we conclude that it is unlikely that they will be spent over the course of the year, we have the ability to transfer capital budgets from one area to another. We will not be recalcitrant in doing so if it is merited.
We want Departments to spend their budgets. In the main, they do. They have significant carryovers into the current year. We expect this to be a year without any closure of construction due to the pandemic, so there will be no excuses for not spending these budgets.