Charlie O'Connor (Dublin South West, Fianna Fail)
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Question 218: To ask the Minister for Health and Children if a directive has been issued, or is proposed to be issued, to the Health Service Executive as to the way certain bodies assisted with funding under section 39 of the Health Act 2004 will differ from bodies assisted under section 38 in relation to budgeted salary and other cost reductions; and if she will make a statement on the matter. [3905/10]

Mary Harney (Dublin Mid West, Independent)
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The Government's decision to reduce its payroll costs in various ways – principally by reducing the salaries paid to public servants and reducing the numbers employed – was deliberately designed to protect existing levels of public services and to provide a more sustainable payroll cost base into the future.

I understand that the HSE issued an early warning notice to its grant aided voluntary agencies anticipating (incorrectly) that the pay reduction for public servants under the Financial Emergency Measures in the Public Interest (No 2) Act 2009 would automatically apply to the agencies. In fact, grant aided agencies (funded under Section 39 of the Health Act 2004) are not directly affected by the pay adjustments provided for under the Financial Emergency Measures in the Public Interest (No 2) Act 2009. Section 39 agencies are not public service bodies as defined in that Act and their employees are not public servants.

However, the grant funding of Section 39 Agencies is subject to the general efficiency savings for the health sector provided for in the Budget. Accordingly, it is entirely appropriate that Section 39 Agencies and other HSE funded voluntary providers take appropriate measures to ensure that they continue to provide the same level of service in 2010 as previously, notwithstanding the reductions in their funding. It is the responsibility of each individual employer to decide exactly what mix of actions should be taken to achieve this goal, to take appropriate legal and other advice, to consult and inform its employees/trade unions as necessary and to manage the HR and industrial relations implications of its decisions.

I further understand that the HSE is in the process of confirming this position to the bodies concerned on foot of clarification in the matter from my Department.

Budget 2010 requires the HSE to generate non-pay savings of €394m, €106m of which is to be met through economies. It is a matter for the HSE to determine how these non-pay savings are to be met, but it is likely that grant-funded agencies will bear some proportion of the savings.