Mattie McGrath (Tipperary, Independent)
Link to this: Individually | In context | Oireachtas source

265. To ask the Minister for Public Expenditure and Reform the details of the way in which the capital carryover of €710 million from 2020 to 2021 will be allocated in 2021; if a debate in Dáil Éireann will be facilitated on the carryover amount; and if he will make a statement on the matter. [4313/21]

Mattie McGrath (Tipperary, Independent)
Link to this: Individually | In context | Oireachtas source

266. To ask the Minister for Public Expenditure and Reform his views on the opinion of the Parliamentary Budget Office in respect of the lack of transparency associated with the capital carryover of €710 million from 2020 to 2021, given that the amount is shown for accounting purposes as having been spent by the Exchequer in 2020 when in fact it will be spent by Departments in 2021; and if he will make a statement on the matter. [4314/21]

Michael McGrath (Cork South Central, Fianna Fail)
Link to this: Individually | In context | Oireachtas source

I propose to take Questions Nos. 265 and 266 together.

The distribution of the €710 million capital carryover has already been detailed in the Appropriation Act 2020 and by subhead in the Revised Estimates Volume 2021. A table setting out the overall carryover request by Vote is set out.

It may be helpful to the Deputy if I outline the carryover procedure and the transparent scrutiny that this procedure receives.

To begin with, capital and current allocations are set out in the Revised Estimates and are subject to Dáil scrutiny each year before being voted on by all members of the House. Members vote on the ambit and amount for each Vote. The ambit for each Vote states the year for which the amount being voted is to be expended.

As the amounts are voted for use in 2020 they have to be drawn down from the Exchequer in 2020, otherwise any unspent Exchequer moneys would have to be surrendered to the Central Fund at the end of the financial year. However, Section 91 of the Finance Act, 2004, gives legal effect to the carryover of unspent Voted Exchequer capital to the following year of up to 10% of capital by Vote, subject to certain conditions, by deferring this surrender requirement. This procedure is designed to promote value-for-money in the use of capital funding, in particular by mitigating any incentive on the part of public bodies to Departments to spend any remaining capital allocation at end-year in an accelerated manner rather than surrender it to the Exchequer. Allowing for up to 10% of the original capital allocation to be carried over into the following year allows for the capital funding to be drawn down in a considered and deliberate manner, that maximizes public benefit.

While the carryover amount is deferred into the following year, subject to the conditions set out in Section 91 of the Finance Act 2004, it is drawn down from the Exchequer in the year it is voted. Therefore the carryover is included in the Fiscal Monitor as it has been drawn down from the Exchequer in 2020. As such, the carryover amount is not classified as an underspend or saving in the year from which it is being deferred as it is funding that is already committed for expenditure.

To allow for spending of the capital carryover amounts in the following year, I am required to make an Order no later than 31 March of that year determining the capital carryover amounts by subhead which will be available for expenditure. Dáil approval of this draft Ministerial Order is required before I can make the Order. As the Deputy will appreciate, it is a matter for the Dáil to decide on what topics it wishes to debate and on the scheduling of such debates.

Once the order is made, the carryover amounts become a first charge against the subheads concerned. If the carryover sums are not spent in the year of carryover, they must be surrendered to the Central Fund.