Gerald Nash (Louth, Labour)
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234. To ask the Minister for Public Expenditure and Reform the changes, if any, that have been made to capital allocations to Departments and agencies in 2023 to account for construction inflation; his plans to do so in the future; and if he will make a statement on the matter. [25624/23]

Paschal Donohoe (Dublin Central, Fine Gael)
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In the interest of safeguarding public projects that are already under construction and to mitigate the risks of significant losses being sustained by contractors, in May 2022 the then Minister for Public Expenditure and Reform announced details of the “Inflation Co-operation Framework" (the Framework) for those parties engaged under a public works contract.

The Framework facilitates both parties to engage with one another for the purpose of addressing the impacts of the most recent onset of exceptional inflation and supply chain disruption and operates on an ex gratia basis. Reports from Departments suggest that agreements have been reached on a wide range of projects and, where formal agreement has not yet been reached, parties continue to engage with works progressing.

The use of the Framework is voluntary, but participation by the parties is strongly encouraged. It represents a pragmatic and proportionate response to the current challenges caused by inflation that are not within either party’s control.

Costs relating to implementation of the Framework are to be met from within existing capital expenditure ceilings in 2023. The levels of capital spending set out in the NDP, at close to 5% of GNI*, are already among the highest in the EU and are close to the limit of the overall capability to deliver in the coming decade. Similar to any process of Vote management, it will be up to sectors and Accounting Officers to assess whether existing timelines for the implementation of key projects will need to be adjusted on account of the Framework implementation or if there will be a need for prioritisation within their existing five year departmental ceilings.

The cost associated with the implementation of the Framework are not collated centrally. It is managed at a project level by contracting authorities and reported to approving authorities so the impact on their overall capital ceiling can be assessed and the programme adjusted accordingly.