Howlin and HSE clash on €186m budget savings

A major row within Government over the health budget is looming, with Minister for Public Expenditure and Reform Brendan Howlin and health service management disagreeing publicly yesterday over whether nearly €200 million in projected savings can be achieved.

The Health Service Executive said last night there was “an unrealisable gap” of €186 million between the total pay-related budget cuts given to the health services at the budget last autumn and the cost reductions that could be delivered.

The HSE statement came just hours after Mr Howlin said he believed savings required in the health budget would be met. Last night, a spokesman for Minister for Health James Reilly said a consultants' report "makes clear that the targets for pay-related savings for the health sector are too high".

Health service figures maintained management had flagged consistently during the Government’s estimates process before the budget that the total savings of €398 million the Department of Public Expenditure was seeking under the Haddington Road agreement were “too optimistic”.

Shortfall
The HSE confirmed a report in The Irish Times last Saturday that it had told the Government last week that, based on a report by a consultancy firm, there would be a shortfall of close to €200 million in the savings originally earmarked.

In its service plan, the HSE was set a target of savings of €290 million under the Haddington Road deal. In addition, €108 million was to be generated by unspecified measures. However, the report by PA Consulting suggested none of the €108 million figure would be achieved and only three-quarters of the €290 million.

The report forecast that cash savings of €212 million were likely to be generated in savings under Haddington Road, as well as 2.939 million hours of additional productivity.

The HSE said the cash savings forecast meant it was likely to achieve a 73 per cent delivery against the original target reduction of €290 million.

Targets
"In addition to the Haddington Road agreement targets, the HSE was given a further additional budget reduction of €108 million in the health estimates. These additional 'unspecified' savings were associated at the time with payroll reductions."

The HSE said the consultants’ report demonstrated “ the practical difficulties that exist whereby all expected budget reductions will not be achievable through reductions in payroll costs”.

Speaking on RTÉ's The Week in Politics , Mr Howlin said: "Every line department . . . the HSE directly . . . was involved in the negotiations and signed off on it. Like every other department, I know that it is going to live up to the targets because it is part of the overall budgetary arithmetic.''