Wednesday 28 September 2016

Revealed: Varadkar's dire warnings to Howlin about this year's health budget

Daniel McConnell and Niall O'Connor

Published 01/10/2015 | 02:30

Brendan Howlin: was warned funding put programme at risk
Brendan Howlin: was warned funding put programme at risk

Health Minister Leo Varadkar issued a dire warning to Public Expenditure Minister Brendan Howlin that cuts demanded in the health sector would cause a "serious downgrading" in quality of services.

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In confidential correspondence obtained by the Irish Independent from Mr Varadkar to Mr Howlin, the health minister warned that the Programme For Government Commitments on primary care, mental health and disability "would have to be abandoned" for him to deliver savings being asked of him by Mr Howlin for this year.

Given the pressure on the budget, senior Government sources have said Mr Varadkar is set to receive an end-of-year bailout for his department of up to €600m.

Much better than expected exchequer returns will enable Public Expenditure Minister Brendan Howlin to cover the overrun in health, according to senior Government sources.

But in his letter to Mr Howlin in advance of last October's Budget, Mr Varadkar also warned that commitments under the Haddington Road pay deal would need to "be replaced" in order to balance the budget.

"It would also be necessary to enter negotiations with trade unions to replace the Haddington Road Agreement with a new agreement providing for more cuts to core and premium pay," Mr Varadkar wrote.

In his robust letter, Mr Varadkar said: "The further 5pc reduction which we have been asked for would necessitate measures which would amount to a very serious downgrading of the level and quality of services."

He also warned that the cuts being demanded by Mr Howlin would force the cancellation of the National Children's Hospital, the Maternity Hospital or the Central Mental Hospital.

"If it is decided to cancel one of them, we should do so sooner rather than later so no more money is spent on planning or design," he said.

Separate "urgent" correspondence from senior Health officials to the Department of Public Expenditure and Reform reveal how major decisions about health spending in 2015 had yet to be taken just three days out from Budget day.

Mr Varadkar, in the end, was spared having to make major cuts and also received an end-of-year bailout, which he looks set to get again this year.

Last month, the HSE demanded a budget increase of almost €2bn, but Fine Gael sources say the most Mr Varadkar will receive in additional funding is €200m.

Correspondence obtained revealed that €200m extra is needed each year merely to meet the demands caused by our ageing population.

Hence, the Government is preparing to ease Mr Varadkar's problems by granting him a supplementary estimate, as he prepares for another winter of trolley crises.

The estimate can be treated separately to the €1.5bn additional spending capacity to be announced on Budget day.

But because of new European budget rules, this year will be the last opportunity for the traditional style supplementary estimate, as from next year, any additional spending has to be found from existing resources.

Irish Independent

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