THE EU has warned that the €200m spending overrun in the health department and Health Minister James Reilly's failure to deliver on key pledges could "endanger" next year's health budget.
Its team of inspectors warned in its final bailout review that one-third of the savings promised by Dr Reilly this year will not be achieved and that the slow progress could lead to serious problems next year.
It has also criticised the absence of any progress on legal service reforms to cut costs for consumers, as well as the potential for the courts to be overwhelmed by a "wave" of up to 21,500 repossession cases next year.
It comes as the Cabinet is due today to discuss a bailout for the health service so that it can cover the estimated €200m shortfall this year -- with another €666m of cuts due next year.
The Irish Independent has seen a copy of the final inspection report by EU staff before the bailout exit next week. The European Commission report will feed into the final review of the €85bn bailout programme by the other two members of the troika -- the IMF and the European Central Bank.
It notes that spending is under control in all government departments except for Dr Reilly's -- "mainly due to delays in implementation of the budgetary measures".
"Delays in the 2013 health sector measures endanger the 2014 health budget. Around one-third of the health savings planned for 2013 will not be achieved due to implementation delays," it stated.
Dr Reilly had promised to raise €65m by charging more for private patients treated in public beds this year but there is going to be a shortfall because this measure has been delayed until the new year.
The report noted that this legislation "was originally planned in 2012".
It also referred to delays in implementing legislation to secure savings from the primary care budget. This is understood to be a reference to the six-month delay in cutting the fees for GPs and pharmacists, which has meant that only €35m of the promised €70m in savings will be delivered.
The European Commission report also complained that there would be lower wage bill savings this year in the health service due to the "difficult transition" between the Croke Park Agreement and the Haddington Road Agreement. And it warned about the possibility of more problems in next year's health budget, saying: "There are concerns over the quality of some savings, particularly in the health sector."
Government sources expect that Dr Reilly will be seeking a supplementary estimate of around ¿200m at Cabinet today. There were intensive meetings yesterday between officials from the Department of Health and the Department of Public Expenditure, which controls public spending.
The Department of Public Expenditure confirmed that savings would have to be delivered in the health sector itself -- as well as from "other votes". This means other departments will have to pay for the cost of bailing out Dr Reilly's department.
A €14m saving in the Department of Social Protection's spending this year -- due to the increase in employment numbers and consequent drop in the numbers claiming social welfare -- is expected to be targeted.
Finance Minister Michael Noonan also insisted there "wasn't a problem". He said the Exchequer was €1bn better off than it had anticipated at the start of the year.
"So the savings elsewhere in the government accounts will pay for the overrun in Health and Justice, but the overruns aren't that significant as a percentage when you think that Health spends something like €13.5bn going on €14bn," he said.
Michael Brennan, Kathryn Hayes and Thomas Lyons