Press release
Statement from the Department of Health: Sunday 20 February 2022
From Department of Health
Published on
Last updated on
From Department of Health
Published on
Last updated on
The Department of Health is aware of alleged recordings of internal meetings which took place between 2020 and 2022 being circulated. Notes claiming to represent comments made by officials also appear to have been circulated.
No official of the Department of Health has given consent to be recorded while carrying out their duties as part of the deliberative process.
Publishing details of meetings between government officials in the ordinary course of their work, which were recorded without the consent or knowledge of participants, is a direct violation of individual privacy.
Work by the department and its officials with the HSE, focused on improving the transparency around financial matters is clearly in the interest of the public.
However, the department strongly believes that quoting the casual comments of individuals will only serve to limit constructive debate and dialogue across the civil service and this is damaging to the public interest.
Currently, no recordings on which allegations are based have been made available to the department and therefore it is unclear what discussions they refer to or if they have been doctored in any way. This makes it difficult to validate or respond constructively.
It is widely acknowledged that there are many legacy issues across the health service to be addressed. The Department of Health and the HSE work closely together to manage the health service and, through Sláintecare, implement the much-needed reform to deliver a better health service for the public. This working relationship, characterised by mutual respect, is professional and constructive.
The department addresses allegations made by the Sunday Business Post, on the basis of alleged recordings below. Technical notes details accruals vs vote accounting, how the HSE is funded, and the legislative position in relation to unspent funding.
The Department of Health funds the HSE out of the Health Vote (Vote 38) allocated to the department by the Oireachtas. The recent budget allocated over €21.7 billion to the HSE.
2020 was a unique and extraordinarily challenging year and saw the requirement for substantial increases in supplementary funding for the HSE driven by the government's response to the pandemic.
The use of accruals is a normal and necessary part of any organisation's accounting process. The Department of Health welcomes the additional assurance provided by the review of 2020 accruals which the HSE has undertaken.
The Department of Health notes the statement by the HSE in recent days that any prior year adjustment which arises would be in the €10 to €100 million range and the information by the Department of Health received from HSE over recent days aligns with that position.
We also note that the threshold for the use of prior year adjustments has now lowered somewhat in current Financial Reporting Standards (FRS) to include material as well as fundamental errors. We also note that there is no suggestion of a need to revisit the audit opinion for 2020 provided by the Comptroller and Auditor General.
The larger cash balance at end year 2020 is largely attributable to the substantial increases in funding allocated to the HSE to implement the COVID-19 response, which also involved a significant increase in the reliance on external suppliers in 2020. The €608 million of cash held by the HSE at the end of 2021, with the agreement of the Department of Health and the Department of Public Expenditure and Reform, represents c. 10 days of a cash holding given the over €20 billion budget of the HSE.
The Department of Health recognises the work undertaken by HSE colleagues over the past 2 years to make a series of interim financial reporting improvements, within the constraints of current legacy systems focused on a shared understanding and reporting around the HSE’s financial position, for example new monthly working capital reports and weekly detailed COVID-19 expenditure reporting. These enhancements are welcomed by the Department of Health and this area will be continue to be a key priority for both agencies to work cooperatively to deliver further improvements ahead of the implementation of new systems.
The core elements of HSE’s financial system at local level are a legacy of the former health board system – the HSE, the Department of Health, and the Department of Public Expenditure and Reform have prioritised the modernisation of the HSE’s financial reporting systems. The HSE has already undertaken substantial internal work on this issue, and with support from the Department of Health are working to deliver a new modern integrated financial reporting system to address the issues associated with current legacy systems. This project will progressively deliver significant enhancements to financial reporting and streamline procurement processes as it is rolled out across the HSE system and the larger Section 38 and S39 health providers.
The total HSE surplus at the end of 2020 was €267 million (€200 million in current + €67 million in capital). The full amount of the 2020 surplus of €267 million was surrendered by the Department of Health on the HSE’s behalf to the Exchequer at the end of 2021. The Fiscal Monitor published in January details the total surrender from the Health Vote.
Budget negotiations commenced with Minister for Mental Health, Mary Butler, officials in the Mental Health Unit of the Department of Health and the HSE in August 2021. The initial estimate sought by the HSE, as set out in supporting documentation was €35 million in new development funding.
The claim that the HSE sought €10 million only in additional funding for 2022 is inaccurate and misleading. The final outcome of Estimates 2022 negotiations saw the Department of Health allocate €37 million in additional core funding plus €10 million in once-off COVID funding to the HSE for mental health for 2022.
With respect to the €10 million for mental health announced for 2021 on Budget Day, extensive discussions were held between Minister Butler, the department and the HSE on how best this funding could be allocated to improve the experiences of as many people as possible accessing mental health services. Details of this funding were announced publicly, once finalised with the relevant departmental officials and the HSE.
It is noted that the HSE’s National Service Plan, which is not yet published but will be published shortly, will set out the final HSE budget for mental health in 2022. This budget will not be lower than the overall increases noted above, but may be higher than previously announced should the HSE allocate further additional funding to mental health.
It should be noted that unlike government departments, which account for their expenditure on a vote accounting basis (reflecting cash expenditure as well as supplier invoices whose credit terms have expired and are due for payment), the Minister for Health has directed, in line with legislation, that the HSE should report its financial performance on an accruals accounting basis (reflecting cash expenditure plus all invoices for goods and services which have been delivered, whether or not they are yet due for payment).
Vote accounting excludes invoices for goods and services which have been delivered which are not yet due for payment whereas accruals accounting includes these invoices. The difference between the two accounting approaches is an issue of timing rather than substance. The Minister for Health has mandated the HSE to report its financial performance in line with Financial Reporting Standard (FRS) 102, apart from some specific exemptions to the FRS102 standard. FRS102 is the main financial standard which is widely used by in Ireland and the UK.
The Minister for Health sets the funding determination for the HSE each year which informs the planning of the services documented in the HSE’s National Service Plan (NSP). This funding determination sets out the maximum amount of capital and current expenditure which the HSE may incur for that year.
In years when a significant amount of additional funding is allocated to the HSE by supplementary estimate, this can cause a temporary buildup of cash at year end. It should also be noted that the position in relation to year end cash balances works differently for government departments versus agencies funded by a government department like the HSE. Government departments must surrender any budget unspent at year end. Funded agencies such as the HSE can be permitted to retain year end cash balances to fund payments in the following year to clear accrued liabilities. The guidance around this is covered by DPER Circular 13/2014.
Under legislation, the HSE does not have the ability to automatically move unspent funding allocated in a year for current expenditure forward to the following year. This decision is made by both Minister for Health and Minister for Public Expenditure and Reform (DPER). There is, however, a mechanism, where the Department of Health can make an application on the HSE’s behalf to the Department of Public Expenditure and Reform to carry forward unspent capital expenditure, up to a maximum of 10% of the annual allocation, to the following year.