Introductory Statement by Mr. Michael McGrath TD, Minister for Public Expenditure and Reform, regarding the Public Expenditure and Reform Group of Estimates

Introduction

I am pleased to be here with you today to present the 2021 Estimates for my Department’s Group of Votes. I am joined today by the Minister of State with responsibility for Public Procurement and eGovernment – Ossian Smyth.

The Group comprises a significant number of Votes, including:

(i) Vote 11 - of Public Expenditure and Reform;

(ii) Vote 12 - Superannuation and Retired Allowances (which covers civil service pensions);

(iii) the Votes for a number of Offices under the aegis of my Department, including the State Laboratory (Vote 14), the Public Appointments Service (Vote 17), the National Shared Services Office (Vote 18) and the Office of the Ombudsman (Vote 19);

(iv) the Secret Service (Vote 15);

(v) the Office of Government Procurement (Vote 39);

(vi) the Office of the Chief Government Information Officer (Vote 43).

Minister of State Smyth is happy to address questions relating to the Office of Government Procurement and the Office of the Chief Government Information Officer, and I will address questions regarding the other Votes.

I note that detailed briefing has been supplied by my Department’s officials, at short notice, who were assisted in this task by their colleagues in a number of Bodies under the aegis of the Department. Further detailed material is also contained in the Revised Estimates for Public Services 2021 which was prepared by my Department.

COVID-19 has presented unprecedented challenges to officials, Members of this House and for the general public. Arrangements for business continuity and flexible working have ensured that essential public services can continue to be delivered, while also ensuring that the general principles of safety, health and welfare are adhered to.

Officials from my Department, and in Bodies under the Department’s aegis, have played a central role in responding to the challenges of this crisis, and I would like to take this opportunity to thank all parties involved for their collective efforts in this regard.

In an overall context, the 2021 total gross allocation for the PER Group of Votes, comprising of 9 distinct Votes, shows an increase of 3% on the 2020 allocation. The overall gross figure for 2021 is approximately €858m compared to €829m in 2020.

This is largely driven by:

- An increased estimate provision to Vote 12

- Targeted, minor, increases to enable the delivery of essential services – such as additional HSE recruitment

- To meet the additional salary costs associated with the Public Service Stability Agreement.

To introduce the individual Votes in slightly more detail:

Vote 11 - PER Vote

• The structure of the PER Vote remains unchanged in 2021, with two strategic Programmes focussed on the two main strategy goals of the Department -
• to manage public expenditure at sustainable levels in a planned, balanced and evidence informed manner, in order to support Ireland’s economic, social and climate goals; and
• to drive reform and innovation across the Civil and Public Service to improve services to the public, and to enhance strategic policy making and public governance structures

The Department has kept its overall 2021 budget flat, and has reallocated resources across a number of expenditure subheads to meet 2021 priorities.

The most significant changes to programme subhead budgets are:

• A9 Funding: for pensions for bodies under the aegis which increased by €700,000 to €1,150,000. This will assist with additional pensions costs incurred by the ESRI and the IPA;
• A3: The ESRI grant subhead has increased by €225,000 to €3,000,000 to support the Institute carry to out additional social research in 2021;
• The allocations for A8 and B5 (the programme consultancy subheads), have reduced by €383,000 in total; and
• B7 Reform Agenda subhead was reduced by €542,000 to €648,000, which is sufficient to meet its requirements this year.

Other Votes

Turning now to other Votes within the PER Vote Group, the estimate for Vote 12 (Superannuation and Retired Allowances) accounts for the vast majority of the envisaged increase in PER Vote Group expenditure in 2021.

Year-to-year variations in the expenditure of this Vote are primarily driven by the number of pensioners on the payroll, the number of individuals who will opt to retire before reaching their compulsory retirement age, and whose years of service and grade/pay level are variable and uncertain.

The estimate I am proposing today for Vote 12 - involving a gross provision of €666.268m – represents an increase of just over €26m, or 4%, on the 2020 gross estimate. This increase reflects an increase in the number of pensioners on the payroll and the number of civil servants reaching retirement age in the year.

Other bodies under the aegis of the Department, such as the Public Appointments Service, the National Shared Services Office (NSSO) and the State Laboratory, provide important services to large numbers of clients across the civil and public service.

A modest increase to the State Laboratory’s 2021 Estimate (Vote 14) will allow the Laboratory to meet additional forecasted demand for tariff classification advice in 2021, and also enable the Laboratory to provide an analytical service to the HSE in relation to e-cigarettes.

The Public Appointments Service (Vote 17) has received a modest once-off increase in 2021 to assist the HSE with increased recruitment demand arising from the pandemic.

The National Shared Services Office (Vote 18) has played an important role in the reform of public services in recent years, namely through the delivery of HR Shared Services and Payroll Shared Services to clients across the Civil and Public Service. The 2021 NSSO allocation will enable the continued provision of HR and Payroll Shared Services, and also enable the Office to progress the rollout of Financial Management Shared Services.

The estimate provision for the Office of the Ombudsman (Vote 19) will allow the various constituent offices to deal with their respective workloads, and enable continued investment in ICT modernisation which will support the Office to meet the challenges of delivering essential services to the public remotely at this time.

Procurement is a key element of the Government’s public service reform agenda. The State procures goods and services costing in the region of €8.5bn each year. In this context, it is essential that the Public Service operates in a co-ordinated and efficient way and delivers sustainable savings for the taxpayer.

Some of the key OGP initiatives supported by the 2021 estimate include:

• improving procurement capability in the public service;
• further develop, implement and action a medium term strategy for construction procurement, including the Capital Works Management Framework (CWMF);
• support Future Jobs Ireland and the Climate Action Plan through focused procurement policy initiatives;
• development of a new national eTenders system; and,
• the delivery commercial skills training across the public service.

Finally, 2021 marks the second year of the Office of the Chief Government Information Officer (OGCIO) as an independent Vote (Vote 43). It was established in 2020 with an estimate of €21.7 million (net), all of which came from Exchequer neutral funding transfers from other Votes.

The estimate for 2021 will rise by 5%, which is largely funded via Exchequer neutral transfers of €1.1m from other public sector bodies.

This Vote serves to drive the digital transformation agenda across Government while providing and developing pan-public service ICT infrastructure, service delivery models and cross government applications.

The OGCIO is facilitating a sustained and wider spread adoption of the Build to Share suite of services as set out in the Public Service ICT Strategy, and endorsed by the Civil Service Management Board (CSMB), with Departments contributing to the funding of services received.

This approach to exchequer neutral funding means that ICT costs can be suppressed across the wider system as a result of labour specialisation, economies of scale and the elimination of duplication.

Conclusion

I am happy to present the 2021 Estimates for the PER Group, approval of which will allow the individual Votes to continue to meet their responsibilities and deliver essential services.

The Minister of State and I are both happy to answer any questions that arise.

Ends