Paschal Donohoe is allocating an extra €2.7bn for health spending over this year and next. The move may be part of an attempt to bring the health budget from the realm of fiction and into the world of reality, but it reflects a lack of accountability within government spending.
When framed as part of an overall budget package of a staggering €8.3bn for next year, the health increases are par for the course. It defies all logic. Health spending has been running over budget for years. It isn’t just about Covid.
Between 2015 and 2019, annual health spending overruns averaged €590m. Last year it was about €1bn. This year will be €1.5bn, without this additional allocation from the Department of Finance.
Any government department that consistently shatters its budget for the best part of a decade is not working. If it isn’t working, then it doesn’t matter what the budget allocation is. It needs to be fixed, not just given more money.
The department has set a target of €400m in cost savings this year. Why this year and not over the last several years, especially before Covid?
Donnelly told the Dáil in May that about 6,000 posts were created last year. The HSE had actually hired more than 8,000 people.
He said this “left more than 2,000 posts that had been either hired or committed to for which there was no funding”.
In any other department, questions would be asked about the management and controls the Health Minister has in place. In any other department, would he still be in a job? Probably not.
But health is still seen in government in a very negative light. Brian Cowen famously referred to his time in the brief as being like “Angola” in the days of the land mines. Few seem to want the job. If politicians don’t want the job, then the system is broken. If the system is broken, it should be fixed instead of just throwing more money at it.
Donohoe is highlighting the need for additional spending across the board because of a larger than expected population. He said the population is around 180,000 more than was envisaged as recently as 2021. He may be right about that, but money alone will never solve challenges, whether it is in health, housing, infrastructure or planning.
If budgets need to be increased, then so be it. Health has shown its budgets are a fiction. Our spending on health has gone through the roof without commensurate improvements in outcomes, according to a Department of Health productivity study.
Donnelly can point to improving patient outcomes and falls in waiting times for appointments.
He has also flagged improvements in survival rates for cancer, stroke, infant mortality and heart attacks. With 50,000 more staff than a decade ago (an extra 28,000 since 2020) it would be difficult not to improve on these things. Our health spend next year is likely to hit €25bn.
In the mid-20th century we spent about 2pc of national income on health. Before Covid, it had risen to 8pc. Ireland ranks sixth highest for government spending on healthcare as a share of national income among 33 OECD countries. Do we have anything resembling the sixth-best healthcare system in the developed world? I think not.
Most of the spending overruns (65pc) relate to pay. The health budget is being hiked by €2.7bn over two years — €1.5bn for 2024 and €1.2bn for 2025. All the while there is an allocation of €1.2bn to cover public sector pay increases next year.
Other areas of exchequer spending are hoovering up increasing amounts of tax collected — for now — from US multinationals. Take untargeted supports to help first-time buyers, who can now avail of around €100,000 of State money to buy a new home.
The Help-to-Buy scheme had cost €920m from its inception to 2023. The equity-share First Home Scheme is seeing a rapid rise in take up. First-time buyers are receiving an average of €67,000 from this scheme, and awards topped €44m in the first half of this year.
At the moment, the cost of the scheme is running at around €88m per year and it has cost €325m to date. Taking it away at some point will have a real impact on house prices.
October’s budget is shaping up to be the ultimate pre-election splurge. It begs the question of what has been truly learned by the political class since the last crash. We will all end up counting the cost if things go wrong a few years down the road.
Diageo takeover talk looks premature
A prolonged drop in Diageo’s share price has prompted speculation that it could be ripe for a takeover. The Guinness and Johnny Walker maker has seen its share price dunk to where it was in March 2020 and April 2018.
The problems seem to relate to a poor performance in Latin America and evidence of a switch among American customers towards cheaper brands.
It isn’t the first time analysts have talked up a possible takeover where Diageo’s share price has looked weak. But who would buy it, given not only its size but its positions in very different complex markets around the world?
Back in 2015, it was touted as a takeover target with the spotlight thrown on investment giant 3G. Nothing came of it. With a market cap of around £55bn, Diageo would be a massive deal. Perhaps too big for anybody except LVMH, which is as much focused on lifestyle brands as alcohol these days.
A raised interest rate environment could also affect the numbers on any possible bid. Mind you, Carlsberg did agree a £3.3bn buyout of Britvic this week. But it’s a sip compared to a deal that could be 20 times that size.
A change of ownership at the maker of Guinness, even if it did happen, is unlikely to affect the business here. It may have started in Dublin, but Diageo has always felt like an international company with its headquarters in London.
Guinness has invested heavily in Dublin through the Storehouse and the development of its site, while also announcing plans for a new brewery outside the capital. None of that would be likely to change with a new owner.
Brexit hoovers up British manufacturing jobs
The Brexit-backing inventor and entrepreneur James Dyson is having to slash around 1,000 jobs from his electrical appliances empire. Dyson thought Brexit was a great idea, but moved his headquarters to Singapore.
He committed to keeping high end R&D work in the UK, where the group employs more than 3,000 people. But he has faced competition from cheaper Asian products and has had to backtrack on a major push into electric vehicle technology. Some of the jobs cuts will be in the UK.
You can’t blame Brexit, but I can’t see how it helped.
