Context for Review

This current rolling three-year Spending Review, announced on Budget day 2016 by the Minister for Finance and Public Expenditure & Reform, is a key process designed to improve how Government spending is allocated and maintained. This process builds on the significant expenditure reforms over the past number of years.

The central aim of these reforms, including the current spending review, is to embed a culture of evaluation and evidence-based policy development within the public service, with the goal of avoiding short-term, reactionary thinking and large annual shifts in expenditure. It is important to ensure that budgetary allocations are prioritised for policies that have a strong evidence base in gaining the best positive outcomes for the citizens of Ireland.

Key Objectives of Review

The specific purpose of the spending review, within the wider reforms, is to shift the emphasis away from the year-on-year incremental increases in spending, through the examination of baseline Government expenditure. The spending review seeks to maximise the impact of Government spending by reprioritising spending from programmes with poorer outcomes to those with better outcomes. This creates a clear link between the programme evaluations carried out across the public sector and the budgetary process.

In addition, a further aim is to encourage greater input of policy departments into the Spending Review and to enhance the role for Irish Government Economic and Evaluation Service (IGEES) in supporting policy analysis throughout the Civil Service. The intention is that this work will then promote the use of an analytical approach to evaluating expenditure and should provide the Government with a stronger evidence based approach to allocating resources in the Budget.

This spending review process is designed to further embed the principles of expenditure efficiency and effectiveness into the wider budget process through:

  • creating a larger stock of relevant analysis and evaluation across all Departments and Offices;
  • identifying areas of existing expenditure that require ongoing analysis if issues are emerging; and
  • ensuring that this analysis forms part of the Estimates process.

Outcomes of the Spending Review 2017

Last year’s spending review culminated in the publication of 23 analytical papers, most alongside the Mid-Year Expenditure Report in July, with the remainder following the completion of Budget 2018 in October. Some significant outcomes resulted from this review, particularly by reference to the three main objectives above.

Firstly, a significant number of analytical papers were produced, with the direct involvement of officials from DPER and other Departments supported by IGEES in the oversight and/or drafting of analysis for spending review topics. As detailed in the Mid-Year Expenditure Report 2017, the objective for 2018 was to increase this number.

Secondly, some key issues for the control of expenditure were identified through the Spending Review in 2017 which will be revisited this year, particularly in the areas of education, social housing, the public service obligation for transport companies and the Garda pay bill. In addition, a key theme identified was the need for greater data and data provision.

Finally, the analysis from last year’s review provided a strong evidence base for estimates discussions across many sectors. In particular, analysis in the spending review 2017 highlighted the reduced demand for employment supports in the employment affairs and social protection sector. During the estimates discussions, it was agreed between the policy department and DPER that substantial savings from this area of expenditure could be reprioritised towards other programmes. 

Output of the Spending Review 2018

The individual topic papers for the 2018 exercise were selected to reflect key strategic/priority areas of expenditure, in terms of the quantum of expenditure and the significance of the emerging policy challenges. The Spending Review 2017 papers also influenced the choice of papers for this year’s review as there were a number of areas where issues are emerging that required ongoing analysis.

Given the diversity of policy areas analysed, the papers can differ based on the prior analysis developed on the topic, the data available and the focus of the analysis. In addition, papers can differ by methodology and research questions, including baselining and trend analysis, investigation of cost drivers, reviews of governance structures, sustainability analysis, reviews of the implementation of recommendations and efficiency reviews. The coverage of topics in the papers below are therefore quite broad.

Results of the Spending Review

The Spending Review has a key role in promoting and embedding an evaluation culture throughout the Public Service. In asking Departments to analyse the totality of existing spending for efficiency and effectiveness, it is possible to improve policy outcomes for citizens using an evidenced-based approach. This will also improve the budgetary process through reducing the focus on year-to-year incremental expenditure and providing additional fiscal flexibility through the reprioritisation of existing spending.

The Spending Review is firmly linked to the positive budgetary and operational reforms that are improving how the business of Government is carried out. The Spending Review utilises the skills of the professional economists and evaluators across the IGEES network, and provides a platform for these professionals to showcase the benefits of evidenced-based policy development. The outputs of the Spending Review in 2018 are also closely aligned with the current public service reform programme, Our Public Service 2020.

Spending Review 2018 Papers (PER drafted unless otherwise stated)

Efficiency and Digitalisation within the Office of the Revenue Commissioners
Management of Exchequer Pay Bill
HSE Staff Trend Analysis, 2014-2017
Policing Civilianisation in Ireland: Lessons from International Practice
Review of Overtime Expenditure in An Garda Síochána
Pay Expenditure Drivers at Primary and Second Level
Understanding the funding needs of the third level sector
An Analysis of Older People Services Spend and Activity, 2014-2017
Pension Bill Projections for the Public Service: Cashflow Analysis
Review of Criminal Legal Aid (DJE)
Supports for Persons on Low Income
Public Employment Services – Mapping Activation
An Analysis of Replacement Rates
Analysis of IDA Ireland Expenditure
Analysis of Enterprise Supports and the Labour Market
An Assessment of Direct Supports for Start-ups and Entrepreneurship (DBEI)
Sports Capital Programme (DTTaS)
Analysis of PSO Expenditure on Public Transport
Assessing the Split Between Current and Capital Expenditure on Social Housing Delivery
Analysis of OPW Spending on State Rents
Subsidised Ferry Services to the Offshore Islands (DCHG)
Review of Recent Evaluations by DTTaS (DTTaS)
Implementation of recommendations made as part of the VFM and Policy Review undertaken in regard to the Arts Council (DCHG)
Comparative Levels and Efficiency of Public Spending
Analysis of Hospital Inputs and Outputs, 2014-2017
Nursing and Midwifery Expenditure
Trends in Public Expenditure

Published Alongside Budget 2019:
Projected Retirements from the Civil Service, 2019-2028
Defence Forces Pensions Expenditure (Defence)
Agriculture Cash Scheme Loan Support Scheme (DAFM)

2017 Spending Review

Background to Review

On Budget Day last year, Minister Donohoe announced that a review of day-to-day Government spending would take place in advance of Budget 2018. The 2017 Spending Review is the first in a series of rolling, selective reviews, which will cover the totality of Government spending over a three year period to 2019. The results of the first year of this new approach are published with the Mid-Year Expenditure Report 2017.

Context for Review

This is a new approach to reviewing expenditure, which has been tailored to reflect the current fiscal and economic landscape, while also reflecting the lessons learned from previous review rounds.  Each year, there is an increasing tendency at budget time to focus on the ‘additional’ incremental increases available, or the so-called ‘fiscal space.’ By systematically examining the totality of spending with regard to the principles of efficiency, effectiveness, sustainability and impact, this tendency can be countered.

The papers prepared for the Spending Review cover a wide range of policy areas and account for a significant proportion of current expenditure. Work on the 2017 Spending Review began in January of this year and 18 papers have been prepared.

Key Objectives of Review

The Spending Review process operates within the reformed expenditure framework that has been developed since the crisis. This new system is designed to replace periodic, sharp fiscal retrenchments with an ongoing emphasis on prudent and sustainable growth in public expenditure. It was introduced to better manage the efficient and effective allocation of expenditure, while respecting the necessary parameters set by overall budgetary targets. The Spending Review complements the operation of the MTEF in better reconciling these ‘top-down’ and ‘bottom-up’ objectives over the medium term.

Output of the Review

In terms of the output from the 2017 Spending Review, there are two main elements:

  • key sectoral trend analyses; and
  • individual topic papers.

Spending Review: Key Sectoral Trend Analyses

The first part of the Review involved an analysis of broad trends in Government expenditure over the past twenty years.  This demonstrated the significant increase in investment over the period with expenditure tripling from €18 billion in 1996 to over €56 billion in 2016. This investment has resulted in an expansion of frontline services, increased provision of social welfare supports and significant developments in infrastructure.

Following on from this overview, a more in-depth analysis was undertaken at a sectoral level. This included a review of the long-term expenditure trends in each sector, exploration of changes in key performance indicators, a brief discussion of the outcomes achieved and an overview of emerging expenditure pressures/demands.

Spending Review: Topic Papers

Following on from the high-level trend analysis, the individual topic papers were selected to reflect key strategic/priority areas of expenditure, both in terms of the quantum of expenditure and the significance of the emerging policy challenges.

Given the diversity of policy areas analysed in the Review, the papers differ reflecting the data available, the stock of relevant analysis already developed on the topic and the type of questions posed in the analysis. In addition, papers also differed by adopting varying analytical approaches, including baselining and trend analysis, investigation of cost drivers, forecasting of future expenditure pressures, process checks and consideration of policy reform options and their potential impact on the future evolution of the given policy area.

Results of the Spending Review

The published output of the Spending Review is intended to provide a robust evidence base to inform discussions between stakeholders ahead of the Estimates 2018 process and improve the options for decision by the Government for Budget 2018 over the medium-term. This will continue into the future on the basis of the analysis and results generated in the further two years of the current three year spending review cycle. From a longer-term perspective, the analysis also supports multi-annual planning, improving sectoral planning and resource allocation while respecting overall fiscal targets.

The Spending Review framework and approach taken is in keeping with a range of other reforms measures undertaken to embed and improve the use of evaluation in policy making across the public service, including the establishment of the Irish Government Economic and Evaluation Service, the development of the performance budgeting initiative and the Public Spending Code.

Tracking Trends in Public Spending 2017
An Assessment of the Rationale, Efficiency and Targeting of Supports in Enterprise Ireland
Climate Change Related Research and Funding in Ireland, 2010 – 2015
Current Expenditure on Housing Supports
The Central Votes: Spending Trends and Key Drivers
Analysis of Further Education & Training Expenditure by Education Training Boards
Special Educational Needs Provision
The Irish Government Economic and Evaluation Service (IGEES): Selection of IGEES Output
Environment Fund
Defence Expenditure
Public Service Obligation (PSO) Funding for Public Transport
Challenges to Investment in Policing: A Public Expenditure Perspective
Review of Social Protection Employment Supports
Acute Hospital Expenditure Review
Future Sustainability of Pharmaceutical Expenditure
Evaluating Further Education and Training Expenditure: Strategic Pilot Initiative Report (SOLAS)
Department of Jobs, Enterprise and Innovation: Review of Capital Expenditure on Research, Development and Innovation (2000 – 2016)
Courts Service Reform (Courts Service)
Disability Allowance Expenditure Drivers
Disability and Special Education Related Expenditure
Targeted Agricultural Modernisation Schemes II