Croke Park deal savings at €330m for nine months, says report

About €330 million in pay and non-pay efficiency savings across the public service were generated in the nine months to the end of last year under the Croke Park agreement, according to a new official report.

However, the third report of the national body overseeing the implementation of the deal said while it had made a significant contribution to progress in stabilising the public finances, further cost extractions and public service reforms were essential.

It pointed to the need to move ahead with plans to rationalise State agencies as a matter of urgency and said there were significant opportunities to produce savings as a result of the introduction of shared services arrangements, particularly in the education, health and local government sectors.

The report said with staffing levels set to fall further, it was essential that public service bodies worked to identify reforms in how they did business, and to eliminate outdated work practices.

It added while new roster changes in the health sector were welcome, the body believed there was a need for these “to be systemic across the entire sector”.

The report said that overall, about €1.8 billion in pay and non-pay costs had been saved since the Croke Park agreement was put in place in 2010.

Further challenges

It warned further challenges remained in the future in order to ensure the State remained on track to meet its financial targets.

The implementation body said the volume of savings achieved between April and December last year and the scope of progress reported on other reform initiatives were down compared with previous periods since the introduction of the Croke Park agreement in 2010.

It said this was unsurprising, and reflected the progress already made under the deal, particularly in terms of staff reductions.

The report said staff numbers – one of the main drivers of reductions in the pay bill – had fallen by 1,500 between April and December last year.

It said the pace of departures from the public service had fallen in the period, but pointed out about 8,000 personnel had left before the introduction of pension changes in February 2012.

The report said pay savings brought about as a result of the departures of staff during the period, as well as through other measures, had generated savings of over €63 million.

It added it had previously set aside a provision of over €97 million in its calculations to facilitate the recruitment of staff to replace some of the 8,000 who left before the end of February 2012. This money was not required, however, and the sum could now be classified as a sustainable saving on the State’s pay bill.

“This brings the total sustainable pay bill savings for the reporting period to approximately €161 million.”

The report said there were now 18,700 fewer staff in the public service than when the agreement was put in place.

The implementation body said while staffing numbers fell overall, there were some instances where numbers increased. For example, numbers in the Defence Forces increased by 600, while the figures for the Civil Service rose by 136.

The implementation body said the exchequer pension bill was expected to increase by €500 million in the period between 2009 and 2015, from €2.6 billion to €3.1 billion.

‘Extracting costs’

The report maintained that “increases in pension costs are not a result of the agreement, whose focus is on extracting costs from the exchequer pay bill”.

It said the relationship between movements in the pay bill and the pensions bill was not a direct one. Movement in the pension bill was subject to a number of other factors including increased life expectancy of existing pensioners.

The report also maintained that €168 million in savings were generated as a result of efficiency or non-pay savings between April and December.

It said this included €58 million in the health sector, €17 million in An Garda Síochána and €14.5 million in the education sector.

Minister for Public Expenditure and Reform Brendan Howlin said the Croke Park implementation body was now being stood down and would be replaced by a new management-union group to oversee the new Haddington Road deal. This will be chaired by the Labour Relations Commission.

Mr Howlin said: ““We need to build on the good progress that we have made since the public service reform plan was launched in November 2011. As an important first step, we will be developing a single integrated view of reform which will allow for a streamlined and consolidated approach to planning and reporting, with one single integrated reform delivery plan for each department and office.”