The exchequer can expect to save no more than €8m from the rationalisation of 41 state agencies proposed by finance minister Brian Lenihan in last October's budget.

Speaking in the Dáil last week, Lenihan said that rationalisation proposals covering nine stage agencies have been implemented so far and this is expected to deliver savings of "at least €2m". This suggests that savings of no more than €8m in a full year can be expected from the rationalisation plan.

The minister said he expects another eight rationalisation moves to be implemented in full this year. Even though there are more than 500 state agencies, Lenihan's plans to reduce that number by 41 met considerable resistance, particularly in those agencies targeted for rationalisation.

There was particular resistance to the integration of the Equality Authority and the Human Rights Commission, leading to the resignation of the Equality Authority's chief executive, Niall Crowley, followed by several members of the authority's board.

Given that the exchequer is facing a €20bn deficit this year, Lenihan will no doubt be disappointed that he can expect such a small saving from a move that has caused such controversy. But the minister explained in the Dáil that while cost savings are important, a key aim is "to deliver a more citizen-friendly system of government with better, more focused delivery of services".

Lenihan's main problem is that while any number of agencies can be rationalised, he
cannot force the staff to quit and staff costs
represent the bulk of the cost.