Monday 20 February 2017

Budget 2017: Pension row as Fianna Fáil won't buy Leo's 'cuddly act'

Published 08/10/2016 | 02:30

Minister Leo Varadkar Picture: Tom Burke
Minister Leo Varadkar Picture: Tom Burke

A cuddly Leo Varadkar ducking into a telephone box and emerging with a "cape of fairness" is an image the Social Protection Minister would love just three days out from Budget 2017 - but Fianna Fáil is not buying it.

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It wouldn't be budget season without a bit of brinkmanship and after days and nights of business-like talks between Fine Gael, Fianna Fáil and the Independent Alliance, a major row has erupted over the €5 pension hike that has been a "red-line issue" since the first week of August.

Click here to view full-size graphic
Click here to view full-size graphic

Having been backed into a corner by Willie O'Dea's demand for a pension increase, Mr Varadkar found himself facing the possibility of coming up short on Budget Day. But this is not about the potential future leader of the party regaining some of the initiative, his supporters say. This is about the carers, the disabled, the blind, the widows, guardians of orphans, and people on invalidity and illness benefits.

In a private email to some party colleagues yesterday, Mr Varadkar openly admitted: "While we would like to give everyone €5 a week from the first of January, [it] would cost approximately €350m a year which obviously is impossible given current budgetary constraints.

"So we are working on a solution that will give everyone an increase as early in the year as we can afford."

Read more: Seven key talking points ahead of Budget 2017

Mr Varadkar said those groups lost €16 a week under Fianna Fáil and have had no restoration since the economic recovery.

His email warns that there is "no perfect solution but we will find one that is good and acceptable".

It's understood that Mr Varadkar has argued that a start date of June would make his plan for across-the-board increases achievable.

And while he has the backing of his usual foes in the Independent Alliance, the third wheel of Government, Fianna Fáil, smell a rat.

They believe Mr Varadkar is merely annoyed at having been outflanked and is trying to regain some ground with a "sudden cuddly, caring, sharing" approach.

"Some in Fine Gael have had a Damascus-like conversation to fairness and to caring in the last few weeks," said Fianna Fáil's public expenditure spokesman Dara Calleary.

"Leo likes everybody to think that he's cuddly and caring and that he suddenly walked into a phone box and came out with a cape of fairness. That's not Leo."

Read more: Budget 2017 update: Here is everything we know so far

Significantly, Fianna Fáil say a delayed start for social welfare increases is "not an option". "We have told them absolutely mid-year is not a starter," said Mr Calleary.

It's worth remembering that when the Government gave OAPs a €3 increase last year, Mr O'Dea called the figure an insult to older people.

"I'm getting calls into the office saying this wouldn't buy me a pint or a bag of chips, it wouldn't buy me a loaf of bread and what about all I've lost," he said last October when he had no influence over the budget.

Putting any increase back by six months would effectively amount to €2.50 a week for 2017.

Would Fianna Fáil collapse the Government over it? Probably not, but it's a dangerous game of bluff.

Mr Calleary said they would be "flexible about making sure that we can spread the benefits" but refused to define "flexible".

It is believed that Fianna Fáil may be willing to compromise on a three-month delay.

Read more: Varadkar seeks increased payments to families in poverty, disabled and carers in budget

Another approach under consideration could see the €5 figure reduced in order to facilitate a smaller increase for everybody, to be introduced earlier in the year.

Mr Varadkar will spend most of his weekend trying to devise a compromise that will keep all sides happy while simultaneously allowing him to portray himself as the Mother Theresa of Merrion Street rather than the minister who halved a €5 pension hike.

Apart from Mr Varadkar, ministers are mostly happy with their allocations.

The Independent Alliance has had more rows with themselves than with Fine Gael.

Transport Minister Shane Ross is understood to have been granted an extra €70m for his department but talks on the Alliance's own package, which includes money for flood relief, people with disabilities and the extension of the Home Renovation Scheme, are ongoing.

Ultimately, the Budget will pass because Fianna Fáil want to be seen as responsible. "The alternative to a budget being passed is another general election with months of uncertainty at a time when the country needs stability," Fianna Fáil's finance spokesman Michael McGrath said yesterday.

Read more: Unions fear new pension may be 'squandered'

There are elements of the Budget plan that don't sit well with them, most notably the first-time buyers' grant of up to €20,000, which Mr McGrath says will "push up the cost of new homes".

He is looking for a full impact assessment to be carried out, but added: "It's not something we will be bringing the Government down on." Party sources say they have "enough wins" to fight back against an onslaught of abuse from Sinn Féin next Tuesday.

These include a 10pc hike to the tax-free threshold for inheritance tax, a small reduction in Dirt for savers, and tax breaks for the self-employed and entrepreneurs.

On USC, which will be reduced by €260 for a worker earning €50,000, Mr McGrath said they would make "no apologies" for supporting the cut.

"We can say with certainty that we have influenced Budget 2017. We don't own the Budget. We haven't written it but we have certainly helped to shape it."

Irish Independent

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