Monday 22 December 2014

Budget throws a lifeline to hard-pressed families

* Free GP cards for all under-5s
* Pupil-teacher ratio protected *
But dole cut for young jobless

Published 14/10/2013 | 04:00

THE Government is tailoring the Budget to include a series of measures, including free GP care for under-fives, to help struggling families.

The parents of nearly 250,000 children in this age group will be spared the cost of doctors' bills with a new universal, GP-only medical card.

The package of measures aimed at families will also include greater investment in improving and supervising standards in creches, and an extension of the schoolbook rental scheme.

But young unemployed people, pensioners and some medical card holders are set to take a hit.

Among the tough measures in the Budget is a squeezing of the income thresholds on medical cards, including those held by the over 70s, which will result in some card holders losing out.

Pensioners are also set to be hit by a cut in the telephone allowance. And a new reduced dole payment for unemployed people aged under 26 will be introduced.

The family-friendly theme of the Budget will also see the pupil-teacher ratio in schools protected, and child benefit spared after last year's savage cut.

The Government last night signed off on the €2.5bn worth of cuts and taxes.

The fuel allowance for old-age pensioners and the respite care grant are, however, safe from social welfare cuts, along with core weekly rates, pension and the free travel allowance.

Government sources warned there would be extremely unpalatable cuts on the health and social welfare side, in particular.

"There is going to be some really tough stuff in there," a source said.

Following a weekend of difficult negotiations, a deal was struck at about 6.30pm last night on the key health budget.

A cabinet meeting, which was due to start at 6pm, was then delayed until 7.20pm – eventually finishing at around 11.15pm.

The GP-only medical card for the under-fives will be hailed as a victory by the Labour Party, as it championed the measure.

However, there were severe doubts over whether the measure was affordable and it hung in the balance for the past week.

Health Minister James Reilly is understood to have secured the extra funding of almost €40m required for the policy. He views the development as a step on the road to the introduction of Universal Health Insurance.

At the moment, 180,000 children under five, 47pc, are covered by full medical cards or doctor-only medical cards.

The new measure will see another 240,000 children under five, 53pc, have their doctors bills covered.

The Government will have to bring in legislation to extend the doctors' coverage to every child in the country under five. The final package saw the cuts in the health budget reduced by €180m to €200m.

On the social protection side, the level of cuts was dropped by between €140m to €150m.

Government sources say there was some final "tweaking" of the social welfare package, on foot of demands from Fine Gael for greater levels of reform.

A change in the terms of dole payments for unemployed young people will be announced.

The changes will only apply to new entrants to the Live Register and won't affect existing recipients.

Young people don't get the full €188 a week dole payment – they are paid a lower rate.

At the moment, young people aged 18-21 receive €100 a week. This rate will now be extended to the age of 24.

At present, those aged 22-24 are paid €144. Once a person hits 25, their payment goes up to €188, but this will now be extended to 26.

Fine Gael will argue it is a reform they demanded to increase labour activation to provide an incentive to take up a job. But Labour will say it is coming in line with the European youth guarantee of providing education, training or a job for those under the age of 25.

The Finance Minister is also believed to be weighing up a gradual increase in the special low rate of VAT, rather than the planned full return.

Fine Gael sources say Mr Noonan had privately hinted the 9pc rate wouldn't go back up to 13.5pc, instead settling at between 10.5pc and 12pc.

He will also announce a stimulus plan worth over €500m and packages to assist the construction industry and start-up firms. Mr Noonan will slap a levy of as much as €200m on the country's banks in tomorrow's Budget.

YIELD

The levy, likely to apply to all main street banks operating here, will go some way to replacing the money lost to the Exchequer following the end of the State's guarantee scheme.

That scheme yielded as much as €1bn from banks that enjoyed state protection. The new levy could raise anywhere from €150m to €200m for the State but would only represent a small burden on each lender because it would apply to more institutions than the scheme it would help to replace.

Mr Noonan also looks set to raid savings again by increasing the Deposit Interest Retention Tax (DIRT), which is levied on savings in bank accounts and could yield another €70m.

Higher DIRT taxes may discourage people from saving and boost retail sales.

More cash could come from changes to a cap on tax relief on pensions delivering retirement incomes above €60,000. Mr Noonan could also raise more limited funds from hikes in capital gains tax and capital acquisitions.

By Fionnan Sheahan,  Fiach Kelly  and Thomas Molloy

Irish Independent

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