FG: 'We'll do deal on USC if FF will row back on water'
Fine Gael is willing to abandon its pledge to scrap the Universal Social Charge if Fianna Fáil rows back on plans to scrap water charges, sources have said.
There is a growing mood among TDs in both parties that their leaders, Enda Kenny and Micheál Martin, will have to meet before the Dáil sits again on April 6 to discuss whether it is possible for a second election to be avoided.
As reported by the Irish Independent on Saturday, the issue of water bills is now seen as the major blockage to Fianna Fáil facilitating a Fine Gael-led minority administration.
Mr Martin's party is adamant that it will need a binding agreement with Fine Gael that water charges will be suspended for up to five years, if it is to allow Mr Kenny to become Taoiseach.
Figures within Fine Gael say making major changes to the structure and operation of Irish Water is not an option.
But in the first sign of a potential trade-off since the election, sources have now said that Fine Gael would be willing to drop its plan of scrapping the USC over the next five years.
A senior Fine Gael source said the election result proved that its promise to end the USC was entirely "out of touch" with the concerns of families, who instead want a greater focus on public services.
Fianna Fáil's USC proposals were more modest and allowed for the scrapping of the tax on incomes of up to €80,000 - but those earning above this level would still have to pay, albeit at a reduced rate.
"This could be one area of compromise," said a minister. "We'll support your USC proposals - but you must row back on water."
Fine Gael has already indicated that tax policy will form part of the negotiations currently under way with 15 Independent TDs and the Green Party.
"Personal tax rates and the future of the USC" were listed among 86 items up for debate on a document circulated to those who attended a meeting in Government Buildings last Thursday.
However, the same list makes no mention of water charges, instead suggesting that only "water management" is an issue for discussion.
Fine Gael is determined not to suspend charges or abolish the utility - the two central planks of the Fianna Fáil policy - for fear that it would bring the party into "meltdown".
The party leadership believes it has the full backing of the parliamentary party and the grassroots when it comes to the principle of water charges.
A Fine Gael strategist last night said the party would "budge somewhat" and would potentially support a rebrand of the deeply unpopular public utility.
But in relation to charges, the senior source said the majority of Fine Gael voters had paid their bills and to ignore that would prove "catastrophic" for the party.
"We'd face wipeout in rural Ireland if we were to go down that route," the source added.
Mr Kenny and Mr Martin were seated just seven seats apart at yesterday's Easter Rising commemorations outside the GPO, but did not interact beyond the normal pleasantries.
Both men are due to continue meeting with Independents and the Green Party this week - but those groups are now growing impatient.
A Fianna Fáil source said: "It's Enda Kenny's job to make the first contact - but we're waiting by the phone."