USC cuts and Garda gangland operations in danger as unions demand pay rises
Plans to phase out the Universal Social Charge (USC) have been thrown into serious doubt as the Government scrambles to prevent the collapse of the public sector pay deal.
Public Expenditure Minister Paschal Donohoe last night warned of serious consequences for "everything else the Government wants to do".
Fine Gael ministers are now questioning whether the party's plans to abolish the USC over five years have been placed in jeopardy.
"The fallout from this could be huge. There will undoubtedly be fewer tax cuts than we had hoped," said a senior Cabinet source.
And there are now major fears that front-line services, including key garda operations, will need to be scaled back in order to find the €40m additional funding for garda pay.
Senior security sources last night said successful operations aimed at tackling the burglary epidemic and the Kinahan cartel could be jeopardised as a result of the Labour Court ruling.
The sources said the success of these operations is based on the extra policing hours available to Garda Commissioner Nóirín O'Sullivan through Department of Justice funding for overtime.
It has now emerged that the Department will have to find the vast majority of the €40m from current resources - meaning ongoing operations could be impacted.
In a separate but equally worrying development for Taoiseach Enda Kenny, senior Fianna Fáil figures last night questioned whether the garda pay deal represents a breach of the Confidence and Supply Agreement that underpins the Government.
The agreement states that Fine Gael and Fianna Fáil "recognise the full implementation of the Lansdowne Road Agreement in accordance with the timelines agreed and recognise that the recruitment issues in the public service must be addressed as part of this agreement".
One party source said the fact that a side deal had been struck with the Garda Representative Association (GRA) brought this particular element of the agreement into question.
The fallout from the deal was discussed at a meeting of the party's frontbench in Leinster House yesterday.
Fianna Fáil is now expected to seek an urgent meeting with Mr Donohoe and Finance Minister Michael Noonan to discuss the fallout from the garda deal.
Speaking at a press conference in Government Buildings, Mr Donohoe said the Government has accepted the Labour Court recommendations and remains committed to the Lansdowne Road Agreement.
"However, this is a recommendation that also has significant consequences and Government, across the coming weeks, will now be meeting the public services commission of the Irish Congress of Trade Unions to engage with them on their views in relation to this matter," Mr Donohoe said.
"We have to have agreements that are affordable for everybody. They have to be agreements that are affordable for those who depend on public services and also those who work within public services," he added.
Mr Donohoe was asked whether the garda deal - and any subsequent deals that follow - could impact on tax plans.
"Any change in the agreement that we have in relation to the Lansdowne Road Agreement has consequences for everything else the Government wants to do," he said.
Pressed on whether this includes USC cuts, Mr Donohoe replied: "It has consequences for everything," adding that the Government has no intention of increasing income tax.
Following the press conference, a senior Cabinet source said it remains the Government's intention to phase out the USC over the next five years.
The same source said the Government is committed to sticking by its policy of two to one spending increases versus tax reductions.
But other ministers privately believe the policy to phase out the USC over several budgets may have to change if industrial unrest erupts.
"The stakes are high. This has heated things up.
"The ripple effect could be extremely destabilising," one source said.
Mr Donohoe is now understood to want to create a "space" for discussions with public sector unions that will not jeopardise the Lansdowne Road Agreement.
Further meetings between Government and union figures are expected in the coming weeks.