Child benefit to avoid Budget axe -- for now
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CHILD benefit and social welfare payments will escape the axe in Tuesday's crisis Budget.
And junior ministers will survive the swingeing cutbacks.
There were strong indications last night, however, that all three areas would be hit later in the year.
But the early childcare supplement, which has already been slashed twice in the past six months, looks to be under pressure in the Budget.
The revelations came as Finance Minister Brian Lenihan received a major boost with the EU signalling it would allow the Government to borrow far more than originally planned.
Child benefit is expected to be left alone until a report comes back from the Commission on Taxation.
It will make proposals on ways to tax it for higher earners.
The Cabinet is due to sign off on the final details of Budget on Monday.
Junior ministers are now thought to have been given a brief reprieve pending a report on Dail reform.
Taoiseach Brian Cowen yesterday gave a clear indication there would be changes to their numbers. "I've been indicating that obviously we're looking at Dail reforms within the reforms,"he said.
Mr Cowen said there were many issues in the political system that would need to be addressed.
However, government sources said the issue was likely to dealt with by a wider report on reform of the entire political process.
Child benefit, in particular, and reductions in social welfare rates were on the table as areas to cut spending were being sought.
The social welfare bill is going up to €21.6bn this year, accounting for 38pc of current spending.
The lengthening dole queues mean unemployment benefits are now expected to cost €4.7bn -- up from the €3bn at the start of the year.
The Government appears to have decided to leave social welfare spending alone, but it will warn this won't be the case indefinitely.
The Commission on Taxation report, to be published later in the year, is expected to recommend that child benefit be taxed. The Commission will also put forward a plan to reform the entire income tax system.
In the interim, though, the Government will increase income levies to bring in additional taxes across the board.
Meanwhile, Mr Lenihan got a clear signal yesterday that the EU will allow us to borrow far more than originally planned in next week's emergency Budget.
The Government had promised to keep its rapidly rising budget deficit within the agreed limit of economy activity this year, which would have meant imposing more taxation increases and spending cuts.
But Mr Lenihan said the European Commission was happy with the approach the Government was taking -- which is expected to lead to a deficit of more than 9.5pc of Gross Domestic Product.
- Fionnan Sheahan and Michael Brennan in Prague
