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Ministers 'weighing up' whether 1.4million people will get Christmas Bonus welfare payment

  • Ministers warn of "severe" impact of a Level 5 lockdown and a deficit that would "grow and grow and grow"
  • McGrath promises "significant" funds for building social housing, roads, schools and public transport projects

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Paschal Donohoe (left) and Minister for Public Expenditure and Reform Michael McGrath (Julien Behal/PA)

Paschal Donohoe (left) and Minister for Public Expenditure and Reform Michael McGrath (Julien Behal/PA)

Paschal Donohoe (left) and Minister for Public Expenditure and Reform Michael McGrath (Julien Behal/PA)

MINISTERS will take the remaining days before the Budget to consider whether or not around 1.4m people will get a Christmas Bonus welfare payment this year.

Speaking this afternoon Public Expenditure Minister Michael McGrath said "no final decision has been made" but ministers will "weigh up all of the different considerations" in the coming days.

He was speaking as he and Finance Minister Paschal Donohoe spoke to reporters ahead of the publication of the pre-Budget White Paper on receipts and expenditure.

Last year 1.2m people including pensioners, long-term jobseekers and others benefitted from a 100pc Christmas Bonus - of an extra week's welfare payment - at a cost of €279m.

The payment was axed after the last economic crash but was gradually restored to 100pc.

Mr McGrath did not say whether there will be a bonus this year and whether more than 200,000 people on the Pandemic Unemployment Payment (PUP) who lost their jobs in the Covid-19 crisis will be included.

He said: "No final decision has been made on that issue at this point in time.

"We are very conscious on the one hand that it has been a very difficult year for so many people including many people who lost their jobs but on the other hand the Exchequer is in a very strained position as a result of all the additional costs that we've had to incur.

"So we'll weigh up all of the different considerations in the next number of days and I would expect along with Minister [for Social Protection] Heather Humphreys to confirm the position next week."

Mr McGrath has said it could cost up to €400m to pay the Christmas Bonus to welfare recipients including those on the PUP.

Separately Mr Donohoe said the current expectation is for this year's deficit to be in the region of €21bn.

However, it will be higher if more strict lockdown restrictions in Level 4 or 5 of the Government's 'Living with Covid' plan are imposed later in the year.

Mr Donohoe said that on a no-policy-change basis, the White Paper indicates that the deficit for next year will be €14.5bn.

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However, this is likely to rise depending on the spending and tax measures in the Budget.

Government figures have suggested that the deficit for 2021 will be in the region of €20bn.

Mr Donohoe would not say if this means the sum available on Budget Day will be around €5.5bn, saying that work remains to be done in the coming days and he would make the announcement on Tuesday

Mr McGrath was asked about the nature of capital spending projects that will be funded in the Budget

He said it would be across all Departments and listed plans like building more social housing, road projects, active travel like cycling and walking, public transport, school extensions and new school developments. He promised a "very significant envelope" for Capital spending will be included in the Budget.

The ministers were asked about the impact on the State's borrowing if Level 5 Covid-19 restrictions were to be introduced in the coming months.

Mr Donohoe said the projected deficit of €21bn for this year was already "very significant" and if further public health measures were introduced it is going to "grow and grow and grow".

He warned "that's why in any decision that is made regarding the need to take more decisions to move up to Level 4 or Level 5 - we just need to be all aware of the many repercussions that are going to be."

He said his "greatest concern" would be the impact on unemployment and "the number of people who might lose their job for the second time in the year."

He said: "if the public health guidance provides a very strong case for moving to Level 4 or Level 5 I'll certainly consider it at that point but will do so cognisant of what the job consequences could be later on in the year."

Mr McGrath pointed to the 600,000 people who were on the PUP during the lock-down earlier this year at a cost of €200m per week as an example of the "immediate fiscal implications" of tightening restrictions.

He said that's "before you measure the loss of output across the economy, the impact on consumption taxes as we saw with VAT earlier in the year".

"So the impact would be immediate and very severe... and that's without even measuring the human impact of people losing their jobs," Mr McGrath added.

Mr Donohoe said the Budget will focus on dealing with the immediate challenges of the Covid-19 pandemic and the consequences of a possible no-trade-deal Brexit.


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