Saturday 25 January 2020

Struggling families face raft of hidden charges

Efforts to portray less draconian Budget exposed by the small print

Charlie Weston and Fionnan Sheahan

STRUGGLING families are facing a dramatic hike in health insurance bills as the fine print of yesterday's Budget revealed a wide range of hidden cuts and stealth charges.

The Government's efforts to make the €1.4bn package of cuts appear less draconian than feared were badly exposed as the true extent of the Budget's impact gradually emerged.

After a month of scaremongering by ministers, a number of floated cuts were dropped. But the first part of Budget 2012 still contained a raft of costs hidden beneath the surface.

And the knock-on effects of the Budget will be felt beyond the cuts and taxes outlined by the Government.

The extra charges for private beds in public hospitals are expected to see health insurance premiums rocketing by up to 50pc.

Budget 2012 contained a series of unpopular measures including:

* Child benefit cut for the third and fourth child.

* Fuel allowance cut by six weeks.

* Changes to the eligibility for the one-parent family payments.

* The age for the back-to-school clothing allowance was raised.

* Jobseekers' benefit was also changed.

Public Spending Minister Brendan Howlin deliberately avoided spelling out the impact of some of the measures.

Among the other costs in store are a €100 household charge, a €250 rise in college fees and the cost of school transport and drug bills rising.

The social welfare payments affected also include reductions in disability payments for young adults. The headline rate of child benefit will stay at €140 a week for the first two children, but the rate for the third child will be cut by €19 and fourth and subsequent children will be reduced by €17.

The second part of the Budget will be announced today by Finance Minister Michael Noonan. A 2pc hike in VAT and an increase in motor tax are among the anticipated tax hikes.

But figures contained in yesterday's document indicate that the Government intends to raise PRSI from new sources, such as rental income and dividends.

Families are set to be hit hard by the measures announced yesterday. The bill for the average household could mount to €1,000 over a year, when the health insurance costs are included, even before the tax hits to come today.

The cost of health insurance will rocket after Health Minister Dr James Reilly said yesterday he would be imposing new charges on insurers.

VHI Healthcare boss Declan Moran said the higher charges could see premiums for consumers increasing by 50pc.

That would mean a family with two adults and two children facing a hike in annual premiums of €1,400 to almost €4,000 a year.

The minister announced that the changes would come in two stages -- with a subsidy for private beds in public hospitals removed from January.


Then legislation will be introduced later in 2012 which will force health insurers to pay hospitals if one of their members is placed in a public bed. The Department of Health expects that both measures will raise in the region of €143m in 2012.

The knock-on effects of the Budget also include increased bus and rail fares and falls in redundancy payments, and more pupils in classrooms.

Changes in VAT to be announced today are set to add €500 to the spending of the average household. And petrol, diesel and coal are all set to go up from hikes in carbon tax.

The Labour Party rolled out its TDs to welcome the content of the Budget.

Mr Howlin denied the Government had scaled back its social welfare cuts by €190m to €475m to pressure from Labour backbenchers.

"There's nobody in either of the two parties in Government who want to cut basic social provision," he said.

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