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Monday 18 February 2019

Government warned to 'prepare for war' over pensions cut

‘Grey revolt’ on cards as Labour TDs threaten to walk over austerity budget

Pensioners protest outside Leinster House in 2008
Pensioners protest outside Leinster House in 2008
Fianna Fail social welfare spokesman Willie O’Dea

Fionnan Sheahan, Daniel McConnell and John Drennan

The Government is being warned to “prepare for war” if it tries to cut the old-age pension.

The coalition is being urged to clarify its position following reports in the Sunday Independent of a planned €10-a-week cut to the old age pension.

Fianna Fail social welfare spokesman Willie O’Dea said such speculation frightened the elderly and would be resisted.

“If Joan Burton is ready to acquiesce with another attack on the most vulnerable, she’d better be prepared for war,” he said.

“I want the Government to make an unequivocal statement that this is not going to happen,” he said.

Senior coalition sources told the Sunday Independent that the Government wants to cut the old-age pension to meet a €3.1bn Budget Day target, senior coalition sources have said.

At present, more than half-a-million pensioners receive payments of up to €230 a week from the State.

It has now emerged that a proposal to means-test the pension has been overtaken by discussions that it be cut instead.

The total cost of the old-age pension, or the state contributory pension, is €5.3bn a year.

The International Monetary Fund, which forms part of the Troika, told the Government last September to cut the old-age pension as well as the minimum wage, social welfare payments and child benefit as part of a range of measures to reduce the budget deficit.

While details of the proposed cut to the old-age pension are not yet finalised, it is estimated that a €10 a week reduction across the board would realise a saving of between €250m and €300m.

Five years on from the "grey revolt" of pensioners — which forced the then Fianna Fail-Green Party coalition to reverse a planned removal of medical cards for the over- 70s — it has emerged that worse-than-expected growth figures have led officials to warn that the full €3.1bn adjustment will be needed.

According to senior government figures familiar with the budgetary process, recent Labour demands for a softer Budget have been deemed "unrealistic", given the necessity to meet targets laid down by the Troika.

They say particular focus has been turned on reducing so-called universal payments which come under the control of Social Protection Minister Joan Burton.

However, last night many within the Labour Party were adamant that any move to implement such draconian cuts, particularly in Ms Burton's department, would result in a collapse of the Government and an early general election.

Within Labour, a revolt against austerity is being driven by a group of five Gilmore loyalist backbenchers who said the cuts demanded of Ms Burton are "not possible, not wearable and not do-able".

Behind all the political kiteflying of recent weeks, the proposed old-age pension cut is just one of a host of "fucking awful" measures actively being considered, one Government source said.

In what will be the eighth austerity Budget since 2008, to be revealed on October 15, the measures include:

● Cuts to child benefit.

● Cuts to widows' pensions.

● Cuts to rent allowances.

● Cuts to TV allowances.

● Sweeping cuts to "non-core" health services, including elective surgeries, home helps and carers amid fears that a budget day bailout for Minister James Reilly will be needed.

● "Bursting" of pupil-teacher ratios in primary and secondary schools by two per classroom.

● Further cuts to 10,000 special needs assistants, and

● Major cuts to third-level funding and the spectre of higher than expected thirdlevel fees.

Despite protestations from Ms Burton and her party leader, Tanaiste Eamon Gilmore, that child benefit would not be reduced, officials familiar with the budget process are adamant that further savings will be "absolutely necessary" for Ms Burton to meet her cuts target of €440m.

Any attempt to impose such a level of austerity will cause serious political difficulties for the high-profile minister.

Ms Burton has repeatedly made it clear that outside of protecting child benefit, her other political priority in welfare was the protection of pensioners.

She told the Sunday Independent: "It is important that we realise pensioners are paying their way and it is important that pensioners know their incomes are secure." Any reduction in child benefit and pensions would be seen to represent a major political defeat for Minister Burton.

Yet both the Department of Finance and the Department of Public Expenditure and Reform are operating on the basis that she will find the cuts, and have said "there is no scope to ease her targets".

In a major hardening of the Labour position, party TDs including John Lyons, Arthur Spring, Eamon Maloney and Michael Conaghan have told the Tanaiste that the current €440m of cuts, or anything even near it, are not tolerable.

Speaking to the Sunday Independent, Kerry TD Arthur Spring said the growing tensions between the coalition parties was a welcome development.

"I welcome this unveiling of the differences between Labour and Fine Gael," he said.

"Social democrats and right-wing parties are not natural coalition partners.

"For the first time the divide — the different colours of the parties — is becoming very apparent. "Labour will continue to protect the values that separate us from our coalition partners." Mr Spring added: "If we do not get a compromise, people are going to have to ask if they're willing to go." Should an election occur, said Mr Spring, no one in Labour has "anything to be embarrassed about if we end up facing the people at the doors".

Meanwhile, Labour TD Kevin Humphreys has warned that the party will "not accept a red cent more in extra austerity".

He said Labour backbenchers are working together to articulate the party's values in advance of the Budget, and criticised those within government who he said "seem to have developed Stockholm Syndrome with the Troika".

He also warned that if the escalating split on austerity was not resolved, it would "certainly lead to a marked deterioration of relations between the coalition partners from which we might not recover from".

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