Saturday 21 September 2019

No-deal warning: Brexit risk to €5 pension and social welfare hike

‘Fiver Willie’: Willie O’Dea has called for another €5 increase. Photo: Tom Burke
‘Fiver Willie’: Willie O’Dea has called for another €5 increase. Photo: Tom Burke
Hugh O'Connell

Hugh O'Connell

The €5 hike to the State pension and weekly social welfare payments is in jeopardy amid a major Budget battle in Fianna Fáil.

Despite the risk of a no-deal Brexit and opposition at senior levels of the party, social protection spokesman Willie O'Dea said he would be "robustly" arguing for the same €5 per week increase in welfare payments.

Such increases were secured in each of the past three Budgets under the party's Confidence and Supply deal with Fine Gael.

"I am looking for €5 across the board because this was part of the Fine Gael and Fianna Fáil manifestos that we would give a certain amount over the lifetime of the budget - the commitment stands," he told the Irish Independent.

Mr O'Dea's comments have been backed by front and backbench colleagues - but they are at odds with the party hierarchy. Public expenditure spokesman Barry Cowen said "all bets are off" in a no-deal Brexit scenario.

"The potential for Armageddon is far too severe and it will be all hands on deck, we must be focused on those areas that are most vulnerable," Mr Cowen said. "The least of our worries would be pensions."

Fianna Fáil has already moved to rule out supporting tax cuts in the Budget in a no-deal Brexit scenario and finance spokesman Michael McGrath said significant resources would need to be targeted at sectors worst affected by a crash-out Brexit.

Fianna Fáil Brexit spokeswoman Lisa Chambers said resources would have to be put into "limiting job losses and protecting vulnerable sectors such as agri food".

Mr McGrath's position, a senior Fianna Fáil source said, was the party position.

But Mr O'Dea insisted there was room for welfare increases even in a no-deal scenario.

"I don't understand all this stuff about Brexit because the Government has said that there is €700m to spend and that figure won't change," he said.

"If there is no deal we have to borrow a couple of billion so how does that affect the distribution of the Budget figures?"

He cited Finance Minister Paschal Donohoe's comments in June when he said in the event of no deal, rather than running a small surplus, the State would run a deficit of between 0.5pc and 1.5pc of GDP next year.

Mr O'Dea argued that this would mean social welfare increases would still be possible with Brexit contingency measures funded by extra borrowing.

"My understanding from what Paschal Donohoe said, that nobody contradicted, is there is a certain amount of money to spend," Mr O'Dea said. "Some of that money should be spent on maintaining standards of living for those who rely on social welfare to survive.

"Remember that money spent on social welfare increases is not a net burden on the State. A lot of it goes back into the economy.

"Just suppose that there isn't a Brexit crash-out, then what do we do? Another budget and increase social welfare?"

Mr O'Dea's fellow frontbencher Marc MacSharry backed the €5 increase. "I would hope the fiscal space available can support this well deserved and modest increase for pensioners," he said,

Fianna Fáil's spokeswoman on children Anne Rabbitte also said she supported a €5 increase but acknowledged "the pot is very tight".

Louth TD Declan Breathnach said: "I always support 'Fiver Willie'. The older generation have served this country well and the least we can do is try and give them a few bob to deal with cost of living."

Fianna Fáil TD Eugene Murphy claimed pensioners he had spoken to were prepared to settle for a smaller increase "if things are really bad".

Irish Independent

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