Thursday 20 June 2019

John Drennan: Child benefit to be cut by €10 per child

Labour reneges on election promise of 'no more allowance cuts after last year'


Child benefit will be cut by at least €10 a month in the Budget on December 6, the Sunday Independent has learned.

The Department of Social Protection wanted to tax the benefit, but bureaucratic difficulties mean the benefit will "be cut by at least €10 a month and it could even be higher''.

The decrease in the benefit is one of a number of controversial measures that the Social Protection Minister Joan Burton will have to bring in as she tries to protect the old-age pension and basic rates of unemployment benefit.

In the Budget of December 2010 child benefit was cut by €10 per month for first and second children while benefits for a third child were cut by €20.

Last February Labour Party leader Eamon Gilmore promised that Fine Gael would have to abandon plans to slash child benefit if it was to have Labour as a partner in Government.

"Fine Gael need to drop their plans to cut child benefit, that's one, so let's start with that one," he said during the election campaign on February 19.

But Ms Burton is under so much pressure to secure cuts that her department only narrowly staved off attempts by the troika-driven Economic Council to axe the half-carers grant and the bereavement grant.

The move to cut children's allowance will inflame the already significant tensions between Labour and Fine Gael backbenchers and the Cabinet.

Last week Labour Super Junior Minister Willie Penrose resigned over the closure of Mullingar barracks and there is also massive anger over the closure of beds in Community Nursing Homes in the Midlands.

Budget cuts can bring down governments. In 1982 Minister for Finance John Bruton failed to get his Budget through the Dail when a number of independent deputies voted against the Fine Gael-Labour coalition on proposals to put VAT on children's shoes.

Ms Burton has to date fought a successful rearguard action to reduce the cuts she has to make in her department to just €700m.

However, her proposals to make employers responsible for the first four weeks of sick pay and to reduce the amount the State pays in redundancy settlements have sparked a furore among the ranks of her Fine Gael coalition partners.

Analysis pages 21-27 & 36

The sick pay decision was strongly criticised at a Fine Gael parliamentary party meeting last week where over 25 TDs vehemently opposed the proposal, which has also run into opposition from business organisations like RGDATA and the Irish Hotels Federation.

Ms Burton, however, claimed that in allowing firms to claim for employees after four weeks, she was being sensitive to their needs.

Ms Burton also said "the number of people claiming illness benefit and other disability payments has increased greatly in the past 10 years from about 170,000 to 247,000 with the cost rising from €330m to €900m during that period.

She insisted that it would leave Irish employers in a very favourable position compared to the UK and the Netherlands, where employers pay for sick leave for two years and 28 weeks respectively.

Ms Burton also claimed the proposal could play a major role in ending high rates of absenteeism in public sector bodies such as the HSE.

Within certain State bodies the culture of absenteeism is so endemic it is believed employees are told to make sure to claim their full quota of sick days each year.

Meanwhile, when it comes to the equally controversial plan to cut the State's contribution to redundancy schemes from 60 per cent to 30 per cent, the Sunday Independent has learnt that profitable multinational corporations are amongst some of the top beneficiaries of the current scheme.

Some of the top multimillion-euro beneficiaries of the scheme in recent years include SR Technics, Diageo and Dell.

A source noted that this is the equivalent of "welfare tourism for multinationals".

A senior source said: "We don't see why the taxpayer should pay for often profitable companies to make their employees redundant."

The source added: "Ireland is unusual among OECD countries in making rebates to employers who make staff redundant. The system was abolished in the UK in 1989 and the cost of the rebates is enormous."

Sunday Independent

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