Wednesday 23 October 2019

Cormac McQuinn: 'Parties ready to fight it out over Budget scraps amid huge doubt around pension hikes'

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Cormac McQuinn

Cormac McQuinn

A fiver for everyone when it comes to social welfare payment increases has been a simple but effective Budget wheeze that has greased the wheels of the Confidence and Supply deal between Fine Gael and Fianna Fáil.

It didn't hurt that both parties made promises of around €5-per-week hikes in the State pension in their respective election manifestos.

In the era of new politics, it was old-school - targeting that element of the electorate most likely to turn out on polling day. And sure why not give the fiver to carers and jobseekers at the same time if it can be done - and it was.

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But the looming prospect of a no-deal Brexit has put a spanner in the works and it's one that will see the social welfare package become one of the key battlegrounds on Budget 2020.

Finance Minister Paschal Donohoe has said he has €700m to spend next year, which is not a huge chunk of change when the country is weeks away from a potentially catastrophic economic threat.

Fine Gael's cherished plans for income tax cuts are out the window for now and warnings have been issued that across-the-board welfare increases will not happen.

Mr Donohoe himself has said social welfare increases will be targeted at the most vulnerable and the fiver-for-everyone - even for pensioners - is all but certain to be off the table.

It is pricey, with last year's social welfare package costing €360m over a full 12 months. A repeat would gobble up more than half of the spending leeway Mr Donohoe is expecting.

Social Protection Minister Regina Doherty was cornered during the week on the prospects of a €5 increase for pensioners. She didn't rule it out, but also warned that she has to factor in the cost of a hard Brexit. Ms Doherty said there's "a long way to go yet" in Budget talks and her department is always one of the last to get its allocation signed off on. She said there are vulnerable people in Irish society including children, people with disabilities and pensioners and "my job is to make sure I look after all of them".

Fianna Fáil's social protection spokesperson Willie O'Dea last night accused the Government of "trying to create a fait accompli" that there won't be social welfare increases. He said: "The size of the social welfare package has not been agreed yet, let alone the shape of it. Trying to create a particular position in advance of the negotiations that have still to take place - I think that's quite frankly unacceptable."

Mr O'Dea is still pushing for the increases, pointing out that in recent years the €5 hikes have kicked in only from March, which works out at €3.75 per week.

He said there's a responsibility to protect "most vulnerable people in the country" even if there's a no-deal Brexit and such sums "don't seem to be very much to ask".

Mr O'Dea also questioned if the €700m will be the final sum available for spending.

"We've talked about those figures before and they always manage to be bigger somehow on Budget day," he said.

While Mr O'Dea is stubbornly persisting in his call for welfare increases, it's unclear how far Fianna Fáil will push the issue. He himself says the party hasn't finalised its demands in the area and it's Barry Cowen and Michael McGrath who are doing the negotiating with Mr Donohoe.

During the week, Mr McGrath said there will be a social welfare package in the Budget to ensure the vulnerable and people at risk of losing their jobs due to Brexit are protected.

He refused to get into specifics on the figures.

And that question of potential job losses due to a feared crash-out Brexit also casts a shadow over the scope for social welfare spending.

The figures are stark. It will cost the State more than €110m in extra jobseekers' benefit and allowance for every 10,000 people that lose their jobs.

Next month's Budget will be the last before the next general election. Brexit has rained on the parade of what should have been a pre-polling day give-away.

Fine Gael, Fianna Fáil and the Independents in Government will be keen to claim credit for any extra cash in people's pockets. Fighting over the scraps of what's likely to be available for a social welfare package is set to be a feature of the weeks ahead.

Irish Independent

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