Noonan to announce range of harsh cuts in budget

Pensioners to lose phone allowance and prescription charges to see big increase. A raft of harsh measures such as ending the monthly telephone allowance for pensioners, a hefty rise in prescription charges, an 8-point rise to 41 per cent increase in Dirt tax and scrapping the mortgage interest supplement payments will be included in the €2.5 billion budget to be announced today.

In late negotiations yesterday, culminating with a late-afternoon meeting of the four-Minister Economic Management Council, agreement was finalised on dozens of measures that will realise €900 million in additional revenues in 2014 and more than €1.6 billion in cuts.

The Cabinet will hold a final meeting at noon today in advance of Minister for Finance Michael Noonan presenting the budget at 2.30pm in the Dáil. Some of the major adjustments were made public over the weekend.

They included the decision to reduce jobseeker’s payments to €100 for new entrants under 25 (the current cut-off age is 22), with those aged 25 getting €144.

The age requirement for the full rate of €188 has been increased to 26. A new bank levy worth €200 million to the exchequer will also be announced.

It was also confirmed that that free GP care will be available to all children five and under (at a cost of €40 million).

The pupil-teacher ratio which looked likely to be adjusted upwards has also won a reprieve.

Other major changes confirmed to The Irish Times yesterday include:

The scrapping of the €9.50 monthly telephone allowance to pensioners;

Dirt tax on savings interest to be increased from 33 per cent to 41 per cent, yielding €100 million to the State;

An increase in prescription charges from €1.50 to €2.50, the second successive rise in that charge;

The discontinuation of the mortgage interest supplement for new entrants from January with a phasing out of the scheme over four years (current cost is €77 million per annum);

Between €170 million and €200 million in cuts in the Department of the Environment, most in housing, although homeless funding is being protected;

The introduction of the Rent-a-Book scheme in primary schools, with funding to be found through cuts in other areas in the Department of Education;

A cut of €5 million in the overall amount paid by the Department of Social Protection from €59 million to €54 million for the 410,000 television licences held by pensioners. RTÉ will have to bear the cost of the reduction.

The overall adjustment will be made up of some €900 million in new taxes as well as a total of €1.6 billion in cuts across all 15 Government departments. Government sources said that the overall figure for cuts in Minister for Social Protection Joan Burton’s department has fallen to €230 million compared to the €440 million figure from several weeks ago. This has been made possible, said the sources, from a number of revenue-raising measures, particularly the targeting of fraud and social welfare abuse.

While the telephone allowance has been cut, sources said all other allowances for pensioners – including free travel, gas and electricity allowances, and the TV licence – would remain unaffected.