Deal to see USC cuts and Fianna Fáil support for three budgets

Fine Gael and Fianna Fáil have agreed a provisional deal for a minority government which will see reductions in USC for workers, support for three budgets, and scope for public sector pay rises.

Nine weeks after the general election, negotiations teams from both parties finally wrapped up talks in Dublin yesterday, claiming victory on both sides.

Details of the provisional deal, which needs to be approved by parliamentary parties, are now being examined by Independents whose support is needed for a government.

Fianna Fáil chief negotiator Michael McGrath said his party could meet over the weekend, following the completion of the talks which he described as a “torturous, long and difficult”.

Transport Minister Paschal Donohoe insisted that the three-year support deal with Fianna Fáil also reflected the interests of the Fine Gael party and its voters. “We do have an agreement between the negotiation teams on an array of matters but the important thing is that we end up with an agreed text at the end of this.”

The Irish Examiner understands the deal includes:

• Support from Fianna Fáil for up to three budgets in the years ahead, with a review in mid-2018;
• A new public sector pay commission, to examine entry level salaries among issues;
• A reduction in the Universal Social Charge for lower and middle-income earners, keeping a clawback for higher earners;
• A 15% rise in rent supplement at an estimated cost of €40m, beginning this year;
• A reinstatement of funds for the national treatment purchase fund to reduce surgery waiting lists;
• Retention of mortgage interest relief for borrowers up until 2020;
• An agreement by Fianna Fáil to not support motions of no confidence and for the two party leaders to instead resolve “significant” issues;
• The recruitment of extra gardaí to bring the force up to 15,000 over the lifetime of the deal.

The document between the two parties has three main parts, including the mechanics on how a minority government will work, the contentious issue of water charges and policies.

Drafting of the document is expected to be completed today. Both parties then intend to bring it before their TDs and senators for approval, possibly over the weekend or early next week. The Independent Alliance is also set to meet Fine Gael about the deal on Monday. The Alliance’s Shane Ross said his group would “not be looking to destroy” the document but wanted to ensure their own ideas are included.

Senior figures on both sides were quietly pleased about the agreement last night.