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Welfare faces hit as budget cuts reach €5bn

DEEP welfare cuts loomed last night as ministers began a marathon session thrashing out how to bridge a €5 billion black hole in the budget.

The Cabinet held a special meeting at Farmleigh House and will continue deliberations today as Justice Minister Dermot Ahern warned nothing was out of bounds.

“Everything is on the table, there is nothing ruled out,” he said.

Ministers were deciding the framework for a four year “adjustment” package to be presented to the EU next month detailing how the Government intends to get the deficit down to 3% of GDP by 2014.

With the economic situation worsening rapidly, the €3bn cuts and taxes package signalled in September is expected to rise to just over €5bn in the December budget – though that is still lower than the €7bn suggested by some experts.

Agriculture Minister Brendan Smith warned that “very tough decisions” were unavoidable.

Community Affairs Minister Mary Hanafin said fairness needed to be at the heart of considerations. “Whatever it takes, we will work night and day to get a fair budget. All of the public are depending on us to get this right so we are giving it our all in their interests.”

The Farmleigh meeting, which lasted three-and-a-half hours, was delayed by 45 minutes as Finance Minister Brian Lenihan was delayed in Brussels discussing fiscal issues with senior EU officials.

Ministers are deciding on the details of individual departmental spending programmes as the Cabinet grapples with the problem of adjusting the deficit to keep the confidence of international money markets while trying to avoid hurting growth rates by taking too much money out of the economy.

A property tax and specific projects like the Dublin Metro North line were under discussion, as was cutting welfare which is set to take a hit of some €2bn. The Greens are keen to save Metro north and some ministers fear cutting the capital building programme too far will damage the economy in the medium term.

Education is also expected to be a big loser on December 7, which could prove a political headache for the Greens, who have been supporters of stronger Government help for schools and universities.

Ministers must also consider the political implications of decisions with the Coalition’s Dáil knife-edge majority likely to be under severe strain as the budget looms, with health earmarked for cuts of between €600 million to €1bn.

Tax was also on the agenda, with rises in at least one of the income levy bands likely, but ministers need to wait to assess the key tax return month of October before finalising details.

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