€300m department underspend to pay for water charge refunds

Taoiseach Leo Varadkar has revealed that the money has been found to pay for €170m in water charge refunds and departments will not be asked to cut services to help foot the bills.

He said a bonus €300m in extra money found this year would help fund the one-off bill for the Government.

Finance Minister Paschal Donohoe last night promised that all of the commitments made in Budget 2017 would be delivered and would not be impacted by refunds.

Mr Donohoe said that, by the end of June, Government departments had under-spent by around €300m, which would be used to pay water refunds.

Speaking at the MacGill Summer School in Glenties, Co Donegal, Mr Donohoe said: “The refund is different to other pressures that are on me in that it’s a one-off payment.

“While many of the other things that I have to manage end up being recurring — in other words if I do them in 2017 people expect them to continue into 2018, 2019, and 2020 — that’s not the case with this.”

Speaking in Dublin, Mr Varadkar confirmed households would not be asked to foot or give back the €100 ‘conservation grant’ when they get the water refunds.

“They’ll be refunded in full,” he said, referring to households.

“We won’t be seeking to reclaim the €100 conservation grant, so the water refunds will be in full.”

Mr Varadkar said Housing Minister Eoghan Murphy had confirmed to Cabinet yesterday that all refunds were expected to be made by the end of the year.

However, he said there may be some complications for people who have moved house, left the country, or have passed on.

“Minister Donohoe [the finance minister] confirmed that he is confident we can do it within existing exchequer resources this year,” said Mr Varadkar.

“No new taxes will be raised this year, there will be no cuts to services, and it won’t impact any way on the Christmas bonus.

“It is always the case... as the year goes on, that there are underspends in some departments, for example the cost of servicing the national debt is less than we expect it to be because interest rates are lower, the fact that we can sell bonds at negative interest rates now — it is a big change to where we were in the past and some tax heads have come in better than anticipated.

“So it has always been the case that for a one-off spend, we can find money such as this. For a current spend, it is very difficult because you need to find money every year, but for a one-off spend, just like the Christmas bonus last year and the year before, we are able to find the money

“Because of the way tax receipts are coming in and because of the way spending is being profiled, we are very confident that we will be able to find this within existing resources without any impact on services and the Christmas bonus.”

However, Mr Varadkar said that he was unable to give a detailed breakdown of this calculation as it is only July and the Government would have a better picture of the country’s finances at the end of September and early October, when three-quarters of spending and tax returns were done.

Gerard Howlin: 10

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