Fianna Fáil wins classroom promise in late talks

Fianna Fáil's public expenditure spokesman Dara Calleary

Fianna Fáil last night secured a 26-pupil class size limit and “modest” across- the-board welfare hikes for pensioners, lone parents, and dole recipients in last- minute talks with Fine Gael.

However, while the welfare packages will be introduced at the same time in mid-spring, separate fuel allowance, and other increases may not be implemented until later next year in order to ensure money can be spread to various groups.

Finance Minister Paschal Donohoe and Fianna Fáil’s public expenditure spokesman, Dara Calleary, agreed the moves last night as the final battles of budget 2018 were fought out.

The Irish Examiner understands the issues included a widely flagged €5 pension rise, similar increases for the dole, extra supports for lone parents and a potential new welfare payment scheme targeted at children who are at risk of poverty.

If the increases are introduced from January, thereby taking in the full year, it would ensure significant improvements for those most at risk in society while also allowing both parties to claim they have looked after and prioritised specific groups.

However, should the welfare increases be delayed until March or April as expected - or potentially as late as June — it would free up hundreds of millions of euro in funding for other areas.

Mr Calleary and Mr Donohoe agreed on when to introduce the welfare rises, with a date of late March expected.

Separately, both rival politicians last night also finalised how the pupil-teacher ratio in primary schools can be fully addressed, an issue which has been repeatedly highlighted by Fianna Fáil in recent months and remains one of its key budget priorities.

It is understood both parties last night agreed to a 26 class size cap, a one person reduction that has been long sought by parent and teacher groups.

Meanwhile, Fianna Fáil’s finance spokesman, Michael McGrath, has already agreed his side of the budget with Mr Donohoe, with income tax band changes to be allowed on condition USC — which will merge with PRSI — is marginally cut.

It is believed these reductions will specifically see Fianna Fáil force through cuts to the USC in at least two rates and for Fine Gael to guarantee that the threshold of paying the higher rate of income tax will be raised above current €33,800 level.

Such measures, if introduced, are likely to mean people affected will be up to €4 better off each week next year.

It is also understood that senior Fianna Fáil TDs, including party leader Micheal Martin, were unhappy with a short video released on social media yesterday afternoon of Mr Donohoe thanking printing staff and handing over a budget document.

While Department of Finance figures have been keen to insist there is no suggestion that the video — which was recorded and released hours before talks ended with either Fianna Fáil or the Independent Alliance — involved the finalised budget 2018 report, the footage has been viewed dimly by Fianna Fáil members.

What sweeteners are likely to be offered?

By Juno McEnroe, Political Correspondent

  • Any increased tax on drink is unlikely but cigarettes could go up by 50c.
  • Diesel costs also look to remain the same despite talk of equalising levels with petrol.
  • A new housing agency will borrow expertise or even finances from Nama.
  • Capital gains tax and inheritance tax look unlikely to be increased.
  • Increases in pension, carers’ and disability payments plus welfare are likely, by €5, but will be staggered, possibly being introduced in spring rather than January.
  • Welfare claimants and lone parents will get a €2.50 rise in the qualified child payment, bringing it to €32.30 a week per child
  • The help-to-buy scheme for first-time buyers is likely to be tweaked but overall retained.
  • The free travel scheme may be extended for other routes.
  • New targets and promises are likely to end the use of hotels for the homeless and to reduce the numbers without homes.
  • A further drop in Dirt savings tax by 2%.
  • Relief for the self-employed to be increased, bringing them closer to the PAYE tax credit of €1,650.
  • Mortgage interest relief will be continued but phased out by 2020, by 25% a year.
  • Reductions in universal social charge in at least two rates and threshold of paying higher rate of income will be raised above current €33,800 level. This might give €4 or more a week back to workers.
  • Increase of commercial stamp duty by at least 2% to 4%. Each 1% rise raises an extra €100m
  • Reducing tax relief for intellectual property rights purchases to 80%, raising up to €150m.
  • Special Brexit package, including potential loans for small businesses and other reliefs, including for exporters.
  • A new sugar tax would raise €40m in a full year, but its delay until April or later will mean less.
  • Health is likely to get an increased budget again, after an overspend of €300m this year.
  • Prescription charges may also be reduced again by 50c to €2 per item.
  • Special Vat rate of 9% likely to be retained for hotel, restaurant and tourism sector.
  • The reintroduction of the €850 bereavement grant, while sought, is by no means guaranteed.
  • Housing assistance payments are likely to be increased — potentially allowing local authorities increase discretionary rent supports they give out.
  • Overall, extra spending for 2018 could be €900m or more, with €600m going on services and €300m on tax cuts, a split in line with the Fianna Fáil government support deal.

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