Lenihan tries to clarify relief confusion

UNDER-fire Finance Minister Brian Lenihan has moved to clarify confusion for the thousands of mortgage holders who will have tax relief on their interest payments suspended from today.

Backbenchers were last night angry over the latest budget blunder while the Dáil descended into farce with Mr Linehan accused of allowing “total confusion” to reign hours before the measure was due to come into effect.

Labour’s spokeswoman on finance, Joan Burton, said the minister had made “an absolute dog’s breakfast” of the withdrawal of mortgage interest relief announced in last month’s budget.

Fine Gael said the fiasco proved that Mr Lenihan was “not competent” to hold the Finance portfolio and is incapable of steering the country out of recession.

Fianna Fáil’s Mattie McGrath TD (Tipperary South) said: “I’m heading back to my constituency and families are unsure, contacting my office, as they are contacting my colleagues.

“We’re going to have to be more accountable on these issues and get it right first time out.”

From today, the relief will be suspended for at least 321,000 of the 562,000 people who currently receive the entitlement.

Of those, about 57,000 mortgage holders will definitely be no longer entitled to the relief while 220,000 first-time buyers will not be affected and will continue to receive the entitlement.

The remainder will have their relief reactivated in two months’ time when administrative issues are resolved and it is established that they are still entitled to receive the relief, Mr Lenihan told the Dáil yesterday.

Earlier, Revenue said it would only take one month to sort out this issue.

Fine Gael’s spokesman on enterprise and employment, Leo Varadkar said: “At this stage the Government can’t say clearly what’s going to happen or what their plans are and if it should be deferred until they get it right.”

Earlier Ms Burton said in Dáil exchanges that Mr Lenihan should “come into the house and clarify the absolute dogs breakfast that is being made of the withdrawal of mortgage interest relief. We were told this was the most prepared budget in the history of the State and the cabinet ministers met no less than 10 times to work out the details of the budget, yet they have left an extraordinary trail of confusion.”

The junior coalition party also said the issue was handled badly. Green Party TD, Ciarán Cuffe, told TV3 news: “It could have been communicated better.

“I think the first rule of political communications is you’ve got to get the bad news out in one news cycle. You don’t want things dragging on. You don’t want clarifications, corrections going on for days weeks and months. I think that has been a problem.”

The fiasco played out as Central Bank figures showed mortgage lending is hitting historic lows.

The slump in mortgage demand is highlighted starkly in the three month figures to the end of March, showing that lending for home loans in that period grew by a modest €428 million.

That represents a massive fall off compared with the €2.6 billion advanced in quarter one of 2008.

In the year to the end of March, the annual pace of lending growth for mortgages fell to 4.2% in March from 4.9% in February.

General economic weakness combined with areluctance by buyers to get involved in the market because they expect house prices to fall further continues to undermine demand.

Credit is also becoming harder to get as banks toughen their stance on lending, the bank said.