Public service faces squeeze to hit €15bn target

PUBLIC servants will be squeezed for savings deeper than were negotiated in the Croke Park agreement as the Government commits to cutting €15 billion off its spending by 2014.

Finance Minister Brian Lenihan said pay scales agreed with public sector trade unions would be respected but what was expected of the service would have to increase.

“I do think the ambition of the Croke Park agreement will have to be broadened and deepened in relation to the savings that can be secured by it.”

Mr Lenihan said Ireland’s deficit outlook was twice as bad as the €7.5bn correction he predicted last year. And the country is expected to grow by only 2.75% annually until 2014.

This grim forecast, confirmed for the first time last night, worsened because interest rates charged to Ireland became prohibitively high and global growth was not expected to be as strong as initially thought.

Mr Lenihan said the borrowing rate was so high, Ireland could not delay making the cuts or stagger the pain.

The minister said a “significant” amount of the €15bn figure would have to be made in December’s budget. Exact annual targets will be finalised in mid-November, after European Commissioner for Economic and Monetary Affairs Olli Rehn visits the country.

Mr Lenihan said because of the delay in ratifying the Croke Park deal, he was not happy with the speed at which savings were being delivered in the public service and he has dealt with departments which did not produce the promised cuts.

The news came as it emerged the Government is considering raising student registration charges again to help achieve savings in an education budget that currently totals almost €9bn. This sector is mostly immune from cuts under the Croke Park deal.

But the possibility is likely to cause outrage on campuses, as the fee has already doubled since 2005.

The Union of Students in Ireland is planning a protest in Dublin next Wednesday against further hikes or cuts to student grants beyond the 5% taken off them this year.

Tonight, the cabinet will meet for the third time in as many days. Yesterday, it met for six hours and Mr Lenihan also briefed the opposition’s economic teams.

Fine Gael finance spokes- man Michael Noonan said the figures released were not surprising and it was significant the minister revealed the €15bn target after a trip to Brussels on Monday where he met Mr Rehn.

Labour’s Joan Burton said the €15bn figure was produced without key pieces of information that the Government used to underpin it. And she said there was no estimate for the overall level of savings expected under the Croke Park deal.