Welfare cuts to fund ‘job bank’

LOOMING cuts in the social welfare budget could be used to help fund an investment bank to boost job creation, it emerged last night.

The Government appears confident it will win approval from the EU/ECB/IMF troika to use money saved in the upcoming comprehensive spending review for the €1 billion initiative aimed at funding start-up companies and ailing small businesses.

The Strategic Investment Bank is set to be the centrepiece of an otherwise bleak December budget as the Coalition hopes to silence critics who branded its May jobs initiative a flop.

Public Expenditure Minister Brendan Howlin is believed to be bullish about persuading the troika to let the Government use funds for the investment bank.

The bank was a commitment in the Programme for Government, but finding funding has proved difficult.

After Finance Minister Michael Noonan failed to fulfil his pledge to burn bondholders at Anglo Irish Bank, the Government insisted it can still claw back public money set to be pumped into Anglo.

Ministers hope ECB president Jean-Claude Trichet can be persuaded to reorder the €3bn a year interest rate payments on the promissory notes the previous Fianna Fáil/Green government agreed to pay from 2013.

The Government is more confident of gaining traction with the ECB on this issue than on bondholders.

The issue will feature heavily in talk with EU/IMF chiefs next month, which aims to hammer out an economic blueprint for the next three years.

Ministers will use the talks to ensure the proceeds of the sale of state assets can be used for the investment bank and other job creation schemes, not just pumped into debt repayment.

Taoiseach Enda Kenny has vowed the “headline” social welfare payments will not be cut in the spending review.