‘Most child benefit savings achieved’

Child benefit savings recommended by an expert group report have already been largely achieved by the Government, Social Protection Minister Joan Burton has insisted.

The comments indicate she is likely to resist large-scale cuts to the payment by either taxing the allowance or replacing it with a two-tier system with greater payments for poorer families.

The advisory group report, published yesterday, recommends reducing the standard rate of children’s allowance from €130 to €110 a month.

Poorer families would have to apply for a top-up payment, the largest of which would be €38 a week. This would reduce as the family income increases above €25,000.

Families with one child would lose their top-up once income reaches €34,935; those with two would lose it when income reaches €44,870, and those with three children would lose it when income is at €54,805.

The Government does not have to implement the recommendation, which was contained in the report submitted to the Ms Burton in October.

That was prior to the budget when she cut monthly payments from €140 to €130 for the first child, and by €18 for the third child — yielding a saving of €140m.

Savings of €200m a year would be made to the exchequer if a two-tier system was introduced, while savings of €300m could be made from taxing the payment, according to the advisory group report.

But in an indication she would not implement the full extent of the cuts recommended, Ms Burton told RTÉ that “the changes I have made in child benefit have already gained most of those savings”.

“You don’t have to do this report over one year, you could do it over a period of time and — in particular — you have to be sensitive to the economy and to the families who have some difficulties,” she said.

Department sources indicated any changes will be considered in the context of reform rather than debt reduction.

The advisory group chair, Ita Mangan, said it would take 18 months to implement changes advised for a two-tier system. This would not prevent the Government from implementing changes in next year’s budget.

Fianna Fáil said the proposals for a two-tier system would hit the already struggling middle-income families. “Families are being squeezed from all angles; there is no respite from banks on mortgage arrears; the property tax doesn’t take into account ability to pay and benefits across the board were cut at the budget,” Willie O’Dea said.

He said there may be scope for higher earners to give more, but children should not be asked to contribute to reducing the deficit. “After two anti-family budgets from this Government, they need to take a new direction,” he said.

“If this Government has any interest in helping middle-income families through this crisis and if they have any interest in fairness, they will quickly and clearly reject this proposal.”

Sinn Féin’s Aengus Ó Snodaigh said the recommendations should be discarded because they would “further impoverish lower and middle range earners who are being constantly squeezed” and are “not the way to tackle child poverty”.

Pay scale

*Basic Payment: €25 a week per child with top-ups of €38 a week for all children in households earning up to €25,000. There is a tapered reduction as income rises above this.

*The top-up would stop at €35,395 for families with one child; at €44,870 for families of two children; at €54,805 for families of three children; and €64,740 for families of four children.

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