Cabinet council discuss specifics of €2.5bn cuts

The Cabinet’s inner circle will meet this evening to decide on specific measures to reach the €2.5bn budget in tax and cuts agreed by ministers to take out of the economy next year.

The Economic Management Council (EMC) — a quarter of cabinet members and their unelected advisers — will decide exactly what the make up of next year’s budget savings will be.

Labour ministers are now attempting to reduce their department cuts after the figure agreed was viewed as a victory for the party last night.

Brendan Howlin, the public expenditure minister, also briefed Labour backbenchers on the figures, but no measures were discussed.

The final budget figure is €600m less than the €3.1bn discussed with the troika. A Labour source said: “The difference between €3.1bn and €2.5bn is a whole lot of hardship.”

But a decision on the exact cuts and savings for each department has been stalled because of delays in assessing an overspend in health this year.

The EMC will meet this evening before at least one further full Cabinet meeting is held before next Tuesday’s 2014 budget is announced.

The budget will be made up of a 2 to 1 ratio of cuts to taxes. This means the Coalition will announce €1.66bn in cuts and €833m in new taxes. The latter will include up to €250m more for the full year of property taxes. Another €200m more should come from more changes to tax relief for pensions.

Tánaiste Eamon Gilmore’s spokesman last night said the Labour leader and his party were “quite happy” following the deal.

Mr Gilmore had insisted there was no need to do more than necessary to meet the deficit target of 5.1% — as agreed with the troika — for next year. But the Coalition have agreed to go further than this and reduce the deficit to 4.8% of GDP.

The spokesman said it “could be assumed” that cuts to social protection — originally agreed at €440m — would now be less as the overall budget figure had been reduced.

The Irish Examiner understands basic social welfare claims, such as jobseekers and pension payments, will remain untouched. Efforts are also under way to make sure child benefit is not reduced again this year.

But it is likely cuts will be made to supplementary welfare payments such as the household benefits package.

European Commission vice president Olli Rehn said the plans were a “sound basis” for correcting the public finances and would pave “the way for a successful programme exit”.

A difficulty for ministers planning their savings is that the HSE and Health Minister James Reilly have not provided an exact figure of the department’s expected overspend for this year.

Any lessening of cuts in social protection and education are expected to depend on health’s overspend, which is expected to amount to several hundred million euro.