Free under-5 GP care and maintenance of class sizes part of budget deal

Free GP care for the under fives and maintaining class sizes will be part of a €2.5bn package of tax hikes and spending cuts for next year, after a deal was last night hammered out between Coalition parties.

Budget 2014 will also include a new bank levy which is set to collect €150m from lenders who benefited from the €440bn blanket guarantee.

The fuel allowance for elderly people, the respite care grant, and free travel pass are all safe from cuts, but there is still uncertainty over rent allowances and other housing related payments. Following an impasse between Health Minister James Reilly and Public Expenditure Minister Brendan Howlin on the size of the adjustment in the Department of Health, agreement was reached yesterday morning, paving the way for a final budget plan to be agreed last night.

A four-man meeting of the Economic Management Council was replaced by a meeting between Dr Reilly and Mr Howlin, as well as Taoiseach Enda Kenny and Tánaiste Eamon Gilmore.

“All four got together and a deal was hammered out,” a source said.

Mr Noonan and Mr Howlin will outline the plans to the Dáil tomorrow. They are due to include:

- A raising of the 9% Vat rate on hospitality services;

- A boost for the building sector and start-up firms;

- No Vat reduction in the construction sector;

- A tax package to hit pensions;

- A range of secondary welfare benefit cuts.

Earlier, Dr Reilly had cast doubt over the plan to provide free primary health care to all children under five, saying it would be “tough” given the financial demands from the rest of his department.

Disagreement on the health budget had resulted in delays in deciding the overall €2.5bn package of measures. Dr Reilly would not reveal the size of his department’s budget overrun, but said speculation that it has gone €400m over-budget was “wild”. He said: “It won’t be anything remotely like that” but would be less than €200m.

The Taoiseach rowed in behind Dr Reilly telling RTÉ’s The Week in Politics: “The profile of health spending was within one million of where it should be at the end of September.

“I think it’s quite extraordinary that Minister James Reilly has been able to streamline the health service to the point where you have lost substantial numbers of people and reduced the spend, and still managed to maintain frontline services.”

Mr Kenny said deciding budgets was difficult because “we don’t know what is going to happen in terms of health issues”.

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