Budget 2021: €17bn splurge to combat Covid and Brexit perfect storm

The Government will allow people on the PUP, including self-employed people, earn up to €480 a month in freelance work while keeping their full payment.

The Government will today announce the largest ever budget day spending giveaway of €17bn to combat the perfect storm of the Covid-19 pandemic and the threat of a no-trade deal Brexit.

The Irish Examiner can reveal that, in addition to €8.5bn in Covid-related spending for 2021, new spending measures in excess of €5bn will be announced by Paschal Donohoe the finance minister, and Minister Michael McGrath the public expenditure minister.

On top of that, a multibillion recovery fund will be held in reserve to be unleashed next year if required.

It can be revealed that following discussions between Mr McGrath and Heather Humphreys, the social protection minister, 90% of the current 228,000 PUP (pandemic unemployment payment) recipients will be eligible for the Christmas bonus if they are in reciept of the payment until early December when the bonus is paid.

At a cost of €350m, the Government is this year reducing the usual eligibility criteria from 15 months to six months to qualify for the Christmas bonus.

People who had previously signed off PUP and subsequently had to go back on the payment can combine periods of payment to get the bonus.

The Government will also allow people on the PUP, including self-employed people, earn up to €480 a month in freelance work while keeping their full payment.

At a cost of €350m, the Government is this year reducing the usual eligibility criteria from 15 months to six months to qualify for the Christmas bonus. Picture: Leah Farrell/RollingNews.ie

We are told that this measure will apply until April 1, 2021, when people will revert back to the normal €203-a-week jobseeker's allowance.

Allowing a maximum of €480 a month, as opposed to having it on a per-week basis, is a recognition of the sporadic nature of such work.

The tourism and hospitality sector will see VAT cut from 13.5% to 9%, although the higher VAT rate of 21% will revert to 23% as scheduled next year.

There will also be an extension of the scheme allowing businesses to postpone the payment of tax bills.

It can also be revealed that a reduction by one in the primary school pupil-teacher ratio, and 600 new garda recruits will be among the main measures announced in today’s budget.

Helen McEntee, the justice minister, will announce another 500 staff plus 70 new garda vehicles to support policing during the pandemic.

Norma Foley, the education minister, will receive additional funding to reduce class sizes even further, despite the pressure placed on class space because of the pandemic.

There will be an extra €100m per year for spending on education for people with disabilities, bringing the special education budget to €2bn for next year.

€2.1bn for Covid-related issues is expected to be announced.

Funding is to be provided for around 400 extra special educational needs teachers, and up to 1,000 extra special needs assistants.

In health, spending is expected to grow by €4bn next year, with €2.1bn for Covid-related issues, and the other €1.9bn for adding new hospital beds, delivering on Sláintecare, and dealing with demographic pressures.

Funding is being made available for 300 new consultant doctors on a salary of €250,000 a year to work exclusively in the public system, it is expected.

In housing, up to €700m is to be made available for the increased delivery of social and affordable housing, with a huge emphasis on local authorities directly building homes.

An extension of the commercial rates waiver as first revealed by the Irish Examiner is expected.

The €7.50 increase in the carbon tax is likely to go ahead, though this will be offset for elderly and vulnerable citizens.

A reform of the system of vehicle registration tax, which will incentivise motorists to switch to electric and hybrid vehicles, will feature. The budget will penalise the purchase of larger petrol and diesel cars and SUVs. The changes will see 88% of motorists escape increased taxes but 7% of drivers of mostly older vehicles will have to pay an extra €10 a year.

There will be another hike on a pack of 20 cigarettes, most likely 50c. However, any increase in duty on alcohol is not expected.

In addition to the PUP changes, the budget will include a €5-per-week increase for around 200,000 people in receipt of the living alone allowance, which will see it go from €14 to €19 per week.

€220m in funding is to be set aside to pay for the delay in increasing the State pension age increase from 66 to 67.

More than 110,000 carers are to benefit from a €150 increase in the carer's support grant. It is to go up from €1,700 to €1,850.