Ministers' memo will warn against giveaway budget

Finance Minister Paschal Donohoe: Level of borrowing must reduce.

The Finance and Public Expenditure Ministers will on Wednesday send a shot across the bow of ministers as Budget 2022 discussions ramp up.

A joint memo from Paschal Donohoe and Michael McGrath will reaffirm the Government's commitment to the figures set out in the Summer Economic Statement for this year's Budget.

That will mean an expenditure ceiling of €88.2bn for 2022, down from €90.7bn slated to be spent this year as the Government seeks to cut back on borrowing to fund spending, though this figure will represent a 5.5% increase in permanent spending.

While sources said that the memo is routine, it is also seen as a reminder to ministers ahead of bilateral meetings that there will be no giveaway budget this year. With almost €7bn of the overall figure made up of Covid-related spending, both ministers are said to be keen to impress on their colleagues that the space for discretionary spending is low, while the Government is aware that its fiscal plan relies largely on the end of Covid-19 spending.

The summer document states that "pandemic-related supports must be unwound as appropriate over the course of this year and next".

"Progress on returning the public finances to a sustainable path depends on a significant reduction in Covid-related spending in 2022."

While there will be a further reduction in overall spending due next year, to €85.1bn, this will come with just €1bn in temporary spending and there are hopes that this will allow the Government to plan its first non-Covid budget.

In a newspaper article over the weekend, Mr Donohoe said "our level of borrowing must reduce" as debt is "a burden on future generations and it is inequitable to saddle future tax payers with large debt-servicing costs".

In the Budget, housing is expected to receive an increase of up to €400m in voted spending to help Housing Minister Darragh O'Brien deliver on his Housing for All plan, published last week.

Also at Cabinet, the first full meeting since July, Health Minister Stephen Donnelly will formally approve the appointment of Fiona Ross as chairperson of the National Paediatric Hospital Development Board.

Ms Ross will replace Tim Bouchier-Hayes who took on the role of interim chairperson following the resignation of the former chair Fred Barry at the end of February.

Cabinet will also consider a €50m fund aimed at assisting students most impacted by Covid-19.

Schools will receive an allocation of additional teaching hours to use in line with their students’ needs. They will be asked to identify the students most at risk of learning loss due to the disruptions during the pandemic.