Social welfare €12 rise at risk as Budget 2026 talks hit deadlock

The 'Irish Examiner' understands that Jack Chambers, right, informed Dara Calleary that the budget package he was seeking is 'too large', adding that it was not in line with what was agreed in the summer economic statement. File Picture: Eamon Ward

Proposed increases of up to €12 in core social welfare rates are now in jeopardy after the Department of Social Protection was told to "go back to the drawing board" on its budget demands. 

Social protection minister Dara Calleary has been told by public expenditure minister Jack Chambers that he is asking for too much money for Budget 2026.

The Irish Examiner understands that Mr Chambers informed Mr Calleary during a bilateral meeting that the budget package he was seeking is “too large”, adding that it was not in line with what was agreed in the summer economic statement.

A government source has warned that a suggested €12 increase in social welfare could now be at risk.

The overall size of the social protection budget is still under negotiation, and it will ultimately be a “sums game” to decided what measures can be taken.

However, it is expected that Mr Calleary will continue to push for a €12 boost to core welfare payments despite the warnings. 

There will also be a “significant focus on child poverty” in the budget, with increases to the child support payment and the working family payment “very much on the cards”.

Meanwhile, enterprise minister Peter Burke is seeking a reduction to the tax levied on beer sold in pubs.

The measure would not be an excise cut this year, but instead would take the form of a rebate due to the EU’s excise directive requiring any cut in tax to be applied to both pubs and off-licences.

Taoiseach Micheál Martin has said the focus of Budget 2026 will be on cutting the levels of day-to-day spending.

Mr Martin said the Government is aware of warnings from the Economic and Social Research Institute (ESRI) around the dangers of overheating the economy.

"We're conscious of the concerns. But equally, the ESRI and others have said we have an infrastructural deficit. So we're prioritising capital investment,” he said.

“No one is saying to us which projects we should cut, in terms of the National Development Plan and public transport projects, and housing. We have a known housing emergency in terms of getting more houses built faster."

Childcare costs

There will also be a push from children’s minister Norma Foley to tackle childcare costs, with a particular focus on cutting the highest fees across the country.

Ms Foley wants to retain the fee freeze for childcare providers within the core funding system.

Government sources have said changes to childcare will be a three-pronged approach, with Ms Foley proposing to balance fee cuts with ensuring there are adequate spaces and supports for staff.

One source said she will seek to reduce the cost of childcare over the lifetime of the coalition, edging it towards the programme for government commitment of €200 per month.

Asked specifically about whether parents could see a cut to childcare fees, the Taoiseach indicated that the focus in the Budget may be on expanding access to places.

"You see all of the warnings in terms of not taking steps that would overheat the economy, so we've got to try and keep public expenditure within certain limits," he said.

"We have a five-year programme for government, and we're acutely aware of the pressure on places and the need for more places.”

In the Dáil, Labour finance spokesman Ged Nash said "there is a certain faint whiff of 2008" about the budget, criticising the Government's approach to corporation tax and saying ministers were treating it like stamp duty.

In response, finance minister Paschal Donohoe pulled up the Labour website on his mobile phone and said the party was calling for increased spending on early years programmes, public transport, housing, and public sector pay.

Meanwhile, the delayed tax on vapes will come into effect from November 1 for both nicotine and non-nicotine e-liquid products at a single flat rate of 50c/ml of e-liquid.