College fees to be cut by €500 as Budget 2026 talks go down to the wire 

Negotiations 'a slog' as public expenditure minister Jack Chambers insists that ministers make business case for spending

Finance minister Paschal Donohue and public expenditure minister Jack Chambers at a media briefing on the latest exchequer returns before Budget 2026. Picture: Cillian Sherlock/PA

Budget 2026 talks will go to the wire on a number of issues, with insiders saying that the process has been "gruelling".

However, college fees will be permanently cut by €500 per year in Tuesday’s budget after a day of long negotiations. 

Budget 2026 discussions are set to drag on into Monday evening as at least five departments work to settle their allocation amid tighter allocations than in recent years.

However, sources confirmed that higher education minister James Lawless was successful in securing the fee cut on a permanent basis after it was cut by €1,000 a year as part of last year’s one-off measures.

Senior government sources stated on Sunday night that there was a “long way to go” for many departments, including social protection, housing, health, children, and education.

A senior source said the number of departments outstanding was “a reflection of the new budgetary landscape” as the Government looks to “moderate” spending.

Minister 'fighting' for €12 social protection hike

As first reported by the Irish Examiner, social protection minister Dara Calleary has been in negotiations to get the €12 increase to core social protection rates he is seeking. 

One source suggested it could fall between €8 and €10, but Mr Calleary was said to be “fighting hard” for the €12 increase.

It is thought that there is a desire to secure a double-digit increase, with sources saying there was an “awareness” that anything below €10 might be politically dangerous given that two expected cornerstones of the budget are a Vat rate cut for both the hospitality and construction sectors.

'Income tax versus social protection'

However, one source said that the absence of an income tax package for workers meant that the Government “can’t go too far” on social protection. 

This, they said, showed this year’s budget was “more of a balancing act” than previous years, despite Government having €9.4bn to allocate.

Tuesday's budget announcement will add €9.4bn to the public finances — between tax measures, new spending, and money designed to keep up with service growth and pay deals — but ministers and advisers have described this year’s talks as “a slog”.

Projected exchequer surplus

Pre-budget projections predict an end-of-year exchequer surplus of €1.07bn, and €1.45bn at the end of 2026, according to the Department of Finance White Paper for estimates on receipts and expenditure published at the weekend. 

The figures do not include any new policy measures to be announced as part of the 2026 budget process.

The White Paper also estimates that the exchequer balance would be a €2.2bn deficit this year if receipts arising out of the Apple tax ruling were excluded.

The broader measure of the general Government balance predicts a €10.3bn surplus this year, falling to €8.8bn next year.

Excluding windfall corporation tax receipts, there would be a deficit of €7.3bn this year, deepening to €9.8bn in 2026.

Talks to go on into Monday 

One source said talks will likely go on into Monday as the final shape of the budget is hammered out with talks described as “tedious” and “really detailed”. A senior source said: 

It’s not that in previous years you just got what you asked for, no questions, but this year is a lot more tedious in getting to a point of even being close to agreement, 

Cabinet recently heard that there are “significant” pressures on spending and ministers have been told to make savings and efficiencies within their budgets.

Specific warnings have been issued to the departments of housing, education, health, and children about overspending. 

Gross spending, at the end of August, is €5bn higher than it was for the same period in 2024, with the Department of Health alone running €1bn over budget.

'Moderation' is a watchword

A source said those overspends had to be curtailed and that “moderation” and “efficiencies” are the watchwords for this year’s budget.

“You can’t pretend that spending beyond your budget year-on-year won’t have a knock-on effect,” said a source close to the talks.

However, government sources rejected the notion that this would be anything like an austerity budget — although one minister has accepted that it will likely be viewed as "boring".

We’re adding billions in spending, €1.5bn in tax measures, and accounting for expanded services. 

"We’re not cutting things here.”

Ministers 'sing for their supper'

One senior source recently told the Irish Examiner that minister Jack Chambers and the Department of Public Expenditure have advised that they will be “changing the approach” to the existing level of service funding and that ministers will have to “justify and make a business case” for their budgets.

The source described the change of approach as dramatic and said people will be made to 'sing for their supper'.

While others disagree with how that has been characterised, they said Mr Chambers has been “very firm” in his refusal to turn over money without solid business cases.

One area seen as likely to go to the wire is housing, where a tax cut for construction companies is likely to be seen. 

However, it is understood that the Government has been wary of leaks because of the impacts they could have on markets.