Government to consider ‘tapering’ €350 Covid-19 payment

Minister for Finance Paschal Donohoe has said the Government will consider "tapering and changing" the special €350 pandemic payment when the initial 12-week period runs out in mid-June.

There is growing concern in the Department of Finance that current unprecedented State supports are unsustainable in the medium term. The 12-week special Covid-19 welfare measures are expected to cost between €4 billion and €4.5 billion.

Political sources also said that the Government would have to bring the spending estimates to the Dáil in June as the general election meant that the Dáil had not yet approved these for this year.

The Government can only legally spend money with the approval of the Dáil. At present the Government continues to spend money under a rule which allows it to spend four-fifths of the previous year’s budget while it waits for Dáil approval.

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However, The Irish Times reported earlier this week that because of the huge increase in social welfare spending the Department of Social Protection will reach its authorised expenditure level in mid-June.

The health service would effectively reach a ceiling on its authorised spending in September under the same rules.

This means that the Dáil would have to vote to allow the Government to continue spending, and some Government sources are concerned that plans to taper off or reduce the special Covid welfare payments could mean opposition parties holding up the estimates.

Welfare payments

Government sources were also tight-lipped about the prospects for the final instalment of the public sector pay deal as the public finances deteriorate rapidly.

Mr Donohoe said on Wednesday that both he and the Taoiseach had indicated they wanted to avoid cuts to core social welfare payments and to protect public service pay as it currently stood.

The Minister did not comment on future pay rises due to public service personnel.

At the start of October more than 300,0000 public service staff are to receive a 2 per cent increase, the largest individual rise in the three-year agreement.

Asked on Friday whether the Government was committed to paying this scheduled increase, a spokeswoman for the Minister said: “The focus of Government right now is responding effectively to the public health emergency while supporting the economy, jobs and business. Public servants are leading this effort in our healthcare system and civil administration. Broader fiscal strategy will continue to evolve as the situation develops and the economic impact becomes clearer.”

Union sources said there had been no contact with the Government on the pay issue.