Burton under Fine Gael pressure over ‘welfare traps’

Fine Gael is stepping up pressure on Minister for Social Protection Joan Burton to make better use of declining welfare expenditure to stimulate employment.

As budget talks go down to the wire, Minister for Health James Reilly is said to be struggling to pin down more than €500 million in savings and officials are warning that new cuts could compromise patient safety. A Cabinet meeting tomorrow at 6pm to finalise Budget 2014 is expected to run late into the night.

The package is likely to include a school book rental scheme for primary pupils, a Labour-inspired initiative designed to cut parents’ annual outlay on textbooks by about 70 per cent.

Measures are also under scrutiny to ease the impact of a projected VAT rise in the tourism and hospitality sectors.

Welfare cuts have now been set at about €300 million, but Ms Burton has yet to come up with specific proposals to achieve such savings, according to political sources.

She is being urged by Fine Gael to intensify labour market “activation” measures to encourage unemployed people to pursue job opportunities.

Rent relief
She also faces rising demands to refocus her expenditure towards schemes to "ensure work pays", one being an initiative to allow people leaving the Live Register to continue claiming some portion of rent relief .

To use more of her budget for such purposes, Ms Burton would need increased savings from secondary benefits such as gas, electricity and telephone allowances.

Taoiseach Enda Kenny referred to welfare-to-work initiatives as he opened the Fine Gael conference in Limerick last night.

Noting that all job-seekers had rights and responsibilities, Mr Kenny said each was obliged

to engage with the employment services to try to find work. “There are many people locked in a range of welfare traps. It is the Government’s job to break them,” he said.

The conference, one week after the Seanad referendum defeat, culminates tonight with Mr Kenny’s televised speech.

With a health spending overrun this year expected to come in between €150 million and €200 million, sources close to the talks indicated that Dr Reilly is unlikely to be given additional funds.

He will have a large “opening deficit” in January, amplifying strain on his budget as demand for services rises and payments from central Government fall.

As he faces demands to cut "well north of €500 million" from his budget, the Department of Health and Health Service Executive is arguing that the system is already "down to the bone".

Pre-budget figures
Final pre-budget figures published this morning by the Department of Finance show the budget deficit at the end of 2013 is forecast at 7.3 per cent of economic output, better than the 7.5 per cent target.

However, weak excise receipts have led to a likely shortfall of €125 million in tax revenues.

If there were no fiscal changes in the budget the deficit next year would be 5.8 per cent.

The €2.5 billion retrenchment next Tuesday is being undertaken to bring the deficit to 4.8 per cent, below the troika target of 5.1 per cent.