Tánaiste Joan Burton declared that the budget next month would bring a close to the years of ever-increasing austerity as she spoke about the need for for an overhaul of the universal social charge (USC).

Although the Coalition is confident it can introduce modest income tax cuts next year, Taoiseach Enda Kenny was quick to dismiss a suggestions from Minister for Health Leo Varadkar that workers could expect to benefit by €5-€10 per week. Mr Varadkar also said that he did not think workers would favour income tax measures at the expense of health services.

His public reference to the financial difficulties in the health service yesterday drew a stern response at a high level in the Coalition.

“Publicly stating your case will get short shrift from the Ministers for Finance,” said a senior Government source.

Ms Burton’s intervention comes as the Government seeks to damp down the clamour for a giveaway budget. “One of the things about the budget that will be different is that we will be leaving the historical period of austerity arising from the troika behind us,” she said.

Noting that some €30 billion had been taken from the economy since the outbreak of the crisis, she said “anybody being honest” would know it was not possible to return such sums to the economy in a single year or even three years. As preparations for a tax reform plan intensify, Ms Burton indicated her focus was on the universal social charge.

Tax code

“I would like to see a reform in relation to the USC and to look at how we can reform the whole tax code over a period of years.” This would be executed at “staged intervals”.

She also said the budget would include a housing investment package,with a focus on social and affordable homes and “starter homes” for young people.

Ms Burton's Labour colleague, Minister for Public Expenditure Brendan Howlin, struck a similar note yesterday, saying in an interview with The Irish Times that the succession of budget retrenchments to achieve control over the public finances was mostly complete.

“It’s largely over in terms of those type of scale of adjustments,” said Mr Howlin. “So we’re moving certainly into a different phase now.”

‘Neutral’ budget

Mr Howlin predicted a “neutral” budget adjustment on October 14th, in which any new spending would be funded by separate spending cuts and any tax cuts would be offset by separate tax increases.

He would not say whether the net package of tax and spending measures would come in below €1 billion, as suggested in Government circles.

“I don’t want to go into that bluntly, but when I use phrases like a neutral budget you can figure that we have additional savings coming from some sources, for example: our determination to ensure that the live register continues to fall; some full-year impact from adjustments we’ve already made.

“There will be additional pressures from demographics and so on that have to be met so that balancing is part of the detailed forensic analysis that’s going on right now.”

In relation to Mr Varadkar, Mr Kenny said discussions were still taking place between Minister for Finance Michael Noonan and Mr Howlin.

The Government had already settled on its priority areas and would make collective decisions in those areas before budget day.

“We’ve made no decisions about any of these figures at all,” Mr Kenny said.

Mr Varadkar’s spokesman declined last night to comment on Mr Kenny’s remarks.