Minister for Social Protection Joan Burton has strongly indicated there will be no reductions in child benefit in October's budget and has also confirmed that proposals to tax the allowance, or to introduce two-tier payments, are likely to be shelved.

In an interview with The Irish Times, Ms Burton says the widespread feedback she has received from TDs and Senators in both Fine Gael and Labour is that the benefit should remain at its current level of €130 a month for the first four children and €140 a month for subsequent children.

She says there is evidence to show that many middle-income families are using child benefit for mortgage repayments and could not afford to take another hit.

Ms Burton, who is also deputy leader of the Labour Party, has laid down a strong marker for what are expected to be very tough negotiations with Minister for Public Expenditure and Reform Brendan Howlin over proposed cutbacks in her department.

Some €440 million in cuts have been demanded from her budget.

Collision course
Ms Burton has accepted that some cuts are necessary but it is understood she will fiercely resist any attempt to effect savings of anything close to the target figure.

Consequently, she may be on a collision course with her Labour ministerial colleague on this issue.

On child benefit, Ms Burton strongly argues there is no case for further reductions.

“If you look at families with distressed mortgages, the most affected are parents in the mid-30s to mid-50s age bracket.

“The people who are most heavily indebted are the ones with children. You would have to be very out of touch not to appreciate that for those families, the cashflow from child benefit is critically important,” she says.

“This point has been consistently made to me by members of the Fine Gael parliamentary party so the view is shared by both parties.

“I discussed this issue with Fine Gael’s social welfare committee a few weeks ago and the agreement on this is extraordinary.”

Welfare issues
Ms Burton has also confirmed that the report of a group chaired by Ita Mangan that looked at child benefit and other social welfare issues will not be implemented in the short term.

The Mangan report suggested two models, a taxation on child benefit or two-tier payments, while Ms Burton herself says she prefers the tiered payment approach – a lower universal payment of about €100 a month for all children, with top-ups for families with incomes under €35,000.

However, if the Mangan recommendations were implemented, Ms Burton’s concern is that middle-income families, already struggling with negative equity and other taxes, would be affected.

In last year’s budget, child benefit was cut by €10 a child to €130 for the first three children.

The cuts were unpopular with backbench Labour TDs. One of their number, former Labour Party chairman Colm Keaveney, voted against the Government and lost the party whip, citing the cut in child benefit as well as other social welfare changes.

Failed growth
Ms Burton says she is resisting cuts to the social welfare budget on the grounds that economic growth predicted by the troika has failed to materialise and employment remains high at 13.6 per cent (although the picture has improved in the past year).

In that context, she has argued that the social protection budget remains a hugely important driver in the Irish economy.