A number of “fundamental” issues remain to be resolved between Fianna Fáil and Fine Gael before agreement can be reached on the formation of a new government, one of Fianna Fáil’s negotiators has said.

Dublin Bay South Fianna Fáil TD Jim O’Callaghan was speaking after the negotiating teams from both parties decided to refer the differences between them to party leaders Micheál Martin and acting Taoiseach Enda Kenny.

For Fine Gael, Minister for Transport Paschal Donohoe said his party was committed to reaching an agreement but its mandate must be respected.

The two negotiating teams failed to reach an agreement on housing, health, childcare and water charges. It had been anticipated that a number of sensitive issues would be settled directly between the two party leaders.

Speaking after the talks at Trinity College Dublin last night, Mr O’Callaghan said it was now time for the two party leaders to intervene to resolve the issues. He also said the two negotiating teams were ready to recommence talks if asked to do so by their leaders, and both teams were on standby over the weekend.

“I don’t believe any problem is insurmountable if there is compromise on both sides, but we have reached a stage now where we have been talking for a while and a number of fundamental matters have to be resolved and haven’t been resolved yet,” Mr O’Callaghan said.

Leaders

“I don’t think they are going to be resolved without instruction from our leaders.”

Mr Donohoe said the party would seek guidance from Mr Kenny. He said the party was committed to reaching agreement but had to recognise the mandate it had been given.

He added there were a number of important factors to be dealt with by the two parties.

It is anticipated that a Dáil vote on taoiseach, as well as the formation of a government, could take place next week, depending on a successful resolution of talks.

Fianna Fáil sources have said the party needs at least three or four policy concessions in order to justify facilitating a Fine Gael-led minority government.

Mortgages

A range of issues were discussed yesterday, such as banking, mortgage interest relief and standard variable rate mortgages.

Fianna Fáil’s Michael McGrath consistently highlighted standard variable rate mortgages during the last Dáil, and Fine Gael also said it would tackle their high cost.

In its foundation government document agreed with Independent TDs in recent weeks, Fine Gael said it was “not ethically acceptable” for banks to “charge excessive interest rates on standard variable rate customers”.

“We will request the Competition and Consumer Protection Commission work with the Central Bank to set out the options for the government in terms of market structure, legislation and regulation to lower the cost of secured mortgage lending and improve the degree of competition and consumer protection.”

It said this would be undertaken within a year of taking office, but it is not clear if this is acceptable to Fianna Fáil.

Earlier yesterday, Fine Gael’s Leo Varadkar warned both sides would need to make uncomfortable compromises to form a government.

He said: “It is also the case nothing is agreed until everything is agreed.”