Brendan Howlin offers €600m in spending across departments

There is “leeway” of €600 million in spending to spread across Government departments in next month’s budget, Minister for Public Expenditure and Reform Brendan Howlin has told the Cabinet.

Sources said he told Ministers that if they stuck to the original spending plans outlined at budget time last year, he would have €600 million at best to spread across the various departments.

While the budget was initially supposed to contain a total adjustment package of €2.1 billion, the increasing tax-take and growing economy mean the Coalition will probably be able to introduce a broadly neutral budget and still bring the deficit down to 3 per cent.

The Government is working on the basis that day-to-day spending could remain static next year at about €49.5 billion, roughly the same as this year.

A memo brought to Cabinet yesterday by Mr Howlin said: “The development of measures to stay within a current expenditure ceiling of €49 billion would, under the best- case scenario, provide leeway of €600 million to address the additional current expenditure proposals . . . identified from departments.”

The overall spending ceiling laid down at the outset of the budget talks called for further cutbacks of €1.3 billion in 2015, including €600 million in settled cuts and a further €700 million in unallocated cuts.

The Government anticipates that a further swathe of cutbacks will not be required next year, meaning some ministers will not have to find additional cuts as they go into 2015 to make up the required €700 million.

While declining to detail any figures, a Government spokesman said any “flexibility” in the budget will be allocated to “pressure points”.

Spending ceiling

It is understood spending ceilings for the Department of Health in the memo detailed a reduction of €250 million from this year to €12.52 billion. The Department of Social Protection was put at €19.65 billion, down €220 million, and the Department of Education was at €8.18 billion, down €39 million.

Ministers have made claims to spend an extra €3 billion next year but Mr Howlin said such ideas could threaten the recovery, telling colleagues that no one wanted to return public finances to where they were three or four years ago.

The claims for new spending are said to include €1.4 billion from Mr Varadkar, including €200 million in respect of demographic pressure and €200 million for new services.