The Government has agreed an €800 million social welfare package for today's Budget which will see pensions and unemployment benefits rise by some €12 per week.
It is also understood that monthly child benefit payments will increase by €8-€10 in a package that will see the Government ease some of the most controversial of the 15 social welfare restrictions outstanding from last year's Budget.
The €800 million in additional funding to be announced by the Minister for Finance, Mr Cowen, will bring expenditure on social welfare above €12 billion. However, the rise is smaller than the €1 billion increase sought by the Minister for Social and Family Affairs, Mr Brennan, in the early stages of the Budget process.
Mr Cowen will also include a major initiative to increase spending on disability services in what will be his maiden Budget speech to the Dáil this afternoon.
With the Government keen to shed its "uncaring" image, there was increasing speculation last night that the Minister will ease the burden on first time home-buyers by relaxing the stamp duty on second-hand homes as part of a wider housing package.
In line with the overall thrust of a Budget aimed at the less well-off, the tax package will be particularly focused on lower earners. There are likely to be only modest gains for middle and higher earners. The Minister is expected to announce significant increases in tax credits, taking tens of thousands of lower earners out of the tax net.
The Government has committed to removing everyone on the minimum wage - now €273 a week - from the tax net completely over a number of Budgets. There is now speculation that the Minister might move ahead and today announce the removal of all minimum wage PAYE taxpayers from the tax net.
This could be achieved through an increase in annual tax credits of about €280. This would cost about €250 million next year. Increasing tax credits benefits all income taxpayers, but gives the highest proportional gain to lower earners.
An increase in the standard rate income tax band is also expected, but the Minister may have less to spend in this area. Pre-budget figures show that it would cost about €180 million next year (or €261 million in a full year) to maintain the percentage of taxpayers liable at the higher rate at this year's level. Currently just under one third of taxpayers are liable at the higher 42 per cent rate.
The social welfare package is expected to increase the monthly child benefit payment for the first and second children by €8, bringing the payment to €139.60. The payment for the third child and subsequent children is expected to rise by €10 to €175.30.
The carer's allowance will be increased while a "respite grant" currently set at €835 will be increased above €1,000. The Minister is also expected to provide for an increase in the number of carers entitled to the grant.
In addition, the Government will "ease" the restrictions on four of the social welfare cuts introduced by Mr Charlie McCreevy in his final Budget last year. These include the controversial requirement to live in rented accommodation for six months before the entitlement to the rent supplement kicks in.
The Government will also ease the restrictions on the dietary supplement, the back-to-education allowance and on access to emergency creche care.
The Budget will contain increased investment on capital investment projects in addition to those outlined in the the Book of Estimates.
These are almost certain to contain an initiative to ramp up spending on social housing, along with a new Government commitment to pressurise local authorities to deliver on their commitments in this area. However, details about specific initiatives in health, education, environment and transport will be held back until a series of press conferences which will be staggered over the weekend.