Water refunds to be paid out of unspent funds in several departments

€170m will not come from ‘whip around’, Leo Varadkar says

Taoiseach Leo Varadkar has confirmed that people who paid their bills are to have the money returned by the end of the year. The repayments are expected to cost the state approximately €170 million.

 

Minister for Finance Paschal Donohoe has said that refunds of water charges will be paid for out of unspent funds in several government departments.

Speaking to reporters at the MacGill summer school in Glenties Co Donegal, Mr Donohoe said that the underspend across all government departments for the first six months of the year was “approximately€300 million.”

“My objective in the second half of the year is to use those underspends and to use any gains in revenue that we may have later in the year to deliver what the Taoiseach outlined over the weekend which is to make sure that all who have paid their bills receive a full refund,” Mr Donohoe said.

Mr Donohoe said that the underspend figure would change throughout the year but he said he had confidence that suffieint resources would be available later in the year to allow the water charges refunds.

He stressed the refunds were a one-off commitment that would have no implications for future budgets.

Earlier on Tuesday Taoiseach Leo Varadkar said water charges refunds will not be paid for by a €170 million “whip around” of Government Departments.

Speaking after Tuesday’s Cabinet meeting, he said water charges bills would be refunded in full from existing exchequer resources and no Department would be asked to reign in spending in order to provide the money required.

“We’re certainly not doing a whip around. We won’t be asking Departments to make savings. That’s not the case at all,” Mr Varadkar said.

Mr Varadkar also confirmed that the Government would not seek to reclaim the €100 water conservation grant from any households.

Minister for Housing Eoghan Murphy told Cabinet almost everyone would be refunded by the end of the year, while Minister for Finance Paschal Donohoe told colleagues the money could be found from within existing exchequer resources this year.

“Currently total Government spending is running about €300 million behind profile, whereas the cost of the water refund will be about €170 million,” Mr Varadkar said.

“No new taxes will be raised this year. There’ll be no cuts to services and it won’t impact in any way on the Christmas bonus.”

Labour Senator Ged Nash had earlier suggested the Christmas bonus might be cancelled to finance the refunds.

Mr Varadkar said it had always been the case that, as the year goes on, underspends emerge in some Departments because, for example, sometimes the cost of servicing the national debt was less than expected and interest rates were lower.

Off-off spend

“So it’s always been the case that for a one-off spend we can find money such as this. For recurring spend it’s very difficult because you need to find the money every year but for a one-off spend…we’re able to find the money.”

He said he hoped Departments would spend the money that had been allocated to them for the purposes voted on in the estimates process. “So no Department is being asked to rein in spending.”

He said that while he had not contacted Fianna Fail about the issue, Mr Murphy had been in touch with the party’s housing spokesman Barry Cowen about the matter in recent times.

Asked how the money would be repaid, Mr Varadkar said details would be provided in early September. Mr Murphy had indicated his intention to bring the required legislation to the first Cabinet meeting after the summer recess.

Meanwhile, Mr Varadkar said the legislation would also contain provisions for a charging regime for people who “waste and use excessive water”.

Exchequer resources

Earlier Minister for Health Simon Harris has said that water charges refunds must be paid for from existing exchequer resources, .

Speaking on his way into Cabinet on Tuesday morning, Mr Harris said it was appropriate that people would be refunded but those who had paid their bills should not be worse off than those who had not.

“You cannot be worse off for having abided by the law of this land than those who didn’t abide by the law,” Mr Harris said.

“People who discharged their civic duties, paid their water charges and fulfilled their legal obligations cannot find themselves out of pocket while people who didn’t pay find themselves not affected.

“So I think its appropriate that people will be refunded. The Taoiseach has made clear that that will have to happen out of existing exchequer resources.”

Christmas bonus

Earlier, Senator Nash called on Government to specify where the money was coming from.

Mr Nash said he would not be surprised if the Christmas bonus was cancelled so the funds could be diverted to pay back people who paid their water charges.

“The Taoiseach needs to front up and say where the money is coming from,” he told RTÉ’s Morning Ireland.

His comments follow a claim by the Minister for Social Protection, Regina Doherty, that her department could find savings through the Gateway scheme.

Mr Nash said that the Government was doing the right thing in repaying the water charges, but he was concerned that departments will now “put the brakes” on spending on frontline public services.

“I don’t want to see that happening to frontline services.”

There were other options, he said, such as VAT receipts and the savings in servicing the national debt.

“The Government needs to articulate where the money will come from.”