Coalition to increase spending by €450m

The Government has settled on budget plans which will increase expenditure next year by €450 million more than anticipated.

The additional money will be used to hire 1,000 new teachers, bring a large number of additional gardaí on to the beat, implement the programme to deliver free GP care and introduce a big social housing programme.

While there was no discussion on tax when the Cabinet met yesterday to sign off on the spending plan, it is understood that a cut in the top 41 per cent income tax rate remains very much in play, in addition to measures to ease the burden on low and middle earners, likely to involve USC changes.

Minister for Health Leo Varadkar will receive a €500 million supplementary budget estimate this year, with some €300 million to be rolled over into 2015.

Challenged

It is understood Mr Varadkar was challenged at Cabinet yesterday by Tánaiste Joan Burton to make clear that there would be no threat next year to key measures including free GP care, mental health and the BreastCheck initiative.

Claims by Mr Varadkar this week that such initiatives could be in jeopardy are said to have prompted “very considerable irritation” around the Cabinet table. “There was a fairly fierce reaction to that from Howlin and especially Burton. Effectively the Tánaiste was saying you’ll be doing what you’re doing,” said a source.

The measured approved yesterday include:

Funding to hire some 1,000 additional teachers, assistant teachers and special needs assistants.

The immigration service will be “civilianised” at ports, freeing gardaí to take up duties on the beat next year without having to wait for the training of new recruits.

A new financing initiative to boost the supply of social housing, which will keep significant borrowing off the State’s balance sheet.

Talks on a corporate tax package continue as preparations are made to drop the “double Irish” scheme.

Thanks to the surge in growth, the Government has moved from the original forecast that a €2 billion budget retrenchment would be needed to one where it can afford to up borrowing by more than €600 million.

Figures released by the Government yesterday show it is on track to bring the budget deficit to 3.7 per cent of GDP by the end of this year. The deficit would come in next year at 2.4 per cent if there were no policy changes in the budget. This opens scope for additional spending and tax measures with a likely deficit target of some 2.7 per cent.