THE Government's plan to increase spending by almost 4 per cent ahead of inflation next year has provoked Opposition claims that public expenditure is running out of control.
The final increase may be even higher, as the Book of Estimates published yesterday makes no provision for further increases in public sector pay now under negotiation.
Despite the spending increase, substantial tax cuts and social welfare rises are still likely to be afforded in next month's Budget. The Minister for Finance, Mr Quinn, has £140 million for additional spending on Budget day - most of which will go to social welfare increases. He is also expected to have up to £300 million available for tax reductions.
The figures show the Government breached its own limit for spending increases - 2 per cent above the rate of inflation - this year and plans to breach it again next year.
Fianna Fail and the Progressive Democrats united in condemning the rise in spending. Spokesmen for the two parties said the Government had reneged on a commitment given by the three parties when they took office.
The Fianna Fail spokesman, Mr Charlie McCreevy commented: "The news by the Minister for Finance that 1997 spending limits, which the Government set down for itself, will not be met, should come as no surprise to anyone, given the fiscal frittering and overspending which has characterised this Government to date."
The Progressive Democrats' finance spokesman, Mr Michael McDowell, accused the Government of abandoning its commitment to control public spending.
According to the Estimates, the rise in spending this year will run at 5.4 per cent, which is 3.8 per cent in real terms - when inflation is taken into account. Next year will show a 6.1 per cent increase, or 3.9 per cent in real terms. The post Budget spending limit has been set at £13 billion, although it appears that it could rise slightly to accommodate any public sector pay deal.
NCB Stockbrokers calculated that a 2.5 per cent increase for the public sector would add £60 million to post Budget spending, implying a 4.5 per cent real increase in spending next year.
The figures leave room for £140 million in extra spending on Budget day - most likely to be used for social welfare increases. "There is no question that it could be used for public sector pay," Mr Quinn said.
The spending increases are necessary to maintain the current level of services to the public in areas such as health and education, Mr Quinn said.
Social welfare spending is set to rise, even before the Budget measures. The Department of Finance is predicting a rise in the live register this month of 8,000 to 11,000, due to the normal seasonal increase.
As a result, the average number of people on the live register over 1997 is expected to be 268,000. Figures at the end of November showed 268,700 people were signing on. There is also a large full year cost next year for welfare increases introduced this year.
Presenting the Estimates yesterday Mr Quinn said he is determined to ensure that budgetary discipline is continued.
Mr Quinn insisted that all spending increases were strictly necessary. It is not possible to get within the 2 per cent limit without reducing services," he said. "And in the current situation it would be very difficult to explain to poorer members of our society why they should suffer a cutback."
Mr Quinn would give no details of his tax cutting plans beyond stating that the PAYE sector can expect a break. However, he is expected to make at least a one percentage point cut in employees' PRSI of 5.5 per cent as well as at least one point off the 27 per cent basic rate of income tax. A widening of the standard rate tax band as well as increased allowances would also be included.
Mr Quinn would only say that the general Government deficit - the borrowing level set by Maastricht - will be "significantly lower" than the target of 2.6 per cent. However, sources have suggested that the authorities' target is between 1.9 and 2 per cent.