Welfare budget 'may see €1bn cuts'


Cuts of close to €1 billion in the social welfare budget for next year are being considered by the Government as part of its comprehensive spending review.

It is understood the Government is hoping to generate about half the potential welfare savings from a new clampdown on fraud but much of the remaining savings are expected to come from a substantial cut in the €500 million annual expenditure on rent supplements.

Another area believed to be under the microscope is payments made to teachers for doing substitution and supervision duties.

These allowances are paid on top of salary and costs the Department of Education a total of €200 million annually.

The Government has given a commitment not to cut welfare rates but is currently examining all existing welfare programmes to see where the substantial savings that are required under the European Union-International Monetary Fund programme can be made.

Speaking in the Dáil this morning, Taoiseach Enda Kenny described the reported cuts as "speculation."

“The Government will make its own decisions when it has decided what it wants to do,’’ he said.

Every department, he added, was going through an expenditure review and the Government would make its decision known in due course.

Mr Kenny said Ireland was in an economic bind with constraints imposed on it.

Those drawing social welfare payments perfectly legitimately did not want to see others in the system involved in a scam, he added.

The Taoiseach was replying in the Dáil to Sinn Féin’s Mary Lou McDonald who raised the Irish Times report on the proposed Government welfare cuts.

She said the Government had already committed itself to not introducing such cuts.

While the Government was very keen to talk about social welfare fraud, what was involved were irregular payments, including departmental error, she added.

Ms McDonald said Mr Kenny should look into the extravagant salaries paid to the Government’s special advisers in breach of its own pay cap.

A Government spokesman said last night that the comprehensive spending review represented a new approach to the budgetary process which, instead of simply taking slices of expenditure from each department, involved an examination of individual programmes to see if they were justified.

The spokesman refused to comment on any individual department but said the spending review would be published before the December budget.

The current rent supplement scheme has been criticised by the State’s spending watchdog, the Comptroller and Auditor General, for providing little incentive to landlords to lower their charges.

Rent supplement payments are made by the State to people who rent private accommodation and who cannot afford the cost.

About 95,000 households are supported by the scheme which means that, in effect, the Department of Social Protection funds about 50 per cent of the private rented accommodation in the State.

The State’s bill for rent supplement has soared over the last decade or so on foot of a significant increase in the number of those eligible for the payments.

In 2000 the State paid out €151 million but by 2009 this figure had risen to about €500 million.

Last year the then minister for social and family affairs Éamon Ó Cuív set new rent limits to be paid under the scheme in a bid to reflect falls in market prices.

Meanwhile, informed sources said that the Department of Education had previously been looking at the school transport system for potential cuts but that the focus had now moved to the substitution and supervision scheme.

However, sources said yesterday that no decisions had been taken yet.

Ministers in various departments have been engaged in a series of bilateral meetings with Minister for Public Expenditure and Reform Brendan Howlin during the spending review.

Mr Howlin held bilateral talks with the Minister for Health James Reilly on Monday.

At the weekend Dr Reilly signalled that there were different opinions in Government on whether to make cuts to the remuneration of hospital consultants – some of the highest earners in public service with salaries ranging from €150,000 to €190,000.

Highly placed sources said that the Department of Health had initially suggested to the Department of Public Expenditure that the pay bill for consultants – which runs at about €400 million – could be reduced by about €50 million.

However on Saturday Dr Reilly suggested he would prefer seeking to generate savings through efficiencies and work practice changes such as quicker discharge of patients, particularly over weekends.

Based on HSE estimates, he estimated that this could generate €100 million in savings.