Budget 2023: Health spending agreed following tension over allocated funding

Key decisions down to the wire on welfare increases, supports for businesses and childcare funding

A figure has been agreed for the health spending in Budget 2023 after marathon talks, with Minister for Public Expenditure Michael McGrath saying the overall tax and spending package to be announced on Tuesday will be concluded in “substantive form” this evening.

Tensions had been simmering in the background over spending on health, with a €1.1 billion allocation from Mr McGrath deemed insufficient by Minister for Health Stephen Donnelly to cover new spending on his priorities.

On Sunday, a deal was brought together that would see an extra €50 million injected on top of that figure.

There will also be money for one-off measures, as well as pay measures. A total of €1.15 billion is now set to cover off new measures and maintaining an existing level of service.

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There will be a separate Covid 2023 pot of money, which will also contain funding for waiting list reductions, with funding also in line for GP diagnostics which helps with waiting lists.

On Sunday evening, a spokesman for Mr Donnelly said: “We’ve settled on a budget figure. Work continues through tonight and tomorrow to ensure priorities are funded.”

However, with talks now under way between the Coalition party leaders, Mr McGrath and Minister for Finance Paschal Donohoe on finalising the budget, several key areas remain to be agreed. Sources indicated that the leaders will have to decide on the rate of welfare increases, and the composition of the welfare package between permanent increases and one-off measures. It is expected that the entry point for the top rate of tax will be increased to about €40,000.

Meanwhile, measures on childcare, one of the most widely anticipated aspects of the budget, need to be finally agreed as well - as do cuts to the student grant and a scheme to provide small businesses with payments to help with their energy bills. A package of supports for renters and potentially for landlords as well remains to be nailed down.

Speaking on his way into the talks, Mr McGrath said he had “concluded pretty exhaustive negotiations with most of my colleagues across Government and I am in a position to recommend a set of proposals on the expenditure side to the party leaders”.

“We are now at the final stages of putting the finishing touches to the budget,” he said, adding: “Our expectation would be that we will conclude the budget in substantive form this evening.

“Nothing that we propose will come as a surprise to them and we are in a position to present a final set of measures which we hope will meet agreement.” He said there will be a “substantial package overall” and one-off measures would “be significant and they will start to flow quite quickly”.

Entering the talks, Mr Donohoe said: “We’re very much aware of the concerns that many have at the moment, and while we know these are uncertain times, we do believe we have proposals that will help with the needs of today and also help us with further developments that may take place next year.”

Earlier on Sunday it emerged that key Government departments have not signed off their spending allocations with the clock running down to Budget 2023. The landmark budget package is expected to top €10 billion.

Minister for Social Protection Heather Humphreys said a double payment of child benefit in November was among the matters under consideration.

She said her priority was to put money back into people’s pockets, citing older people, carers, people with disabilities, and families.

“I want these groups to know that I am pushing hard on their behalf, and I will continue to do so,” she said, speaking on the This Week programme on RTÉ Radio One.

There would be across-the-board increases in social welfare payments but each euro increase costs €75 million, she said.

Asked about the call from Fr Sean Healy of Social Justice Ireland for a €20 increase in social welfare payments, the Minister said she wanted to look at targeted measures as well as universal measures.

A €20 increase across the board would cost €1.5 billion and the Government had to work within limits, she said. “I think that €20 would be very ambitious and if I did that, I wouldn’t have any money left to target other measures.”

Child benefit is a universal payment that reached a lot of hard-working families that were not rich by any measure of means but don’t qualify for social welfare support, she said. “I can tell you there are a lot more middle-income and low-income families who depend on child benefit, than there are millionaires.”

There will be a mix of targeted and universal measures in the budget to help people with energy costs, the Minister said, adding that she was concerned about people who fall just outside the means test for the fuel allowance and was looking at how more people could qualify.

The joint leader of the Social Democrats, Róisín Shortall, speaking on the same programme, said her party would be in favour of an across-the-board increase in social welfare payments of €15 a week, starting in October.

Households dependent on social welfare got a €5 increase last year, which was the first increase in some time and there was a lot of “catching up” needed, she said. Her party was also in favour of an increase in the fuel allowance, and a double week to be paid some time in October or November.

She said a €10-a-week increase in social welfare payments would not “get close to what is required”. The increase in the fuel allowance should be €15 and should be extended to those in receipt of the working family payment, she added.

She also repeated her call for targeted cash payments to households, by way of a graduated system through the payroll that employers could then recoup within days via Revenue. “We believe this could be done very quickly,” she said. “That should start for those at the lowest levels of income at €800, and should go up, but it shouldn’t go to everybody.”

It is understood the Department of Children, which is responsible for delivering on the politically sensitive task of reducing childcare fees, has not agreed its budget.

Similarly, the amount to be allocated to the Department of Enterprise, including for a major new initiative to help small and medium businesses (SMEs) with energy costs, has not been agreed.

The Department of Agriculture has also not yet signed off.

Major pressure to deliver

The Government is under major pressure to deliver for voters facing record levels of inflation driven by rampant energy costs. Upwards of €3 billion is expected in one-off cost-of-living measures, alongside a budget day package of €6.7 billion in permanent tax cuts and spending increases.

A scheme worth €600 per household is expected to help with winter utility bills, but debate is ongoing over the precise level of welfare increases, and the mix between permanent benefit hikes and temporary cost-of-living measures.

The structure of a new scheme to help SMEs with energy bills is testing politicians and officials in the final days before the budget. Revenue is expected to administer a scheme that is to help all or most businesses in the country – but there are difficulties in determining eligibility for the payment, as well as how precisely it will be paid. The Business Post reported that up to €1 billion could be earmarked for the scheme.

There is also last-minute horse-trading over new supports for landlords and renters, with the Sunday Independent reporting that a row has broken out between the Department of Finance and the Department of Housing over how many renters would stand to benefit, which would have knock-on impacts for the cost of any scheme.

The precise level of supports to be given to parents in childcare subsidies is also to be determined, but expectations are high after the Government committed to helping tackle Irish fees, which are among the highest in Europe.

A cut to the student registration fee of up to €500 is expected to be backdated for this year.

The Ministers for Justice and Education, Helen McEntee and Norma Foley, are expected to secure funding for hundreds more gardaí, teachers and special needs assistants, with Minister of State with responsibility for Special Education Josepha Madigan also seeking money for the National Council for Special Education. More money is expected to help defuse the row over school bus allocation.

A row over healthcare spending had been continuing over the weekend, with frustrations in both the Department of Health and the Department of Public Expenditure. Minister for Health Stephen Donnelly had been seeking more than the offered allocation of €1.1 billion to fund his priorities around IVF, GP charges, women’s health and free contraception. But the Department of Public Expenditure wants to hold back spending amid ongoing concerns over a to-be-determined overspend in his department this year.

Defence Forces spending will be hiked by tens of millions in line with a Cabinet decision to increase the budget for defence earlier this year.

Minister for Finance Paschal Donohoe is working on new zoned land and vacant home taxes, but it is not known if he will extend the 9 per cent special low VAT rate for hospitality amid friction between hoteliers and the Government about the cost of hotel rooms and a belief that the benefit of the reduced rate has not been passed on.

Jack Horgan-Jones

Jack Horgan-Jones

Jack Horgan-Jones is a political reporter with The Irish Times

Colm Keena

Colm Keena

Colm Keena is an Irish Times journalist. He was previously legal-affairs correspondent and public-affairs correspondent