€5-a-week pension hike at risk of being delayed for months

Paschal Donohoe needs Fianna Fáil support for his first Budget Photo: Gareth Chaney Collins

Finance Minister Paschal Donohoe is considering delaying a planned €5 hike to the old-age pension by several months, the Irish Independent understands.

The minister is concerned that the €150m cost of introducing the rise on January 1 would drastically reduce his ability to spread the benefits of Budget 2018.

Sources say Fianna Fáil is open to the idea, but it has not yet been officially discussed between the two parties.

The scope of increases in social welfare payments will “go down to the wire” with an acceptance there is not enough money to give across-the-board increases similar to last year.

Social Protection Minister Regina Doherty met with Mr Donohoe earlier this week and listed lifting children out of poverty as her top priority.

It is understood she wants extra funding for the ‘Increase for a Qualified Child’ (IQC) allowance, which is paid to low income parents already in receipt of social welfare.

It is currently paid at a weekly rate of €29.80 per child.

The Budget Day announcement will also include confirmation that a Christmas bonus will be paid to social welfare recipients this year – although it will not be paid at the 100pc rate.

While a rise in standard dole payments is still on the table, sources said such increases were “well down the list and may not be possible”.

Both Fine Gael and Fianna Fáil agree in principle that the old-age pension should be increased by €5 to reflect their pre-election promises. However, with just €350m available for tax cuts and new spending, sources in both parties said they must be realistic about what is achievable.

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If the €5 rise was delayed until April it would cost €112m, while holding back the increase until July would result in a €75m bill for the Exchequer next year.

“We haven’t gone into the detail but these are the ideas that will be talked about. A precedent was set last year and people understand how little money is available,” said a source close to the talks.

A pre-Budget row between Fianna Fáil’s Willie O’Dea and then social protection minister Leo Varadkar last year was resolved when both sides agreed that welfare increases would kick in from March rather than January.

Fianna Fáil is anxiously awaiting the September Exchequer returns, which are due out early next week, before finalising its demands.

The Opposition party’s finance spokesmen Michael McGrath and Dara Calleary have held a number of initial conversations with Mr Donohoe, but nothing has been tied down.

Mr Donohoe needs their support in order to get his first Budget as Finance Minister through the Dáil.

Sources told the Irish Independent that many of the decisions relating to social protection would not be resolved until very close to the Budget on October 10.

However, they predicted the need for equality in the area of welfare payments could become “a flashpoint” next week.

Another source said: “Given the political and financial complications relating to the social protection area, it’s likely to be the one that causes problems. All sides will have to be exceptionally creative.”

Earlier this week Ms Doherty said that measures to alleviate child poverty were “at the top of my list”.

She said there were 113,000 children living below the poverty line and she was particularly interested in improving supports for lone parents. Asked directly if she would be seeking a €5-a-week hike for pensioners, she referred to the commitments made in the Programme for Government, adding: “We will be looking after pensioners.”

In terms of other areas she said: “We have a wide variety of weekly and monthly resources that are given to people who have no other choice but to live on those – be they carers, invalidity, disability, or pensioners or working age unemployment, jobseekers.”

Irish Independent

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