Frantic final days of budget negotiations as deadline looms without agreement

Several Government departments have not yet agreed their spending settlements ahead of next week’s budget, setting up a frantic final few days of negotiations in Government.

Sources with knowledge of the discussions say that only five departments had agreed their spending plans for next year with Minister for Public Expenditure Paschal Donohoe as of Thursday morning after weeks of sometimes fraught discussions.

The party leaders are due to meet with the two budget ministers on Sunday to sign off on Tuesday’s package, meaning that a flurry of negotiations will take place on Friday and Saturday.

The most difficult will be the session to agree the health budget. The Department of Health will require a €1.1 billion bailout this year, which will take the cost of the health budget to over €25 billion this year. With inflation and additional demand on health services, the budget could expand to over €26 billion next year, eating up much of the available resources for spending increases across all departments.

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It is also understood that there have been some tensions between the Department of Health and the HSE over the overspend in the hospital sector, which has been evident in the budget negotiations.

The budget negotiations take place against a background of a bulging exchequer but with storm clouds gathering on the economic front and some weakness evident in corporation tax receipts in the past two months, Mr Donohoe and the Minister for Finance Michael McGrath are insisting on a tight rein on spending.

“A lot of people believe that money is no object,” said one source close to the negotiations. “But it is.”

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Speaking privately, Ministers expect the room for new spending measures may be limited.

Sources said that discussions have focused on converting measures funded by Covid-19 or Ukraine-linked expenditure into permanent, repeating funding, which will expand the baseline of core spending and embed these measures for the future. Ministers fear, however, this will leave very little room for new measures.

“I don’t think you’ll find the volume of new measures compared to last year’s (budget),” one Minister said, adding “we’re in a much more normal paradigm”.

Speaking in Spain where he is attending an EU summit, Taoiseach Leo Varadkar confirmed that the budget would include supports for people to help with electricity bills.

“The detail of that hasn’t been worked out, but what I can say is that people will get help with their electricity bills over the course of the winter. Electricity prices have fallen, but they’re still substantially higher than they would have been two winters ago. We understand that as a Government, and we have the money to help people with those bills, and we will.”

Speaking in the Dáil, Tánaiste Micheál Martin said: “It is our intention in this budget to continue to cushion people because next year living standards will rise above inflation.” He was responding to the People Before Profit TD Richard Boyd-Barrett, who said that ordinary people were being “absolutely crucified” while the Government sat on a €16 billion surplus.

Mr McGrath previously told a meeting of the Fianna Fáil parliamentary party that it would not be possible to “do everything” in the budget, but that there would nonetheless be a “good story to tell”, with one-off measures that make a difference.

Meanwhile, the Labour Party launched its alternative budget, promising an immediate €15 hike in weekly social welfare payments, later rising to €27.50 next year, a €200 cap on childcare costs, an SUV tax and a monthly €9 “climate ticket” for public transport. The budget package is worth almost €11 billion.

At a press conference in Dublin, party leader Ivana Bacik said it included “radical and realistic” priorities, arguing it was a budget “to create an equal Ireland”.