Large spending on health services and supports for businesses and other sectors impacted by Covid-19 will form the backbone of Budget 2021, which Minister for Finance Paschal Donohoe is to announce at 1pm.
The Cabinet earlier met from 8am to sign off on the Coalition’s first budget, drawn up in the shadow of Covid-19 and Brexit.
The budget will include cash supports for businesses forced to close during the pandemic, an extra €4 billion for the Department of Health, €500 million extra for social housing as well as funding to hire more doctors, gardaí, teachers and special needs assistants.
It will include a massive package of State supports for individuals and businesses, as well as more funding for public services, with overall borrowing to reach up to €19 billion.
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Among the budgetary measures, Minister for Education Norma Foley is aiming to bring down pupil-teacher ratios to 25:1 with the creation of 600 new positions.
Minister for Housing Darragh O’Brien’s housing affordability programme will cost €468 million and will include €110 million to be split between affordable purchase measures, and scheduled delivery of cost rental in 2021.
The affordable purchase measures will be constituted as a shared-equity scheme and will account for €75 million. The details of this are still being worked out and will be announced in the coming weeks.
However, it is understood the Department is in talks with the pillar banks to put in matching funding, bringing the total to €150 million. This will also need State aid approval. Some €35 million is being put aside for cost rental. The remaining €358 million is being split between existing schemes such as the serviced sites fund, the local infrastructure housing activation fund, rebuilding Ireland home loans and the Land Development Agency.
One of the last measures to be finalised late on Monday night was to enable the vast majority of people receiving the pandemic unemployment payment to get the social welfare Christmas bonus this year.
Following the Cabinet meeting, Mr Donohoe will unveil Budget 2021 at a Dáil sitting in the Convention Centre in Dublin.
Minister for Public Expenditure Michael McGrath will follow his colleague with a speech at around 1.45pm.
After the Government speeches, Sinn Féin’s finance spokesman, Pearse Doherty, will deliver his party’s response to the budget, its first as the largest Opposition party.
Speaking before the Cabinet met, Mr Donohoe said the Government was “keenly aware of the concerns, the anxiety that many have regarding the future, we understand the air of uncertainty that we have now at the moment”.
“What we are doing in this budget is laying out the way in which we’re going to support our health service, we’re going to aim to support employers, and we’re also going to deal with the concerns that those who have lost a job in circumstances that they didn’t think possible, that we as a country didn’t think possible,” he said.
On his way into Cabinet, Mr McGrath described Budget 2021 as a “hope and confidence” budget.
“Hope that we will come through this very difficult period. Confidence in the fact that we are hopefully providing a record level of public expenditure, investment and support, we hope that will help to sustain the high level of social solidarity at this period,” he said.
Speaking on Tuesday, Minister for Health Stephen Donnelly said the “biggest health budget in history” would build “permanent capacity” across the system.
“It’s a large investment in acute care, in beds and doctors, in nurses, in allied health professionals – it is a very large investment in community-based care,” he said.
‘Time to stimulate’
Green Party leader and Minister for the Environment Eamon Ryan said the large spending increases were the “correct thing to do” given current circumstances.
“We have to get the country through a very difficult period and I think the economic strategy is the correct one, this is not a time to cut,this is a time to stimulate the economy,” he said.
The budget is expected to include a new scheme to support the cash flow of companies forced to close due to Covid-19 restrictions, or whose turnover has dropped by 80 per cent.
The payments will be capped at €5,000 a week, with Ministers told this morning that the scheme will be open to applications from next week onwards. The first tranche of payments will be made next month.
It is understood it will be mainly focused on small and medium enterprises.
The grant is understood to be €1k higher than its contemporary scheme in Northern Ireland and the UK. It will be paid in addition to the Employment Wage Subsidy Scheme.
Further budget measures include an extra €5.5m for the hot school meals programme, and an extra €2,000 for applicants of the widowed and surviving civil partner grant.
There will also be a new €50m fund to provide a once-off financial assistance to full time third level students, likely to be worth €250 to each of them.
There will also be a €120m package for reskilling and retraining including an extension of the apprenticeship scheme. Minister for Higher Education Simon Harris has also secured €30m for research including for all-island research.
There will be a large package of climate action measures, including a home retrofitting scheme.
Vehicle registration tax and motor tax will be reformed to incentivise electric and low-emission cars, and penalise polluters, with about 10 per cent of motorists facing higher bills.
The total cost of the social welfare Christmas bonus this year is now expected to be in the region of €350 million, far in excess of the €279 million paid out last year.
As an exceptional once-off measure, those on jobseekers’ payments will also receive the bonus this year if they have been on the scheme for four months instead of the regular 15 months.
In health there will be a spending boost of €4 billion. It was also agreed on Monday that some €50 million would be put aside to fund new drugs for thousands of patients.
Gardaí funding
Separately, Minister for Justice Helen McEntee has secured funding for an extra 600 gardaí and another 500 civilian staff, and funds to replace 70 temporary Garda vehicles that have been used through the pandemic.
In housing, some €500 million will be allocated in new funding, with much of this directed towards the construction of social housing by local authorities and approved housing bodies on public lands.
In education, it is expected there will be increased funding to bring down the pupil/teacher ratio in small schools, and an increased allocation to disadvantaged schools under the Deis programme.
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