While budget details were trailed beforehand, the extent of several cuts was surprising
THE FIRST chapter of nest year’s two-part budget may have held few surprises, but the details of the cuts and the knock-on effect some measures are likely to have on consumers’ disposable income will still make for very grim reading.
Larger families were targeted for the most swingeing cuts outlined by Minister for Public Expenditure Brendan Howlin. A couple with four children who are eligible for child benefit will be worse of by close to €800 a year as the payment for third and subsequent children is to be cut from up to €177 to €140 a month over the next two years.
The news is even worse for more than two million holders of health insurance. The cost of private beds in public hospitals will be increased and legislation introduced which will make bed designation clearer.
This will allow hospitals to pass on increased costs to private patients which will lead to premium increases of at least 50 per cent almost immediately, insurers warned. These changes when they come into effect could mean the cost of an average health insurance policy for a family of two adults and two children climbs by more than €1,000 a year.
While pensions and social welfare payments were not touched, students, homeowners and people who need the fuel allowance will also feel the budget’s sting in the new year.
The Coalition rowed back on a proposal to reduce child benefit across the board and instead targeted those with larger families. Under existing arrangements €140 in benefit is paid for the first two children, €167 for the third and €177 for the fourth and subsequent children.
This means a family with four qualifying children gets €624 each month. This will fall to €560 by 2013, a drop of €768 a year. Mr Howlin said the standardisation of the rates of payments would save €47 million next year and more than €70 million a year when it is fully implemented.
The back to school allowance was scrapped for two and three year olds and payments were reduced for all eligible children.
Last year under the scheme – which offers an annual payment to eligible families to assist with the extra costs each autumn – more than €7 million was paid out to parents of 40,000 children aged three or under who do not attend school. These payments are to be abolished and the rates for primary and secondary school children will fall from €200 and €305 to €150 and €250 respectively.
The period people can claim a fuel allowance has been cut by six weeks from 32 weeks to 26 in a move which will cost people about €120 annually.
Seán Moynihan, of the charity Alone, described it as a life-or-death issue and said the reductions would “have a marked effect on vulnerable older people who are already suffering due to increased cost of fuel”.
While Minister for Health Dr James Reilly’s warning about a €50 annual medical card fee did not materialise, moves to eliminate the subsidy provided for private medical treatment carried out in public hospitals could increase substantially the cost of an average private health insurance policy for a family of four.
The Government intends to abolish the system of designated private/public beds in public hospitals and to allow hospitals to raise charges in respect of all private patients.
Vhi Healthcare warned that, if implemented in full, it will double what it pays for customers attending public hospitals. Moreover if the insurer is to continue to cover all public hospitals it would result in a premium increase of at least 50 per cent. “At a time when an increasing number of people are struggling to maintain their health insurance policies Vhi Healthcare does not believe people can afford this,” the company said.
Chief executive Declan Moran said the change would have “a profound impact on the private health insurance market and put further pressure on the public system”.
In further bad news for non-medical card holders, the threshold for the Drug Payment Scheme has gone up to €132 a month, an increase of €12.
Third-level students were not spared the axe and registration fees are to increase by €250 to €2,250 while maintenance grants for new postgraduate students have been abolished.
The anticipated household charge of €100 was also announced. Minister for the Environment Phil Hogan described it as an “interim measure” and said proposals for a property tax will be considered by the Government “in due course”.
