Minister for Social Protection Joan Burton is under growing pressure within the Government to do more to cut welfare spending and compel claimants to pursue job opportunities.
As preparations for the October budget gather pace, she faces criticism, on both the Fine Gael and Labour flanks, for not producing firm suggestions to curtail welfare expenditure.
The 2014 budget process is being overseen by Minister for Finance Michael Noonan and Minister for Public Expenditure Brendan Howlin.
Ms Burton has been instructed to reduce her €20.3 billion budget by €440 million next year, a decrease of more than 2 per cent. She is understood to believe this is too much and a source close to her argued that a reduction of that scale could not be made "without doing some very harsh things".
Scope limited
In addition to the 2014 cutbacks, she has been told to plan reductions of 3 per cent in both 2015 and 2016. The source said, however, that "the scope for further cuts is extremely limited" after five years of cutbacks.
Welfare spending is being reduced by €390 million in the 2013 budget, after an initial Government demand for €540 million. It was cut by €475 million in 2012, after an initial demand for €665 million.
“The cumulative effect of savings measures introduced in the welfare budget since 2009 now stands at over €3 billion,” the source said. “There is a limit to how much further you can reasonably cut from the welfare budget, because it would have a deflationary effect on the economy.”
The Government is committed to a €3.1 billion package of tax hikes and spending cuts in Budget 2014.
At the same time, the improving fiscal outlook could provide scope to scale back the retrenchment or make money available for the construction sector or young families. Pressure is building on the Fine Gael side of Government for tax cuts.
While the the improving outlook could ease pressure on welfare spending, Ms Burton is being urged to concentrate more on measures to encourage claimants to take up work than on the protection of her budget.
In particular, the Minister faces complaints in Government over the slow progress of “work activation” schemes to help unemployed people find jobs. In a private report this week on the bailout, the EU Commission called for rapid action to outsource “activation” services to the private sector.
