Unemployment benefits for new claimants aged under-25 are to be reduced in the budget.

People aged between 18 and 21 years currently receive €100 per week in jobseekers allowance with those aged between 22 and 24 years receiving €144. The rate for those aged 25 years and over is €188.

A Government source said the €100 rate would be extended to those aged up to 24 years, with €144 payment coming at 25 years and €188 payment at 26 years. The measure is expected to save more than €30 million annually.

The initiative is seen in Government circles as a way of encouraging young people to take up training opportunities or to participate in schemes such as JobBridge and JobsPlus.

The Cabinet reached a deal to provide free GP care for children aged five and under as it signed off late last night on tomorrow’s budget.

The GP scheme will cost €40 million next year, providing care free at the point of access.

It was agreed after Ministers James Reilly and Brendan Howlin were called to direct talks with Taoiseach Enda Kenny and Tánaiste Eamon Gilmore to settle the estimate for the health service.
"By and large, virtually everything is resolved at this stage: a few little tweaking of things, but the structure of each department line by line was gone through and the Cabinet signed off," Mr Howlin said shortly before midnight.

“We’ll have some surprises I hope by Tuesday.”

The introduction of the GP scheme had been in question amid doubt over the state of the finances in the health services.

Ahead of the talks, Dr Reilly said he was “not ruling it out” but that “tough decisions have to be made” in the budget.

The GP scheme was a priority for Labour, but Fine Gael politicians see it as a coup for Dr Reilly.

It will be cast as a step on the road to universal health insurance. The Cabinet meeting started after 7pm and broke up at 11.20pm.

The settlement of the health budget was said not to necessitate any fundamental review of the provisional estimates agreed last week with other Ministers.

Last-minute talks with the Ministers for Health and Public Expenditure followed prolonged tension between the two men over the scale of a large health spending overrun this year and the action required to deal with it.

As he arrived at Government Buildings, Mr Kenny would not say whether a supplementary estimate will be needed later this year to make up the shortfall.

“You have 2½ months to go yet in terms of the running of the health services,’’ the Taoiseach said. “I cannot predict what that spend will be.’’

Dr Reilly had gone into weekend talks battling demands for a spending cut next year well in excess of €500 million.

However, he still secured funding for the free-GP scheme.

There was no pre-Cabinet meeting of the Economic Management Council, the committee at which the Taoiseach, Tánaiste, Minister for Finance Michael Noonan and Mr Howlin settle the thrust of fiscal policy.

The budget, which will be unveiled tomorrow by Mr Noonan and Mr Howlin, will see €290 million cut from welfare expenditure managed by Minister for Social Protection Joan Burton.

It emerged as the Cabinet met that cutbacks from at least one of the major secondary benefit schemes under which pensioners receive telephone, gas and electricity allowances remained in play.

This, however, was still subject to final agreement. Such cuts would be likely to prove contentious if introduced.

The budget embraces a €2.5 billion retrenchment, two-thirds from spending cutbacks and one-third from tax measures.
However, the Government is also expected to earmark half the proceeds from privatisations and the sale of Bord Gáis assets for investment purposes to create employment.

This includes new budget measures to boost the construction industry and house-building particularly, a priority for Fine Gael.

The initiative is unlikely, however, to include a special VAT rate for the construction sector. The budget is also expected to include a new levy on the banking sector to raise between €150 million and €200 million.

This will apply to banks which are in receipt of State support and those which are not.

Increases in deposit income retention tax, capital gains tax and capital acquisitions are also in prospect. These are dubbed the “new old reliables.”

Fianna Fáil finance spokesman Michael McGrath said the imperative from his party’s point of view was that tomorrow’s budget “is seen to be fair”.

“We all accept you won’t get a consensus on what is fair but I think the litmus test is whether or not the distribution of the burden of the adjustment is carried by those who have the best capacity to pay it,” he said.

Mr McGrath noted the proposed introduction of free GP care for under fives and said there were undoubtedly families with young children who could not afford the cost of bringing them to see a doctor.

However, he asked “at whose expense” the scheme would be funded given the fact the medical card system was in chaos.

“Will it be at the expense of children over the age of five who might have autism, who might have Down’s Syndrome, or at the expense of adults who have lifelong debilitating illness, such as Motor Neuron Disease, such as MS, people who are profoundly disabled… that is the key question the Government will have to answer tomorrow.”

On proposals to change welfare entitlements for young jobseekers, Mr McGrath said “much more rigorous activity on the labour activation side” would be needed if payments were to be cut.

“What we will be looking for tomorrow, is that if there is a change to the rate being paid to young people on the live register, that it is accompanied by meaningful labour activation, that they can be guaranteed that they will be offered a place that is tangible, whether it be in education or in training which gives them the best possible prospect of securing work.”