Taoiseach Enda Kenny has distanced himself from a prediction by his Minister for Health this morning that tax changes in the Budget will put an “extra fiver or tenner” in workers’ weekly pay packets.

“We’ve made no decisions about any of these figures at all,” Mr Kenny told reporters this afternoon.

Speaking to RTE Radio this morning, Leo Varadkar said workers would benefit by between €5 and €10 per week as a result of "relatively modest" changes to taxation .

“I think people would like to see that because it would be real evidence that the economy is recovering. It would also help to boost the economy itself by increasing demand,” he said.

Mr Kenny said discussions were still taking place between Minister for Finance Michael Noonan and Minister for Public Expenditure and Reform Brendan Howlin.

The Taoiseach said Government had already said where its priority areas were and would make collective decisions in those areas before Budget Day on October 14th.

‘Neutral’ budget

Mr Howlin said earlier today that the Budget will be “broadly neutral” as a result of better than expected improvements in the economy.

He said “things have improved significantly” since the Government published the last economic forecast in April, when it was envisaged cuts of €2.1 billion would have to be made in order to achieve the EU target of a 3 per cent deficit by the end of next year.

It had been estimated that around €1.4 billion would come from expenditure cuts, and €700 million in additional taxes.

But the latest exchequer figures published last week showed €1 billion, or 4.1 per cent, more tax had been collected than expected so far this year, while spending remained on target.

“We have made substantial progress on where we thought we would be. The tax revenues are robust. The focus on jobs, which the Tánaiste has led the charge on, is bearing fruit and we are getting people back to work, and that gives us options,” Mr Howlin said.

If tax adjustments are to be made they will be paid for by “tweaking taxes somewhere else”, and “if there is to be additional spending in health or any place else, we have to find that by reducing expenditure somewhere”.

Health overspend

Mr Varadkar said this morning that he didn't think workers would welcome an increase in take-home pay if it came at the expense of health services. He said spending at the Department of Health was likely to overrun by around €500 million this year because of a "quite significant" increase in the number of people using health services.

Responding to Mr Varadkar’s comments, Mr Howlin said on the Today with Sean O’Rourke programme that he had experienced difficulty negotiating the Budget with the Department of Health each year since he became Minister for Public Expenditure and Reform, “for them to fully understand that everybody had to be part of the crisis and there was no ring-fenced complete exemption”.

He said the amount of money allocated to the Department of Health “has been unaltered, unreduced, since 2011”, and there had been “no scope to give additional money to one when we were clawing back from the others”.

Mr Howlin said he would be “engaging bilaterally” with Mr Varadkar along with every other Minister and Department in the coming weeks to negotiate Budget adjustments.

"The one thing there is an absolute consensus on across Government is that we have worked might and main with the people of Ireland to get a restoration of our economic fortunes. The foundations of that are in, and we are not going to put that in jeopardy," he said.

“We are going to have a sustainable financial future that will be able to expand public services in an affordable way, and ensure that there is a rigorous evaluation of what we spend our money on, that we are not wasting money and that we get value for money.”

Tánaiste Joan Burton has said people on low and middle incomes will be prioritised by the Labour Party in pre-Budget negotiations.

Ms Burton said she agreed with the Taoiseach Enda Kenny following her appointment as Labour Party leader that “policy priorities were focused on middle and low income people, including particularly families with children, and also older people including people who had retired”.

She added that although the country’s finances are now “hugely better” than in the lead up to the last three budgets, “we can’t do everything in one budget”.

“So we want to target it and do it in a way that builds and sustains the economic recovery. But we also want to target it particularly at middle and low income people,” she said.

“That’s the agreement that I have with the Taoiseach, and that is very much our approach in the Budget.”