The Irish Independent reports that Ministers have
been ordered to identify potential spending cuts worth €10.5bn from their
departmental budgets, including reductions in staff numbers and social welfare.
And government departments have been instructed not to hold back from coming
up with ways to reduce the number of workers in their area.
Although the Government is due to reduce expenditure by €2.1bn next year,
departments are being asked to come up with a menu of cuts five times as big.
Cuts which are not implemented in December's Budget 2012 are expected to feed
into reductions to be brought in over the following three years.
The instructions are to find savings worth 15pc to 20pc of spending, or €1 in
every €5 spent, under the Fine Gael and Labour Party review of all departmental
The revelation comes as Public Expenditure and Reform Minister Brendan Howlin
publicly admitted some of his colleagues were not pulling their weight in coming
up with cuts. But Mr Howlin is refusing to name the cabinet ministers involved.
The admission indicates that Mr Howlin is failing in his task of ensuring his
colleagues realise the difficult job facing the Government in bringing in next
Finance Minister Michael Noonan is due to publish a plan in the coming months
that will show the reductions in spending by departments over the next four
Next year, Budget 2012 will contain a package of €3.6bn in tax hikes and
spending cuts -- €1.5bn in tax and €2.1bn in cuts.
However, a memo from the minister's office says each department must come up
with savings "by reference to the 'rule of thumb' 15-20pc level".
The letter from the Department of Public Expenditure's secretary general,
Robert Watt, says the overall budget targets are subject to final government
"You should bear in mind that to afford the Government maximum scope for
decisions about prioritising resources in certain areas, we should not be
constrained from putting forward a full and comprehensive set of savings
options, even where this goes beyond the indicative ceiling," he said in the
letter sent two months ago.
Mr Watt said departments should "put forward options for achieving reductions
in staff numbers".
Among the ways to reduce numbers listed were
"rationalising schemes and
programmes, moving to e-payment rather than traditional processing, outsourcing,
and identification of specific areas where incentivised exit schemes may be
"The question of how to deal with surplus staff identified in this way --
e.g. costs of exit packages where necessary -- will be dealt with centrally by
the Department of Public Expenditure and Reform, and should not in itself be a
bar to your full consideration of this important aspect of the comprehensive
spending review," his memo says.
Getting rid of the quangos already in line for the chop is described as
"early wins" being put forward by departments.
"On balance, it may be appropriate to put forward a more comprehensive
overall package of agency rationalisation measures -- both a speeding-up of
existing proposals and announcement of some new proposals -- as tangible 'early
wins', while signalling that broader issues around agency rationalisation will
be looked at critically in the comprehensive spending review," the memo says.
The level of detail shows Mr Howlin and his officials have had extensive
contacts with his colleagues in other departments over the past number of
Yet he is now complaining that some departments are failing to present
adequate spending reduction plans.
The minister has repeatedly talked up his involvement in the spending review.
A spokesperson for Mr Howlin said last night the minister would not be naming
the departments concerned.
Taoiseach Enda Kenny's spokesman said the spending review was an ongoing
"The Government remains determined to bring it to a successful conclusion,"
The Irish Independent also reports that frantic
efforts by banks to tie down the security attached to thousands of NAMA loans
caused a backlog in the Companies Office last year, it has emerged.
The transfer of property loans to NAMA throughout 2010 forced banks to secure
the collateral behind a huge amount of loans in a short space of time.
It has previously emerged that many banks had inadequate security and poor
documentation backing up their loans.
In its latest annual report, the Irish Companies Office said: "2010 posed
significant challenges for the mortgages and charges processing team.
"An increase in the number and complexity of submissions was recorded in
2010 in line with Irish bank activity in transferring certain loan books to NAMA
as well as reviews by lenders of their security arrangements generally."
The office said banks had to file additional submissions on the basis that
action would be taken against certain firms.
NAMA has castigated the banks on several occasions for the poor quality of
the security underpinning certain loans.
In some cases NAMA has discounted the value of loans by 100pc.
The scale of property lending from 2001 to 2007 meant that banks were often
stretched beyond capacity to arrange and secure all collateral.
"There was an increase in the number of judgment mortgages received from 156
in 2009 to 268 in 2010," said the office.
"As a result of these issues, processing of submissions within 20 working
days was not achieved in all cases in 2010 but the backlog is being
systematically worked through and additional resources have since been
redeployed," it added.
The Irish Times reports that there has been a huge
increase in requests from families for assistance with the cost of sending their
children back to school.
Almost 200,000 parents have applied for the back-to-school clothing and
footwear allowance, 30,000 more than the Government had budgeted for. The
allowances are worth up to €305 per child.
Requests are arriving in welfare offices at the rate of 1,000 a day and may
continue to be made until the end of September. The economic downturn and the
rise in unemployment means significantly more parents now qualify for the
While the majority of claims were automatically paid in June, officials are
still trying to process more than 40,000 requests for assistance.
A spokeswoman for Minister for Social Protection Joan Burton said 50
officials were working “flat out” to process them, but conceded that many will
not be made in time for the start of the school year.
Some €82 million was set aside for the allowance in 2011. The surge in demand
is likely to cost the State at least €12 million more than it budgeted for,
though officials have stressed all valid claims will be paid.
Children’s charity Barnardos expressed concern yesterday that delays in
processing applications were putting further financial pressure on parents.
“This delay is increasing the likelihood of some parents having to go into
arrears on other bills or resorting to money lenders in order to have all the
school materials for their children,” said Barnardos chief executive Fergus
The Society of St Vincent de Paul has suggested that schools should allow
pupils to return to school without their uniforms because of the delay in
The number seeking back-to-school welfare payments has increased dramatically
in recent years. There were 88,000 applicants in 2007, rising to 160,000 last
year. Yesterday, this figure had risen to 198,000 and is on course to exceed
200,000 later this week.
The back-to-school allowance is worth €200-€305 per child, depending on their
The Irish Times also reports that the German finance
ministry has denied that the looming reform of the euro zone bailout fund (EFSF)
would put it beyond control of national parliaments.
As EU politicians hurry to stabilise the euro zone, new data out yesterday
suggested its economic motor, the German economy, was slowing down faster than
Last month, faced with euro zone turbulence, EU leaders agreed a political
deal to give the EFSF bailout fund new powers to provide pre-emptory credit
lines for states in financial difficulty as well as credit via member states for
Now that political deal is being translated into a legal document to be put
before national parliaments.
A 41-page leaked draft proposal appears to allow the EFSF’s directorate award
itself competences in the areas of “price formation, political conditions,
In addition, a revamped EFSF would also be allowed “in exceptional
circumstances” to purchase sovereign bonds directly from financial markets or
German officials said yesterday that the early draft proposal was subject to
change, had been circulated to the Bundestag to keep MPs informed and would not
curtail politicians’ control function.
The final version of the document will be put to national parliaments next
month, along with a second aid package for Greece.
The new EFSF would see its guarantee limit raised from €440 billion to €770
billion, and would assume the bond-buying role recently played by the European
Yesterday German president Christian Wulff attacked as “legally
questionable” the Frankfurt bank’s purchase of €110 billion worth of euro
zone sovereign bonds since May last year.
“I regard the huge buy-up of government bonds of individual states ... as
legally questionable,” said Mr Wulff to an international conference in
The remarks are in line with reservations expressed in recent months by the
As politicians race to copperfasten last month’s euro zone bailout deal,
Germany’s closely-watched Ifo business confidence index recorded its steepest
plunge in 14 months.
The Irish Examiner reports that a split has emerged
in the Cabinet over calls for a national debt relief scheme for troubled
Tánaiste Eamon Gilmore last night rejected suggestions from Labour ministers
that the Government should consider a wide-scale debt forgiveness system.
His comments come after it emerged lenders have begun writing off debts for
borrowers after taking back their homes, through talks with advocacy group New
But the Labour leader ruled out the Government financing any extensive write-off
"I think some kind of a blanket writing-off of mortgage debt, which has been
suggested by some, is not what the Government is considering," he told RTÉ.
"What we are developing are proposals that will be fair to those who are in
difficulty paying their mortgage, fair to those who are paying their mortgages
and, of course, fairest to the taxpayer who is going to have to fund it."
Economist Morgan Kelly last week said 5 billion to €6bn would help end the
Mr Gilmore’s comments are at odds with other Cabinet and party members.
Labour minister Joan Burton yesterday said the Government should consider a debt
resolution scheme similar to one in Iceland. The Social Protection Minister said
mortgage repayments could be based on the value of the home rather than the
The Icelandic government and lenders have agreed to reduce the cost of certain
mortgages to 110% of the value of the property.
Housing Minister Willie Penrose earlier this week said it would be
"foolhardy" not to look at a wide-scale debt forgiveness scheme.
A Government-appointed committee, also looking at measures to assist borrowers,
is due to report shortly.