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 spending.

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 year's Budget.

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 years.

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 decision.

"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".

Ways

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 appropriate".

"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 months.

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 process.

"The Government remains determined to bring it to a successful conclusion," he said.

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."

Castigated

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 means-tested payment.

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 Finlay.

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 processing payments.

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 age.

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 expected.

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 struggling banks.

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, terms of use and documentation”.

In addition, a revamped EFSF would also be allowed “in exceptional circumstances” to purchase sovereign bonds directly from financial markets or issuing states.

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 Central Bank.

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 southern Germany.

The remarks are in line with reservations expressed in recent months by the Bundesbank.

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 mortgage holders.

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 Beginning.

But the Labour leader ruled out the Government financing any extensive write-off of debts.

"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 mortgage crisis.

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 original loan.

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.