Marita Moloney
Marita Moloney

18.44 13 Oct 2020


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The Minister for Public Expenditure has described Budget 2021 as "an unprecedented package" as the country faces the dual challenges of COVID-19 and Brexit.

Minister Michael McGrath and the Finance Minister Paschal Donohoe delivered a €17.75bn budget for 2021 today, the biggest budget in the history of the State.

He said Budget 2021 was "an unprecedented package but we are faced with an extraordinary set of circumstances with COVID-19 and the possibility of a no-trade-deal Brexit".

Speaking on The Hard Shoulder, Mr McGrath said the budget was focused on ensuring health services, the economy, social welfare and housing remained priorities.

He said: "What we're trying to do with this budget is look after the basics, to ensure our services are fully funded, particularly our health services, and that we're doing all we can to support the economy, to support businesses and to support incomes.

"It's not possible to do everything that we might like to do in this budget.

"We have a very significant deficit this year over €20bn, it's going to be of a similar order next year so what we decided to do was to introduce a targeted set of measures in the social welfare code.

"This includes pensioners who are living alone, they are getting a €5 increase, and we have a range of other measures that are designed to tackle poverty, particularly child poverty."

Health

Mr McGrath said the decisions made for the budget measures on health "are hugely significant".

He said: "It's important to remember what we're providing for here in the budget, a €4bn increase in the healthcare budget.

"It is split into two halves as such, €2bn relates to COVID-19, to make sure our health service next year is able to cope with the ongoing challenge of COVID.

"The other €2bn is essentially to improve the permanent capacity of our health service.

"The increase in the acute hospital bed capacity of about 1,200 beds, the increase in the critical care beds as well of 66 in terms of permanent funding for those beds, that is a step change of approach.

"We have to ensure that our health service can deal with the here and now.

"But COVID will be gone at some point and we're all hoping for that as soon as possible but our health service will still have challenges."

The Minister said the government was committed to Sláintecare and universal access to a publically-funded healthcare system.

He added: "We need to build capacity, we are now providing the resources to do that."

Housing

Today's budget also allocated €500m for capital expenditure on housing for 9,500 new social housing units in 2021.

Mr McGrath said: "In 2019, we had just over 6,000 direct builds of social housing units by councils and approved housing bodies.

"We are saying that next year we will build 9,500 social housing units.

"Without providing the extra funding that we are providing today, €500m of extra funding in capital into the Department of Housing, we wouldn't be meeting the ambitious targets we have.

"It is the right thing to do and we need to do it and we will increase our social housing stock by 12,750 next year.

"What we have signalled today is an important shift in favour of direct builds by councils and approved housing bodies.

"Councils, particularly those that have land, we do want to see them develop ambitious social housing proposals."

Mr McGrath added: "We have quite a strong overall affordability package.

budget 2021 Finance Minister Paschal Donohoe at government buildings in Dublin before outlining details of Budget 2021 today. Credit: PA

Hospitality

The budget also includes a new COVID Restrictions Support Scheme to provide targeted support for businesses that have temporarily closed because of the pandemic.

Mr McGrath said that commercial rates will be waived for Quarter 4, or until the end of this year, while the lower rate of VAT for the hospitality sector is being cut to 9%.

He said: "We're giving a commitment that the wage subsidy scheme will continue through next year.

"Minister Donohoe announced a very important new initiative whereby businesses that have had to close or can only trade minimally because of government-imposed health restrictions will receive a weekly cash payment.

"It will be based on the average weekly turnover of a business, excluding VAT, over the course of 2020 and then for the duration they are closed due to government-imposed restrictions we will pay them 10% of that average weekly VAT-exclusive turnover.

"In simple terms, a cash payment up to a maximum of €5,000 per week so that's a really significant scheme which is about helping businesses to stay alive during the period they are closed."

Economy

Mr McGrath added that the government did not think it was "appropriate" to include income tax cuts in the budget given the €20bn deficit.

He said: "We haven't introduced general income tax cuts in this budget, we didn't believe it was appropriate to do so given the scale of the deficit we have.

"The overall priority was to ensure that our services are funded properly at a time where a lot of extra costs have to be incurred in the provision of those services because of COVID-19

"If you look at the supports we're providing across the economy, I think a better economy benefits everyone.

"People who are in work do not want to see hundreds of thousands of people unemployed and on the Pandemic Unemployment Payment.

He added: "This is a budget that's been cast in unprecedented circumstances."

Main image: Minister for Public Expenditure and Reform Michael McGrath and Minister for Finance Paschal Donohoe on the steps at Government buildings for their joint press conference for Budget 2021. Photo: Sasko Lazarov/RollingNews.

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Budget Budget 2021 Coronavirus Covid-19 Economy Health Hospitality Housing Michael McGrath Paschal Donohoe

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