Budget 2017 revealed - Elderly win big in ‘Grey Vote Budget’ as social welfare benefits rise

In a last minute change to the Budget, it was agreed to reduce the maximum fee that over-70s pay for medicine by €5 a month.

This comes on top of a €5 increase in the weekly pension, which will kick in from March.

And the Irish Independent can reveal that the Christmas Bonus, which is paid to everybody on long-term social welfare, will be paid at a rate of 85pc this year. This will be an increase of around €24 for a pensioner.

At the other end of the spectrum, a new childcare subsidy will be made available to families with a combined gross income of under €80,000. The subsidy will be capped at €8,000 per family, with those on lowest incomes receiving the most.

Other measures to be announced today include:

■ A 2pc reduction in tax on savings.

■ A rise in the threshold for inheritance tax to €310,000 for parents leaving assets to their children and a 10pc increase in other categories.

■ Home Care Tax Credit to be increased by €100.

■ Jobseekers' allowance to increase by up to €5.

■ Home Renovation Scheme to be extended until 2018.

■ €20m for the National Treatment Purchase Fund to reduce hospital waiting lists.

■ Self-employed to receive PRSI benefit for the first time.

■ A first-time buyers' grant of up to €20,000.

All workers will benefit from cuts to the Universal Social Charge, which will apply to income up to €70,000. The three lowest rates of USC will be cut by 0.5pc each, meaning a worker on €50,000 stands to gain €5 a week. The minimum wage is to be increased by 10 cents to €9.25 and these workers will also be exempted from USC.

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Talks between Fine Gael and Fianna Fáil were ongoing late last night as they tried to reach a compromise on when to introduce a raft of increases to social welfare recipients.

It is expected that carers, the disabled, the blind, widows, guardians of orphans, and people on invalidity and illness benefits will see their payments jump by €4 or €5 in the second quarter of 2017.

Social Protection Minister Leo Varadkar will also announce a series of extra benefits for lone parents.

These include:

■ A €5 increase to the One Parent Family Payment and the Back to Education Allowance;

■ An increase in the income disregard for the One Parent Family Payment and Jobseeker's Transition payment, representing a further potential increase of up to €10 a week;

■ A new €500 annual Cost of Education Allowance will be made available to Back to Education Allowance participants with children.

Mental Health Minister Helen McEntee is to get €35m for initiatives, although not all of this will be allocated for spending in 2017. She will also get a significant capital budget, including funding for the redevelopment of St Ita's Hospital in Portrane.

It is understood Health Minister Simon Harris had not budgeted for a reduction in prescription charges when his bid was finalised by Paschal Donohoe last week. Mr Harris had favoured investment in services rather than a cut in charges. However, Independent Alliance TDs arrived at Government Buildings with a last minute demand on the issue, leaving the minister stunned.

Sources said it was agreed to limit the reduction to the over-70s at a cost of around €13m a year. They will see their monthly payments limited to €20, compared to younger medical card holders who pay up to €25.

Age Action, which has campaigned for the removal of the charges, has previously said they were "a tax on being sick, a tax that has gone up 500pc since it was introduced in 2009".

Fianna Fáil is expected to abstain on today's Budget after tough negotiating with Fine Gael. Sources say tensions between the parties rose over when the €5 pension hike would begin, with Fine Gael seeking a start date of June.

One minister last night told the Irish Independent that Fianna Fáil leader Micheál Martin was more determined to ensure his party "got a win" on the issue than ensuring it was affordable. Fianna Fáil sources reject the claims.