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Youth groups call on Government to reverse €870m relief for banking sector

Blog Posts Octo­ber 21st2013

A coalition of youth organisations consisting of the National Youth Council of Ireland, the Union of Students in Ireland (USI), Labour Youth, and SpunOut.ie are today calling on the Government to reverse some of the €870m in relief provided to the banking sector in last week’s budget by doubling the yield from the banking levy to €300m.

This follows the Government’s decision in March of this year to cease the eligible liabilities guarantee scheme (ELG) where banks including AIB, Bank of Ireland and Permanent TSB cumulatively paid €1bn* a year to the exchequer in exchange for a state-backed unlimited guarantee on deposits.

The new banking levy, announced in the budget, will replace the ELG scheme and the Government have said they expect to raise just €150m a year for the public finances from the levy, a reduction of 85% (€870m) on the sum generated by the ELG in 2012 (€1.02bn).

The ‘bank relief’ comes despite the fact the banking sector will benefit from the assumption within financial markets that the state would step in again should they run into trouble.
The Department of Finance said the aim of the ‘bank relief’ is to increase the speed at which the banking sector can return to profitability.

By doubling the banking levy to €300m, the increased funds of €150m could be used to plug the gap in the public finances instead of cutting income supports to young unemployed people and medical and social supports to older people.

An extra €150m from the banking levy could allow the Government to abandon:

  • €44m in cuts to the telephone allowance for older people
  • €32m in cuts to income supports for young unemployed people
  • €72m of the total €149m cuts planned to medical cards
  • €2m in cuts to youth work

Core pre-budget pledge broken

“Banks have the capacity to contribute further to the resolution of this financial crisis in contrast to the young unemployed people and vulnerable older people of Ireland who had no hand or part in creating it.” said Ian Power, Executive Director of SpunOut.ie

“The Government have said this bank relief is to fasten the pace at which banks return to profitability, but what about the profitability of investing in our young people, the next generation?” continued Ian Power.

“Minister Joan Burton repeatedly stated in advance of the budget that core welfare payments would be protected. This is clearly not the case as core payments for young unemployed people have been slashed by over 30%.”

“Right now, there are 32 people unemployed for every job vacancy advertised in Ireland, to suggest young people are not looking for work is completely disingenuous. Furthermore, the capacity is simply not there for young people in terms of education and training opportunities.” said Ian Power.

Only 3,250 ‘new’ training places for those under 26 in 2014

“We estimate that the cuts to jobseekers allowance will impact on at least 21,000 young people in 2014. That doesn’t include new claimants aged 22-25 next year.” said James Doorley, Deputy Director of the National Youth Council of Ireland.

“Despite claims that additional education, training and work experience places are being provided, we estimate that there are only about 3,250 “new” places for the under 26s in Budget 2014. We already have insufficient places so young people are having their welfare cut to “incentivise” them to take up opportunities that don’t exist.” continued James Doorley.

“We have been very disappointed with the denigration of young people to justify these cuts and we call on all politicians to refrain from engaging in lazy, inaccurate and negative stereotypying to excuse the inexcusable. We are calling on Government to reverse these unfair and regressive cuts and instead offer hope and opportunity to the young people of Ireland who, with support, can be the drivers of the national recovery.” concluded James Doorley of the NYCI.

~ ENDS ~

For further information contact:

Ian Power, SpunOut.ie, 083 148 4527 or ian@spunout.ie
Dan Meister, NYCI, 087 781 4903
Joe O’Connor, USI, 087 677 6636 or 01 905 2100
Aideen Carberry, Labour Youth, 085 122 6797

Notes to Editors:

*Payments by participating lenders in the ELG scheme totalled €1.2bn in 2011, €1.02bn in 2012 and €430m in 2013 (scheme was lapsed after Q1 2013). Source: Press Office, Department of Finance.