Brian Lenihan: budget day

A salary cap of €250,000 will be introduced across the public service in Tuesday's budget and the government is also seeking to apply the ceiling across the semi-state sector to include companies such as ESB, Coillte and RTÉ.

Such a move would have a direct impact on the likes of ESB's Padraig McManus, who got a package of over €750,000 last year, and Coillte boss David Gunning, who received a package of €417,000. It could potentially have a knock-on impact on the future pay of the top RTÉ stars such as Marian Finucane and Pat Kenny.

There is a strong view among ministers that salaries among the top earners in semi-states have largely escaped the impact of cutbacks over the last couple of years and need to be addressed.

The cabinet has received legal advice that there may be difficulties in applying the salary cap to people on existing contracts in the semi-state sector.

But there is a belief in cabinet that they should "put it up to people" and let them challenge the move.

A number of options are being explored by the government over the weekend and sources said that, while "there is nothing definitive right now, there is a belief" that a workable solution can be found that "will stand up legally".

For constitutional reasons, the government will not move to directly cut the pay of existing judges, but it is understood that any newly appointed judges – at whatever level – will have to accept a 10% reduction on current pay rates.

Politicians' pay, which has already been cut in previous budgets, is also likely to be further reduced, with the Green Party pushing for the move. The details of the cuts have not been finalised but reductions of 5-10% are anticipated and there are also likely to be more cuts in the expenses of TDs and senators.

There are also likely to be further cuts in the fees paid by the state to barristers and financial consultants, while GPs who treat medical-card patients will have their fees reduced.

The budget will also see:

* A 5% across-the-board cut in social welfare rates – bar the state pension – which will mean a cut of close to €10 in unemployment benefit.

* A €10-a-month reduction in child benefit to €140-a-month and the ending of the extra €37-a-month premium paid from the third child onwards.

* 10% cuts in tax credits and tax bands, which will affect all those currently paying tax as well as bringing thousands of workers into the net.

* A major reduction in, but not the full abolition of, the €10 airport tax.

* The ending of PRSI and health levy relief on pension contributions.

Serious consideration was given to introducing a cut in the state pension for those who turned 65 after 2011 – thus leaving all existing pensioners untouched but reducing the bill for future pensioners – but it now seems as if this will not be included in the budget.