FORMER Tanaiste Mary Harney yesterday insisted she has earned her €130,000 a year pension – which she describes as "very decent" – after 34 years in politics.

Her defence of her lavish pension followed Taoiseach Enda Kenny’s indication that the Government had no intention of cutting the eye-watering pensions being paid to former cabinet ministers.

Mr Kenny’s stark admission came as the Government revealed plans to cut the numbers working in the public sector by 23,500, scrap 50 quangos and ditch 40 decentralisation projects.

And the Irish Independent learned last night that 70,000 college students are facing a cut in their maintenance grants.

A reduction of up to 5pc is likely to be announced in the Budget – meaning a €175 cut to the average grant.

No final decision has yet been made but education sources say a cut is on the cards. It would be the second year running for students to suffer a drop in income.

Cigarettes, beer, wine, computers, cosmetics, diesel, petrol, tools, detergents and car parts are all set to be dearer after it emerged that the top rate of VAT is to rise to 23pc in the Budget.

The mooted 2pc increase is mentioned in leaked details of the budget preparations in a document given to the German parliament.

The finger of blame for the leak was pointed squarely at the European Commission by government sources.

Despite the pain to be inflicted on the public in the Budget, Mr Kenny seemed to rule out any cuts to the extravagant pensions of retired senior politicians.

"What the Government has done is change the regulations for the future. Obviously, some of these pensions are quite enormous and those who receive them, I suppose, if they reflect on the value of their work and the consequences of that, they will consider that," he said.

As many as 30 former ministers are entitled to annual payments worth more than €100,000.

These include former Taoisigh Bertie Ahern and Brian Cowen, former Finance Minister Charlie McCreevy and corrupt former Justice Minister Ray Burke, who served time in jail.

Ms Harney yesterday defended her pension, saying she did not believe it should be cut.

Regulation

The 58-year-old former health minister will get a taxpayer-funded pension worth €129,805 for the rest of her life.

Ms Harney's Progressive Democrats party advocated the light-touch regulation of the banking system and the erosion of the tax base.

"We have already taken substantial cuts," she said on local Kildare TV. "The Government last year cut the pensions of TDs and ministers and former public servants in line with the general cuts that were applied and I think that was the right thing to do.

"But remember many people have dedicated their life to politics. In my case, I spent 34 years in politics. I don't have business interests. I don't have another career.

"Many people can move easily from politics into another career or from one career to another. Many politicians have given their whole life to public service.

"They have done so on the basis of particular entitlements and whilst it may seem excessive to many, I think the cuts that took place, and of course the level of taxation that's applied now, is extraordinarily high, relative to where it used to be. And I believe that was the right decision to reduce the level of those pensions last year," she said.

Irish Independent