The Minister for Finance will hold a series of follow-up meetings with bank officials to discuss mortgage interest rates, ahead of Budget 2016 being announced.

Michael Noonan told the Dáil that the meetings, due to be held in September, will follow on from discussions in May where he told banks that their rates were too high.

He said officials had agreed to review their rates and come up with suggestions to deal with the issue by 1 July.

Mr Noonan said he had also raised the need for greater competition in the market, and wanted to make it easier for customers to take up new products that came available.

The minister was responding to a question from Fianna Fáil’s finance spokesperson Michael McGrath, who said the response from the banks so far had been underwhelming to say the least. 

He said that none of the banks had announced a reduction in their standard variable interest rate mortgages since the meeting in May.

He added that a reduction in the fixed rate, as announced by Bank of Ireland, is not a substitute for a variable rate cut as customers who switch to a fixed rate would then be locked in to that rate for a minimum of two years.

Mr McGrath asked if the minister was satisfied with the response from the banks so far ahead of the 1 July deadline.

In response, Mr Noonan said banks had begun to make improvements on the issue.

He said a reduction in mortgage rates was the objective of the meetings and AIB had announced changes to its rates before the meeting.

Mr Noonan has also defended the suggestion of reducing the top rate of tax in the forthcoming Budget. 

He was responding to a question from Sinn Féin’s finance spokesperson Pearse Doherty.

Mr Doherty asked about the plan in light of the fact that the ESRI has stated that cuts in the top rates of tax, or in the Universal Social Charge, would have a strong impact on households with incomes in the top 10%, but little effect on households at low and middle income levels.  

Mr Doherty said the top 10% of earners are high earners, not middle income earners and said if the Government wanted to introduce a tax measure that would benefit the highest earners they should not dress it up as something, he said, it was not.

In response, Mr Noonan accused Sinn Féin of being a high-tax party and a "tax and spend" party.

He said Fine Gael's position was different and he did not need the ESRI to tell him that if people do not pay tax, the tax reduction does not affect them.

Minister to look at inheritance tax

Mr Noonan said he would review a number of aspects relating to inheritance tax in the context of Budget 2016.

He was responding to a question from Mr McGrath about plans to review the way in which Capital Acquisitions Tax is applied, in particular in respect of inheritance of the family home.

The minister said he was conscious of the concerns raised and that each person has a number of lifetime gifts they can receive, depending on the nature of the relationship with the deceased.

He outlined the various groupings and the thresholds that apply.

Minister Noonan said in recent years the threshold of inheritance tax has been reduced and he said the OECD agrees that such taxes were less harmful to the economy than taxes on income.

Mr McGrath also asked the minister if he would consider an annual indexation of thresholds, and a reduction in the rate on interest which applies to people, who by virtue of their circumstances, need to pay a Capital Acquisitions Tax bill by instalments.

He said there was an increase of 34% in the number of people liable to pay inheritance tax.

Mr McGrath welcomed the review and noted the reduction in the threshold from parent to child and the change in yield from €186 million in 2010 and €400 million in 2015.

He said he wanted the 8% interest rates as well as indexing the threshold to be looked at under the review.

Minister Noonan said there was a need to see where the values are going before indexing.

Mr Noonan said his information from AIB is that the bank has not confirmed any outsourcing of its IT division and if it does so, it will engage with the IBOA.

Socialist TD Ruth Coppinger had asked if he or his department have had any discussions with AIB over the outsourcing of Application and Development Management Services.

Minister Noonan said that the State does not intervene under the relationships framework in the day-to-day operations of the banks, and therefore issues such as outsourcing is a matter for the banks.

He said AIB had previously indicated that it has not reached any agreement to outsource its IT and if such agreement is reached, AIB would engage with employees.

Ms Coppinger said the Government could change the nature of its relationship with banks and intervene to ensure there are no job losses due to outsourcing.

She said there had been serious problems in outsourcing IT in other banks.

The minister said the relationship framework sets down that the Government should not get involved politically in commercial decisions in the banks.

He said his information from AIB is that the bank has not confirmed any outsourcing of its IT division and if it does so, it will engage with the IBOA.

He also said that Ms Coppinger was misguided in her views and he questioned her information.

No plan to reverse cut to lone parent family payment

Meanwhile, the Government does not intend to reverse the cut to the lone parent family payment.

The Taoiseach made the announcement during Leaders' Questions, in response to a question from Fianna Fáil leader Micheál Martin.

The cut to the lone parent family payment, which is due on 22 July, means lone parents with children aged seven and older will no longer be entitled to the benefit.

Mr Martin accused the Government of driving lone parents out of work and into poverty.

He pointed out that 60% of lone parents were working outside of the house in 2012 and that number had halved by 2014.

Enda Kenny said the Government had a particular programme "to make work pay".

He said the purpose of the phased scheme was to reduce social welfare and stop the "welfare trap, generation after generation".