Gov't to cut €2.5 billion from budget; Free childcare plan delayed for 2 years, STAP slashed

The government will implement 2.5 billion euros in budget cuts across all Ministries except for Defense, sources told RTL Nieuws. The Ministry of Social Affairs’ poverty policy will also keep its original budget. The cutbacks mean a plan to make childcare virtually free will be delayed two more years, and will not take effect until 2027, sources told NOS. The STAP budget subsidy will also be also be drastically reduced, but, at the same time, the health insurance deductible of 385 euros will remain unchanged for the time being.

The Cabinet does not want to cut spending on Defense, and also wants to keep plans to combat poverty intact. But their budgets will have to absorb higher wages and inflation without any additional funding. The Ministries of Justice and Security and Education, Culture, and Science will be faced with minor cuts.

The Dutch ministers have been meeting for weeks to try and fill massive gaps in the budget caused by - among other things - extra compensation for Groningen residents for decades of gas extraction and resultant earthquakes, and asylum shelter turning out to be much more expensive than budgeted. Sources previously told AD that Finance Minister Sigrid Kaag’s message would boil down to: budget cuts are back after years of spending, and it is time for the Ministries to show some discipline again.

The parties who joined the coalition included a provision in their agreement to make childcare costs like daycare and after-school care nearly free for parents. This was supposed to be implemented in 2025. That plan has been delayed to provide extra cash that the Cabinet can use to shore up other holes in the budget. The intention was that a new system would take effect to replace the system used to distribute childcare benefits, with the government taking on 96 percent of the cost, and paying that money directly to childcare providers.

The decision to implement the system also came in the wake of the tax office's childcare benefits scandal, in which algorithms profiled parents as a fraud risk. This data included a determination that increased the likelihood someone would be categorized as a fraud risk if they held citizenship from other countries, and other factors about their background. The scandal led to many people being falsely identified as a fraudster, and forced to pay back large amounts of subsidies in one lump sum, while forfeiting the right to future subsidies. It pushed thousands of people into a dire financial position, and led to the fall of Prime Minister Mark Rutte's previous Cabinet. Many victims in the scandal still have yet to be compensated for the situation.

According to NOS, parents will receive some form of compensation by 2025 as many may have counted on the free childcare provision when it was announced. Parents have already been hit with rising costs of childcare, but the increase in the current subsidy scheme has not covered the rising hourly rates that parents pay.

The government is also cutting the STAP budget, intended to improve the position of the workforce on the Dutch labor market by giving them up to 1,000 euros for additional training or retraining. RTL’s sources said this cut would be “considerable.” Introduced last year, the program is budgeted at about 200 million euros, however it has been faced with many problems from the start, ranging from unqualified trainers capitalizing off the limited validity checks included in the program, to education providers raising their rates to earn money from both the subsidy and the students simultaneously. On top of that, the program was rolled out in such a way that many residents have been unable to obtain the subsidy, which is given out on a first come, first served basis.

Sources close to the Cabinet told NOS that the government scrapped a proposal to raise funds by increasing the healthcare deductible. But the personal contribution to the Social Support Act (Wmo) - through which municipalities regulate daytime activities, shelter, and supervision for vulnerable people - will increase, according to RTL’s sources. That should raise 100 million euros.

The Rutte IV is working on the Spring Memorandum - the spring update to the national budget in which the Ministries have to cover additional spending by making cuts or raising taxes. The government must submit the memorandum to parliament before June 1.