Budget leaves Ireland’s more vulnerable households condemned to prolonged hardship

Posted on Wednesday, 2 October 2024

Budget 2025 is cold comfort for the hundreds of thousands of people who’ve been frozen out of Ireland’s economic recovery. The Government's decision to repeat those measures from the past two budgets which widened income gaps means that the coalition's last Budget has condemned Ireland’s more vulnerable households to prolonged hardship. Social Justice Ireland’s initial response to Budget 2025 measures on social welfare, child poverty, low pay, energy, taxation and housing is outlined below.

Social Welfare

The €12 increase in core social welfare rates fails to compensate for the damage that inflation continues to wreak on poorer households. A €25 boost was the minimum required for Government to benchmark rates to 27.5% of average weekly earnings. This was the target set by Government in 2007.
Today's increase falls far short of achieving the modest 2007 target, leaving those depending on social welfare with incomes of less than a quarter of average weekly earnings. Yet again this Budget fails the poorest. They are being left behind without any hope of enjoying the fruits of Ireland’s current prosperity. There’s no attempt whatever to reduce poverty in line with the government’s own targets in the Roadmap for Social Inclusion 2021-2025.
While one-off measures and double payments are welcome, they are no solution to the challenge of poverty and income adequacy. Indeed, when the one-off measures are stripped out, households on fixed incomes have been left watching in dismay as all other groups stretch their lead over the poorest and income gaps will widen further. A €25 or similar increase in all core weekly welfare rates would enable households to buy essentials routinely and not as treats.

Child Poverty

1 in 7 children (more than 176,000) are living in poverty in Ireland. Budget 2025 did not contain the measures that would tackle child poverty: putting more recurrent income into poorer families’ pockets and making the public services they rely on more available and more affordable.
Combatting child poverty requires more than double payments and one-off credits. It requires measures such as adequate adult welfare rates, decent rates of pay and conditions for working parents and aspiring parents, and adequate and more accessible public services. Child benefit also remains a key route to shutting this incubator of so many other deprivations. It is of particular value to families on the lowest incomes. Instead of increasing the monthly rate to support these low income families, Government again chose to rely on one-off lump sum payments which will not have the desired impact of lifting those children and their families out of poverty.
The failure to adequately increase core social welfare rates and Child Benefit and to address low pay leaves vulnerable families trailing behind. Government did not prioritise their access to housing, childcare, healthcare, education and other essential public services. While some welcome changes were announced regarding the Free School Book Scheme, National Childcare Scheme funding, the Hot School Meals Programme and maintenance grant thresholds, these remain insufficient.
Overall in Budget 2025 Government has failed, for the second year running, to fully implement its own policies on addressing child poverty as laid out by the Child Poverty and Wellbeing Unit work programme. This is despite the Unit’s strategic location inside the Taoiseach’s, Simon Harris’s, own Department, and the Taoiseach’s own commitment to make Budget 2025 a ‘child poverty budget’.

Low pay

Yet again, workers earning between €15 and €20 per hour gained least from this Budget. In 2025 a single person on €30,000 will gain €5.34 per week, a couple with one earner on €30,000 will gain just 55c per week.
Social Justice Ireland warmly welcomes the Budget 2025 decision to increase the minimum wage by €0.80 per hour, bringing it to €13.50 per hour in 2025 as part of a move towards tackling low pay. However, the new rate is still €1.25 below the Living Wage as calculated by the Living Wage Technical Group. As persistent inflation snaps hardest at the heels of the poor, the failure to further progress the Programme for Government’s Living Wage commitment is regrettable.
The failure to make tax credits refundable means that low paid workers have gained least from the last three Budgets of this administration.

Energy

Over the coming months, a one-off energy credit won’t stop many thousands of inadequately insulated homes growing even colder and damper than they were last winter. This will damage the health of many of their low-paid or welfare-dependent residents.
Neither will this credit compensate for the increase in electricity bills as a result of PSO changes which come into effect today, increasing hardship for vulnerable households.
This budget contains limited measures to tackle energy poverty and long-term energy costs. While the one-off lump sum fuel allowance payment is welcome, we regret that the Fuel Allowance payment itself was not extended to those on the Working Family Payment. Neglecting the 50,000 households concerned in this way freezes them out from getting fully-funded energy upgrade supports.

Taxation

This budget failed to implement the recurring taxation measures that are required to fund the services and infrastructure that a growing and ageing population requires, now and into the future.
Instead, changes to income tax bands, hikes in inheritance tax thresholds and reductions in the USC will narrow the tax base. This leaves us without any plan to cater for the needs of a growing and ageing population for childcare, education, pensions, social welfare, health and home care, home help, housing adaptation, disability and community care.
The continued reliance on reductions on income taxes, indirect taxes and levies as a means of providing short terms solutions to the ongoing cost-of-living challenges are poorly targeted, costly and should have been avoided.

Housing

Budget 2025 fails to invest enough in home building. An additional capital investment of €1.75 bn is needed for Government to reach Social Justice Ireland’s proposed target of boosting social housing to a 20% share of housing stock by 2030. This would invest in long-term social housing for those who need it, significantly reducing reliance on the private sector. The dwellings vacated in this way could then be leased on the open market.
We are disappointed that the remit of Housing First was not extended to homeless families accessing emergency accommodation. This was a missed opportunity to deliver on Government’s own child poverty aims.
Continuing with the failed policy of a rent credit rather than converting it to a renter’s grant, is a mistake. The past two years has shown that the credit does not work, is inherently unfair, and has done little to make renting more affordable.