Government must close income gaps in the Budget and increase minimum social welfare rates by €25

In today’s (Thursday July 11^th) Budget Forum, hosted by Minister for Social Protection, Heather Humphreys TD, Social Justice Ireland call on Government to prioritise vulnerable households and to close the income gaps which have opened as a result of temporary measures in last year’s budget. 

 

Do not repeat mistakes of Budget 2024

Looking at household income changes as a result of Budget 2024, temporary measures are more concentrated among welfare dependent households and those at work but on low incomes. On the other hand, the income gains received by higher income working households are much more associated with permanent measures such as income taxation reductions. Whilst the temporary measures disappear, the income effect associated with these permanent measures will remain and notably widen income divisions in Irish society. Government must acknowledge that income adequacy cannot be addressed by one-off measures. Budget 2025 should adopt recurring taxation and expenditure measures which prioritise the protection of the most vulnerable groups in our society and close these income gap. 

Increase current social welfare rates by €25
Social Justice Ireland is proposing a €25 increase in core social welfare payments in Budget 2025 as part of a suite of targeted measures to support households on fixed incomes and are also calling for the equalisation of Jobseeker’s rates for young people under 25, and the introduction a cost of disability allowance in Budget 2025.

Prioritise the vulnerable in Budget 2025
A lesson from past experiences of economic recovery and growth is that the weakest in our society get left behind unless welfare increases track increases elsewhere in the economy. Even after the provision of social welfare payments, in 2023 (the latest data available) there were more than 559,000 people in Ireland living below the poverty line. Of these almost 177,000 were aged under 18. If Government is serious about meeting its own poverty targets and supporting households on the lowest incomes who, through good and bad economic times, struggle to live life on a low income, then core welfare rates must increase by a minimum of €25 in Budget 2025. Adequate levels of social welfare are essential to addressing poverty. Income adequacy cannot be addressed by one-off measures.

Summary of Social Justice Ireland proposals:

Minimum Social Welfare rates: A social welfare payment must provide an adequate safety net to lift people out of poverty. This is even more critical in light of increases to essentials such as rent, energy and heating costs, the risks to food security. As a start Budget 2025 should increase minimum core social welfare rates by €25 per week at a cost of €933m. The rate of jobseekers for those aged between 18 and 24 (not living independently) is currently inadequate to meet even basic needs and must be raised to the full adult rate at a cost of €63m.

Indexation: Social Justice Ireland supports the indexation of minimum social welfare payments to ensure recipients do not fall behind the rest of society. Government should commit to benchmarking core social welfare rates to 27.5 per cent of average earnings in Budget 2025. This benchmark should be used as the starting point in the development of a pathway to index core social welfare rates to the Minimum Essential Budget Standard over time.
 

Older people: Without temporary cost of living measures, the poverty rate among older people would have doubled from over 64,000 to over 132,000 older persons in 2023. This is particularly concerning as these cost of living measures are temporary. Older people are particularly vulnerable due to their overwhelming reliance on a fixed income to make ends meet. should increase the State Contributory and Non-Contributory Pensions by €25 per week and universalise the payment, starting in January 2025 at a cost of €1,370m in Budget 2025 and Increase the Living Alone Allowance, by €5 a week in Budget 2025 at a cost of €62.5m to support older people living alone.

Fuel Allowance: Taking a five-year reference period (March 2018-2023) the CSO found that prices for Electricity, Gas & Other Fuels, prices increased by 102.2 per cent. Absorbing such a price increase has an impact on every household, however the impact is most acute for those households on the lowest income. Social Justice Ireland proposes extending the fuel allowance payment to those in receipt of Working Family Payment at a cost of €44.5m. This also unlocks secondary benefits such as access to retrofitting grants.

Bereavement Grant: Recent research from the Irish Hospice Foundation shows that 30,000 households every year are impacted by a bereavement with many facing difficult and unforeseen costs. The Bereavement Grant should be reinstated at the rate of €850 per person deceased at a cost of €31m.

Disability: The group in Irish society with the highest risk of poverty are those who are unable to work due to long‐term illness or disability. Social Justice Ireland believes that the introduction of a cost of disability allowance to at €20 a week is vital to address the high rates of poverty experienced by this group at a cost of €228m.

Carers: Carers provide a huge service to the State. According to the latest census data there are over 299,000 unpaid carers in Ireland providing unpaid care each week, an increase of 53 per cent in six years. To acknowledge and support the work of carers in Ireland, at the very minimum in Budget 2025 Government must:  

• Expand the Free Travel scheme to include people in receipt of Domiciliary Care Allowance (cost of €6.1m).

• Increase the annual Carer's Support Grant to €2,000 (at a cost of €20.9m).

• Implement an independent review of Carer’s Allowance.

• Increase the Domiciliary Care Allowance to €355 per month.

• Pilot a Universal Basic Services and a Universal Basic Income Scheme for Carers at a cost of €10m in line with the Programme for Government Commitment to a Carers Guarantee.

Children: Child benefit remains a key route to tackling child poverty and is of particular value to those families on the lowest incomes. In 2023, almost 177,000 children in Ireland were living in poverty. As a first step towards investing more to address, reduce and prevent child poverty in Irish society Social Justice Ireland proposes:

• an increase of €50 in the Child Benefit payment in Budget 2025 at a cost of €740m.

• an increase to the Qualified Child Allowance for children under 12 by €6 and children over 12 by €11 at a cost of €121m

• an additional two weeks paternity leave at a cost of €14m.

• an additional two weeks of paid parental leave at a cost of €26m.