Long Term Commitment Needed, Not One Off Payments

As the one-off payments delivered as part of Budget 2023 are due to come to an end towards the end of February [1] and inflation still expected to remain high in 2023, those on the lowest incomes (social welfare and low pay) will fall further down the income ladder. By their nature, one-off supports cannot tackle the embedded low income culture that has prevented our republic from eliminating poverty. 

Additional Needs Payments

There were 146,569 Additional Needs Payments (ANPs) registered across the country in 2022. [2] If a household with low level of income or in receipt of social welfare, has an expense that cannot be met from the weekly income, an additional needs payment can be applied for from the local Community Welfare Officer. By the October of 2022, over 75,000 applications for ANPs had been processed which was a 63 per cent increase when compared to the same period in 2021. [3] 

One-off payments delivered either via Budget 2023 or the Community Welfare Office to those on social welfare whilst welcome fail to benchmark social welfare rates to ensure they provide a minimally adequate standard of living. They also fail to compensate for the rise in the cost of living which is expected to continue. In reality social welfare recipients will be worse off this year than last year. The Select Committee on Budgetary Oversight published Post-Budget 2023 Report on January 31st 2023. They note " with concern the medium-term challenges facing households and queried whether the use of once-off measures in Budget 2023, though beneficial, would result in a larger gap in households’ real incomes to address in 2023/2024 if inflation is running at approximately 7% as the Central Bank and the ESRI have predicted" and recommend " that consideration be given to indexing welfare payments ".

Poverty is never simply about income. But it is always about income. The government is continuing to betray the social contract that, at critical times in the past, generated solidarity and social cohesion in this republic.

Benchmarking Social Welfare - making a long term commitment

Past experiences of economic recovery and growth teach us that that the weakest in our society get left behind unless welfare increases track increases elsewhere in the economy.  A €20 increase in core social welfare rates was the minimum increase required in Budget 2023 to set Government on the correct path to benchmark social welfare rates to 27.5 per cent average weekly earnings over a two-year period, which was the standard set by Government in 2007.  Meeting this benchmark is a crucial first step in addressing income adequacy challenges for people dependent on social welfare. It would also lead to a reduction in poverty rates. 

Budget 2023 was sold as a Cost of Living Budget. It did not however, focus its attention on those who need the greatest assistance with making ends meet given the significant and ongoing challenges they face. The standard of living that social welfare payments can provide is dramatically reduced when the cost of living rises. The impact of inflation on living standards is greatest for those households in the bottom twenty percent of the income distribution.

There is a high proportion of individuals who are unemployed, long-term ill or disabled, living alone, or who are single parents in these households. Compared to better off households, they spend a greater proportion of their income on essentials, which exposes them more to price increases in the shops and to energy hikes. Increasing core social welfare rates is a key policy tool for Government to support these households. 

Impact of Poverty

The purpose of economic development should be to improve the living standards of all of the population. Despite Ireland’s welcome economic performance, successive failures to raise core social welfare rates have further eroded social cohesion. Large numbers of people continue unnecessarily to experience deprivation as the gap between them and the better-off widens.

Poverty impacts hardest on those experiencing it in their day‐today lives. It limits their options and opportunity and narrows their focus to week‐to‐week survival and the unavoidable trade‐offs of living on inadequate incomes. 

The most important requirement in tackling poverty is the provision of sufficient income to enable people to live life with dignity.  If those dependent on social welfare are not to fall even further behind the rest of society as living costs continue to rise, the benchmarking of welfare rates to wage rates is essential.

Targeted measures to support welfare dependent households must be an essential part of the evolving policy response to the current experience of inflation. If not, those on the lowest incomes will be left behind. 

[1] The €200 energy credit for households is due in March, the reduced 9 per cent Vat rate on electricity and gas and the reduced rate of excise duty on petrol and home heating oil due to end in February, as well as the ban on energy disconnections. 

[2] https://www.oireachtas.ie/en/debates/question/2023-01-24/386/#pq_386

[3] https://www.oireachtas.ie/en/debates/question/2022-11-29/397/#pq-answer…