Government 'cannot afford' recommended €15-€20 social welfare payment hikes

SVP said increases to household income must move ahead of inflation after social welfare rates were frozen for two years until the €5 increase in last year’s budget. Picture: Denis Minihane

The Government has rejected calls for a €15-€20 increase in social welfare payments to offset the cost-of-living crisis, claiming the Exchequer cannot afford it.

St Vincent de Paul said the increase in welfare payments is needed just to “keep people standing still” in the face of soaring inflation and spiralling costs.

The Government has repeatedly ruled out emergency measures prior to the Budget this October despite an ESRI report showing fuel poverty at its highest rate since the mid-90s. That report also recommended an extra double social welfare payment, similar to the Christmas bonus, to relieve pressure on families.

Rates frozen

Dr Tricia Keilthy, head of social justice at St Vincent de Paul, said increases to household income must move “ahead of inflation” after social welfare rates were frozen for two years until the €5 increase in last year’s budget.

With more than 78,000 calls received by SVP already this year, up 20%, she said demands for significant increases to social welfare payments reflect the “reality of the situation” and are needed to prevent even more families being pushed into poverty.

However, Government sources have cast doubt on whether such high welfare increases would be affordable for the Exchequer.

One senior Cabinet minister said: “I am not saying they are wrong. But a €20 a week increase in payments is a lot, maybe €3bn a year.” 

The minister said that one-off measures may be the “safest” option and that it would be worse to provide an increase in social welfare that would have to be taken back if it proved unaffordable.

Ms Keilthy said SVP is already getting calls from parents fearful of the costs associated with going back to school, which is traditionally a time when pressure ramps up on household finances.

“The real stand-out we’re seeing from people is the level of debt they’re reporting,” she said. There’s people calling St Vincent de Paul for the first time — people who were just getting by and now they’re struggling.

The ESRI report highlighted how almost three in 10 (29%) of Irish households are in energy poverty. It suggested an extra double social welfare payment as one of a number of ways to support those households hardest hit by energy inflation.

Ms Keilthy called for a “very progressive budget” with measures that kick in immediately for households, rather than waiting until 2023. 

Tánaiste Leo Varadkar confirmed that should be the case. "One thing we are actually looking at now is to see what measures we could implement right away, so that we wouldn't have to wait til January for all of them to come into effect," he said.

"We did that in the last budget. So we're examining now which measures we could introduce right away, which ones would then come into place in January, and which ones would come into place later in the year."

An ESRI report said 29% of Irish households are in energy poverty and suggested an extra double social welfare payment.

In the Dáil during tetchy exchanges with Mr Varadkar, Sinn Féin's Pearse Doherty called on the Government to bring in an emergency budget before October.

The party's finance spokesman said the current measures are not sustainable.

However, both Mr Varadkar and Taoiseach Micheál Martin separately again ruled out an emergency budget, saying that measures to tackle the cost-of-living crisis will be outlined in October.

Mr Martin said the ESRI's report will feed into the budget deliberations.

"We will have further engagement with the ESRI and around the Cabinet table to see what we can do to get the right set of measures, like the ones referenced [double Christmas bonus], to do this intelligently."

Mr Varadkar said the Government “isn’t ruling out” introducing measures to help struggling families before the Budget in October, but a comprehensive set of supports will only be rolled out at that point.