The cost-of-living measures in Budget 2023 won’t be enough to combat the increase in the minimum essential standard of living, and more people could be pushed into poverty this winter, new analysis suggests.
Compiled by the Vincentian MESL Research Centre at St Vincent de Paul, it said that the cost of a socially acceptable minimum standard of living will increase by 10% over the full year to 2023 while there will be a “notable increase” in energy poverty next year.
The idea of a minimum essential standard of living, or MESL, was referenced by the Tánaiste before an Oireachtas committee last week, where he described it as a “basket of goods and services that you think anyone should be able to afford in order to have a dignified life”.
Breaking down households by their different characteristics, it found that many will be worse off due to the rising cost of living despite the Budget measures.
“The 2023 analysis finds that, for the first time since 2017, neither the Contributory nor Non-Contributory State Pension will provide the basis of an adequate income for an urban older person living alone,” it said.
The measures within Budget 2023 feature a number of one-off payments aimed at helping people meet the surging cost of living this winter.
It includes €600 off electricity bills, in three payments, for all households in the State. It also includes a double child benefit payment, and once-off payments to people getting the Living Alone Allowance, Fuel Allowance and Working Family Payment, among others.
It also includes an increase of €12 in weekly social welfare payments and an increase to the amount you can earn before you start paying the higher rate of tax by €3,200.
However, the analysis from the Vincentian MESL Research Centre said that the retention of the fuel allowance core rate of €33 per week comes despite the huge surge in energy costs driving inflation.
“An additional €400 top-up lump sum is also to be paid in November 2022,” it said. “The total value falls €300 short of maintaining the purchasing power of the fuel allowance and is forecast to contribute to a notable increase in energy poverty in 2023.
“These supports are welcome and will ease pressure on many households. However, the increase in the cost of a MESL in 2022 Q4 is estimated to be greater than the additional income provided by the ‘Cost of Living’ measures. As a result, income inadequacy is forecast to deepen in the latter part of this year.”
Meanwhile, the €2 nominal increase in qualified child rates for children in social welfare-dependent households is described as “surprisingly modest” while lone parents with two children will see the weekly inadequacy gap – the shortfall between their income and a minimum essential standard of living – grow from €70.94 to €93.32.
Taking 214 “test cases”, a mix of different household compositions and incomes, 163 of them will demonstrate income inadequacy. Within that, “deep” income inadequacy would be found in 95 cases, up from 66 last year.
“This demonstrates that the spiral of increasing living costs has the potential to push the cost of a MESL significantly above the level of social welfare support provided, as the real value of core rates and secondary supports are not protected in Budget 2023,” it said.
For a single adult to be able to afford a minimum essential standard of living in Dublin next year, they’d need to work over 58 hours a week if earning the minimum wage, the analysis added.