One-off payments failed to tackle poverty — what will work is to index social welfare rates to average wages

Benchmarking social welfare rates to average earnings would help to mitigate the impact of rising costs, give long-term certainty to households on fixed incomes, and prevent widening income inequality

Wed, 24 Sep, 2025 - 01:00

Susanne Rogers

With less than three weeks to go to Budget Day, it is welcome to hear Government is committed to ensuring there are targeted measures in place to support vulnerable households with the impact of ongoing price increases, particularly in essentials such as food, housing and energy.

One of the challenges facing Government and the minister for social protection is how to deal with the sustained social and economic impact of rising costs on low-income households, which has been exacerbated by a policy of one-off measures targeted at these households and universal payments spread too thinly.

Indeed, recent figures from the Commission for Regulation of Utilities show despite more than €2bn spent by Government in universal credits on energy bills, arrears levels and amounts owed continue to increase.

Rather than leave the vital issue of how much someone gets every week in order to pay their bills and put food on the table to the bargaining skills of a minister each year, a far more sustainable policy would be to embed adequacy into our social protection system.

Recent budgets have relied on a series of short lived, one-off measures targeted at these households, accompanied by only small nominal increases in welfare.

In contrast, higher-income households gained from pronounced reductions in income taxes in those budgets, which impact over the long term and get more valuable over time. This has led to a widening of income divides, a serious society-wide issue this Government now must deal with.

One means available to the minister, and Government, to address these widening income gaps is to benchmark social welfare rates to average earnings and to index them against earnings going forward. This would help to mitigate the impact of rising costs, give long-term certainty to households on fixed incomes, and prevent widening income inequality.

Such a policy is in line with the Government’s commitment to continue to implement progressive reforms to the social welfare system. The programme for government has stated policies would be guided by the principles of sustainability and fairness.

These are the principles which should guide decisions made regarding social welfare payments in Budget 2026 and over the lifetime of this government.

The reported commitment to increasing weekly social welfare rates by €50 in the lifetime of the Government will not address the challenges this country faces in terms of poverty and social exclusion.

Nor will it address the challenge of child poverty. Child poverty does not exist in a vacuum. Children live in families, households, and societies. Children are one of the most vulnerable groups in any society. The current surplus of resources available to the Government represents a major opportunity to once and for all address this persistent and damaging problem by supporting the families of these children.

Susanne Rogers, Social Justice Ireland: 'Ultimately, poverty damages lives. The Government makes no savings by not spending on social welfare. The costs are simply borne elsewhere in the system.'

Rather than leave the vital issue of how much someone gets every week in order to pay their bills and put food on the table to the bargaining skills of a minister each year, a far more sustainable policy would be to embed adequacy into our social protection system and to make it a national priority to achieve the poverty targets as set out in the Roadmap for Social Inclusion.

A fair and sustainable social protection system would give certainty and permanence both to those who rely on it, and to this, and future governments.

The first step towards building a social welfare system embedded with the principles of sustainability and fairness is the indexation of social welfare rates against average earnings. By committing to this principle, Government will provide long-term certainty to households on fixed incomes, and certainty to this and future governments in terms of social welfare expenditure.

This would bring predictability to the budgetary process as it is clear how much is required each year to ensure social welfare rates are indexed against wages. It protects those in our society who have been and will continue to be the most impacted by rising prices.

Ultimately, poverty damages lives. The Government makes no savings by not spending on social welfare. The costs are simply borne elsewhere in the system.

Budget 2026 should commit to a system of indexation which starts with a benchmark of 27.5% of average weekly earnings.

A reliance on one-off measures in recent years has masked the shift towards greater levels of poverty, and even with those one-off payments poverty has increased.

To prevent it increasing further, Government needs to target resources to those who need it most, and index welfare rates against earnings. The gap at the moment is €25, and this is the increase that is needed to support vulnerable households to stay warm and well as we head into winter and to prevent further rises in poverty and deprivation.

A €12 increase in Budget 2026 falls far too short of what is really needed.

Social Justice Ireland has consistently argued for the prioritisation of low-income welfare dependent families in budgetary policy. As our findings show, prioritising these families works, and leads to reductions in poverty.

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Unfortunately, the most recent budgets have shifted away from this approach; meaning much of the recent progress will be reversed. More needs to be done to target low-income households but Budget 2026 can and should at the very least ensure stability, security and sustainability by introducing indexation.