The term "fuel poverty" has been described as the inability to afford adequate warmth in a home, or the inability to achieve adequate warmth because of the energy inefficiency of the home. The primary contributory factor is the energy efficiency of the private and public housing stock. Problems relate mainly to older housing with poor insulation and draught-proofing or inefficient heating systems. All new housing, including social housing, is being built to modern energy efficiency standards. In addition, local housing authorities are undertaking an ongoing programme to upgrade the older social housing stock and provide better living conditions generally for tenants, including draught insulation and energy efficiency. The role of the social welfare system in relation to this issue is primarily to provide income support. The main focus of Government policy is to increase primary weekly social welfare rates significantly in real terms, to enable pensioners and other vulnerable groups to meet their heating and other basic living costs more adequately throughout the year. In this regard, the budget provides for an increase of €14 per week in the old age contributory pension rate, an increase of €16 per week in the old age non-contributory pension rate and a general increase in other social welfare rates of €17 per week.
In recognition of higher home heating costs recently, the fuel allowance rate has also been increased by €5 a week in this budget, with effect from January 2006. This will bring the rate of fuel allowance to €14 for the basic payment and €17.90 for recipients in designated urban smokeless fuel zones. This increase will cost €39.7 million in a full year and bring the total cost of the fuel allowance scheme to €125.1 million in 2006, benefiting some 275,000 recipients. Electricity and gas allowances are paid under the social welfare household benefits package throughout the year to over 320,000 pensioner, disabled and carer households towards their heating, light and cooking costs, at an overall scheme cost of €108.8 million. In addition, a special heating needs supplement is available through the supplementary welfare allowance scheme to assist people in certain circumstances with specific heating needs due to infirmity or particular medical condition.
In order to address the causes of fuel poverty, my Department is co-operating with the Department of Environment, Heritage and Local Government, Sustainable Energy Ireland and the Combat Poverty Agency in an action research project to improve heating systems and insulation in selected older private dwellings and to monitor the outcomes in terms of improved cost-efficiency and household comfort and health levels. This project is due to begin shortly and should be informative in formulating future policy on this issue, as well as being of direct benefit to the pilot households involved. In the budget, I have set aside €2 million funding to extend this action research.