Dáil Éireann Debate, Tuesday - 20 September 2011
228 Deputy Bernard J. Durkan asked the Minister for Social Protection the reasons for reduction on the household benefits package that took effect from 1 September 2011; her future plans regarding this package; and if she will make a statement on the matter. [24498/11]
View answer240 Deputy Paul J. Connaughton asked the Minister for Social Protection the reason householders were not given prior notice of the changes to the household benefits package; her views that issuing a press release is not a sufficient method of informing persons of the changes and if the possibility of changing the slips issued at post offices in relation to social welfare payments could be explored to allow messages to be inserted, for example informing recipients that as from 1 September the households benefits package would be cut, which would allow families, particularly low income families such as those in receipt of the households benefits package, to plan for the changes in terms of the family budget; and if she will make a statement on the matter. [24583/11]
View answer257 Deputy Eoghan Murphy asked the Minister for Social Protection if measures are in place to ensure the most vulnerable in society, especially the over 70’s medical card holders, will not be adversely affected by the cuts in the household benefits package. [24776/11]
View answerI propose to take Questions Nos. 228, 240 and 257 together.
The savings in the fuel allowance scheme and household benefits package were provided for last December in Budget 2011 but were not specified or announced by the Government at that time.
From September 2011 the fuel allowance has been standardised at €20 per week, the rate currently received by the majority of customers, with no additional allowance for living in a smokeless area. The cost of the telephone allowance is reduced following negotiations with Eircom which will ensure that customers receive €26.86 of value on their bills, at a cost to the State of €22.22 per month. The number of free units provided under the electricity and gas allowance will be reduced to the level at the start of 2007 (from 2,400 to 1,800). These three measures will generate savings of €17 million in 2011 and €65 million annually.
The rationale for paying the smokeless allowance to customers in smokeless areas cannot be maintained. The price differential between the types of coal is as low as 2% while the allowance represents an addition of 20% to the fuel allowance. Use of coal has dropped considerably, to about 3%. It is inequitable to continue paying this top-up allowance to some customers and not others when the purpose for which it was intended no longer applies.
As regards the telephone allowance, the deal negotiated with Eircom represents good value for the State and the customer. The main saving is that the Department will no longer pay a monthly rental for handsets, but customers will be able to keep their set at no charge. Indeed a lot of households no longer use or have their original handsets so it makes no sense that the State would continue to pick up this cost.
The reduction in units in the electricity allowance and equivalent gas allowance is essential to control spending. Because the allowances are based on units the full cost of energy increases has been borne by the State, with no incentive for customers to switch to other cheaper companies. Currently, up to 82,000 (21%) customers under-use their allowance of 2,400 units. Only 16% of social welfare customers have switched companies compared to 42% nationally. People will be able to offset some of the reduction in units by availing of cheaper rates.
A poverty impact assessment was carried out in the context of developing a range of options for the future administration of the household benefits package in a de-regulated domestic energy market. While this focused on the potential impact of changing the electricity allowance from a unit base to a cash base to avail of cheaper rates available it also examined the issue of the vulnerability of older people who are the main recipients of the household benefits package.
Data for the 2009 EU Survey on Income and Living Conditions (SILC) show that households comprising predominantly older people had lower consistent poverty rates than other age categories. Single adults aged over 65 with no children had a consistent poverty rate of 0.6% while people in households with 2 adults at least one of whom was aged 65 or over with no children had a consistent poverty rate of 1.0%. In 2009, in the general population, 5.5% of people were in consistent poverty.
My Department will spend over €530 million in 2011 on the fuel scheme and the telephone, gas and electricity elements of the household benefits package which will benefit over 630,000 people. Help will also continue to be available for people with special or additional heating needs through the Heating Supplement and Exceptional Needs Payment Scheme under the Supplementary Welfare Allowance Scheme.
Along with other Departments and agencies, my Department has been working with the Department of Communications, Energy and Natural Resources on an Affordable Energy Strategy which will be published shortly. The most cost-effective means of protecting households from energy poverty in the long term is to reduce their consumption of energy through improving the thermal efficiency of the home. The Sustainable Energy Authority of Ireland (SEAI) has administered an energy efficiency programme for privately owned low income households (Warmer Homes) since 2001. Over 65,000 such households have benefited to date, with a further 15,000 expected to receive energy efficiency upgrades this year. A similar upgrade programme is also in place for local authority houses.
In addition, my colleague the Minister for Communications, Energy and Natural Resources, Pat Rabbitte T.D. announced this week that Electricity and Gas customers experiencing financial hardship will not be disconnected this winter provided they have entered a payment plan or have agreed to the installations of a pay-as-you-go meter. The Commission for Energy Regulation (CER) is to work with all gas and electricity supply companies to implement the initiative.
Furthermore, myself and my colleague the Minister for Communications, Energy and Natural Resources, Pat Rabbitte T.D. are in the process of seeking greater discounts from the ESB in the context of the electricity allowance. However to date I have been disappointed at the apparent reluctance of the ESB to offer what I would regard as meaningful discounts. In circumstances where a large percentage of the ESB's customers are in arrears, my Department is effectively guaranteeing the payment of 390,000 customers' bills on exceptionally favourable payment terms; it is therefore a matter of serious concern to me that the ESB is either unwilling or unable to offer my Department a discount that is commensurate with the benefits it derives from the electricity allowance.
My officials have been liaising with Minister Rabbitte's officials in relation to this matter and we hope to be in a position to arrange a meeting with the CEO of the ESB in order to urgently progress this matter.
As regards informing our customers, these changes were announced by my Department on 12th July 2011. On foot of a press release there was significant coverage in the national papers, radio and television. Information, including a Frequently Asked Questions segment was available on my Department's website www.welfare.ie. My Department’s phone system was updated with a recorded message advising changes to the scheme and a Lo-call number was available for any enquiries. Given the volume of customers in receipt of either a fuel allowance or household benefits package the cost of changing the slip in post offices or writing to customers individually on the changes would be prohibitive in an environment where departments are under pressure to achieve savings.
