The household benefits package comprises the electricity or gas allowances, the telephone allowance and the free television licence. The package is generally available to people living in the State, aged 66 years or over who are in receipt of a social welfare type payment or who satisfy a means test. The package is also available to carers and people with disabilities under the age of 66 who are in receipt of certain welfare type payments. The package is currently paid to approximately 410,000 customers. The allocation for 2013 is €284 million and the estimated expenditure on the scheme in 2012 was €372 million. The following changes were made to the household benefits package in recent Budgets:
A saving in the household benefits budget allocation was provided for by the previous Government in Budget 2011 but the measures were not specified at the time:
- The number of free units provided under the electricity and gas allowance was reduced to the level at the start of 2007 (from 2,400 to 1,800). This change was effective from September 2011.
- The telephone allowance was reduced to €22.22 per month (from €25.91 per month). However customers continued to receive €26.86 of value on their bills. This change was effective from September 2011.
- New applicants for carer’s allowance, who are not living with the person for whom they are providing care, are no longer entitled to household benefits. The person receiving care may be entitled to household benefits in their own right. This change was effective from April 2012.
- Electricity allowance was restructured and is now based on the average best rate (minus the PSO) available for 150 units per month from Electric Ireland, Bord Gáis Éireann and Airtricity. The new rate for both the electricity and gas allowances is €35 per month. The change is effective from January 2013 and will generate savings of approximately €37.6 million in a full year.
- Telephone allowance reduced from €22.50 to €9.50 per month. This change is effective from January 2013 and will generate savings of approximately €61 million in a full year.
The change to the electricity and gas elements of the household benefits package in Budget 2013 will bring significant savings while aiming to encourage customers to achieve better savings through greater mobility and access to the most competitive rates. The cost of the electricity and gas allowances has risen from €110 million in 2005 to an estimated outturn of €201 million in 2012, an increase of 83% over seven years. In the current economic climate these increases were unsustainable.
The Affordable Energy Strategy drew attention to the fact that customers in receipt of household benefits were much less likely than other customers to switch energy supplier to obtain better value. Only 16% of social welfare customers have switched companies compared to 42% nationally. There will also be some administrative efficiency gained through simplification of the scheme with one payment rate instead of five. The change to the telephone allowance is a cost saving measure. The numbers in receipt of the telephone allowance has also increased significantly in recent years, while the nature of the telephone market has been transformed with deregulation, mobile services and bundled services including television, broadband and telephone. There is a wide variety of deals available, for example, it is possible to get a standard pay-as-you-go brand name mobile telephone for as little as €19.99 in large retailers.