Dáil Éireann Debate, Tuesday - 15 June 2004
74 Mr. McGinley asked the Minister for Social and Family Affairs her views on whether the free schemes package should be renamed, now that the schemes are no longer free; and if she will make a statement on the matter. [17657/04]
Amharc ar fhreagraThe household benefits package of schemes comprises the electricity, natural gas and bottled gas allowances, telephone allowance and free TV licence. Apart from the TV licence scheme which meets the full cost of the annual licence, the household benefit allowances have always represented contributions towards the cost of household utility bills, rather than full coverage of all costs. They are intended to meet the standing charges and a certain fixed amount of electricity consumption, gas consumption or telephone calls respectively. The extent to which these bills are met by the allowance depends on the individual household usage pattern.
This package of allowances is valued by social welfare clients as a significant contribution to their periodic household bills. The allowances are not, and were never, entirely free; the utility companies must be reimbursed by my Department on normal commercial terms for the allowances they apply as credits on eligible customer bills. There is a significant ongoing cost to the taxpayer, estimated at €280 million this year. My Department continually negotiates to obtain the best commercial terms and value for money for this very sizeable annual expenditure on the household benefits.
The qualifying conditions for the various individual allowances were harmonised in 2002 and renamed as the household benefits package. The purpose of this was to ensure that a customer who qualified for one allowance could qualify for all of them. The introduction of this package also meant that there would be just one application form to be filled out by a person wishing to avail of this scheme.
In October 2003 I introduced a further change to the telephone allowance which may be what the Deputy is referring to in this question. The structure of the allowance was changed to make it a cash credit on bills and not attributable to any particular component of the bill. Previously the allowance had covered the line and instrument rental charges specifically, along with a small element of call costs on each two-monthly client bill. The change I introduced makes it easier for eligible clients to switch from Eircom to another participating service provider if they so desire. If they so choose, the newly standardised allowance can be applied to phone bills from the service provider irrespective of the tariff components.
In conjunction with this change, a special "bundle rate", the Eircom social benefits scheme was negotiated with Eircom. It provides telephone allowance customers with line and equipment rental plus an enhanced call credit of up to €5.35 worth of free calls per two-month billing period. The cost of the bundle gave better value for money to my Department for the ongoing expenditure on these services. ComReg approved a price increase application from Eircom of 7.5% in line rental, effective from 4 February 2004. A lesser percentage increase was also applied to telephone instrument rental where applicable. Following detailed discussions between my Department and Eircom, it was agreed that the increase in the Eircom social benefits scheme would be limited to CPI of 1.9%.
Additional information not given on the floor of the House
Some technical restructuring was also introduced by Eircom which removed some additional call unit value. To offset this, Eircom offered to give low use customers up to €10.00 worth of calls free per two-month bill, by offering them its separate "low users" scheme in addition to the social benefit scheme.
The higher Eircom charges have resulted in an increase to the social welfare customer of 94 cent, including VAT, per two-monthly bill, less than 12 cent per week. This is much lower than the increase applicable to other households. The other revisions to call costs by Eircom should be broadly beneficial to welfare customers, particularly those who are low call users.
I raised this issue at our last meeting and it certainly arose on the doorsteps during the election campaign. The Minister for the Environment, Heritage and Local Government, Deputy Cullen, spoke yesterday about taking off his hard-line face and donning his softer face in his dealings with people.
That would be no bother to Deputy Ring; his face is impeccable.
The Minister, Deputy Cullen, always had a hard-line face but it is good that he got the hard-line message from the people on the ground this week. He told us yesterday that he will now take the softly, softly approach.
I want the Minister to return to her Department on this scheme. The principle of the scheme was that the service was free and people did not have to pay for the rental. Many people are now confused. The new charges are creating problems because people do not know what the extra charge is for. Some of them have not paid it because they think it is a mistake and the charge is building up. I urge the Minister to go back to her Department to find the small amount of money it would cost to leave this as a free scheme. She should not talk about ComReg or regulators. I am sick and tired of regulators because when I put a question to Ministers the usual reply is that the Minister has no responsibility for regulators.
I remind the Deputy that supplementary questions are limited to one minute. He has exceeded his minute.
I am almost finished. We always had free schemes. I do not wish to get annoyed with the Minister but I urge her to get her Department to simplify the issue and pay the extra money for the rental in order to avoid confusion among the elderly on the matter. It was good that we had the free scheme in the past and that people knew the rental was free. That is no longer the case and people now have to pay a charge every two months. I ask the Minister to rectify the situation and let that be the beginning of the new, caring, soft Government that got its message over the weekend.
I envy the Deputy his enthusiasm. We will see who gets to the wire in three years' time.
ComReg agreed a 7.5% increase in line charges. I negotiated with the Department to reduce that to 1.9% on the basis that we had introduced a number of changes. Many people on social welfare are low users of the scheme and this is why Eircom has provided a special package for people. It is called a "bundle" and costs €20.41 plus VAT per month, great value for money for those people who avail of it. The amount of money involved in the change is very small, 94 cent every two-monthly bill, which is just a few cent per week.
The scheme known as the household benefits scheme does not cover the entire costs. Whether we like regulation or not, I must provide for competition within the scheme and I have done that. On the basis of that competition we have negotiated not only with the main providers of telephone services but also with mobile phone providers to use that money specifically to provide the best deal that can be obtained for the customer. It is on that basis that the changes have taken place.
How much would it cost the Minister to pay that 94 cent?
I knew that off the top of my head but I am so tired today I cannot remember. I think it is approximately €1.5 million.
It is only small money.
Expenditure on the scheme this year has increased from €88.24 million to €92.2 million. I will get the figure for the Deputy.
It is only a small amount.
