Dáil Éireann Debate, Tuesday - 5 February 2013
505. Deputy Brendan Smith asked the Minister for Social Protection the changes/savings that have been made in the schemes for the elderly including the household benefit scheme, fuel allowance, smokeless coal supplement in the past three years from 1 January 2010; the dates of each change; the reduction to the individual Dublin area of each measure and overall for the three years; and if she will make a statement on the matter. [5929/13]
Amharc ar fhreagraThe 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 over 415,000 customers and will cost an estimated €284 million in 2013.
The fuel allowance is a means tested weekly payment of €20 available for people on long term welfare schemes, including State pension, disability allowance, one-parent family payment and jobseeker’s allowance (after 15 months); it is currently paid for 26 weeks from October to April each year. The scheme is available to approximately 400,000 customers and will cost an estimated €211 million in 2013.
I am aware that any reduction in social welfare payments or benefits is difficult. I also appreciate the important role that the household benefits package and fuel allowance scheme play in promoting social inclusion and preventing isolation of older people and people with disabilities. However, to allow the Government to protect the core payments which people receive such as pensions, disability payments and carer’s allowance, we had to look very carefully at other additional payments such as the household benefits package.
It should be noted that Ireland’s older population has the lowest rate of consistent poverty and, as a group compared to the rest of the population, are least likely to be at risk of poverty - pointing to the adequacy and importance of the State pension. Between 2004 and 2010, consistent poverty for older people (those over 65) fell from 3.3% to 0.9%. The “at risk of poverty” rate for people in that age group fell from 27.1% to 9.6% over the same period.
The Government committed itself in the Programme for Government to protect welfare rates. These weekly welfare rates were maintained in Budgets 2012 and 2013. All of the schemes operated by my Department, including the household benefits package and fuel allowance are kept under review given the on-going need for savings and to target expenditure at those most in need.
The following changes were made to the household benefits package and fuel allowance scheme since January 2010 starting with the most recent changes introduced in Budget 2013:
Budget 2013
Electricity allowance restructured and now based on the average best rate (minus the PSO) available for 150 units per month from Electric Ireland, Bord Gais Eireann 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.
Budget 2012
New applicants for carer’s allowance, who are not living with the person for whom they are providing care, are not be 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.
Duration of the fuel season reduced by six weeks, from 32 to 26 weeks for fuel allowance recipients.
Budget 2011
Changes were made to the household benefits package and fuel allowance scheme during 2011. These changes were provided for in Budget 2011 but 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 would continue to receive €26.86 of value on their bills, at a cost to the State of €22.22 per month. This change was effective from September 2011.
The smokeless allowance (additional €3.90 per week) payable to some recipients was abolished and one standardised fuel allowance (€20 per week) was available for all qualifying customers. This change was effective from September 2011.
Budget 2010
There were no changes to the household benefits package or fuel allowance scheme in 2010.
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. 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 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.
The smokeless fuel allowance of €3.90 per week was abolished from September 2011. This allowance was first introduced to lessen opposition to a ban on the marketing, sale and distribution of bituminous coal and to compensate people in receipt of fuel allowance who were living in coal ban areas for the anticipated higher cost of smokeless fuel. The ban applied in sixteen towns and cities around the country (Dublin from 1990, Cork 1995, Arklow, Drogheda, Dundalk, Limerick and Wexford 1998, Celbridge, Galway, Leixlip, Naas and Waterford 2000, Bray, Kilkenny, Sligo and Tralee 2003).
The rationale for paying this allowance to customers in smokeless areas could not be maintained as the price differential between smoky and smokeless coal has dropped considerably over the years and is now as low as 2%, significantly less than the 20% supplement which the smokeless allowance represented. Smokeless fuel is also much more energy efficient than conventional coal, more than offsetting any increase in cost. Research indicates that the efficiency gain can be up to 50%. People were being compensated unnecessarily. Therefore, the smokeless allowance was abolished with a standardised fuel allowance €20 per week for all recipients.
In 2005 there were 265,000 customers in receipt of Fuel Allowance; in 2011 there were 390,000, an increase of almost 50% over six years. Of these, 147,000 recipients (38%) qualified for the additional smokeless allowance at a cost of €18.7 million for 32 weeks.
The fuel allowance scheme was envisaged as a way of providing some additional support for those on long-term welfare payments during the winter season. Budget 2012 reduced the duration of the fuel allowance by 6 weeks from 32 weeks to 26. However, in paying the allowance for 26 weeks my Department is still providing a fuel support for half of the year and is covering the coldest months of the year from October to April.
The tables below outline the impact of the changes to the household benefits scheme and fuel allowance at an individual level.
Table 1: Impact of Budget Changes 2011 – 2013 – Household Benefits Package
|
Electricity Allowance |
Gas Allowance |
|
From 1 September 2011 – allowance on bills adjusted from 400 units every two months to 300 units every two months. The unit rate and standing charge increased on 1 October 2011 from 0.141 to 0.1619 and 0.252 to 0.2893. The PSO levy was also adjusted from €3.10 to €1.83 monthly on 1 October 2011. |
From 1 September 2011 – allowance was adjusted from €489 to €393 annually. |
|
From 1 September 2011 - rate of the cash allowance was adjusted from €43.80 to €35.80 a month. |
From 1 October 2011 - allowance was increased to €451 annually to take into account the increase in the electricity allowance. |
|
From 1 October 2011 - the electricity allowance was increased to €39.40 a month due to an increase in energy prices. |
From 1 September 2011 - the cash gas allowance was adjusted from €40.70 to €32.70 a month. |
|
From 1 October 2011 - the cash gas allowance was adjusted to €37.60 based on the increase in energy prices. |
|
|
From 1 October 2012 - Electric Ireland prices increased by 5.9% from October 2012. For those receiving a credit on their bills the allowance increased to €42.07 (urban) and €45.57 (rural) to reflect PSO and unit price rise for these customers. The value of the cash electricity and gas allowances remained the same. |
From 1 January 2013
|
Allowance Type |
Reduction of Allowance to €35 per month – cost to customer € |
|
Electricity Allce (urban) |
7.07 |
|
Electricity Allce (rural) |
10.57 |
|
Electricity Cash payment |
4.40 |
|
Gas Allce (credit on bill) |
2.58 |
|
Gas Cash payment |
2.60 |
|
Telephone Allowance |
|
From 1 September 2011 – the rate was adjusted from €25.91 to €22.22. |
|
From 1 September 2011 - the cash telephone allowance was adjusted from €26 to €22.30. |
|
The 2012 Budget increased VAT to 23% which resulted in increase to value of the telephone allowance to €22.58; the cash telephone allowance was increased to €22.60. |
Table 2: Impact of Budget Changes 2012 – 2013 – Fuel Allowance
|
Allowance Type |
Budget 2011 Abolition of the Smog Allowance - € |
Budget 2012 Reduction of fuel weeks from 32 to 26 - € |
|
Fuel Allowance (Smog area) |
3.90 x 32 weeks |
€20.00 x 6 weeks |
|
Fuel Allowance (Non-Smog area) |
N/A |
€20 for 6 weeks |
