The savings arising from the initial reduction and subsequent discontinuance of the telephone allowance meant that my Department was able to retain the other valuable elements of the household benefits package such as the electricity and gas allowance and the television licence. My Department will spend approximately €232 million this year on these elements of the household benefits package for over 428,000 customers.
The cost of the telephone allowance scheme had risen significantly each year, as the number of eligible customers grew. At the end of September 2013 there were almost 396,000 receiving the telephone allowance compared to approximately 316,000 people in 2007. This was an increase of 25%, or an average increase of nearly 4% per annum.
The value of the telephone allowance in 2012 was €270 per annum. Therefore, the cost of restoring the allowance at this level in 2018 might be estimated to be in the region of €118 million per annum, although the precise figure would depend upon a number of factors.
While the telephone allowance was an important measure for vulnerable persons, the nature of the market has been transformed in recent years with deregulation, mobile services and bundled services including television, broadband and telephone. It makes the former notion of an allowance covering handset rental, standing charges and a number of calls somewhat outdated, when similar assistance can be achieved by increasing the rate of core payments, which benefit people regardless of whether they have a landline or not, and which can be spent by the recipients either on their landline-related costs, or on something else of their own choosing.
The Government is keenly aware of the impact of Budget decisions on the Department’s clients, and strives to ensure that the money available is targeted in the most effective way. In Budget 2016, the first increase in the basic rate of the State pension in seven years was given. This increased the personal rate of the non-contributory pension to €222, and that of the contributory pension to €233.30. There was also a €2.50 increase in the rate of the Fuel Allowance, from €20 to €22.50 per week.
In Budget 2017, there was a further increase in the rate of State pensions by €5, which has increased the maximum personal rate of the non-contributory pension to €227, and of the maximum rate of the contributory pension to €238.30.
Therefore, over the past two Budgets, the maximum weekly rate for State Pensions has increased by €8 per week, along with pro-rata increases for Increases for Qualified Adults. The value of these increases is well in excess of the value of the telephone allowance previously provided.
Any decision to restore the telephone allowance would have to be considered in the context of overall budgetary negotiations. In the previous two Budgets, the Government has concentrated resources on increasing the rate of the pension, rather than on the Household Benefits package.
I hope this clarifies the matter for the Deputy.
