Dáil Éireann Debate, Tuesday - 22 March 2022
8. Deputy Éamon Ó Cuív asked the Minister for Social Protection if she intends on widening the eligibility criteria for the free fuel allowance and increasing the payment in order that the real purchasing power of the allowance is maintained in view of the recent rapid increase in the price of energy; and if she will make a statement on the matter. [14835/22]
Amharc ar fhreagraThe Minister has answered this question in various forms but we are back to the fuel allowance and the extraordinary increases in fuel costs over this winter, which are unlikely to abate given the situation in Ukraine and Europe. Will the Minister increase the real purchasing power of the fuel allowance? As other Deputies have asked, will she extend it to people who are just a small amount over the means test threshold?
I thank the Deputy for raising this issue. The Government is committed to protecting vulnerable households from the impact of energy costs. As part of the overall welfare budget package of €600 million in increases secured for 2022, I increased the fuel allowance payment by €5 per week, effective from budget night. I also increased the weekly income threshold for fuel allowance by €20, which enables more people to qualify for this support. Further Government measures were recently announced to help to mitigate the effects of rising energy costs. As part of these measures, totalling over €500 million, an additional lump sum payment of €125 was paid to all households in receipt of the fuel allowance payment. It is estimated that this additional lump sum will cost €49 million. This lump sum payment, in addition to the budget increase, will mean low-income households will receive an increase of 41% this fuel allowance season when compared to last season. The recently announced electricity costs emergency benefit payment is another key measure and it will be paid in addition to the gas and electricity element of the household benefits package to qualifying households. Approximately 2.1 million households will benefit by €200 each from the new scheme. The combined worth of these payments to fuel allowance recipients is €325, which is the equivalent of almost ten weeks of additional fuel allowance payments. Furthermore, due to the continuing rise in inflation and as part of the economic consequences of the tragic conflict in Ukraine, the Government recently reduced excise duty on fuel.
The increases provided in the budget last autumn were given at a time of relatively stable fuel prices. They were given just to maintain the situation as it was and had nothing to do with what has happened since. At the end of December, 500 l of kerosene cost about €411. Today, it costs €760. That is an increase of 74%. That is the scale of the challenge. We have provided €125, because the other measures were pre-facto and were not based on anything to do with Ukraine, which had not become an issue at that stage. In view of the incredible increase in the price of fuel and the huge pressure on people at the lowest end of society, will further consideration be given to this issue? This will be particularly relevant if this kind of price, or the price on 12 March of €842 for 500 l of kerosene, is maintained.
The Government recognises the impact rising energy prices are having on people. That is why we have acted to assist families. We have brought forward a series of measures that cost over €1 billion to help to ease the burden on people. Last year, the fuel allowance was €784. This year it is €1,049 when the €125 lump sum payment is included. Adding on the €200 energy credit brings it up to €1,249. Compared with the €784 from last year, that is a 60% increase in the fuel allowance. In monetary terms, if my calculations are correct, that is an extra €465. I take the point that people cannot get over how much it is costing them to fill the tank with oil but the Government cannot just do everything. We have brought in a lot of measures and we are trying to help. Of course, we keep these things under review.
The Government raised the fuel allowance last autumn because it realised it was inadequate even at the old prices. The free electricity allowance has been at the same level for a long time. It no longer relates to units but to a cash amount. In the old days, if the price went up, the units allowed stayed the same so it made no difference and the cost did not increase. However, that was changed. The reality is that everybody got the extra money for electricity so nothing has been done for those on the household benefits package on the electricity side. I mean no disrespect to the Minister but she is distorting the figures slightly because she is conflating things with the fuel allowance that was given before the rise in prices due to Ukraine. What will the response be now that prices have gone up 74% due to Ukraine? There has been an increase of over 30% in gas prices and huge increases in electricity prices and €125 is the total response.
We have to put this in perspective. We had a pandemic and we spent €9 billion on the PUP. In October, we introduced the largest social welfare budget in 14 years and in the past few weeks we have announced another €1 billion to assist with energy costs. We would all like to do more but the reality is that resources are finite. In fairness, when all the measures I outlined are counted up, compared to last year we have increased the fuel allowance by 60%.
We will keep all these things under review but it is a difficult time for everybody and I understand that.
