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Raise social welfare rates to shield struggling households from spiralling inflation, experts say

The Government is set to unveil a new cost of living package this week.

RAISING SOCIAL WELFARE rates, even on a temporary basis, is the best way to cushion the most vulnerable from the impact of rampant inflation, campaigners and economists say.

With low-income households “disproportionately affected” by rising prices, economists from the Central Bank of Ireland and the Economic and Social Research Institute (ESRI) believe the Government may need to adjust welfare payments to reflect their revised outlook for inflation.

The Government, which has so far resisted opposition calls for a mini-Budget in response to the economic fallout from Russia’s invasion of Ukraine, is set to unveil a new package of measures this week, aimed at easing the burden of rising prices on households.

The Public Service Obligation levy on energy bills is expected to be scrapped as part of the new ‘cost of living’ package — the second round of measures rolled out in a little over two months.

However, Government sources have said there is a need to “manage expectations” ahead of the announcement, given the uncertainty around the outlook for inflation.

It comes after the Central Bank downgraded its economic forecasts for 2022 against the backdrop of soaring prices.

Irish household earnings are now expected to fall in real terms in 2022 for the first time since 2013 with inflation expected to outpace the rate of income growth.

As a consequence, thousands of low-income, older and rural households — particularly those with no income from wages who are reliant on some form of social welfare — could see a significant decline in their standard of living, economists say.

Irish consumer prices were on average 6.7% higher in March this year than they were in March 2021, according to Central Statistics Office figures released last week.

But with both the Central Bank of Ireland and the Economic and Social Research Institute forecasting prices to rise at an even faster pace over the coming months, lower-income households and people on fixed incomes are expected to face significant challenges.

The Society of St Vincent De Paul (SVP) said its members are already seeing the impact of rising prices on people facing poverty.

“People are cutting back on essential energy use for fear of the next bill, or because there is no money to top up pre-payment meters, and are having to make the impossible choice between buying food or turning the heat on,” a spokesperson for the charity said in a statement.

The latest CPI showed that this situation is “continuing to get worse”, according to the spokesperson. “We have to remember that inflation is actually higher for people on the lowest incomes, who spend more of their budget on essentials like energy, food, housing and transport – all of which are getting more expensive.” 

SVP said raising social welfare rates to meet the cost of living, creating a hardship fund to support people struggling with energy costs and increasing and extending the Fuel Allowance should be part of the Government’s response.

‘Targeted and temporary’

Current social welfare rates were set at Budget time last year when the Department of Finance expected inflation to peak at 4.5% in the fourth quarter of last year.

But the rate at which prices are increasing has accelerated sharply in 2022 against the backdrop of the war in Ukraine.

The invasion and Western sanctions have combined to push up global commodity prices, in particular, crude oil and wholesale natural gas prices.

That, in turn, is pushing up home energy and heating bills, which along with rising petrol, diesel and home heating oil prices, is the main driver of the current bout of inflation.

Food prices are also starting to rise along with fertiliser prices. Commodity markets are also pricing in the potential loss of Ukrainian and Russian grain later this year.

The CSO’s March Consumer Price Index revealed the price of flour and other cereals, up 10% over 12 months, climbed 5.1% in the month of March alone.

Both the Central Bank and the ESRI have recommended that any measures aimed at insulating households from inflation need to be targeted at the most vulnerable so as not to add to inflationary pressures building up within the economy. They would also need to be temporary in nature so as not to add to the long-run cost of running the State.

Asked last week by The Journal whether broad-based increases to core social welfare rates would meet the definition of “targeted”, Mark Cassidy, Director of Economics and Statistics at the Central Bank said they would.

“We know lower-income households are disproportionately affected,” he said.

We also know lower-income households, not only do they spend more of their incomes on fuel and energy than higher income groups, but we also know that they’re more vulnerable to the effects because they don’t have savings. They don’t have the same buffer between the money coming in and the money going out and therefore they are more vulnerable to the effects. 

In that context, Cassidy said policymakers could “look at social welfare rates”. However, he cautioned that any increases may need to be temporary so as not to add “permanently to the cost base of the economy” after the current crisis subsides.

Speaking to The Journal this week, economist Karina Doorley, Senior Research Officer with the ESRI said the rate adjustments announced in Budget 2022 were designed to be inflation-proof. 

“Some payments, like Child Benefit and the Working Family Payment, were not increased in line with inflation expectations,” she said. “But by and large, most of the welfare payments rose in line with expected inflation.

But obviously, that’s changed now. Expected inflation is going to be higher and unless there is a revision of those rates, then it is likely that those households on low incomes or with no wage income will experience greater losses than those who do have a wage and who can go to their employer and bargain for a wage increase. 

The Government “can’t compensate everyone for expected inflation”, Doorley added. 

She said, “The response is going to have to be very, very targeted. But I would argue that an increase in core rates is targeted. These are low-income households. If you want to be even more targeted, you could make the increases temporary.”

Doorley said the increase could take the form of an extra, one-off payment like the Christmas bonus for people in receipt of long-term welfare payments like the State Pension, the One-Parent Family Payment or the Long-term Jobseeker’s Allowance.

“There could be an extra bonus this year or something like that,” she said, “something that is targeted and temporary to allay any fears that the exchequer is going to have to come up with this money every year in future because realistically, it will be expensive.”

Asked whether increasing social welfare rates across the board could actually increase inflationary pressures within the economy, Doorley said it’s possible. But the impact is likely to be very mild.

“Of course when you give people extra money it can increase demand for goods and services,” she said.

“But I would argue that if that money is targeted at low-income households, the effects are going to be moderate.”

She added, “The cost of living package that was announced recently, some of that was targeted but some of it was very broad and is going to be inflationary. Any more measures that are going to be introduced, they should be very, very targeted.

“The easiest way to do that is through the social welfare system.”

— Additional reporting by Christina Finn

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    Mute Elizabeth W
    Favourite Elizabeth W
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    Jan 31st 2016, 9:10 PM

    It’s unbelievably shocking the waiting lists for children. Never something I appreciated until recently. Getting things done for children should be a priority. So that they don’t have complications later. It’s heartache for the child and family and ends up costing more in the long run.

    131
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    Mute Little Diddy No
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    Feb 1st 2016, 3:15 PM

    And a huge number of mentally distressed children and adolescents waiting more than a year to access the HSE Children & Adolescents Mental Health Service as well – completely unacceptable in any decent society.
    That’s why, when candidates knock on your door, you should tell them you don’t wish to have your vote bought with tax or USC cuts – you want them instead to invest that money into starting to reverse some of the savage cuts in recent years to services and supports for our most vulnerable. That is the only moral path.

    3
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    Mute Cupid Stunt
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    Jan 31st 2016, 9:31 PM

    250000 for carpets for leinster house, 500000 to move the work of art outside the central bank, tds expenses 40 million, there’s plenty of money around but just not for the children of Eire, you can thank fine Gael and Labour for that.

    102
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    Mute Al Ca
    Favourite Al Ca
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    Jan 31st 2016, 9:28 PM

    This Government can find the €1000′s to well overpay their advisers above the set wage cap……but not for sick children.

    74
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    Mute Bondage Informer
    Favourite Bondage Informer
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    Jan 31st 2016, 9:22 PM

    The public system is a complete failure. DOH and HSE managers don’t have a clue and their incompetence is killing people. No concerns here as there is ZERO accountability in these positions.

    74
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    Mute dave muller
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    Jan 31st 2016, 9:18 PM

    A sickening situation for anyone to have to wait for this operation. If these kids can’t be helped here due to the excuse ridden HSE rubbish then they need to be sent out to other European countries where they work on the alien concept of the idea of speed of service. Waiting lists cause pain and in the end cost more than dealing with the patients immediately.

    64
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    Mute eggy
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    Jan 31st 2016, 10:06 PM

    Scoliosis is a really horrible thing to live with. I only found out I had it at 14 by pure accident. Luckily the surgery was done when I was 16 so it wasn’t too bad. It really made my quality of life a lot better too

    52
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    Mute Mark Gerard Lochlain
    Favourite Mark Gerard Lochlain
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    Jan 31st 2016, 9:32 PM

    This is appalling. Shame on the HSE and the Government. Children should be a priority when it comes to medical care. It disgusts me

    40
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    Mute Deirdre McDonnell
    Favourite Deirdre McDonnell
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    Feb 1st 2016, 12:09 AM

    For any parent of a child with scoliosis please feel free to join my support group. We are working together to try get the lists down and need all the support we can get.

    Thank you for the lovely comments. I won’t stop until Mr varadker understands why these lists need to be sorted before it’s too late.

    https://m.facebook.com/groups/415024695288784

    35
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    Mute Kevin Mullen
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    Jan 31st 2016, 9:57 PM

    Before Burton gave her backslapping speech to her horde of liars, it was penned by a cohort of over paid arse lickers who’s salary would pay for the operation that these people deserve especially when funny noonan has a fortune to build a doomsday wall

    30
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    Mute Niamh Ní Néill
    Favourite Niamh Ní Néill
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    Jan 31st 2016, 10:54 PM

    I was luckily diagnosed at the age of 6 due to the District Nurse visit to the school to do routine checks on eyesight, hearing general development etc. I had two curves in opposite directions (sideways so they didn’t impinge on any my organs) so I stood straight and to all appearances had a straight spine. I and wore a brace from the age of 7 to 14 which corrected the top curve but unfortunately the bottom curve was not corrected and I had a spinal fusion operation in 1990 by the amazing and now retired Dr Frank McManus at Cappagh Orthopeadic Hosptial. I was very lucky to be diagnosed so young and wonder if cuts to health visits to schools are meaning children don’t get picked up until much older and where that curve could’ve been corrected if picked up earlier.
    I also remember some of the costs were covered by my parent’s VHI insurance account in order to be operated on sooner so the curve didn’t progress too much and remember that they tried to wangle out of payment by suggesting that the surgery was cosmetic. Thankfully a letter from McManus and his surgical team sorted that one out.

    30
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    Mute Rashers Tierney
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    Jan 31st 2016, 9:54 PM

    To the author of this article. Excuse me for asking, but what gives you the impression that this Government, or indeed ANY state agency, has any interest in your plight? (or anyone else’s plight, for that matter). There must be a death ; a slew of reports ; publicity and the threat of law suits to arouse the vaguest interest. You DO know that, don’t you?

    23
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    Mute Patricia Anderton
    Favourite Patricia Anderton
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    Jan 31st 2016, 9:54 PM

    Why were they worried to operate earlier? I was 13 when I had a rod put on my spine, ww was in 1982- Dr frank Dowling in crumlin hospital for

    23
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    Mute Aaron Daly
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    Jan 31st 2016, 10:48 PM

    “significant progress achieved in the management of the spinal surgery waiting list in the last year”.??? Well done HSE. 2009- 75 children waiting on spinal surgery, 2016 -250 children waiting in pain. That’s not the progress we need!

    20
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    Mute Enda Elvery
    Favourite Enda Elvery
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    Jan 31st 2016, 10:06 PM

    Shame on the people of Ireland,To allow this.

    If the minister of health got boycotted
    In the next election, we’d show real people power. And the next minister would jump to our tune.

    19
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    Mute @mdmak33
    Favourite @mdmak33
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    Jan 31st 2016, 10:25 PM

    All the mouthing fg,lab, do about children, they do not care about anyone outside their circle.

    18
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    Mute Andrea Rock Massey
    Favourite Andrea Rock Massey
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    Jan 31st 2016, 10:15 PM

    The crosscare directive scheme is the only way to go for people waiting for treatment here. Look into it people. I’m in the process of arranging to have my daughter’s tonsils removed privately up north and the HSE will be picking up the tab. They will pay whatever it would have cost if I was having them removed here (they pay the cheaper of the two) and I only have to pay the difference which is going to be very little. Everyone is entitled to this care now.

    16
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    Mute Gus Sheridan
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    Feb 1st 2016, 1:24 AM

    The heavy burden of doing nothing will be lifted soon Leo, so sorry to see you go, mind the door doesn’t hit your sorry arse on the way out.

    10
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    Mute Rashers Tierney
    Favourite Rashers Tierney
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    Jan 31st 2016, 10:28 PM

    “causes abnormal curvature in the spine or backbone”?? Jesus wept.

    9
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    Mute Matty Reese
    Favourite Matty Reese
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    Jan 31st 2016, 11:08 PM

    Sorry to hear about your condition Dierdre and thank you for explaining what it is. I am tired of lazy journalism where the author uses words they dont understand and dlnt care that we dont understand. Illness and ailments are not just fancy words, they are conditions that real peolle suffer from and the rest of us are capable of understanding about.

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    Mute Matty Reese
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    Jan 31st 2016, 10:39 PM

    Orĺá. Thank you for highlighting this issue and bringing it to a wider audience.
    However I dont understand why you bring in uncommon terms such as “neuropathy” without explanation of its meaning. It is standard practice in science and medicine to briefly explain any term not in everyday use upon its first mention in any article even it is written for a specialist audience., This applies more so when said article is directed at the general public.

    2
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    Mute Deirdre McDonnell
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    Jan 31st 2016, 10:58 PM

    Neuropathy is peripheral nerve damage caused by the curve crushing my spinal cord,which presents itself in foot numbness in my case to the extent I had a bone infection in my foot and couldn’t feel a thing,normally this infection (osteomyelitis) causes severe pain. Not to me!

    25
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    Mute jane
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    Jan 31st 2016, 11:09 PM

    Always has to be one ass. Very well written and interesting article Deirdre. A Google search will explain any of the hard words for you Matty.

    21
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    Mute Orla Forkan
    Favourite Orla Forkan
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    Dec 24th 2016, 10:46 AM

    Well done. My daughter has ehlers danlos syndrome and lots of comorbidities including scoliosis Atlantoaxial axial instability chiari and cervical instability.
    We have to travel to uk in order to access the expert care she needs. She now has to travel to USA for neurosurgery and fusion. This has to be privately funds no support from the state. Shame on government and the pretence that we have a health equitable service. Those with rare diseases continue to be ignored by the state

    1
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    Mute Katie McBride
    Favourite Katie McBride
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    Dec 24th 2016, 10:09 AM

    I had a spinal fusion done for scoliosis when I was 15 in 2005. I was so lucky that there was no waiting lists back then. I couldn’t imagine life now if I hadn’t had the surgery done. It’s a disgrace that those children are left to deteriorate while waiting for so long for a consultation.

    1
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    Mute Dave Doyle
    Favourite Dave Doyle
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    Feb 1st 2016, 6:44 PM

    When it’s more important to pay banker debts and bondholders, kids needing any sort of medical intervention to save lives or improve the quality of life will never be given any sort of priority.Banks and bondholders are much more needy and important that sick kids.
    Even with such a fantastic “recovery” in which we are all doing so well, so better off, ordinary people, the children of ordinary people are not allowed share or benefit from it
    A heartless, uncaring government. Vote them out.

    1
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    Mute Milicent Harison
    Favourite Milicent Harison
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    Nov 29th 2016, 4:19 PM

    This is also what Beatrice West said about same Doctor Uwadia Amenifo, i sometime talk about.

    ‘I am Beatrice West of 100 Adams Street, Texas, USA. I want to quickly enjoin all here to help me say a big thanks to

    Doctor Uwadia Amenifo for his wonderful work he has done for my family for saving my son of his Hypermobility and

    scoliosis. Brethren, my son by name is called Josh, and he is 18 years old. He was very ill when he was 8 years, and was

    treated, we noticed that he begin to have issues with working when he was 10 years he always complain of his joints and

    spine, and we took him to hospital for treatment, and the doctor diagnosed hypermobility, so he was given medications, and

    we continued to give him his medications until when he was 15 he was also diagnosed of scoliosis in this, my son was

    unable to Bend forward and backward, He was Walking with pain, he Doesn’t sleep well, Wake up middle of night to toilet

    and During daytime he can’t stand to wee wee and need to rush him to toilet. This continues for two years and I was

    running hectare scepter looking for how to get a cure for him. I was always doing a research online about his disease, and

    I found in a blog where a woman aged 50 testified of how she was cured of scoliosis by a herbal Doctor Uwadia Amenifo with

    the use of herbal medicine, and she didn’t have to undergo any surgery. So I found the info interesting and decided to be

    in contact with the said herbal doctor. In the blog were the contact details of the herbal doctor. So I pick up his

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    scoliosis that was when I then told him that also he have hypermobility. So he counseled me, and promised me that he will

    cure my son with his herbal medicine. So we concluded the arrangement, and he prepared the herbal medicine, and sent it to

    me in Texas. So I gave it to my son just as he directed and to god be the glory my son was totally cured by his herbal

    medicine of his hypermobility, and also hos scoliosis, and as I write this testimony, my son is totally cured and can now

    move well and do all he was made to do. So please I want all here to help me say a big thanks to doctor Uwadia Amenifo for

    his wonderful work in the life of my son. Today my son is totally cured. Please if you want to talk with doctor Uwadia

    Amenifo concerning your health issues, and also if you are suffering from hypermobility, and or scoliosis and you want to

    be cured without surgery just as my son was cured without surgery contact Dr Uwadia now on his email

    (doctoruwadiaamenifo@gmail.com) or call him on (+2349052015874). God bless you all’.

    1
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