Written answers

Tuesday, 15 October 2019

Department of Employment Affairs and Social Protection

Fuel Allowance Payments

Photo of John BradyJohn Brady (Wicklow, Sinn Fein)
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613. To ask the Minister for Employment Affairs and Social Protection the way in which a €2 increase in the fuel allowance will offset a €6 carbon tax increase when vulnerable households are already experiencing increased energy costs which have been rising; and if she will make a statement on the matter. [42055/19]

Photo of Regina DohertyRegina Doherty (Meath East, Fine Gael)
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The Fuel Allowance is currently a payment of €22.50 per week for 28 weeks (a total of €630 each year) from October to April, to over 372,000 low income households, at an estimated cost of €240 million in 2019.  The purpose of this payment is to assist these households with their energy costs.  It is not intended to meet those costs in full.  Only one allowance is paid per household.

My Department also pays an electricity or gas allowance under the household benefits scheme at an estimated cost of €188 million in 2019.

In Budget 2020, I increased the Fuel Allowance payment by €2 to €24.50 per week.  This is an increase of just under 9% and will increase the annual Fuel Allowance rate from €630 to €686, i.e., a €56 yearly increase.  This increase will bring the total payment made to over 200,000 customers in receipt of household benefits and fuel allowance to €1,106 per annum towards their energy costs.

The annual cost of this increase in Fuel Allowance is €21m and this cost has been funded via a ring-fenced allocation from the circa €90m which will be raised from the Carbon Tax increase - this is the largest single allocation and is directly aimed at protecting the most vulnerable.  The specific cost to any household of any increase in carbon tax would vary upon a number of factors, notably the energy efficiency of the homes of Fuel Allowance recipients, and the amount and type of fuel they use. 

This increase follows on from a number of other improvements and increases made to the Fuel Allowance scheme in recent Budgets including an increase from €20 to €22.50 per week and the number of weeks the fuel allowance is paid for increasing from 26 to 27 and then to 28.

Last year the ESRI published its report "The Economic and Environmental Impacts of Increasing the Irish Carbon Tax" (available at ) in which it conducts a detailed analysis of the impact of increasing carbon tax at various rates.  This includes a treatment of the effect on households at each income decile.  Interpolating these figures clearly shows that the additional cost of the carbon tax will be less than the weekly net value of the Fuel Allowance increase I have announced for at least the three lowest income deciles - the very people that the Fuel Allowance is targeted to.  Accordingly, it is intended that the new Fuel Allowance increase will compensate these households effectively.  In addition, it is important to note that, while the Fuel Allowance increase will come into effect from the 6th January 2020, the carbon tax increase will not take effect until May 2020 for home heating fuels, giving such households additional headroom for its introduction. 

Under the supplementary welfare allowance scheme, exceptional needs payments may be made to help meet an essential, once-off cost which customers are unable to meet out of their own resources and this may include exceptional heating costs.

My colleague, the Minister for Communications, Climate Action and Environment has the role of reducing energy poverty by implementing measures (administered by the Sustainable Energy Authority of Ireland (SEAI)) to improve the energy efficiencies of Irish homes.

In this regard it was also announced in Budget 2020 that  a total of €52.8 million is being made available to retrofit the homes of people living in or at risk of energy poverty through the Warmer Homes Scheme.  This represents the biggest ever allocation for the Warmer Homes Scheme – more than double the initial allocation for 2019.  €13 million of this funding is ring-fenced revenue arising from the increase in the carbon tax.  This reduces the energy required to adequately heat a home, thus reducing a household’s exposure to increases in energy costs. 

I hope this clarifies the matter for the Deputy.

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