John Brady (Wicklow, Sinn Fein)
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74. To ask the Minister for Employment Affairs and Social Protection if she carried out an impact assessment as to the effect the increase in carbon tax announced in budget 2020 will mean for fuel allowance recipients who are struggling to meet their fuel costs; and if she will make a statement on the matter. [43521/19]

Regina 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.  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.

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.

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 set out a detailed analysis of the impact of increasing carbon tax at various rates, using a Energy Social Accounting Matrix (ESAM) covering a range of activities and commodities, reported across 10 household groups, including 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 targeted for receipt of the Fuel Allowance.  Accordingly, it is intended that the increased 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. 

Therefore, all households in receipt of the Fuel Allowance will see a net gain in their income arising from these changes.  This ensures that the most vulnerable in society are protected from the increased carbon tax.

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 June 2019, the Government published a Climate Action Plan.  Action 173 of this Plan requires the Department of Communications, Climate Action and Environment to review ways to improve how current energy poverty schemes target those most in need.

My Department undertakes ex-ante and ex-post social impact assessments of the main welfare and direct tax budgetary policies.  The Social Impact Assessment (SIA) is an evidence-based methodology which estimates the likely distributive effects of policies on household incomes, families and poverty.  The analysis is generated through the ESRI’s tax / benefit micro-simulation model, SWITCH.  The model simulates the impact of budgetary changes on a representative sample of households from the CSO Survey on Income and Living Conditions.  Indirect tax measures such as the carbon tax are not currently included in the full post-Budget Social Impact Assessment but the potential for the inclusion of same is being examined.  Previously published assessments of Budgets 2013 to 2019 are available on the Department’s website at: .

I hope this clarifies the matter for the Deputy.