Tom McDonnell highlights that one-time payments can’t resolve the living-costs crisis. Despite a slowdown in price inflation, the average prices have surged by an alarming 21 per cent in the preceding four years, leaving many households unable to keep up.
The crisis’ impact differs from household to household, creating an imbalanced economy. Some families are thriving and enjoying unprecedented wealth, contrary to others who are grappling with escalating living costs. Statistics from 2021 onwards indicate that material deprivation has been on an upward trajectory. However, it’s important to note that despite this, the economy, labour force, and overall household wealth have simultaneously reached all-time highs.
Categorising the most vulnerable groups under living-cost pressure and deprivation are made possible through Central Statistics Office (CSO) data. This data defines deprivation as: inability to afford heating in the past month, being unable to buy new clothing, or not being able to hold social activities at one’s home. This data indicated that in 2023, 17.3 per cent of Ireland’s populace lived in households subjected to two or more deprivation instances. The most severely affected are children, with over 20 per cent exposed to forced deprivation.
Nearly half of those who can’t work due to longstanding health issues or disability are struggling, while the same issue applies to one in four unemployed individuals. Single parents and renters are significantly more vulnerable. That said, employment is not a guaranteed ticket out of deprivation— one in eight employed individuals face deprivation due to insufficient wages, inadequate work hours, or a combination of both.
In essence, deprivation signifies inadequate income and inability to manage living cost pressures. As such, this living-cost crisis reveals its true nature— a crisis centred on income insufficiency.
Should regulators intervene and provide temporary universal assistance to the populace? It’s a proposition fraught with obstacles. First, a sizable portion of this aid would inevitably land in the hands of affluent households whose need for such support is negligible. Consequently, a program with universal reach might drain our capacity to aid those genuinely requiring assistance. Another factor is that these financial lifelines, if viewed as temporary measures, would only seem reasonable if consumer prices were expected to decline. However, modest but steady price hikes are predicted over the next several years. At some point, decision-makers will face a conundrum: choose to make these supports permanent or discontinue them. The termination of aid could worsen living conditions and inadvertently increase enforced deprivation unless alternate support systems are put in place. Increased prices would persist, but the aid would have disappeared.
Moreover, temporary universal supports can contribute to a rise in demand and inflation. Unintentionally, inflation could undermine the material value of the supports intended to tackle poverty and deprivation at the lowest income levels. Singular measures are a misjudged reaction to a surge in the cost of living. The fact of the matter is, the recent escalation in living expenses is structural, gradual and non-reversible.
What’s the path forward then?
The Taxation and Welfare Commission has recommended a fresh strategy: welfare payments should be determined based on adequacy benchmarking. This would tie payments to standards of living and the cost of living at household levels. Replacing the current spontaneous means of setting income support, this empirically-validated method should be implemented from the 2025 fiscal year as a standardized budgetary process.
Regrettably, the existing techniques employed by the government have proven inadequate in response to the increase in living costs and subsequent rise in deprivation. The adoption of a benchmarking system is the appropriate solution to such shortcomings.
Dr Tom McDonell, of the Nevin Economic Research Institute, alongside Suzanne Connolly, assert that balancing targeted and universal aid is pivotal to aiding poverty-stricken families.
Enduring cost-of-living strains persist amidst diminishing inflation rates. Even though prices are not rising as quickly, families remain under severe stress to furnish their children with the necessities of daily life, including heat, power, nourishment, and access to recreational activities. Many parents continue to abstain from fulfilling their own needs, making sacrifices in an effort to secure the wellbeing of their offspring. For these families, the primary concern regarding the year’s budget is the assistance available to alleviate cost of living stressors.
Last year, the percentage of impoverished children in Ireland saw a striking increase. This implies that an escalated number of children (21 per cent, to be specific) were unable to access vital necessities like adequate heating or clothing. Many parents were unable to afford the rudimentary needs for their children, notwithstanding the budgetary provisions made in 2024 to address the cost-of-living. Were it not for these supports, child deprivation would have been drastically more severe. A survey conducted a few months prior by Amárach Research on behalf of Barnardos found that nearly half of parents (47 per cent) admitted to either foregoing or reducing heat, power, medical, or food provisions over the past six months. Additionally, over four out of five parents (81 per cent) reported that their children had been adversely affected by cost-of-living problems and over a quarter (26 per cent) confessed that they were constantly anxious about procuring daily necessities for their offspring.
There is an urgent call for Budget 2025 to prioritize extending adequate fiscal aid to families so their children can access the basic necessities required for a decent childhood. That includes having enough food, heat, electricity, and a sufficient income to maintain a minimum essential standard of living. Meeting this need involves a blend of targeted and universal support.
Focused assistance is needed to uplift those families who are at the greatest risk of privation; particularly those who have been vastly affected by cost-of-living increases in recent years, especially the ones with low incomes and single-parent homes. Simon Harris, the Taoiseach, remarked last week that the working family payment and the qualified child allowance, stand as the most potent tools to alleviate child poverty. We eagerly anticipate the government’s utilization of this understanding and instigation of a substantial rise in these payments in the upcoming budget.
The government necessitates focusing on families teetering on the poverty fringe, who, due to their ineligibility for current aid, are experiencing worsening deprivation. Prioritising these families by lowering barriers for particular relief payments, such as clothing and footwear grants for school, and broadening the criteria for aids like the fuel allowance could significantly support them.
Recently, parents nationwide have encountered considerable difficulties, and many have noted a substantial decrease in their quality of life as well as their children’s. Frequently, they’ve foregone basics while prioritising their children’s needs. This situation, over time, has adversely affected their own mental health and the family’s overall wellbeing.
Tailoring and widening aids toward families would help alleviate their hardship, producing a profound impact on children’s lives. At Barnardos, we recognise that the echoes of childhood stretch through a lifetime. Persistent poverty and deprivation can have considerable detrimental effects on children’s current health and prospects for development and wellbeing. Augmenting assistance to families, primarily those encountering the utmost struggles and ensuring all children enjoy the basics of a decent upbringing, is the smartest investment this Government could undertake.
Suzanne Connolly heads Barnardos as the incumbent CEO.