Budget 2027 - initial assessment

Posted on
Budget

Budget 2027 - a pathway to sharing the benefits of growth for some, just not for those on the lowest incomes.  The cost of living crisis is having the greatest impact on low income households – those reliant on social welfare or in low paid employment.  Budget 2027 failed to prioritise these households sufficiently, and failed to adequately target supports where they are needed most.  

 

Social Welfare

  • The failure to index social welfare payments to wages, and to adequately increase the weekly rate copper-fastens already widening income divides and condemns vulnerable households to a winter of prolonged hardship with persistently high food and energy prices.
  • The €10 increase in weekly core social welfare rates fails to compensate for the damage that inflation continues to wreak on poorer households.  A €15 boost was the minimum required for Government to move towards a benchmark rate to 27.5% of average weekly earnings (a government target set in 2007). This would allow fixed income households to afford essentials.  Instead, those on the lowest incomes, who have struggled the most with increased costs since 2022 see their purchasing power further eroded.
  • Today's increase falls far short of achieving the modest 2007 target, leaving people depending on social welfare with incomes of just a quarter of average weekly earnings. The poorest are being left further behind, with no optimistic pathway outlined for them today as to how they can share in the benefits of Ireland’s growth.
  • Benchmarking social welfare rates to 27.5% of average weekly earnings and a commitment to a system of indexation would have helped to mitigate the impact of rising costs, give long-term certainty to households on fixed incomes, and prevent widening income inequality. 
  • While increases in the Living Alone Allowance, income disregard for Carers Allowance and the Fuel Allowance thresholds are welcome, they are no solution to the challenge of poverty and income adequacy. Ultimately poverty damages lives. The Government makes no savings by not spending on social welfare. The costs are simply borne elsewhere in the system.

Children

  • More than 200,000 children are living in poverty in Ireland. Budget 2027 did not contain the measures that would sufficiently reduce child poverty: putting more recurrent weekly income into poorer families’ pockets and making the public services they rely on more available and more affordable. 
  • While the increase to the Child Support Payment is welcome, as is the increase in the Working Family Payment threshold, the failure to adequately increase core social welfare rates and to address low pay leaves vulnerable families trailing behind as the real value of their incomes has been eroded in recent years due to persistent price increases.  Despite a stated commitment to children and families from Government, Budget 2027 fails to build on progress made in 2026 and fails to deliver the urgent policy response needed to meet Government’s own child poverty targets.   
  • While welcome changes were announced to the National Childcare Scheme to reduce childcare costs for parents with children aged under 7, the challenges facing the sector itself in terms of sufficient places, wages and running costs were not addressed.
  • In August 2026, 2,800 families, including 5,830 children, were living in emergency accommodation.More than one in four families have been in emergency accommodation for between 1-2 years, with more than one in five for over 2 years. Government missed the opportunity to extend Housing First to children and families, opting instead to continue payments to providers of emergency accommodation, ignoring repeated warnings by human rights organisations about the risks of institutionalising families.

Cost of Disability

  • We warmly welcome the steps taken in Budget 2027 to introduce a permanent cost of disability payment. While the annual €500 payment announced is a positive first step, a weekly payment would be preferable to allow recipients to budget appropriately for the additional costs they incur.  Social Justice Ireland had proposed a weekly payment of €20 as a first step. 
  • Future increases in the rate of this payment should be informed by the recommendations of the ‘Cost of Disability in Ireland – Research Report’.
  • We regret that Budget 2027 failed to take the necessary steps to substantially improve services and funding for children and adults with a disability and ensure that those services can meet current and future demand. Investment in disability services, respite and Personal Assistant services falls far short of what is needed to meet demand. 

Energy  

  • The weekly increase of €5 in the Fuel Allowance and changes to the weekly income threshold for pensioners is welcome.  But there was little in the budget to support households in arrears.  These are households that require targeted support.  Arrears continue to grow, both in amount and in the number of households - Budget 2027 fails to address this growing problem.
  • While cuts to excise provide temporary relief to some households, this type of blanket solution can be extremely costly, but often the benefit does not always go to those who are most in need.  An energy crisis cannot be solved by tax cuts.  Large scale investment in our energy infrastructure, storage capacity and our grid is the long term response to deal with high energy costs.   
  • Using the carbon tax to reduce prices is shortsighted given the energy efficiency and social protection measures targeting low-income households that it funds. Deciding to not collect this revenue undermines these initiatives, reduces the capacity to deal with increased demand as a result of demographic growth and any plans for expansion.  Budget 2027 did not provide clarity as to how any potential shortfall will be funded. A better use of resources would be to target households in arrears, and those impacted by increases in the cost of home heating oil with specific measures funded via the Just Transition Fund.  

Taxation 

  • Despite being dubbed a budget that would support working households, those earning less than €44,000 are clearly not a priority for Government. The decision to focus the tax package at increasing the threshold of the standard rate band by €2,500 means that higher income earners gain substantially more than low and middle income workers.  While tax credits were increased, these pale in comparison to the gains made by higher earners.  The growing gap between high and low income workers should have been a key concern for Government
  • The focus of the income tax package on changes to the standard rate band means that benefits are skewed to those on higher incomes.  While increases in the two personal tax credits are welcome, the gains to higher income workers are more than double that of lower income workers, raising questions about the distributional impact of this approach.
  • Government failed to deliver on its commitment to maintain a broad tax base and to implement the recurring taxation measures required to fund the services and infrastructure that a growing and ageing population requires, now and into the future.