Budget leaves Ireland’s more vulnerable households condemned to prolonged hardship
Budget 2026 gives worrying indications of this government’s priorities in the coming years. 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. Government has prioritised an election promise made to the hospitality sector over commitments made to vulnerable groups such as carers, children and households in poverty. The budget failed to sufficiently broaden the tax base, and address the underlying fiscal deficit, leaving our growing and ageing population without plans for childcare, education, pensions, social welfare, health and home care, home help, housing adaptation, disability and community care.
Government priorities
Government prioritised an expensive and inefficient VAT cut, which expert advice says won’t sufficiently reduce restaurant closures over abolishing the means test for carers, making substantial investment in addressing child poverty or an appropriate cost of disability payment for example. The VAT reduction doesn’t address the core issues facing the industry. A better and targeted approach that dealt specifically with the challenges of energy costs and staff shortages would be more sustainable and less costly. The failure to index social welfare rates against average earnings means that income adequacy and certainty continue to remain out of reach for some of our most vulnerable households and families and widening income gaps will persist.
Social Welfare
The €10 increase in core social welfare rates fails to compensate for the damage that inflation continues to wreak on poorer households. A €25 boost was the minimum required for Government to benchmark rates to 27.5% of average weekly earnings (a target set in 2007). This would allow households to buy essentials routinely, not as treats. Today's increase falls far short of achieving the modest 2007 target, leaving people depending on social welfare with incomes of less than a quarter of average weekly earnings. Yet again this Budget fails the poorest.
They are being left behind without any hope of enjoying the fruits of Ireland’s current prosperity. 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 Child Support Payment, income disregard for Carers Allowance and the Working Family Payment threshold 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.
Child Poverty
Almost 1 in 6 children (190,000) are living in poverty in Ireland. Budget 2026 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 increases to the Child Support Payments are welcome, addressing child poverty also requires measures such as adequate adult welfare rates, decent rates of pay and conditions for working parents and aspiring parents, and adequate and more accessible public services. Child benefit also remains a key route to shutting this incubator that generates many other deprivations. It is of particular value to families on the lowest incomes. Despite a stated commitment to children and families from Government, the budget allocation of €300m while welcome, fails to fully deliver.
The failure to adequately increase core weekly 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. Government did not prioritise their access to housing, childcare, healthcare, education and other essential public services. While some welcome changes were announced regarding the Child Support Payment, Fuel Allowance extended to recipients of the Working Family Payment, and maintenance grant thresholds, these remain insufficient. Overall, in Budget 2026 this government, like its predecessor has failed to fully implement its own policies on addressing child poverty as laid out by the Child Poverty and Wellbeing Unit work programme.
Taxation
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. Reductions in VAT for hospitality and construction combined with new and extended tax breaks will narrow the tax base. This leaves us without any plan to deliver on commitments in the Programme for Government to cater for the needs of a growing and ageing population for childcare, education, pensions, social welfare, health and home care, home help, housing adaptation, disability and community care.
Energy
This budget contains limited measures to tackle energy poverty and long-term energy costs. While we welcome the weekly increase in the Fuel Allowance and the extension of the payment to those on the Working Family Payment, there was little in the budget to support households in arrears. Over the coming months, many thousands of inadequately insulated homes will grow even colder and damper than they were last winter. This will damage the health of many of their low-paid or welfare-dependent residents. Budget 2026 failed to adequately support these households. Recent figures from the Commission for Regulation of Utilities show that despite more than two billion euro being spent in universal credits on energy bills since 2022, arrears levels and amounts owed continue to increase. Budget 2026 does not contain the measures required to address this growing problem.
Low Pay
Social Justice Ireland welcomes the Budget 2026 decision to increase the minimum wage by €0.65 per hour, bringing it to €14.15 per hour in 2026 as a partial move towards tackling low pay. However, the new rate is still €1.25 below the Living Wage as calculated by the Living Wage Technical Group. As persistent inflation snaps hardest at the heels of the poor, the failure to further progress the Programme for Government’s Living Wage commitment is regrettable. The failure to make tax credits refundable means that low paid workers gain little from this budget.
Read our detailed Budget 2026 Analysis and Critique here.