THE NUMBER of households receiving emergency welfare support to help them meet mortgage repayments has almost doubled over the past six months.
New figures compiled by the Department of Social and Family Affairs show there were almost 14,000 people in receipt of the mortgage interest supplement at the end of July. This compares with 8,000 recipients at the end of 2008, and 4,000 at the end of 2007.
In a further sign of how the downturn is affecting households, the number of people in receipt of rent supplement – a short-term welfare payment for those who cannot afford rent – has risen to 91,000, an increase of more than 50 per cent since the end of 2007.
The sharp rise will put further pressure on the public finances, with the cost of rent allowance on course to reach about €490 million by the end of this year.
Total expenditure on the rental subsidy was €392 million in 2007 and over €440 million in 2008.
The Government had attempted to deflate the ballooning cost of rent allowance in recent budgets through cost-cutting measures, such as increasing tenants’ minimum contribution and reducing the State’s maximum contribution.
But the sharp rise in unemployment, as well as increases in the number of people on reduced hours or on smaller salaries, are continuing to push more people on to the rent supplement.
The scale of debt facing many people is apparent through a surge in demand for assistance at Money Advice and Budgeting Service (Mabs) offices across the State, which have been struggling to cope in more recent times.
Minister for Social and Family Affairs Mary Hanafin will today announce plans to allocate extra staff to 19 Mabs office centres.
So far this year, the service has nationally dealt with almost 10,000 new clients with an average debt of just over €15,000.
With mortgage and rent payments among the main issues of concern among clients, Mabs and the 12 main banks and financial institutions have signed up to an agreement for helping clients formulate mutually acceptable repayment plans.
The scale of problems in the public finances, meanwhile, means there will be more pressure on the Government to reduce rent allowance again in the next budget. The Cabinet has agreed that about €1 billion will need to be cut from the department’s €21 billion budget for 2010.
Under changes contained in last April’s budget, the minimum contribution recipients make towards their rent or mortgage was increased from €18 to €24 per week, while the maximum contribution made by the State fell by up to 10 per cent. Ms Hanafin justified the cuts on the basis that rents had been falling. But tenants groups such as Threshold say rents are falling at a much slower rate in the lower end of the market.