New benefit to cushion vulnerable families from inflation will come at Christmas

Government has responded to calls from anti-poverty groups for an additional cost of living mechanism targeting vulnerable families by introducing a new benefit.

With an outlay estimated at between €10 million and €11 million, around 37,000 families, accounting for 80,000 people, will receive on average a cheque of €300.

Finance Minister Clyde Caruana said this benefit will start being paid from this year and families will be receiving their cheque just before Christmas.

Poorer families, and those with more children, will receive more. The cheque is over and above the yearly cost of living adjustment and any other benefits the families already receive.

The benefit will be paid every year and is tied to inflation. It will be revised upwards whenever the inflation rate surpasses 2% and when inflation in three of five categories – food, housing, utilities, household maintenance and health – is higher than the average of the previous five years.

This additional cost of living mechanism will have no impact on companies and businesses and will be paid by government.

Caruana insisted that the new benefit will “not distort the ‘Making Work Pay Principle’” since it will still pay more to work than rely on benefits.

He said this measure would help reduce poverty among pensioners by one percentage point and overall by 0.4%. "This measure will deliver the largest impact on poverty ever by a single measure," Caruana explained during a pre-budget briefing with journalists.