Two-tier children's allowance now likely in October's budget

Extra.ie​

17-06-2025

Extra child benefit payments for lower-income families are being discussed ahead of the October Budget, as Cabinet ministers have been ordered to bring forward ideas to alleviate child poverty.
Taoiseach Micheál Martin set out his stall on core issues he hopes to see addressed in Budget 2026, with anti-child poverty measures and a disability package to be prioritised in the formulation of the social welfare package.
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Speaking at the National Economic Dialogue in Dublin, one of the main precursor events to the budget negotiations over the summer, the Fianna Fáil leader said 'nothing was off the table' in targeting our most vulnerable children.
Taoiseach Micheál Martin. Pic: Michael Chester
His comments come as research from the ESRI has found the number of children who are materially deprived rose in 2023, with almost one in five children now deprived, but not at risk of poverty.
A separate report from the Children's Rights Alliance, published last week, showed the number of children in consistent poverty had risen by over 45,000 in a year, bringing the total to over 100,000.
In a speech at Dublin Castle yesterday, Mr Martin said, despite increased spending on welfare supports, 'the most recent figures show an unwelcome increase in persistent child poverty'.
The Fianna Fáil leader said 'nothing was off the table' in targeting our most vulnerable children. Pic: Getty Images
'We need to make sure that this increase turns out to be a temporary spike, out of line with the overall trend. Therefore, for Budget 2026, I have asked my ministerial colleagues to plan and come forward with measures that will really make the difference to the most vulnerable families and children,' he said.
An ESRI paper this month found the system of child-related cash and in-kind benefits 'significantly reduces child income poverty and deprivation'. It said the introduction of a second tier of means-tested child benefit payments is the most cost-effective option to prevent child poverty, and would lift 55,000 out of income poverty.
The Programme for Government commits to examining a two-tier system of benefits, which includes more targeted payments on top of the universal rate. Asked if the Government would consider the ESRI's suggestion, Mr Martin said 'nothing is off the table' in budget negotiations.
Taoiseach Micheál Martin. Pic: Sasko Lazarov/© RollingNews.ie
'There's a wide menu we can choose from to target resources to meaningfully impact on the child poverty situation. That's not just in terms of income supports, but also in terms of other initiatives in education. For example, the Deis+, which would target more children in particular with severe disadvantage,' he added.
According to the ESRI, the effective top-up of the existing €140-a-month child benefit would cost the State € 772 million annually. Mr Martin acknowledged that introducing another tier of support would be costly, but said child poverty will be a priority issue in budget negotiations.
The comments come amid a pivot in fiscal policy, with officials signalling capital investment will take precedence over one-off financial supports in budgetary policy over this Dáil term.
Finance Minister Jack Chambers and Public Expenditure Minister Paschal Donohoe. Pic: Sam Boal/Collins Photos
Money ministers Jack Chambers and Paschal Donohoe have ruled out a cost-of-living package for 2026, while it has emerged that income-tax cuts are not being viewed as a priority. A well-placed source confirmed discussions on how the two-tiered system would operate are ongoing.
However, they said it is 'too early' to speculate how the scheme might operate and how much funding will be required. The source said it is unlikely the universal child benefit will see any decreases.
However, asked if the basic rate will be raised in addition to a second layer of payments being rolled out, the source said the Department of Social Protection's focus will lie with measures for lower-income workers.
The Department of Finance. Pic: Gareth Chaney/Collins Photos
'We are still in the very early stages of figuring out what a two-tier child benefit system might look like, and discussions remain active. But the Taoiseach's messaging is clear: child poverty and disability will be two key areas addressed in the social welfare package. And that is what the Department is focusing on.'
The source could not elaborate on whether certain middle-income earners will qualify for an extra level of support, saying no decisions have been taken on the parameters of a new system. Another Government source signalled an expansion of existing, lesser-known measures will likely form part of any package.
They pointed to the Equal Start initiative which aims to ensure children experiencing disadvantage have equitable access and participation in early learning and care and school-age childcare. It provides universal and targeted supports to families and childcare settings.
The initiative currently supports 35,000 children, with a senior Government source saying the programme will likely be further expanded in Budget 2026.
The source also indicated more resources will be provided to family resource centres, which provide universal services in disadvantaged areas.
Louise Bayliss, head of social justice and policy at St Vincent de Paul, told Extra.ie that older children and teenagers are disproportionately affected by poverty.
'We know the needs of babies and very young children are met under existing social welfare payments. However, the older children get, the wider the gap between their needs and the State supports they qualify for grows,' Ms Bayliss said.
She said the ESRI's two-tier system does not recognise the difference in needs between children under 12 and those older than 12. Meanwhile, one senior Coalition figure said a separate disability package will be introduced in the budget, which is likely to include the annual cost of disability payments promised in the Programme for Government.
The Taoiseach also said yesterday he wants the movement of therapy services into schools to be significantly funded in the budget. He also indicated the process of scrapping the means test for the carers allowance will begin in the next budget.