Cuts to pay for housing refugees will cost the state more

Extra.ie​

14-05-2025

Cuts to payments for pledged accommodation for Ukrainian refugees mean the State may have to pay millions more to house them in hotels, guesthouses and B&Bs.
Internal documents obtained by Extra.ie show officials in the Department of Public Expenditure are concerned about the knock-on effects from cutting the monthly payment from €800 to €600 in February.
In a memo prepared for Minister for Public Expenditure Jack Chambers, they warned that 'there is a risk this could undermine ongoing efforts to reduce reliance on expensive commercial accommodation'. Pic: Gareth Chaney/Collins Photos
Integration Minister Norma Foley wrote to Mr Chambers in February seeking to reduce the Accommodation Recognition Payment (ARP), a cut that takes effect from June.
Ms Foley said the reduction sought to 'balance' maintaining the scheme 'while minimising interference with the private rental market'.
She added: 'Reducing the payment will facilitate winding down the scheme in an orderly way in advance of the Temporary Protection Directive [which is due to lapse in March 2026].
'I believe this approach will help to manage expectations of pledgers, BOTPs [Beneficiaries of Temporary Protection] and NGOs supporting them.'
No business case was provided by Ms Foley to support the decision. An estimate of the savings associated with the change was requested by Department of Public Expenditure officials, but none was provided. Pic: Shutterstock
The officials provided their own high-level analysis of three potential scenarios for Mr Chambers, telling him over 1,000 people each month had been added to the scheme in the past year.
'There is clearly very strong demand for the scheme. It may be the case that the 25% cut will have a limited impact, particularly when it will still remain above the initial rate of €400,' they wrote.
In a scenario where the cut resulted in a 10% drop in additional people availing of the ARP each month from April, it would cost an extra € 7 million by the end of the year.
This would amount to a rise of 100 people in commercial accommodation who otherwise would have been in pledged accommodation.
In the second scenario, where 25% fewer additional people availed of the scheme, it would cost € 18 million more by the end of 2024. In the final scenario, which assumed a flatline of people in the ARP, this could lead to an increase in cost of € 76 million. Pic: Shutterstock
However, the officials noted that 'this seems somewhat unlikely given the demand for the scheme to date'.
The official noted work to reduce Ukrainians in commercial accommodation since October meant the fallout from the monthly rate cut could be met in the existing budget.
The note says the Department of Integration told them a political 'consensus' was reached after discussions between Ms Foley, Taoiseach Micheál Martin and Minister of State at the Department of Justice Colm Brophy.
Asked for their view on the impact of the measure, Department of Integration officials said they believed there would be an impact but it was 'impossible to quantify'.
'Some host applicants may close their applications and BOTPs will need to move elsewhere,' they wrote. Pic: Getty Images
The officials conceded there would be a 'significant cost' if there was a reduction in the level of pledged accommodation, and Ukrainians had to find accommodation in the 'already straitened private rental market or seek to secure State contracted accommodation'.
'If the latter was to transpire, this would result in significant additional costs and may be at variance with the department's intended policy,' they wrote.
The Integration Department suggested Ukrainians could make a 'top-up' payment to their hosts to bridge the gap rather than have the tenancy terminated, but this was 'between the parties themselves'.
'It should also be noted that pledged properties (many of which would fall under ARP) provide a valuable exit mechanism from the 90-day Designated Accommodation Centres for BOTPs who arrived post March 2024, and who are not entitled to State-contracted accommodation,' the officials also wrote.
The memo says that between July 2022 and December 2024, around € 364 million was paid out via the scheme, with € 141 million of this in 2024.
In comparison, the Department of Integration spent € 1.143 billion on its Ukraine response in 2024, with the biggest driver being commercial/ serviced accommodation.
As of February 18, 2025, there were 26,937 Ukrainians in commercial/received accommodation (e.g. hotels and guesthouses). This is down from a peak of 59,000 in November 2023.
In response to Ms Foley's request, Mr Chambers said he consented to the reduction, but that an analysis of the impacts needed to be undertaken.
'I would highlight the potential risk of this proposal possibly reducing the number of Ukrainians moving out of commercial accommodation, which is significantly more expensive per night,' he wrote.
Former integration minister Roderic O'Gorman told Extra.ie: 'These documents from [Public Expenditure] show the lack of a clear economic rationale for the decision to reduce the recognition payment, which keeps thousands of Ukrainians out of directly provided State accommodation, which we know is far more expensive.'
A Department of Justice spokesman said: 'Although the reduction has been flagged for some months, the number of ARP applications has continued to increase.
As of May 11, 2025, there are active claims in payment for over 21,000 properties, an increase from some 19,800 at the end of February.'