PERSONAL FINANCE:DESPITE THE rhetoric from some at the top rungs of Irish business and politics, "living within your means" on a social welfare payment of €196 a week is a completely different exercise to doing so on a six-figure salary.

Managing such low incomes with the burden of bank debt, a mortgage and utility arrears is downright heroic. And it’s increasingly common.

“People are now coming to my clinic who have never come to a TD in the past,” says Labour Party TD Liz McManus. “People who are middle class and have always managed. People who’ve always been able to get work, pay their bills, but who’ve lost their jobs, are living in negative equity and are very often afraid and embarrassed to seek help. Actually they often don’t know where to go for help.”

They could start with An Post. Its Household Budget Scheme (HBS) allows those on social welfare to have a percentage of their utility bills (eg local authority rents, electricity, gas, phone bills) taken directly from their weekly payment.

“Post office counter staff tell us that this is invaluable for people when it comes to managing their weekly monthly and yearly budget,” says Angus Laverty, public affairs manager with An Post. “It gives them a control over their finances that they wouldn’t have had before and it means they can, on a weekly basis, offset against the bigger bills coming in.” As of last November 20,000 were signed up to this scheme – people can download a form from the website or collect one from their local post office – and according to Laverty it’s grown substantially since then.

Often, however, by the time people discover schemes like this they’re already in serious difficulty. The Money Advice and Budgeting Service (Mabs) is a free and confidential state service which helps people negotiate the complexities of their financial situation.

“People who were traditionally on welfare would have been quite used to managing on a low income,” says Michael Culloty from Mabs. “But people who weren’t in this space before can find it difficult to readjust and put their priorities in order. We help them with that and we help them to prioritise rent or mortgage, light and heat, as well as food and other necessities. Sometimes people don’t actually do that.”

One of the key pieces of advice for anyone dealing with debt is to keep in contact with creditors and Mabs can help arrange payment plans.

“Sometimes the payment agreed might only be a euro a week or even nil depending on the person’s income and needs,” says Culloty, “but it’s important that something is agreed to and that people don’t feel unnecessary pressure. We’d often advise indebted people to arrange nil payments on certain things so that they have money to look after themselves and their families. Very often they themselves demand to pay off more because they so hate the thought of being in debt.”

But it’s not enough just to help people manage their own budgets. The wider environment also needs to change. There’s no debt-forgiveness in Irish legislation – although it is hoped that the report from the Irish Expert Group on Mortgage Arrears and Personal Debt might signal some sort of change to that.

In the meantime, an estimated 36,500 people are reportedly behind on their mortgages, while over 110,000 households have signed up to arrears repayment plans with the ESB and Bord Gáis. Some 900 ESB customers are being cut-off on average each month and as we move into winter with an added carbon tax and a five per cent hike in bills, Mabs, the Vincent de Paul and politicians like McManus, are putting pressure on the utility companies to be more humane.

“Until recently we’ve seen a less humane approach from those companies because of the pressures of the marketplace,” says Culloty. “I think that because of what’s happening now politically, they’re going to be forced to confront the whole area of disconnection and the arrears scenario.”

John Mark McCafferty, head of social justice and policy at St Vincent de Paul, notes that other jurisdictions take a different approach.

“In the North, people are put on prepayment meters and there’s a policy of not disconnecting,” he says. “They don’t have that draconian practice of cutting people off on a widespread basis which has emerged in the Republic. This was always an issue, but it’s getting more attention now that it’s hit middle-Ireland. St Vincent de Paul spend around €4 million a year staving off disconnection, working out a plan and paying a percentage of people’s arrears. Too often we’re brought in at the end of the day because people see us as a last resort. Sometimes they call when the engineer is literally walking up the path with a spanner in his hand. Historically the semi-States have engaged with us more than others, but in recent weeks, because the Joint Oireachtas Committee on Energy has been calling energy suppliers to account, we’ve seen more engagement.”

One of the offshoots of this recent engagement was the regulator’s announcement that it would be supplying another 17,000 free pre-payment meters for electricity. There are currently around 23,000 meters already in households and the demand has increased substantially. “I think in the short to medium-term prepayment meters are a preferred option for low income energy users,” says McCafferty.

“It helps with budgeting because they can put in smaller amounts of money as and when they need it and it also allows the energy provider to get back some of the arrears. Bord Gáis has been proactive in getting as many meters out as possible. There was a bit of reluctance from ESB, I think, possibly because they’re piloting smart-meters,” he notes.

Another problem is the heavy burden of disconnection and reconnection fees. “This doesn’t make any sense for people who are clearly in financial difficulty,” says Culloty. “To pay these fees to get their electricity back on, the customer often needs to borrow money from family or often, worryingly, a money lender.”

McCafferty is also displeased with Eircom’s decision to introduce a minimum payment of €20 for those paying bills through their local post office. Eircom stresses that there are plenty of other ways to pay and that this is a result of the fees An Post charge per transaction and that vulnerable people on the household budget scheme will be excluded from this restriction. But McCafferty feels it sets a bad precedent. “We’d appeal to their sense of humanity and decency and hope they’d rescind that idea,” he says. “We think it’s a draconian move, discriminating against those without bank accounts, when we should be moving towards a more inclusive way of working with people who have less. It’s a slippery slope. We’ve already heard that other companies are considering a move in this direction.”

Right now, for those on a limited income struggling with debt, Ireland looks like a pretty cold place. “If you owe €1,000 in this country it’s your problem,” says McCafferty. “If you owe a million it’s the bank’s problem. If you owe a billion it’s the people of Ireland’s problem. We need a fundamental rebalancing of that situation.”