By Conor McCabe.

This article is the second in a four-part series adapted from the Unite union’s policy document, Hope or Austerity: A Road Map for a Better, Fairer Ireland After the Pandemic, written by Conor McCabe.

The effective shutdown of large sections of the Irish economy has led to the introduction of unprecedented fiscal measures. While the government’s response has made – temporary – steps forward when it comes to healthcare provision and unemployment supports, it has fallen short when it comes to the payment of rent and mortgages, consumer debt repayments and utility bills.

Health spend

The government quickly expanded the budget of the Health Service Executive (HSE) and lifted the recruitment embargo on nurses and other key staff. It immediately increased health expenditure by €1 billion with an additional €1 billion planned subject to final approval.

The government also approved a framework agreement with private hospitals, with Taoiseach Leo Varadkar stating that they would “operate effectively as public hospitals under Section 38 of the Health Act for the duration of the Emergency….”.

The Minister for Health, Simon Harris, added that ‘[t]here can be no public versus private here’ and that patients with Covid-19 would be treated for free in what he described as a single national hospital service. 

The government’s deal with the private hospitals has been hailed as the nationalisation of the health service and the creation of a single-tier service. The HSE will have full use of all nineteen private hospitals – a 17 per cent increase in public health capacity overnight – with access to beds on a need, not income, basis, both for Covid-19 and non-Covid-19 patients. All private consultants have been offered a public locum contract as terms for their treatment of public patients. As of yet, however, the consultants have not signed up to the deal.

The government insists the arrangement with private hospitals is temporary, initially for three months with the option to extend if necessary. It should be noted that Section 38 of the 2004 Health Act allows for the HSE to enter into a service agreement with a private service provider for the provision of a health or personal social service. It is in effect a business contract where the physical assets remain in private hands while the service is made public. The government is essentially renting the hospitals for twelve weeks, the terms of which have not been made public.

Nevertheless a Rubicon has been crossed. While it is true that under the agreement the physical hospital buildings and equipment remain private and for-profit – it is only the service to the patient itself that has been ‘nationalised’ – it is also true to say that what was once seen as impossible has now been normalised.

Income supports

On 16 March the government introduced the COVID-19 Pandemic Unemployment Scheme for those laid off as a result of the shutdown. By the end of March 2020 around 283,000 people were in receipt of this payment. Initially the rate was set at €203 per week, but after intense lobbying by the trade union movement it was increased to €350 per week for twelve weeks.

In addition the government raised illness benefit to the same rate and simplified the application criteria with a waiver on the normal six day waiting period and PRSI contribution qualification requirements – again on the insistence of trade unions.

The government also introduced the Temporary Covid-19 Wage Subsidy Scheme to enable employees, whose employers are affected by the pandemic, to receive income supports through their employers’ payroll system. It allows for a government subsidy payment of up to 70 percent of the normal net weekly wage, capped at €410. Employers are then free to top up this amount. It is designed to last for twelve weeks and as of 30 April 2020 there are over 427,400 people in receipt of the payment.

As of 30 April 2020 the unemployment rate in Ireland is 28.2 per cent. This does not include those on the Wage Subsidy Scheme. Youth unemployment (16-25 years) is at 34 per cent.

‘Flexibility’ on rent is not enough

Even with the additional measures, this sudden and unprecedented spike in job loss raises issues regarding involuntary costs that cannot be put off without consequences, such as rents, mortgages, loans, and utility bills. 

With regard to the rental sector, the government’s response has been limited to a three-month moratorium on rent increases and evictions. It has asked landlords to be ‘flexible’ with tenants under financial pressure, but has not set up any mechanism for a rent holiday or the writing-down of rent debt where needed during the crisis period. The moratorium will not stop evictions, only delay them.

The right of a landlord to evict a tenant for missed rent payments remains in place – in other words, no exception has been put in place as a result of the pandemic. Rent remains a ‘priority’ debt, fully enforceable by the law.

Utilities can disconnect households

In terms of utility services – in particular electricity, gas, broadband, and mobile phone networks – the government has kept in place all legal requirements for bill payments to be met or suffer credit rating penalties and/or discontinuance of service.

This is at a time of an unprecedented rise in unemployment and when people have been told – under threat of arrest – to stay in their homes save for essential trips and to exercise within a 2km radius of their residence. No additional measures or legally-backed flexibilities have been pursued.

During the financial crisis, ESB was used as cash cow by the government to part-fund its bailout of banks. This cannot be repeated. In terms of households and businesses, legislation is needed to ensure credit history is not affected by missed payments during the crisis and that no essential service is discontinued for affected households.

Personal debt

For those with mortgages, the government announced a set of measures that were a rehash of ones already in place. On 18 March the five main banks agreed to ‘defer legal proceedings and repossessions against borrowers in default and extend payment holidays to homeowners and businesses hit by the economic crisis sparked by Covid-19’ for a period of three months.

Such payment holidays are nothing new. The deferred payments are added to the total loan/mortgage when the ‘holiday’ is up, leading to higher monthly repayments. The Minister for Finance Paschal Donoghue said he expected the banks to waive interest for the three months but the banks declined to do so.

Outside of these measures the government fell back on moral suasion, with the Minister for Health Simon Harris asking the banks to show ‘compassion’ when it came to those made unemployed as a result of Covid-19. Given the history of banks in Ireland, however, that may be something of a lost cause.

Car loans account for 44 per cent (€3.1bn) of all regulated personal loans outstanding. Car loans under Personal Contract Plans, however, are unregulated and so the Central Bank of Ireland is unclear as to the size and/or depth of that market.

With over 600,000 people made unemployed because of Covid-19, and with no provisions in place to address this issue, it is clear that personal debt will be a significant concern after the lockdown – one that, unless it is dealt with, will significantly stifle attempts to restart the economy.

Dr Conor McCabe is a research associate with UCD Equality Studies Centre, and the author of Money (Cork University Press, 2018). Follow him on Twitter @CMacCaba.

Read the full report, Hope or Austerity: A Road Map for a Better Fairer Ireland After the Pandemic, published by Unite the Union here. Follow Unite on Twitter @UniteunionROI.

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