Will your lifestyle survive?...
THE GARDA and the Army have been refreshing their riot-control skills in recent times. Clearly, the fear is that the Irish might emulate their French and Greek counterparts and stage a peasants’ revolt. But even Opposition party members are taken aback by the “rather eerie silence” around the constituencies in the wake of the emergency Budget...
“The only flashpoint was the Pat Kenny show with Brian Lenihan,” says one Fine Gaeler. That programme featured a 51-year-old teacher on €63,000 who stood to lose €800-€900 a month. Although she might be considered better off than most, she claimed to understand “how people go home and hang themselves”.
The main sense was an absence of hope. Some households stood to lose a third of their income, yet there was no sign of economic stimulus. And what was it all for?
As Caroline, a mother of four, told The Irish Times : “It’s to pay for the smart gambles hatched in the Galway tent. And the only hope they can offer us is ‘if you think it’s hard now, wait till December’.” With “no obvious bugbear to coalesce around” – as one observer put it – the resulting search for a scapegoat has divided citizen from citizen: bitter eruptions between the already poor (those on benefit lamenting the Christmas bonus) and the new poor (the middle-paid on decimated incomes); a ratcheting-up of the battle between the public and the private sector; rising indignation against “foreigners” claiming benefit.
MEANWHILE, IRENE WINTERS , a Fine Gael councillor in Wicklow town, notes the swelling number of “asset-rich” self-employed (disqualified from benefits) reduced to living on food parcels left on the doorstep. “They are the new poor,” she says. “They can’t eat their bricks and mortar. A big part of the problem is that property values are so over-rated by estate agents and the banks, who can’t afford to reflect the worthlessness in the balance sheet. If people think it’s bad now, they really have no idea of what’s coming down the line.
“The first thing that has to happen is that the Department has to sit down and review how they do their assessments. We need a new system for the new poor.”
At every stratum of society, the sense of betrayal is acute. Amy and Robert are both 45, probably at their earnings peak on a joint income of more than €200,000 a year, with two children – one on a gap year and another in fifth year. Their mortgage has just been paid off, replaced by one for a holiday home down the country.
“We’ve both worked our butts off all our lives for what we have,” says Amy, “and now here we are, facing into a drop of about €35,000 a year, between pay cuts of 10 per cent and Budget hits. By the time our daughter goes to college in September 2010, it’s likely college fees will be back – and we will also be paying fees for our son.”
The original plan was to wind down when they both hit 50, to move out of Dublin and pursue other avenues. “But with the pay cuts, the levies and the possibility of more hits in the next five budgets, this plan is shattered. Our pension funds are shattered too, and a few investment properties we have for our retirement have devalued by up to 50 per cent. We felt we were well set up for early retirement and the future after all our years of hard work. After breaking our backs, this is what we’re left with.
“We know we’ll be fine, and it’s all relative, but we will be cutting back on the fancy weekends away, eating out at the drop of a hat and all that. We’ll be spending less in an effort to put away money for the college fees and retirement, given that the pensions will be so poor and the investment houses not worth what they were. And needless to say, we’ve already started shopping in Lidl and Aldi, when before we didn’t think twice about shopping for food in Marks and Sparks, Avoca or the local deli.”
Meanwhile, Caroline, a mother of four from Castleknock, Dublin, is reeling at the prospect of further inroads into her family’s income. “I was a civil servant; my husband is a guard. We’re a well-educated couple. I would always have felt we were middle-class; our aspirations were always middle-class. We planned to send our girls to Mount Sackville [a private secondary school near Phoenix Park].
“I would certainly have wanted them to go to college. I would never have thought of the swimming lessons and the music lessons and the Gaeltacht in the summer as luxuries – just part of a normal rounded education. But that’s all gone now. If one of our children goes to university, I’d be surprised.”
But they were “already poor”, she says, even at the height of the boom. “Even then, we qualified for the GP medical card, because our income was so low.” Their mistake four years ago was to buy “an ordinary four-bed semi” on the basis of two apparently stable salaries. But she had to leave work in the absence of affordable childcare, and rising interest rates sent a manageable mortgage of €800 a month ballooning to €1,500. In desperation, they opted for a fixed-interest deal. They are now trapped with monthly payments costing €300 more than the market. Release would incur a €6,540 penalty from EBS.
They survived by relentless cost-cutting. The child benefit goes towards the mortgage. Her husband’s salary goes into a Garda budgeting scheme, which deducts and pays the bills. This leaves them with €120 a week to feed and clothe a family of six. They run one car. Their one weekly pizza outing has stopped. She goes to Newry for the nappies and has learned to shop around for groceries, mainly in Lidl. There was a time when she donated to the St Vincent de Paul shop in Blanchardstown; she now gets her clothes there.
“We would have managed if my husband’s salary hadn’t been cut and cut and cut. If child benefit had been cut on Tuesday, we’d have been on our knees; it’s part of our income. I can’t bear to think about the new levies. Honestly, we would be better off now in a council house on the dole. When I was in the civil service, I worked in an area where the cleaners were always going off on weekend breaks and sun holidays and I wondered how they could do it. And then I realised it was because they all lived in council houses. I know how this sounds. I know nobody is going to feel sorry for me because of my aspirations for my children and because we’re both well-educated.
“I suppose what really grates is that we will not be a penny better off for having coped and worked hard all our lives. I’m only 38 and my aspirations are all gone. I feel the life has been sucked out of me. I’m passionate about doing the right thing, but what reward is there? People like us – the good little civil servant and the good little guard, the good little coping classes – have no voice. I feel like I’m screaming in a glass jar.”
IF CAROLINE STRUGGLES with what it now means to be “middle-class”, Ruth is unquestionably in that bracket. Ballet and piano lessons and private healthcare costing €2,000 a year are part of the family fabric. She is a mother of three, aged from 12 down to six, living in Co Wicklow with Peter, who pulls in a basic salary of €76,000. In a good year, bonuses can bring this to about €100,000. She has a part-time job as a school supervisor, which brings in another €5,000-€6,000 a year, and she also gets €535 a month in child benefit. They were lucky to get a “bargain” house for €459,000; a year later, a neighbour sold his for €725,000. Now the same houses are going for about €600,000, “so we’re not in negative equity yet”, she says cautiously. By any standard, Ruth and Peter should be in clover.
Yet, she says, they already work to a “very tight budget”. Their social life is “non-existent” and the annual “budget” holiday is looking “very, very unlikely” this year.
“We don’t go to the pub or go out for meals but we’re prepared for that to pay for extra things for the children. It’s giving them the opportunities that is the problem. The children’s allowance allows us to save for school uniforms, books, clothes and shoes. I’ve managed to cut the shopping bill from €200 a week to €130 by shopping mostly in Lidl and SuperValu. Together, diesel for the car and the shopping for the week are now down to €175. But then you have to take two children to the doctor and suddenly it’s €200 for the fees and antibiotics. My eldest is coming up to sixth class and I’m told that free dental care ends then, so that’s something else.”
For Ruth and Peter, the real problem is nervousness about the future. “We would be very reluctant to spend any money, such as on a summer holiday.” Theirs is exactly the bracket, she says, that will be crushed by last Tuesday’s Budget and by what lies ahead. In addition to the levies, which will probably take €5,000-€6,000 out of the household, the threat of higher tax rates, means-tested child benefit and probable loss of her part-time job – the only kind that allows her to accommodate her children’s timetables – will combine to “absolutely screw” them, she reckons.
“And this is only the beginning, we’re told. You could lie down and cry. There’s a sense that we have to keep pulling back. Life won’t be any fun. I know people will be reading this and saying ‘what have they to complain about?’, but it’s all relative. My husband really has to work very, very hard to maintain what we do have. We’re just peed off that in spite of all the hard work, we’re seeing less and less benefits.”
LIKE CAROLINE, SHE feels they were “lulled into a very false sense of security. I’ll be 40 later this year. We’ve had a very good standard of living. We think that’s normal. Our parents might say they had nothing and made do with a lot less, but back then the banks didn’t just hand out the money. Our parents weren’t able to get credit or loans. The banks were very happy to give us the money so to us it was normal. But I also blame the government. I do think that during Bertie Ahern’s tenure, things were starting to crumble well before we realised and they should have seen it coming. As a nation, I think we’ve been ignorant; we should have been stopping to think for ourselves. I feel, in our case, we should have been more careful and saved more. But it will be the middle classes who will pay for it all in the end.”
EVERYTHING IS RELATIVE, of course. All of these women are quick to acknowledge that. In Waterford, Jim, a 45-year-old father of one, working in manufacturing, is on short-time work – one week in four is on the dole, when his weekly gross of more than €700 comes down to €200 – and also has a fixed-interest mortgage for a house bought six years ago, “before the madness, but still mad”. His lender, KBC, is demanding a fee of €8,000 to release him from the fixed term. The planned summer holiday to Lanzarote has been cancelled. The car – a two-year old Honda when he bought it – will be kept for another five. His wife works a part-time job and is “brilliant” at money management, “but we are definitely struggling as a family. We know that consultants have been called into the factory and the job is not secure. We used to shop at Superquinn – they’re Irish – but now it’s Aldi and Lidl. And I don’t like them, the stuff is thrown at you – but it is cheap. We go to the butcher’s for meat. We used to get a Chinese takeaway twice a week; we got one meal yesterday and shared it. We might have gone out for Sunday lunch – that’s all cut out now. A full [satellite] package with Sky that was costing €100 a month, I’ve brought down to half. Before, we might have gone for weekends away to Dublin or Cork every few months but that’s gone too.”
Jim has no doubt that people went “a bit mad borrowing” in the good times. “It had to be the latest plasma, or CD or dishwasher. People were changing things for the sake of it, getting the house painted – things you certainly wouldn’t be doing now – and went into debt for it. The Credit Union was brilliant but I think they make it too easy; you just ring up for the loan and it’ll be there for you. And I see they’re still advertising loans ‘for your special occasions’ – like Communions and Confirmations. I think that’s a bit of a disgrace.”
His experience is echoed by Tracey from Ballyfermot, a qualified chef married to a warehouse worker, with three children, on a joint income of about €65,000 a year and a 30-year mortgage of €165,000. Between them, last Tuesday will probably cost them at least 2,000 a year. Their jobs are not secure. They may be facing a wage cut. They are already anticipating the effect of restored college fees on their teenage daughter, and the probable fall-out of means-tested child benefit. The days of rambling around Liffey Valley shopping centre, buying a few children’s outfits, going to the cinema every week followed by a Big Mac are over for Tracey and her family. “Now you’re watching everything. It looks to me like if you’re not on a good wage, you might be better off not working. I’ve always worked and I like to work, but a lot of people are saying that if you’re out of a job you get half the mortgage paid for, a fuel allowance, a bin-charge waiver, a back-to-school allowance. Where’s the incentive to work hard? I know we’re very lucky. We both still have jobs. But then you hear that fellow on the TV talking about having ‘only two million a year’ to live on.” As they say, everything is relative.
Woe by numbers
- 50 per cent Reduction to jobseeker’s allowance for under 20s, bringing it to €100 a week.
- 100 per cent Increase in the income levy, bringing the new rates to 2 per cent, 4 per cent and 6 per cent, with the new entry points reduced to €15,028, €75,036 and €174,980.
- 25 cent Increase in the price of 20 cigarettes.
- 50 per cent Reduction to the monthly early childcare supplement from May 1st, with the payment to be abolished entirely at the end of the year.
- 100 per cent Increase in the health levy rates, bringing them to 4 per cent and 5 per cent.
Report by KATHY SHERIDAN - Irish Times.
THE GARDA and the Army have been refreshing their riot-control skills in recent times. Clearly, the fear is that the Irish might emulate their French and Greek counterparts and stage a peasants’ revolt. But even Opposition party members are taken aback by the “rather eerie silence” around the constituencies in the wake of the emergency Budget...
“The only flashpoint was the Pat Kenny show with Brian Lenihan,” says one Fine Gaeler. That programme featured a 51-year-old teacher on €63,000 who stood to lose €800-€900 a month. Although she might be considered better off than most, she claimed to understand “how people go home and hang themselves”.
The main sense was an absence of hope. Some households stood to lose a third of their income, yet there was no sign of economic stimulus. And what was it all for?
As Caroline, a mother of four, told The Irish Times : “It’s to pay for the smart gambles hatched in the Galway tent. And the only hope they can offer us is ‘if you think it’s hard now, wait till December’.” With “no obvious bugbear to coalesce around” – as one observer put it – the resulting search for a scapegoat has divided citizen from citizen: bitter eruptions between the already poor (those on benefit lamenting the Christmas bonus) and the new poor (the middle-paid on decimated incomes); a ratcheting-up of the battle between the public and the private sector; rising indignation against “foreigners” claiming benefit.
MEANWHILE, IRENE WINTERS , a Fine Gael councillor in Wicklow town, notes the swelling number of “asset-rich” self-employed (disqualified from benefits) reduced to living on food parcels left on the doorstep. “They are the new poor,” she says. “They can’t eat their bricks and mortar. A big part of the problem is that property values are so over-rated by estate agents and the banks, who can’t afford to reflect the worthlessness in the balance sheet. If people think it’s bad now, they really have no idea of what’s coming down the line.
“The first thing that has to happen is that the Department has to sit down and review how they do their assessments. We need a new system for the new poor.”
At every stratum of society, the sense of betrayal is acute. Amy and Robert are both 45, probably at their earnings peak on a joint income of more than €200,000 a year, with two children – one on a gap year and another in fifth year. Their mortgage has just been paid off, replaced by one for a holiday home down the country.
“We’ve both worked our butts off all our lives for what we have,” says Amy, “and now here we are, facing into a drop of about €35,000 a year, between pay cuts of 10 per cent and Budget hits. By the time our daughter goes to college in September 2010, it’s likely college fees will be back – and we will also be paying fees for our son.”
The original plan was to wind down when they both hit 50, to move out of Dublin and pursue other avenues. “But with the pay cuts, the levies and the possibility of more hits in the next five budgets, this plan is shattered. Our pension funds are shattered too, and a few investment properties we have for our retirement have devalued by up to 50 per cent. We felt we were well set up for early retirement and the future after all our years of hard work. After breaking our backs, this is what we’re left with.
“We know we’ll be fine, and it’s all relative, but we will be cutting back on the fancy weekends away, eating out at the drop of a hat and all that. We’ll be spending less in an effort to put away money for the college fees and retirement, given that the pensions will be so poor and the investment houses not worth what they were. And needless to say, we’ve already started shopping in Lidl and Aldi, when before we didn’t think twice about shopping for food in Marks and Sparks, Avoca or the local deli.”
Meanwhile, Caroline, a mother of four from Castleknock, Dublin, is reeling at the prospect of further inroads into her family’s income. “I was a civil servant; my husband is a guard. We’re a well-educated couple. I would always have felt we were middle-class; our aspirations were always middle-class. We planned to send our girls to Mount Sackville [a private secondary school near Phoenix Park].
“I would certainly have wanted them to go to college. I would never have thought of the swimming lessons and the music lessons and the Gaeltacht in the summer as luxuries – just part of a normal rounded education. But that’s all gone now. If one of our children goes to university, I’d be surprised.”
But they were “already poor”, she says, even at the height of the boom. “Even then, we qualified for the GP medical card, because our income was so low.” Their mistake four years ago was to buy “an ordinary four-bed semi” on the basis of two apparently stable salaries. But she had to leave work in the absence of affordable childcare, and rising interest rates sent a manageable mortgage of €800 a month ballooning to €1,500. In desperation, they opted for a fixed-interest deal. They are now trapped with monthly payments costing €300 more than the market. Release would incur a €6,540 penalty from EBS.
They survived by relentless cost-cutting. The child benefit goes towards the mortgage. Her husband’s salary goes into a Garda budgeting scheme, which deducts and pays the bills. This leaves them with €120 a week to feed and clothe a family of six. They run one car. Their one weekly pizza outing has stopped. She goes to Newry for the nappies and has learned to shop around for groceries, mainly in Lidl. There was a time when she donated to the St Vincent de Paul shop in Blanchardstown; she now gets her clothes there.
“We would have managed if my husband’s salary hadn’t been cut and cut and cut. If child benefit had been cut on Tuesday, we’d have been on our knees; it’s part of our income. I can’t bear to think about the new levies. Honestly, we would be better off now in a council house on the dole. When I was in the civil service, I worked in an area where the cleaners were always going off on weekend breaks and sun holidays and I wondered how they could do it. And then I realised it was because they all lived in council houses. I know how this sounds. I know nobody is going to feel sorry for me because of my aspirations for my children and because we’re both well-educated.
“I suppose what really grates is that we will not be a penny better off for having coped and worked hard all our lives. I’m only 38 and my aspirations are all gone. I feel the life has been sucked out of me. I’m passionate about doing the right thing, but what reward is there? People like us – the good little civil servant and the good little guard, the good little coping classes – have no voice. I feel like I’m screaming in a glass jar.”
IF CAROLINE STRUGGLES with what it now means to be “middle-class”, Ruth is unquestionably in that bracket. Ballet and piano lessons and private healthcare costing €2,000 a year are part of the family fabric. She is a mother of three, aged from 12 down to six, living in Co Wicklow with Peter, who pulls in a basic salary of €76,000. In a good year, bonuses can bring this to about €100,000. She has a part-time job as a school supervisor, which brings in another €5,000-€6,000 a year, and she also gets €535 a month in child benefit. They were lucky to get a “bargain” house for €459,000; a year later, a neighbour sold his for €725,000. Now the same houses are going for about €600,000, “so we’re not in negative equity yet”, she says cautiously. By any standard, Ruth and Peter should be in clover.
Yet, she says, they already work to a “very tight budget”. Their social life is “non-existent” and the annual “budget” holiday is looking “very, very unlikely” this year.
“We don’t go to the pub or go out for meals but we’re prepared for that to pay for extra things for the children. It’s giving them the opportunities that is the problem. The children’s allowance allows us to save for school uniforms, books, clothes and shoes. I’ve managed to cut the shopping bill from €200 a week to €130 by shopping mostly in Lidl and SuperValu. Together, diesel for the car and the shopping for the week are now down to €175. But then you have to take two children to the doctor and suddenly it’s €200 for the fees and antibiotics. My eldest is coming up to sixth class and I’m told that free dental care ends then, so that’s something else.”
For Ruth and Peter, the real problem is nervousness about the future. “We would be very reluctant to spend any money, such as on a summer holiday.” Theirs is exactly the bracket, she says, that will be crushed by last Tuesday’s Budget and by what lies ahead. In addition to the levies, which will probably take €5,000-€6,000 out of the household, the threat of higher tax rates, means-tested child benefit and probable loss of her part-time job – the only kind that allows her to accommodate her children’s timetables – will combine to “absolutely screw” them, she reckons.
“And this is only the beginning, we’re told. You could lie down and cry. There’s a sense that we have to keep pulling back. Life won’t be any fun. I know people will be reading this and saying ‘what have they to complain about?’, but it’s all relative. My husband really has to work very, very hard to maintain what we do have. We’re just peed off that in spite of all the hard work, we’re seeing less and less benefits.”
LIKE CAROLINE, SHE feels they were “lulled into a very false sense of security. I’ll be 40 later this year. We’ve had a very good standard of living. We think that’s normal. Our parents might say they had nothing and made do with a lot less, but back then the banks didn’t just hand out the money. Our parents weren’t able to get credit or loans. The banks were very happy to give us the money so to us it was normal. But I also blame the government. I do think that during Bertie Ahern’s tenure, things were starting to crumble well before we realised and they should have seen it coming. As a nation, I think we’ve been ignorant; we should have been stopping to think for ourselves. I feel, in our case, we should have been more careful and saved more. But it will be the middle classes who will pay for it all in the end.”
EVERYTHING IS RELATIVE, of course. All of these women are quick to acknowledge that. In Waterford, Jim, a 45-year-old father of one, working in manufacturing, is on short-time work – one week in four is on the dole, when his weekly gross of more than €700 comes down to €200 – and also has a fixed-interest mortgage for a house bought six years ago, “before the madness, but still mad”. His lender, KBC, is demanding a fee of €8,000 to release him from the fixed term. The planned summer holiday to Lanzarote has been cancelled. The car – a two-year old Honda when he bought it – will be kept for another five. His wife works a part-time job and is “brilliant” at money management, “but we are definitely struggling as a family. We know that consultants have been called into the factory and the job is not secure. We used to shop at Superquinn – they’re Irish – but now it’s Aldi and Lidl. And I don’t like them, the stuff is thrown at you – but it is cheap. We go to the butcher’s for meat. We used to get a Chinese takeaway twice a week; we got one meal yesterday and shared it. We might have gone out for Sunday lunch – that’s all cut out now. A full [satellite] package with Sky that was costing €100 a month, I’ve brought down to half. Before, we might have gone for weekends away to Dublin or Cork every few months but that’s gone too.”
Jim has no doubt that people went “a bit mad borrowing” in the good times. “It had to be the latest plasma, or CD or dishwasher. People were changing things for the sake of it, getting the house painted – things you certainly wouldn’t be doing now – and went into debt for it. The Credit Union was brilliant but I think they make it too easy; you just ring up for the loan and it’ll be there for you. And I see they’re still advertising loans ‘for your special occasions’ – like Communions and Confirmations. I think that’s a bit of a disgrace.”
His experience is echoed by Tracey from Ballyfermot, a qualified chef married to a warehouse worker, with three children, on a joint income of about €65,000 a year and a 30-year mortgage of €165,000. Between them, last Tuesday will probably cost them at least 2,000 a year. Their jobs are not secure. They may be facing a wage cut. They are already anticipating the effect of restored college fees on their teenage daughter, and the probable fall-out of means-tested child benefit. The days of rambling around Liffey Valley shopping centre, buying a few children’s outfits, going to the cinema every week followed by a Big Mac are over for Tracey and her family. “Now you’re watching everything. It looks to me like if you’re not on a good wage, you might be better off not working. I’ve always worked and I like to work, but a lot of people are saying that if you’re out of a job you get half the mortgage paid for, a fuel allowance, a bin-charge waiver, a back-to-school allowance. Where’s the incentive to work hard? I know we’re very lucky. We both still have jobs. But then you hear that fellow on the TV talking about having ‘only two million a year’ to live on.” As they say, everything is relative.
Woe by numbers
- 50 per cent Reduction to jobseeker’s allowance for under 20s, bringing it to €100 a week.
- 100 per cent Increase in the income levy, bringing the new rates to 2 per cent, 4 per cent and 6 per cent, with the new entry points reduced to €15,028, €75,036 and €174,980.
- 25 cent Increase in the price of 20 cigarettes.
- 50 per cent Reduction to the monthly early childcare supplement from May 1st, with the payment to be abolished entirely at the end of the year.
- 100 per cent Increase in the health levy rates, bringing them to 4 per cent and 5 per cent.
Report by KATHY SHERIDAN - Irish Times.