The Department of Social and Family Affairs is in talks with Eircom in an attempt to persuade the firm not to hike charges for pensioners and welfare recipients, writes Jamie Smyth, Technology Reporter

The telecoms company will also face pressure from lobby groups representing the elderly, many of whom do not even know that the price of the Social Benefit Scheme is due to rise shortly.

The cost of Eircom's scheme, which has 300,000 participants, is set to increase by €1.74 to €26.44 per month from February 4th. The increase is one of a range of price hikes that were announced this week.

The scheme enables people who qualify for a Government telephone allowance to pay a set monthly fee, which covers the rental of a line and calls worth €2.21 excluding VAT.

The Department is concerned because, for the first time, Eircom's Social Benefit Scheme tariff will be higher than the related Government allowance worth €24.70 per month.

The proposed new tariff will mean that pensioners and welfare recipients on Eircom's Social Benefit Scheme will now have to pay the difference of €1.74 per month themselves.

Details of the price hike for pensioners and welfare recipients has largely been overshadowed by the furore caused by Eircom's decision to increase line rental for the third time in a year.

Yesterday it emerged that the Commission for Communications Regulation (ComReg) would review line rental prices in Ireland as part of an ongoing market review. This process will be completed later this year.

But a ComReg spokesman said the Social Benefit Scheme was primarily an issue between Eircom and the Department of Social and Community Affairs.

A spokeswoman for the Department said last night it was talking to Eircom about the proposed fee increase in an effort to get the company to change its mind.

She said the Department was also meeting ComReg next week to discuss issues related to the benefit scheme.

The Department is planning to allow members of the Social Benefit Scheme to use their Government subsidy towards the cost of using a mobile rather than using Eircom's benefit scheme.

This decision could have major implications for Eircom as it netted €84.1 million in charges from members of its Social Benefit Scheme in the nine months to the end of September 2003.

A Vodafone spokeswoman said last night that the firm would welcome the opportunity of offering people who receive the telephone allowance scheme a cost-effective mobile service.

Meanwhile, Age Action Ireland, a pressure group representing elderly people, called on Eircom last night to put its proposed increase in fees on hold.

"For anybody living on a fixed income, such as pensioners, even a small increase in charges every month can cause huge difficulty for them," said Mr Paul Murray, head of media relations.

"Even €1 per month makes a difference."

Statistics compiled by Age Action Ireland show that in 1997 some 24 per cent of pensioners lived below the poverty line. Just three years later that figure had increased to 43 per cent.

Mr David McRedmond, commercial director of Eircom, said that the firm would work with the Department on the issue.

"This hasn't been a problem in the past, we will work with the Department to make sure that this isn't going to be a problem."