Budget 2026 has been presented as a social budget, with a long list of measures aimed at families, pensioners, persons with disability and low- to middle-income households. Beyond the speeches and figures, however, the key question remains whether people will actually feel a difference in their daily lives. This article looks at what has been announced, how it is likely to affect people, and what still needs to change if we truly want a fair and resilient welfare state.
On the cost of living, the budget offers a Cost of Living Adjustment of around €5 per week for all workers and pensioners, together with the continuation of the additional cost-of-living mechanism that targets tens of thousands of low- and middle-income households. These are accompanied by increases in the supplementary allowance and improvements in sickness and unemployment benefits, so that someone who falls ill or loses their job has a somewhat stronger safety net than before.
For families with children, the budget builds on existing pillars such as free childcare, breakfast clubs and free school transport, but goes further in three main directions. There is a reform of income tax for parents who both work and have children, gradually improving their tax bands over the coming years. There are increases in the Children's Allowance for low- and middle-income families, particularly those below a specified income threshold. And there is a new allowance for children in post-secondary education, paid in addition to existing stipends, easing the burden on parents supporting teenagers and young adults in further study. Symbolically important is also the "donation of leave" scheme in the public service, through which colleagues can donate some of their own leave so that new parents can spend more paid time with their newborn.
In the field of pensions, the budget grants a €10 per week increase to pensions on top of the COLA. Widows and widowers, especially those still raising children, see additional improvements. There is an effort at historical justice for those born before 1962 whose pensions have traditionally lagged behind those of later cohorts. On the tax side, a larger share of pension income, including bonuses, becomes exempt from income tax, even when pensioners remain in work. The way income is calculated for people in residential homes is made more equitable, and the annual grant for those aged 75 and over who live in their own home or in private homes is increased, recognising the extra costs that ageing at home brings.
Persons with disability and their carers are also given greater attention. The budget raises rates of assistance for severe disability and improves carers' allowances. The Carer's Grant is increased and extended to non-working parents of children with severe disability. Families can obtain higher refunds for therapy for children with disability, with the age of eligibility extended into early adulthood, acknowledging that support is needed beyond childhood. The invalidity pension is strengthened so that those with the highest level of disability, including cancer patients, receive an amount linked to the two-thirds pension rather than the minimum wage. A new partial invalidity pension for severe mental health conditions such as bipolar disorder and psychotic depression recognises that people with psychiatric illnesses face particular barriers to full-time work and deserve tailored support.
On housing, the budget pledges more investment in social and affordable units, including projects offering rents around 30% below market levels, and the continuation and strengthening of rent-assistance schemes in which the state leases property from the private sector to house vulnerable families. The existing grant of €1,000 per year for ten years for first-time buyers is retained, offering some help to those stepping onto the property ladder for the first time in a difficult market.
Community care, ageing and mental health are also present. Schemes such as Home Helper of Your Choice and Carer at Home see higher rates, while more support services and medical equipment in people's homes are promised, especially for those with dementia and chronic conditions. In education, the Budget speaks of stronger school-community programmes, a national strategy on educator wellbeing and targeted interventions for children and young people's mental health, including initiatives in Gozo. These measures recognise that wellbeing is shaped as much in classrooms, families and neighbourhoods as in clinics and hospitals.
Taken together, these measures should provide more security and some extra breathing space for many households. Families with modest incomes will find it slightly easier to cope with food bills, school expenses and basic utilities. Elderly people may feel they can live with more dignity rather than constantly cutting back. Families of persons with disability may feel less alone with the financial burden. Some of those in precarious housing situations will be helped to keep a roof over their head.
Yet it is equally clear that the benefits will not be felt equally by everyone. Households just above eligibility thresholds, renters facing very high private rents, people in insecure employment and those who are simply unaware of their entitlements may still find themselves struggling. We must keep on working so that no-one falls through the cracks.
If we are serious about social justice, we therefore need to go further. Access to information and support must be much simpler and more user-friendly, with clear communication, community-based "one-stop shops" and practical help with applications. We must identify and target the gaps, especially among precarious workers, high-rent tenants, people without family support and vulnerable migrants. We need to shift more of our effort into prevention, with early programmes in families and schools on mental health, work-family fit and life skills, and broader access to mental health first aid and community services. And we must align benefit levels more systematically with real living costs, not just headline inflation.
Budget 2026 unquestionably contains many steps in the right direction. The challenge now is to ensure that what is promised on paper is actually felt in people's lives - and that the voices of those who are still falling behind guide the next wave of reform.
Dr Katya De Giovanni is a warranted Organisational Psychologist and Member of Parliament