Ireland is following Europe’s lead as a package to drive up household costs will be unveiled today

The COST OF LIVING package to be announced today will include targeted aid – as well as a “universal benefit” for all households, according to Tánaiste Leo Varadkar.

Speaking at an event at Trinity College yesterday, he said the cost of living was fast becoming the ‘burning issue’ for the public, and they were feeling the impact of rising inflation in their weekly store, their energy bills and their fuel costs.

The government “must respond”, Varadkar said, indicating that following a meeting of the economic sub-cabinet committee later today, an announcement of the new “one-off” measures will be announced this evening.

“It’s important to recognize that middle-income people – people who, on paper, may have an average salary of €40-50,000 – also struggle to pay the bills as they often have to pay mortgages, childcare children, all those things,” Varadkar said. .

It is also important that there is a targeted element, as people on fixed incomes and welfare are the hardest hit by increases in fuel prices.

Released this morning, a new poll by Red C – conducted on behalf of the Society of Saint Vincent De Paul – reveals how households are struggling to cope with the continuing spike in inflation.

Some 37% of respondents said they had reduced their essential heating and electricity consumption and 17% said they had reduced other essentials such as food.

Meanwhile, 48% of unemployed respondents said they had already cut essential heating and electricity, along with 37% of single parents.

“The cost of living is going up and people are really feeling it,” Varadkar said.

They see it in the cost of groceries, filling a tank of diesel, and especially electricity and gas bills.

It increases by about 5% per year. Depending on your individual experience, however, it may seem much higher than that.

Inflation could be a feature of life in Ireland, Europe and around the world for years to come, so we need an anti-inflationary strategy that is not just about treating the symptoms.

Varadkar said the cost of living is the number one issue raised by his own constituents right now, adding that some people are feeling the impact more than others.

Although he said there will be a “universal” element to some of the measures, the Tánaiste said targeted measures are needed for the “hardest hit”, which he says is the “right approach “.

Finance Minister Paschal Donohoe said the government was “very aware” of the pressures people are facing, adding that a decision will be made today that will “address” the “real issues”.

He said he would respond “in a meaningful way” and not in a way “that would make matters worse”.

Energy credit

There has been a lot of speculation about what the package of measures will be, but the planned electricity credit of €100 is likely to be increased, it is understood. Customers should begin to see the impact of this credit at the end of next month.

Major changes to taxation or welfare rates are unlikely to be part of the government’s announcement today, with the focus instead on energy costs and fees charged for utility services. the state in the fields of health, transport and education.

Although there has been speculation that the energy credit could be doubled, sources who spoke to this website felt that, as it could cost around 200 million euros, it could be a step too away – instead a rise to €150 could be on the cards, but nothing can be ruled out at this stage.

A credit increase of €100 is seen as the most obvious and “cleanest” measure to deal with soaring prices.

Europe

There has been a trend of these kinds of actions being taken by the governments of some of our closest neighboring states. Politicians across Europe have been under intense pressure to deal with soaring costs of living this winter.

Most of their efforts have been aimed at tackling rising household electricity and heating bills and the Irish government is likely to follow suit.

Another measure likely to be announced today is the extension of the fuel allowance season until April this year – with changes to the criteria to allow more people to take advantage.

While many members of the public may see the rising cost of petrol and diesel as one of the main issues, it is believed that there will be no action to tackle the level of excise duty applied to fuels.

A source stressed that such a measure would not be acceptable to the Green Party, adding that there would be “no point in having this argument”.

In an effort to alleviate the burden on drivers to some extent, things like a reduction in vehicle taxes could be considered.

Environment Minister and leader of the Greens, Eamon Ryan, only recently managed to secure a reduction in some public transport charges, with sources saying further cuts may be announced.

Many of the measures taken today are expected to be ad hoc in nature, with the government keen to convey that they are emergency measures and are likely to be rolled back when inflation subsides.

A change to the rules allowing employers to give employees a tax-free bonus of up to €1,000 a year is also proposed, as is a suggestion to reduce fees for passports and driving licenses.

A global problem

Speaking yesterday, Varadkar was keen to stress that inflation is a global problem and just isolated to Ireland.

In an attempt to insulate households from a sharp rise in costs, most European interventions in recent months have aimed to cushion the blow of rising energy and heating bills.

As part of the EU’s suggested toolkit to tackle the rising cost of energy, she suggested that emergency income support for energy-poor consumers, for example through vouchers or part-payments of bills, may be permitted.

The EU also said member states could allow temporary deferrals of bill payments.

Higher bills have been the main symptom of the current energy crisis in Europe, mainly triggered by soaring wholesale natural gas prices, making it more expensive for power companies to generate electricity.

Electricity providers in turn pass these costs on to Irish and European consumers in the form of higher household bills.

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Prices for crude oil and therefore petrol and diesel have also risen sharply over the past year as cars, buses and trucks have returned to European roads after long periods of lockdown in 2021.

Heating oil prices also jumped during the winter months.

Overall prices for energy products in the eurozone rose nearly 30% year-on-year last month, according to the latest figures from Eurostat, the EU’s official statistical agency.

France and United Kingdom

With elections looming in April, French President Emmanuel Macron last month vowed to cap energy price increases at 4% a year and ordered French energy giant EDF to sell nuclear energy to its rivals at reduced rates.

But EDF is 80% owned by the state. This gives the French government more leeway to intervene on prices than would be the case in Ireland where electricity supply is privatised.

In the UK, where the energy market is also deregulated, the impact of the price cap introduced in 2019 led to the collapse of a number of energy suppliers in the latter part of 2021.

Unable to cope with skyrocketing wholesale costs and adjust their prices accordingly, several large energy retailers closed their doors. But the price cap is expected to rise 54% in April and household bills are expected to follow.

Prime Minister Boris Johnson’s government has announced a package of measures – including a £200 bill rebate that must be paid back over five years – to address the problem.

Mary I. Bruner