LAST UPDATE | 3 Feb 2022
THE CABINET SUB Committee on economic recovery will meet next week to discuss the rising cost of living in Ireland.
A “suite of measures” are currently under consideration include increasing the energy credit of €100 which is due to be issued in March, increasing the tax-free bonus amount an employer can give an employee from €500 to €1,000 annually, and expanding the fuel allowance season.
While there were indications that VAT reductions on energy, food and fuel might be considered, it is believed that government are fearful that if brought it in would be difficult to reverse again.
Government sources pointed to how the State finances were buttressed in 2021 by a record €68.4 billion tax take that exceeded expectations, stating that “it has to be the case to return that to the punter”.
Increasing the energy credit is seen as one of the “best” and “cleanest” options for the government.
At parliamentary party meetings last night, the leaders of Fianna Fáil and Fine Gael said the government needs to examine measures to tackle the rising cost of living.
This afternoon, during Leaders’ Questions in the Dáil, Varadkar said the economic Cabinet committee will discuss the issue next week.
“We’ll make a decision on it and we’ll make it soon, certainly in the next couple of weeks, because we do acknowledge that the cost of living is rising,” the Tánaiste said.
We acknowledge that it’s causing a huge squeeze for a lot of families and that as a government we have to do something about it, and we’re aware that other governments in other parts of the world have taken action and we believe we must do so as well.
“When the budget was prepared back in September, October, the estimates for inflation were 2-3% and we built the budget on that basis, but that was not the case,” he said.
“It turns out inflation has been much higher, around 5%, and rather than being a temporary phenomenon, it looks like we may be stuck with higher inflation for a longer period than we would have anticipated.”
Sinn Féin TD Pearse Doherty said that the “Irish people deserve a government that understands the difficulties that they’re facing”.
“Not all households will feel the cost of living increase equally. We know from the CSO that the poorest households spend three times more of their income on heating and lighting their homes than the richest households, that those in the middle spend twice as much as those at the higher end.”
Doherty called for a 5% increase in key social welfare payments and for the fuel allowance season to be extended by two weeks and for the eligibility criteria to be expanded so more people can avail of it.
Parliamentary party meetings
At a meeting of Fine Gael’s parliamentary party last night, Varadkar said the cost of living must be reduced and work is underway to look at potentially reducing some government fees and charges.
He said the €210 million energy rebate scheme (€100 credit for 2.1 million domestic electricity customers) was not enough.
Rising living costs were also addressed at Fianna Fáil’s parliamentary party meeting last night where Taoiseach Micheál Martin said he is conscious of the impact of the cost of living and how much of it is energy related.
Martin told TDs and senators that it’s important to protect the disposable income of workers and families.
The Taoiseach said a range of measures are being examined, including government charges to enable people to cope with the cost of living increases and to protect people’s disposable incomes during this difficult time.
Government will also announce progress on retrofitting with proposals next week to address the need to make it affordable.
The Fianna Fáil meeting was also told that Sinn Féin are hardening their strategy to attack the government.
Consumer prices were 5.5% higher in Decemberthan they were the year before, the largest annual change in prices recorded since 2001.
Data from across Europe also found that consumer price inflation soared to a new record high in January.
Additional reporting by Christina Finn and Lauren Boland
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