WE ARE IN the grip of a cost of living crisis. Every household is feeling the squeeze as their incomes are stretched by rising prices. According to the latest Economic Pulse report by Bank of Ireland, one-third of households are now ‘just making ends meet’.
Faced with rising energy bills, growing food costs and crippling rents, many are struggling to make it to the end of the week. Most are seeing their living standards fall.
Last month inflation reached its highest level in nearly four decades at 8.3 per cent – and it is set to rise even further.
Emergency budget
Today, Sinn Féin will bring a motion to the Dáil calling for the introduction of an emergency budget to provide immediate support to lower and middle-income households.
For months, the Government has resisted and dismissed consistent demands for a package of measures to support households. Instead, they have insisted that workers and families should wait. This approach is wrong and incoherent. We need to understand what is causing inflation and what isn’t.
And we need the Government to understand the level of hardship that so many are already feeling. We cannot allow more households to fall into energy poverty and financial distress.
What is causing inflation and who does it hurt most?
Prices are rising at the fastest rate in four decades. But what is causing it and what isn’t?
This is crucial if we are to understand why households are suffering and how Government can and should respond.
We know that the illegal invasion of Ukraine has led to a sharp increase in energy and food prices. But rising prices have been with us since last year – when inflation reached 5.7 per cent in December. This was due primarily to energy price shocks and supply chain bottlenecks as the world emerged from the pandemic. None of this has been caused by the purchasing power of lower and middle-income households.
Today, increases in the price of energy and food make up almost half of inflation. Allowing households to plunge into poverty and hardship will not create more energy or grow more food. We can respond to some of the underlying causes – by reducing rents, for example, and then freezing them. By cutting the cost of childcare and giving more people the opportunity to work. And securing our energy supply.
And at this time of great hardship for so many, we must support households that are struggling in the face of a cost of living crisis. Inflation impacts everyone, but not equally, with those on low and middle incomes hit hardest. Lower-income households spend a higher proportion of their income on food and energy than those at the top.
Who is it hitting?
In January, I wrote to the Central Statistics Office (CSO) asking that the agency provide a breakdown of the impact of inflation by income and across different household categories. In June the CSO found that inflation was higher for low-income and rural households, lone-parent families and renters.
This underlines the need for targeted measures that support those suffering most under the strain of this cost of living crisis – action that has not been taken. Many households have been struggling for the past year. Others, faced with low pay and incomes, have been struggling for much longer.
The Government has a moral duty to support those facing hardship, especially the most vulnerable.
For months, Sinn Féin has called for an emergency budget with measures to ease the burden so many are facing at this time. Last year, energy providers announced 35 separate price hikes with big suppliers announcing further hikes this year.
Households who use home heating oil have seen its price more than double in the past 12 months. At the same time, the price of petrol and diesel has soared with many having no option but to travel by car to go to work, visit sick relatives and bring their children to school.
As these prices have risen, the tax take the State brings in through VAT has also increased. On Budget day last year, the Government was expected to spend €8.3 billion more than it would bring in through revenue. The ESRI now expects the Government to run a surplus of nearly €2 billion this year – taking in more in revenue than it will spend.
This is in part due to the impact of inflation. The Government is therefore in a strong position to act and support workers and families today. Many, such as the Central Bank and the Budget Watchdog, have echoed this fact.
Emergency budget for a time of crisis
Today, we will bring a motion to do the Dáil calling on the Government to bring forward an emergency budget with measures that will provide relief against mounting costs and rising prices.
To support lower and middle-income households with cost-of-living cash payments. To protect the most vulnerable and increase social welfare rates in response to inflation. To increase the minimum wage and increase pension payments for pension households. And as fuel costs soar, to cut the price of petrol and diesel at the pump and the price of home heating oil by reducing the rate of excise duty to the minimum level possible. To cut childcare fees by a third and, for those crippled by rising rents, putting one month’s rent back in renters’ pockets through a refundable tax credit and banning further rent increases.
These are measures that could be introduced and which the Government is in a good position to deliver. These measures are affordable. They are a common-sense response to the crisis households face.
For too long, the Government has told struggling citizens to wait but workers and families cannot afford to wait. Already, the number of families using food banks has tripled while Saint Vincent de Paul has received 78,000 calls for help so far this year – a 20 per cent jump from last year.
A report published this month found that nearly one in three households is now experiencing energy poverty. As so many now struggle to make ends meet, the time to act is now.
Pearse Doherty is a Donegal TD and Sinn Féin spokesperson on Finance.
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