Have cost-of-living measures finally been announced by Cabinet?
After weeks of negotiations, hints, leaks and attempts to temper expectations, the Government confirmed details of a €1.3-billion cost-of-living package that includes bonus welfare payments, supports for businesses and some respite from higher taxes.
Sounds good, what’s in it for me?
That depends. If you are not in receipt of social welfare payments, don’t have young children and don’t work in the hospitality sector or drive a car, you probably won’t see that much by way of extra money in your pocket.
What do you mean when you say ‘that much’?
Well, you’re getting nothing, really.
Nothing?
There’s precious little on the table for many people. The Government, obviously anticipating some negativity on that score, had answers ready. When asked what the cost-of-living measures did for people earning middle (and high) incomes, Taoiseach Leo Varadkar pointed to recent pay rises for public servants, tax cuts, the rent credit and an increase in the minimum wage. He also said deferred and phased restoration of excise rates on petrol and diesel and VAT on the hospitality sector were measures that would “benefit everybody”.
Are you in a mortgage switching sweet spot? If so, you could save thousands
New health insurance company backed by Aviva claims it can offer ‘meaningful savings’
Election 2024 poll: Support for Independents jumps but Fine Gael remains most popular party
Hybrid working gains made during pandemic must be protected, Fórsa election document says
So where is the spending going?
The Government is targeting sectors of society that are struggling the most. While few people have escaped the impact of rising prices, people on the lowest incomes have been disproportionately hit.
Can you break the measures down for me?
Carers, pensioners, lone parents, disabled people and other recipients of weekly welfare payments will get a once-off bonus payment of €200 in April while child benefit will be topped up on a once-off basis of €100 per child in June.
Anything else?
The lowered VAT rate of 9 per cent for the hospitality sector is being extended until August while lowered rates of excise duty on motor fuels will be increased, but on a phased basis. Rates will go up on June 1st, September 1st and October 31st.
What about businesses?
The Temporary Business Energy Support Scheme (TBESS) has been extended for three months, with up to €15,000 per business available. The rules have been relaxed to allow more people to qualify.
But no more energy credits for domestic users?
No. The €200 March credit will go ahead but that will be that.
But surely energy costs are a big drain?
They are, but the Government is hoping the easing of wholesale inflation on European energy markets will see companies lower their prices. If they do, then the impact of disappearing energy credits will be lessened and – depending on the size of any potential cuts – possibly offset altogether.
What about school costs?
A fee for school transport services is being introduced from next September, with the cost capped at a maximum of €125 per family. The Government is also waiving exam fees for the Leaving Cert and Junior Cert in 2023 and providing a €100 top-up to the back-to-school allowance.
Will the measures make a difference?
For some people, they will help, but many will continue to struggle. The general rate of inflation has fallen back to closer to 7 per cent in recent times but it remains many multiples of what it was. A typical Irish household’s energy bills have climbed by more than €2,000 over the last 18 months while the annual grocery shopping bill is now more than €1,000 higher than it was in 2020. Then there is the higher cost of motor fuel, which has left many motorists worse off by in excess of €800 over the last 12 months. Clothes, haircuts, holidays, alcohol and a whole lot more besides have also climbed in price. Successive interest rate hikes from the European Central Bank (ECB) since last summer have caused the mortgage repayments of people on tracker rates to climb by more than €2,000 a year.
What does all that mean?
The reliefs introduced last year were worth more than €1,400 net to many households over the last 12 months. With few of those reliefs being replicated under the current plan, hundreds of thousands of homes will have to take more drastic steps to plug the financial gap themselves. And, as is becoming increasingly apparent, many people have run out of wiggle room already.
