Ministers consider doubling the €100 household energy credit

The household energy credit being could rise by up to €100 under last-minute discussions among Ministers about tackling the cost of living.

A number of departments are finalising proposals to help households deal with soaring inflation ahead of a key Cabinet committee meeting on Thursday afternoon.

In December, the Government agreed to give a €100 credit to every household in the country to help with rising energy bills. It is expected to be issued by the end of March.

Now, Government sources have said that while nothing has been agreed yet, an increase in the home energy credit from €100 to between €150 and €200 is on the cards. This would be a universal measure that everyone would benefit from, while more targeted measures would be directed at lower-income households.

Sources confirmed that last-minute talks are centring around bringing forward a planned increase in the working family payment with measures also expected in helping with the cost of fuel.

The working family payment is a weekly tax-free payment for employees with children which supports people who are on low pay. It was announced as part of Budget 2022 that the payment would increase by €10 across all family sizes from June of this year. Sources said that bringing this date forward was one proposal being seriously considered. One option also considered by officials was a longer fuel allowance season but this idea appears not to be favoured although no final decision has been made. The fuel allowance season is already due to run until April.

There is a strong view in Fine Gael that middle-income households should be included in the package. This was echoed in comments made by Tánaiste Leo Varadkar on Wednesday. He said that new measures to be introduced this week to tackle the rising cost of living would not be reserved for the unemployed and those on low incomes, because those on higher salaries are also facing difficulties.

Speaking at the announcement of a new €90 million fund for start-ups, Mr Varadkar indicated that a new package of measures was likely to be revealed on Thursday. The package is expected to include the previously announced electricity credit.

Mr Varadkar said the package had yet to be finalised, with a number of Government departments still weighing which charges could be reduced to help households.

Inflation is rising at levels not seen in more than 20 years, with estimates showing most households will need to find more than €2,000 extra this year than in 2021 to cover essentials such as heating costs.

“It is important to acknowledge that middle-income people – people who on paper may have average salaries of €40,000-€50,000 – are also struggling to pay the bills, because often they have to pay mortgages, childcare, all those things,” Mr Varadkar said.

“It is also important that there be a targeted element though because people on fixed income and social welfare are hit hardest by fuel prices increases,” he added.

Burning issue

Mr Varadkar said the cost of living crisis has replaced Covid as the “burning issue” for consumers.

“The cost of living is rising and people are really feeling it. They are seeing it in the cost of groceries, in filling a tank of diesel, and particularly in electricity and gas bills ... It is rising at about 5 per cent a year. Depending on your individual experience however it can feel a lot higher than that,” he said.

The Tánaiste warned that even with the introduction of new measures, households may be dealing with rising costs for some time to come.

"It could be the case that inflation is going to be a feature in life in Ireland, Europe and around the world for years, so we need an anti-inflationary strategy that isn't just about dealing with the symptoms," he said.

Mr Varadkar said the new measures likely to be agreed will be applied on a one-off basis. He added that he did not see such measures affecting competitiveness.

“I don’t think this will impact on our competitiveness because this is not just an Irish phenomenon,” he said.

The Tánaiste added however that the housing crisis could be a barrier to further economic growth.

He said because the economy and the population has grown so rapidly that the State faces “serious infrastructural constraints”.

“It isn’t as though we have just realised this though. That is why we have been ramping up public spending,” Mr Varadkar said.

Later, on Thursday evening, he told his parliamentary party that the package of cost of living measures would be “substantial”.

He reiterated that there will be a universal element to help all households and targeted elements for those most in need.

TDs and Senators were also told that a wider anti-inflation strategy is required in the long term.

Inflationary pressures

At Wednesday evening’s Fianna Fáil parliamentary party meeting, Minister for Public Expenditure Michael McGrath briefed members on inflationary pressures.

With inflation running at over five per cent, he told his colleagues that the Government needs to target the root cause of inflation - but that he was working on a package of measures to tackle the issue, and liaising with party leaders in the hope of making proposals tomorrow.

He told TDs and Senators that there should be a focus on measures already taken - such as childcare fees being frozen, and free GP care for six and seven year olds, alongside discounted travel for younger people and changes to welfare payments. He said the electricity credit for 2.1 million homes would, as announced so far, cost €215 million.

Micheál Martin told the meeting that inflation is largely driven by international factors - however, he said the coalition is “acutely aware of the impact of inflation on households”

“It has become a reality for many people as high gas and electricity bills are arriving,” he told the meeting, adding that there would be more measures, alongside the planned electricity rebate, announced shortly.

Meanwhile, a report published by property website Daft.ie on Wednesday shows the number of homes available to rent has fallen close to historic lows, while rents have increased sharply.

According to the study, there were fewer than 1,400 properties to rent across the State on Daft at the beginning of February. In Dublin, there were just 712 properties available, the lowest number since Daft’s records began in 2006.