Inflation ignites political debate as TDs return to Dáil

All of a sudden, inflation – and especially the rising cost of energy – has exploded on to the political agenda, and will play a significant role in the Government’s budget considerations.

TDs say the cost of living is an issue that has been simmering away underneath public sentiment for some time. But as energy prices have soared in recent months, it has very much bubbled to the surface.

When TDs returned to the Dáil from their constituencies on Tuesday, there was only one thing they all wanted to talk about.

“The cost of living is dramatically increasing,” said Labour leader Alan Kelly, first out of the traps. “The Government is genuinely facing a winter of discontent unless it acts on these issues, which affect people’s everyday lives and living standards.”

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Sinn Féin was not to be outdone. “Workers and families are being hammered by hikes in electricity and gas prices,” said Dublin Fingal TD Louise O’Reilly.

“People are paying through their noses to light and heat their homes . . . They are under massive pressure right now.”

Independent TD Mattie McGrath called for “swift action” as “price increases of this magnitude and frequency are totally unsustainable”.

Ministers rarely agree, if ever, with McGrath in Dáil exchanges, but Tánaiste Leo Varadkar did this time.

“I thank the deputy,” he replied. “He is absolutely right.”

Surging prices

It is not just an Irish problem. Surging energy prices all over Europe – the price of gas on wholesale markets is currently running at four times its customary level – have prompted European Union governments to introduce a range of measures to ease the pressure on consumers.

France is giving €580 million to help poorer households, Spain is capping utility bills and Greece is offering monthly subsidies to those on lower wages.

Here, the Government has signalled that it will increase the winter fuel allowance, which is paid from next week, but other welfare payments, including the living-alone allowance and the qualified child allowance, are also likely to be increased.

It will also consider extending the eligibility for the fuel allowance, with the possibility of a discretionary fund for people in hardship but who fall outside the income thresholds also mooted. In other words, dealing with the pressing issue of fuel prices is going to be a major part of next month’s budget.

Currently, the fuel allowance is paid to about 360,000 households and costs the State about €240 million annually.

But at €28 a week currently, even a substantial increase will not entirely alleviate the rising costs of fuel and heating for many people, which TDs say is adding hundreds to people’s heating and electricity bills.

The squeeze on households is likely to be felt in other areas of consumer spending too, as inflation begins to bite across the economy. This is likely to become one of the most pressing – if not the most pressing – political issue of the autumn.

The Government’s recent difficulties, which lasted for weeks, were generated by the botched appointment of Katherine Zappone to a job few people had ever heard of.

That fixated the media and political class for weeks. But the cost of heating their homes is likely to matter a lot more to ordinary people. Consequently, it is of much greater political importance.