What happens when the once-off cost-of-living measures people have become accustomed to over a series of giveaway budgets suddenly stop, as is expected this year?
The Government has already got a taste of the anger that can ensue. After Minister for Higher Education James Lawless signalled that €1,000 cuts to third-level student fees seen in recent years may not be repeated on budget day there was a backlash. It caused not just a political storm, but also led to a flood of written complaints from parents and others to the Fianna Fáil minister in the days after his remarks during a radio interview at the end of June.
Here’s a flavour of the reaction:
A mother of two students wrote that she was “absolutely appalled” at the possibility the fees would revert to €3,000, saying that was “massive to the squeezed middle”. She added: “Why are ye crucifying us? Why?”
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“A national disgrace” thundered another parent. “Six votes in my house will be going elsewhere [in] the next election if it is not overturned.”
There were many more in a similar vein. While a spokesman for Lawless stressed he is “acutely aware of the financial pressures facing students and families” and will be “fighting hard” for budget measures that reduce the cost of education, it remains to be seen what these measures will be come budget day in October.
In one sense it should be no surprise that the once-off measures – brought in as part of recent budgets to respond to rampant inflation and a cost-of-living crisis – are to end; it was flagged by sources within the Government less than two weeks after its formation at the start of the year.
Throughout the year senior Coalition figures stated publicly there would be no once-off measures amid the need to reign in spending in the face of huge economic uncertainty over US tariffs on EU (including Irish) goods.
In late July in the summer economic statement an overall package of €9.4 billion was announced as being available for spending increases (€7.9 billion) and tax cuts (€1.5 billion) in the budget.
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There has been no talk since by those who control the purse-strings in Government of topping this up with billions in once-off measures as previously happened. But “once-off” is also a complete misnomer as many of the payments were repeated in some form over three budgets. And getting rid of them in one fell swoop is fraught with political risk.
The pre-election budget last year featured a €2.2 billion cost-of-living package including two €125 electricity credits and multiple double welfare payments and lump sums. These included extra payments of the fuel allowance, disability allowance and working family payments.
For parents there were two double child benefit payments at the end of 2024 and other measures included reductions in school transport fees and State exam fee waivers.
If such measures must be dropped, it makes sense politically to do this at the start of a government’s term with an election expected to be years away. However, doing so also has the potential to create divisions within the Coalition, as happened with the student fees controversy of recent weeks. More importantly though, there is the anger that scrapping once-off payments may well spark among the public.
Meanwhile, with many costs, such as food and energy, still high the Government can be sure Opposition parties will seek to exploit any public dissatisfaction after budget day. Sinn Féin has already made demands for a cost-of-living package a running theme in public statements over the summer.
It appears the Government is not budging.Minister for Finance Paschal Donohoe was asked about people in arrears with electricity bills during a visit to Clonmel, Co Tipperary, this week. He said such issues will be considered as the budget approaches. But he also reiterated: “We will not be bringing forward the kind of one-off measures that we’ve had in the past.”
He added the Government is “very conscious that the cost of living continues to be a challenge for so many”, but said: “We now need to ensure that measures that we bring forward, in light of the economic uncertainty that is there, are ones that we can afford and ones that will be sustainable.”
He advised people having difficulty paying bills to engage with electricity suppliers on measures such as alternative payment plans.
His stance appears to be at one with Minister for Public Expenditure Jack Chambers who said last month that, rather than once-off payments, Budget 2026 would be about decisions on “permanent”, “sustainable” and targeted measures that “protect the most vulnerable”.
Chambers indicated that the social protection system will still be used to help the least well-off in the budget.
Indeed it would be highly surprising if increases in the State pension and other welfare payments – as in recent years – do not feature in the upcoming budget even in the absence of once-off measures. On the tax side, scope for income-tax cuts is likely to be limited by proposals to bring in VAT reductions for the hospitality industry at some point next year.
Dropping once-off measures – and what will be done to ease their loss in people’s pockets – is the key political minefield the Government must navigate as budget preparations ramp up from the end of August.
Lower-income households will have to be protected but ministers will also have to remember – as the student fees controversy showed – that hell hath no fury like a voter scorned.
