Soaring ESB profits to be used to bring down energy costs for families and businesses - Taoiseach

The Government is to use soaring ESB profits to help bring down energy costs for families and businesses

Taoiseach Micheál Martin said the Government is the shareholder on behalf of the Irish people and “obviously given the scale of the profits on the back of the energy crisis, I think government can look forward to a much higher dividend than would have been the case prior to the (energy) crisis.”

The government will use this dividend “to underpin its efforts to reduce pressures on households, and also protect jobs”, he said speaking in Co Clare.

Elsewhere, Tánaiste Leo Varadkar said: “I think it’s right and proper that the Government should take back some of the big profits that some of the energy companies are making.”

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He said when it comes to the ESB it can be done either through a windfall tax or a bigger dividend

“We would use that money then to help bring down costs for families and businesses and that’s what we intend to do.

Mr Varadkar also said he wants to see the Help-to-Buy scheme for first time buyers extended beyond the end of the year, a measure that is under consideration ahead of the Budget.

Profits at the ESB rose in the six months to the end of June amid surging energy prices.

[ ESB profits soar to €390m in first six months amid surging prices ]

Earnings, including a one off gain from what it called “exceptional volatility” in global commodity markets, jumped to €390.3 million from €128.4 million a year ago.

The group recorded revenues of almost €3.7 billion, which were up from almost €2.2 billion the year before.

The Taoiseach said the Government will bring in a cost-of-living package with the Budget to protect households and jobs “as best we can”.

He said: “we will do that with the ESB profits, but also through the windfall measures that will be taken at a European level but that will apply to Ireland, and we’ll also get some revenues back”.

Mr Martin said the exchequer surplus will provide “certainly in the medium-term, to enable us to help people who need help because of rising electricity bills, rising energy costs, and general inflation”.

He added: “Where the government is heading is through measures and mechanisms, through energy credits, tax, through the public service pay agreement, through cutting costs in terms of public services, and then through social welfare, to reduce costs overall and to give people supports to weather the extraordinary bills that they currently have.”

Mr Martin warned that energy prices “are going to go higher again into the final quarter 2022 and first quarter of 2023″ but that the government would respond to help people facing historic high bills.

Earlier this week Ryanair chief executive Michael O’Leary warned of the risk of driving inflation and told Virgin Media News: “The Government giving €200 energy subsidies to rich people like me is not the way out of this.”

Asked if the airline boss was right, Mr Varadkar said he understood the point Mr O’Leary was making but said means-tested payments are “very complicated... very expensive, very slow to administer, and sometimes they aren’t always fair.”

He asked where the cut-off point would be and said people on good incomes often struggle to pay for rent, mortgages and childcare costs.

Mr Varadkar added: “For anyone who’s very well off in Ireland, whatever they may get in terms of a household energy credit, they’re going to pay it back, you know, in income taxes and capital gains tax and property tax.”

Mr Varadkar said he does not believe the upcoming Budget will fuel more inflation.

He said that, unlike the inflationary impact of expansionary budgets in the Celtic Tiger years, it is a “very different situation now” with rising interest rates meaning credit is more expensive and billions of euro leaving the country in energy costs.

“That’s why I think that if we stay within the parameters that we’ve set out, an expansionary budget wouldn’t be inflationary,” he said.

The Minister for Enterprise was speaking in Kerry where he met business and community groups.

He was asked by reporters about the prospect of the lower 9 per cent VAT rate for the hospitality sector being extended beyond the current cut-off date of the end of February. He said a decision has not been taken on whether it will be extended and expressed a belief that “price-gouging’ - has not been the norm in the sector.

On the Commission on Taxation and Welfare’s recommendation that to introduce a ‘tourist tax’ for hotel rooms similar to those in place in many cities around the world, Mr Varadkar said if it was to be brought in it would be best left to local authorities to decide on. He suggested the funds could be used locally to improve tourist attractions rather than going into central government coffers.

Mr Varadkar stood by comments earlier this week when he said some of the commission’s proposals are “straight out of the Sinn Féin manifesto”.

Some on the commission were taken aback by the comments.

The Fine Gael leader said on Friday: “What I said was just a factual statement that some of the recommendations that are in the Commission report are Sinn Féin policies. That’s a fact.

“I also said that some of the recommendations were very good and I would be supportive of them and I also said that the Commission’s report is very thorough, objective, analytical.

“So I think if you take my comments in the round, they were very fair.”

He said he did not agree with the commission’s recommendation to increase inheritance tax nor its proposal to get rid of the Help-to-Buy scheme. On the latter measure Mr Varadkar said: “That’s really important for first time buyers.

“I want that extended, not ended at the end of this year.”

He said: “I don’t accept the view that the government or any future government automatically has to accept the recommendations.

“That’s never been the case for any commission.”