Mixed reaction to €1.3bn cost-of-living package

The €1.3 billion cost-of-living package unveiled by the Government has sparked a mixed reaction with business groups giving it a broad welcome but others saying once-off measures for struggling households do not go far enough.

The Cabinet signed off on a €200 bonus payment for welfare recipients such as pensioners, lone parents and people with disabilities as well as a €100 child benefit top-up for families.

Taoiseach Leo Varadkar said the new measures were aimed at helping people and businesses get through the spring and summer and it would be the last cost-of-living intervention “this side of the budget”.

Tánaiste Micheál Martin predicted that while the Opposition would dismiss the measures, the public would welcome them when viewed alongside the €11 billion package in last year’s budget.

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Ministers also agreed to extend the reduced VAT rate on electricity and gas, and for excise cuts on petrol and diesel to be phased out in three stages between June and the end of October.

There will be no extra €200 electricity credit this summer but the Government signalled that the need for such payments next winter would be considered in advance of the budget.

The Cabinet agreed the waiving of exam fees for the Leaving Cert and Junior Cert and to boost the back-to-school allowance by €100. What is being described as “modest” charges for school transport in rural areas are to be reintroduced after they were dropped last year.

The Coalition also approved the extension of the reduced 9 per cent VAT rate for the hospitality sector until the end of August. Mr Varadkar said it would be “the final extension”.

Irish Fiscal Advisory Council (Ifac) chairman Sebastian Barnes welcomed the “greater reliance on slightly more targeted measures” in the Coalition’s cost-of-living package.

He said it offered a “better balance between helping the people who really need it” and not putting too much extra money into the economy which could have inflationary consequences.

Mr Barnes said Ifac was concerned about the extension of the 9 per cent VAT rate for the hospitality sector.

He said the €300 million cost was “quite a big chunk of the fiscal room for manoeuvre that the Government has” and allocating the money now was “potentially going to make it more difficult for the Government to help people within its plans towards the end of the year if we have a hard winter”.

Mr Barnes added that it was important for the “credibility” of overall Government policy that the Coalition followed through on the commitment to phase out the support.

Employers group Ibec welcomed changes to the Temporary Business Energy Supports Scheme (TBESS) to encourage take-up and expand eligibility for businesses.

The Society of St Vincent de Paul (SVP) welcomed the social protection measures but said increasing core welfare rates “would have been more effective in ensuring those on the lowest incomes are not pulled further into poverty”.

Sinn Féin leader Mary Lou McDonald criticised the package as “silent on housing” with “nothing” for renters or mortgage holders.

Social Democrats co-leader Róisín Shortall said it was “wholly inadequate”.

Labour leader Ivana Bacik said she was disappointed that a decision to extend the temporary eviction ban was not announced with the cost-of-living measures and that “renters need certainty now”.

Mr Varadkar defended the package saying it was “a series of one-off measures” to help people and that other permanent measures such as the increase in the pension, reduction in childcare and healthcare had previously been announced.