Lower-income households may be targeted in cost-of-living package

Measures targeted at less-well-off households may supplement wider energy credits as part of the Government’s cost-of-living package, due to be signed off later this month.

The Green Party is understood to favour that the package should include elements more narrowly targeted at lower-income households – and on Friday, Taoiseach Micheál Martin said the Government believes there will be scope within the State’s finances to help people with lower incomes in particular.

Tánaiste Leo Varadkar is thought to favour an increased energy credit above the €100 already agreed, so all households benefit, alongside a more targeted measure for those most at risk of fuel poverty.

The Fine Gael leader is believed to harbour concerns about the logistical difficulties of identifying and excluding people on higher incomes from a broad-brush higher electricity credit, which is anticipated to form part of the package.

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However, the cost of wider energy credits, if they were put in place, could limit the room for manoeuvre on other measures. Doubling the planned €100 credit would bring the total cost to more than €400 million, which is more than the Christmas bonus, an expenditure measure so significant that it is considered only at budget time.

Minister for Public Expenditure and Reform Michael McGrath previously sought to engineer the already-planned electricity credit so that better-off people could opt out of receiving the €100 credit for all consumers.

However, that element of the plan was shelved after the Commission for the Regulation of Utilities advised that it couldn’t be done due the systems being used to administer the payment. Mr McGrath is also thought to be open to targeting some measures towards working families.

Amid widespread speculation about the scope and scale of the cost-of-living package, coalition sources cautioned against inflating expectations, saying that while a package would be agreed, it would not be a giveaway, and that many of the mooted changes circulated late this week would not go ahead.

Cabinet subcommittee

Mr Martin yesterday ruled out a mini-budget to respond to the rising cost of living, but declined to offer specifics on the Government’s plans to help people counter high inflation and energy costs. The Cabinet subcommittee on economic recovery, chaired by the Tánaiste, will meet next Thursday to discuss options being worked on by line Ministers.

A memo for decision by the Cabinet is expected before the end of the month. Speaking on Friday, Minister for Social Protection Heather Humphreys said the Government “recognises that the cost of energy has increased considerably, and we know that the cost of living has gone up, and we’re going to sit down and look at different ways of how we can support people”.

Mr Martin said there were targeted measures to help people in October’s budget and “there won’t be a mini-budget or anything like that but we are looking at further ways that we could perhaps ease the situation for people”.

Asked where funding for other measures would come from, the Taoiseach said the fiscal situation is improving all of the time and pointed to tax returns from January that saw “quite high” increases in VAT and income tax receipts.

“We have targets and I think we’ll reach our fiscal target by the end of the year but within that we believe there will be some flexibilities to enable us to help people, particularly those on lower incomes who are more affected by the inflationary cycle.”