Government cannot promise return to lower cost of living, Tánaiste warns

The Government cannot promise that energy bills will be the same as they were last year, after cost-of-living and budgetary interventions kick in, Tánaiste Leo Varadkar has said.

Mr Varadkar also said it would be a mistake for people to assume that prices for food, fuel and other items would go back to the way they were.

“I would love to be in a position to say to people that energy bills will be what the were last year,” Mr Varadkar said during his visit to the National Ploughing Championships in Ratheniska, Co Laois.

“I would love to make that promise but I can’t. We just don’t know how high energy bills are gonna go or for how long but we are going to help,” he said. “Interest rates are rising, food prices are rising, energy prices are rising. It will be a mistake to assume that things will just go back to the way they were. And that’s why we need to help people with their bills in the budget to make sure that people see an increase [in net income], as people pay less tax. And we will help reduce the cost of other things that are too high, like childcare, like the cost of education, putting kids through college, for example, because, in the round, we don’t want people to be worse off.”

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He rejected the Sinn Féin proposal of imposing a price cap on bills, saying it was the type of spending gamble that had brought Anglo Irish Bank to collapse more than a decade ago. “The difficulty with price caps is we’ve no idea how high the price of energy will go. And we don’t actually control that because the oil and gas is brought in from overseas.

“So if you have a price cap, the Government has to be willing to say that it will pay the amount over the cap no matter what it is. And that, as the Taoiseach said, is a blank cheque. It’s a contract for difference. It’s the thing that brought down Anglo Irish Bank. It’s reminiscent of the bank guarantee, and I’d be very, very nervous to go down that road. It might be popular for a while but it might be the thing that brings back austerity or starts something we don’t want to ever see in our country again.”

Speaking separately at the Ploughing Championships, Sinn Féin leader Mary Lou McDonald defended Sinn Féin’s policy on capping energy bills until February at 2021 levels against accusations it was like issuing a blank cheque.

“That’s not true. Over the last 48 hours, the Netherlands was the most recent country to introduce a measure like this. We have said that for autumn and winter it is essential that people are given breathing room and peace of mind,” she said. “So we want to bring prices back to the 2021 levels before all of this spiral of inflation. And we want to have the cap in place until the end of February. It is a temporary measure, it is an emergency measure, but it is a necessary one,” she said.

Commenting on the agrifood sector, Mr Varadkar said the Government would make sure farmers were included in any scheme in relation to energy costs. He said a package the Government was putting together to help businesses with the rising cost of energy would apply to farmers, “because farmers are businesses too”.

“While farmers are getting very good prices for the food they produce at the moment, input costs are also really high too. I think energy is one of the areas where we can help.”

Asked if his proposal for a new 30 per cent tax rate in the budget was now off the table, Mr Varadkar said work had been done on that option and it would benefit many people. However, he said it might take time for it to be introduced and that would be a factor when the Government was making decisions on the budget.

“In my view, and in the view of most people, it’s very unfair that people on average incomes, earning over €37,000, have to pay the highest rate of income tax. That’s not the norm across Europe. It’s not the case in the United Kingdom. It puts us at a competitive disadvantage when we’re trying to recruit talent into the country.

“And I would like to see fewer people having to pay the higher rate and I’d like to see more people being able to get a pay increase, get a pay rise, do some overtime without losing about half their income in tax.”

Mr Varadkar was also asked for his response to the announcement by Russian president Vladimir Putin on expanding the war in Ukraine.

“What is happening in Ukraine is a crime against humanity. And Putin is now going to commit more terrible crimes against Ukraine. I believe we have to stand behind the Ukrainian people in their fight against Putin and against what he stands for,” he said.

“We cannot forget what this is all about. If Putin is successful in Ukraine, it will not stop there. He will continue and he will threaten other countries. We saw this before in Europe in the 1930s and 1940s. Historically, governments in the West that time took far too long to stand up to terror, the tyranny that was stalking Europe at the time, and we can’t afford to make that mistake this time.

“It’s in all of our interests that we stand up for democracy, stand up for human rights and stand with the Ukrainian people.”