In a bid to help mitigate the rising cost of living, the Government has announced a €505 million package to help Irish consumers.
You’ll be hard-pressed to find someone who isn’t affected in some way financially by the cost of living crisis, with inflation currently running at 5.5%.
That’s why the Government recently introduced a string of new measures aimed directly at assisting people with their bills.
All in all, the cost-saving measures being introduced will cost the Government just over €500 million and will go towards the previously announced energy rebate, and more.
So what exactly has been announced? Here’s a look at the new measures, what exactly is changing, and what it means for you the consumer.
1. Energy subsidy
At the end of 2021, the Government announced an energy rebate of €100 for customers nationwide. This payment was devised to help consumers offset the cost of rising energy prices.
However, as part of its revised package announced recently to reflect the ongoing inflationary crisis, this energy credit has been doubled to €200 including VAT.
The energy credit will be applied to electricity accounts only and will be credited through whichever supplier you’re with.
Energy customers don’t need to do anything to claim the credit as it will be paid directly to your energy supplier by ESB Networks. The credit will then be automatically deducted from your bill by your supplier in the March/April billing cycle.
Furthermore, if your bill is less than €200 for the above billing period, the balance of the available credit will be carried over so you won’t lose out on any money.
The energy credit is what makes up most of the cost of living package, and will cost the exchequer somewhere in the range of €378 million.
Criticism of subsidy
The payment is not means-tested, meaning all residential electricity customers will receive it.
This point has been heavily criticised by members of the opposition in the Dáil, as those who can well afford to cope with the cost of rising prices will also be subsidised by the Government.
Members of the Social Democrats for example have debated that the credit should not apply to holiday homes as some people will benefit from the credit twice.
However, the Government has argued that there is no easy way to stratify the payment without the process taking time and the payment being delayed further.
2. Public transport fares slashed
A significant reduction of 20% in public transport fares has also been announced.
The temporary reduction will come into effect from the beginning of April and will last until the end of the year.
The reduction will apply to fares with Bus Éireann, Iarnród Éireann, Go Ahead, Local Link, Dublin Bus, DART, and Luas, and will benefit around 800,000 daily users.
Those who have already bought an annual pass or ticket will be able to claim back some of the amount they’ve already paid.
The reduction in public transport fares will cost the exchequer some €54 million.
Changes to school transport costs
The Government also announced changes to the school transport scheme for primary and secondary school students.
Before the announcement, primary school bus users were charged €100 per pupil with a max charge of €220 per family. This maximum annual charge has now been reduced to €150 per family.
Meanwhile, secondary school pupils were charged €350 per pupil with a max price of €650 per family. This has now been capped at €500 per family at post-primary level.
3. Fuel allowance
An additional lump-sum payment of €125 will be paid to households receiving the fuel allowance.
The money will be paid to recipients in early to mid-March, of whom there are approximately 390,000.
Additional subsidies announced
- Drugs Payment Scheme: The threshold for recipients will fall by €20 to €80 to the benefit of just over 70,000 people.
- Working family payment: Weekly income threshold increased by €10. This payment increase was introduced during the last budget but is being brought forward from June 1st to April 1st.
Are the measures enough?
The thinking behind the measures, especially the energy rebate, was to introduce a number of universal payments for everyone and as soon as possible, to help mitigate against the effects of rising prices for consumers.
However, opposition parties in the Dáil have stated that the raft of measures are not and will not be enough to help against rising costs for struggling families, with a fear of more measures being required down the line.
Calls have been made for a reduction in income tax, amongst other measures. This however would only prove to be a short term fix and potentially stoke higher inflation in the short to medium term.
The harsh reality is that the measures are simply a drop in the ocean for those struggling, particularly with their energy bills. Certain energy suppliers have increased their prices by well over €1,000 the end of 2020 so the energy credit will only be a dent in the annual bill for some.
Only time will tell whether the new measures will be enough to stave off continually rising costs, or whether or not yet more measures will need to be taken.
We recently looked at how the Government adds to the cost of living in Ireland. Take a look at our article here for the full analysis.
Our Head of Communications, Daragh Cassidy also recently appeared on Today FM to discuss the impact of tax on the cost of living which you can listen back to here.
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To discover more ways to help cut your expenses, take a look at our blog on how to combat rising inflation.
Keep in touch
What do you make of the new cost-of-living measures being introduced? Are you in favour of them? What else should be done to combat rising inflation and costs for consumers?
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