Budget 2023: Cost of living package could rise to €2bn

Pressure to help households with the cost of living could force the Government to deliver a package of once-off measures to accompany the budget topping €2 billion.

The Coalition leaders met on Tuesday night to discuss the energy crisis including how the public sector can lead by example on conservation measures and European Union proposals to hit the revenues of energy companies.

Discussion of specific measures to help households with spiralling energy costs will take place at a future meeting.

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However, senior sources have suggested that pressure to support people with the cost of living could push a package of once-off measures — to be announced in parallel with the budget — as high as €2 billion. Some have said it could go higher.

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While the Departments of Finance and Public Expenditure and Reform are likely to resist requests from Ministers for further spending there will be a political imperative to provide more support amid rising utility bills.

It was previously believed that just €1 billion would be allocated to mooted once-off measures like double welfare payments in the autumn and before Christmas and another energy credit to help households with electricity bills.

However, sources suggest that the large exchequer surplus of €6.3 billion for the first eight months of the year gives the Government firepower to deliver a bigger than expected package.

How can Ireland find a way out of the energy crisis?

Listen | 25:19

As the colder winter months approach, the energy crisis shows no signs of abating. So, what is being done about it and how bad will it get? Conor Pope speaks to Irish Times political reporter Jack Horgan-Jones about the Government’s response to soaring energy prices and what measures they will take to further protect consumers, while ESRI energy economist Dr Muireann Lynch explains why we are facing blackouts this winter and what can be done to find a way out of the crisis.

Ministers in high spending Government departments are said to be arguing against “too much prudence” with some sources citing big packages in other EU countries and suggesting the State will have to follow suit.

Meanwhile, the Department of Finance is understood to be arguing for an increased contribution to a new rainy day fund.

Taoiseach Micheál Martin, Tánaiste Leo Varadkar and Green Party leader Eamon Ryan were joined by finance and public expenditure Ministers Paschal Donohoe and Michael McGrath in a meeting to discuss the energy crisis on Tuesday evening.

Mr Ryan is expected to bring a memo to Cabinet on Wednesday on how the public sector can conserve energy by setting temperature limits at 19 degrees in offices as well as avoiding the unnecessary heating of low occupancy spaces. Speaking on RTÉ's Prime Time, Mr Ryan said households and businesses would need to cut energy use between peak times of 5pm and 7pm.

“That’s the time when actually the last generator goes on. So if we can use some of our devices, in large industry or at home, those washing machines, dishwashers which can be done on a time basis, that actually is one of the best ways of getting through the winter without having to turn on to those last generators at the peak period,” he added.

The Coalition leaders also discussed Friday’s emergency meeting of European Union energy ministers which Mr Ryan will attend.

Proposals to be tabled at the meeting include skimming the revenues of energy companies to tackle surging household bills.

Electricity price

Another option in a European Commission paper circulated to member states is to decouple or limit the impact of the price of gas on the price of electricity, changing the current situation in which gas sets prices for the market.

The Republic is understood to be fully supportive of the broad principles laid out in the commission’s paper which would achieve a similar impact to a windfall tax while maintaining important market signals for investment in renewable energy.

One of the concerns about bringing in a windfall tax here is that it could have an impact on energy companies investing in renewable energy generation.

Mr Ryan said proposals in the EU document “could work” in the Republic.

He suggested Friday’s meeting could result in “really significant steps” to help address the energy crisis for households facing soaring costs.

He said he hoped there will be quick agreement and that the commission could then “introduce measures that allow us to try and cushion some of the blow of those higher bills.”