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Budget 2023: Pensions and social welfare will be front and centre in this year’s cost of living crisis budget

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We are only in July but given the cost of living crisis, it’s perhaps unsurprising that the budget is a central focus - and most people will be asking just when they might get some financial reprieve.

The budget is likely to be held two weeks early this year, with September 27 mooted as a potential date.

Among the potential measures to be placed front and centre are the State pension and social welfare.

The Government is considering one week’s extra payment to those collecting their pension and those on State benefits.

This would cost the State €350m and would help 1.4 million people during what is certain to be an economically challenging autumn as prices across the board continue to rise.

The eligibility criteria that normally applies for a double payment may also be relaxed, meaning those who are claiming jobseekers’ allowance for less than 12 months, may also be entitled.

Meanwhile extra fuel allowance payments may be allocated to eligible households, along with the consideration of another €200 electricity credit for all households.

Some sections of Fianna Fáil are unhappy about a universal electricity credit, as this would not be means-tested and would also go to wealthy homes.

However, Fine Gael is in favour of everyone receiving a payment, which would amount to around €400m.

Childcare subsidies may be a focus which could address a crisis within the system which has led to parents being burdened by high costs.

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Earlier this month parents and childcare providers protested outside Leinster House to highlight issues with current funding models.

The Federation of Early Childcare Providers is calling for a subsidy of €100 per child on the ECCE scheme to cover costs currently subsidised by the childcare owner.

The Government has already said that reducing childcare costs is one of its priorities for the budget.

There may also be increases to core social welfare payments and a reduction in student fees.

Higher Education Minister Simon Harris said last week that he wanted to see the slashing of the €3,000 student contribution fee from this October.

He said there was also a need for student grants to rise.

The Green Party is also rallying for an increase in the threshold for the working family payment, to allow parents to earn more and still qualify for the payment of at least €20 a week. Currently the payment is calculated on household income and the number of dependents within a home.

It is also expected there will be changes to the taxation on petrol and diesel, and moves on GP care and other healthcare.

The Government is set to extend current fuel tax cuts and reduce the VAT rate for electricity.

Housing remains an urgent necessity to address and Housing Minister Darragh O’Brien has already said he is working on tax incentives to keep smaller landlords in the market.

There is a continuing shortage of housing stock and price levels to buy and rent are high. It is likely Fine Gael will rally for further building programmes.

Fine Gael wants to maintain the €30,000 first-time buyers grant. However, it was recently revealed that a third of buyers did not need the grant to achieve 10pc of their deposit, which had raised concerns about the scheme which has cost €600m to date.

Fine Gael is also keen to widen the free GP care scheme and to reduce the price of medicines.

The expenditure available to the Government will be detailed within the Summer Economic Statement, to be published today.

In total, the Government is expected to spend an extra €4bn next year, with €2.2bn of this to be directed to demographic changes and the remaining amount on the public-sector pay deal and an additional €800m in capital expenditure.

This will leave around €1bn for extra public expenditure. However, this will increase to pay for welfare increases.

A potential rise of at least €10 in weekly welfare payments will cost €750m alone.

Last week, Public Expenditure Minister Michael McGrath indicated the Government is planning to introduce a new tax bracket within the budget that would shield workers from being placed into a higher levy.

This proposal could see workers keeping more of their salary to help tackle the bite of inflation.

The measures are designed to help people through a difficult period of inflation, when costs have risen in the supermarkets and there have been repeated utility bill hikes.

Irish inflation has been estimated at 9.6pc by the EU’s statistical agency Eurostat. The rate was higher than had been anticipated and it is also above inflation across Europe, which rose by 8.6pc.


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