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Cost of living crisis: Plan to extend €200 electricity subsidy into next year on the table in Budget talks


Finance Minister Paschal Donohoe

Finance Minister Paschal Donohoe

Finance Minister Paschal Donohoe

Households could see electricity bills reduced by another €200 next year under plans being discussed by the Government ahead of the Budget.

With the cost-of-living crisis escalating, senior ministers are discussing a range of Budget measures aimed at reducing the financial burden on households.

Central to high-level discussions are plans to extend the unprecedented €200 electricity credit, which was taken from bills in recent months, into the new year.

The move is among a series of Budget decisions being discussed by Government leaders and senior ministers as opposition calls grow for an emergency budget.

Finance Minister Paschal Donohoe is considering re-introducing the electricity credit again next winter as concerns deepen within Government over the impact of record levels of inflation.

Mr Donohoe told colleagues he wants to focus his Budget decisions on once-off measures such as the credit and the fuel allowance rather than policies that have to be unwound later.

Government officials are also putting in place plans to ensure Budget measures can be introduced this year rather than in 2023.

Income tax changes will not be introduced before the new year but changes to social welfare payments could be implemented within the coming months.

However, the introduction of legislation will have to be fast-tracked by the Dáil to ensure the public can benefit from the measures.

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Holding the Budget in September would give the Government more time to pass legislation underpinning Budget decisions. Legislation already exists for the re-introduction of the energy credit which means it can benefit electricity customers sooner.

“We are not looking at new instruments but rather we are examining existing credits and allowances we can look at so as to move quicker,” a Government source said.

It comes after Tánaiste Leo Varadkar warned the cost-of-living crisis could last for “years” and dismissed demands for an emergency budget during the summer.

Mr Varadkar said the Government was keenly aware of the difficulties people were facing with costs. He said €2.4bn had already been spent to help people and this was more than many other governments had done in facing what is now a common problem across the world.

“I think everyone is feeling squeezed but people on low incomes, and people in rural areas are especially feeling the pinch,” the Fine Gael leader said.

The Fianna Fáil parliamentary party is meeting today to discuss its priorities as Budget negotiations intensify ahead of the Dáil recess.

A party spokesperson said its priorities are tax cuts for working families, social welfare hikes and reduction on childcare costs. The priorities mirror those of their Coalition colleagues in Fine Gael.

Meanwhile, Sinn Féin has said households earning up to €80,000 should be entitled to claim the back-to-school allowances.

Under the party’s plans to reduce the cost of living, an additional 500,000 children could apply for the Back to School Clothing and Footwear allowance.

The existing scheme provides €160 for children aged four to 11 years old and €285 for those aged 12 and older.

Sinn Féin also proposes increasing the allowance by 50pc for families currently on the scheme – meaning children aged four to 11 years old would be entitled to €240 and those aged 12 would get €427.50, under its plans.

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