BY JOHN ELLIS, FINANCIAL ADVISOR
I presume you are very aware of the effect that high energy prices and the cost of living are having on you, your family and your business. You will be glad to know that the Government is “acutely aware” of your predicament and to alleviate these challenges the Government has agreed a package to put money in your pocket to help with the bills you are facing.
In a recent statement the Taoiseach said: “We know the cost of living remains very high and that people are under pressure. This package is about helping families who are struggling with the cost of living, helping businesses with their energy costs, and helping those on fixed incomes like pensioners and people on social welfare including carers and people with disabilities.”
The package will also be helping families with young and school going children. The Back-to-School Clothing and Footwear Allowance will give a once-off €100 in July and child benefit will receive a bonus of €100 in June. A payment of €200 is being paid to those on the Working Family Payment, lone parents, low-income families, carers, those on disability payments, and pensioners among others. Lower VAT and excise rates continue on gas, electricity, petrol, diesel and marked gas oil until October.
Businesses are given a lifeline in that it will be easier to apply for TBESS to help with electricity and gas bills. LPG or kerosene business users can avail of a new grant and the special reduced 9% VAT rate for hospitality businesses continues to August.
Tánaiste Micheál Martin said: “This Government remains committed to helping protect the most vulnerable, families and businesses from the rising cost of living caused primarily by Russia’s immoral and illegal invasion of Ukraine. This comes on top of a substantial package of supports in Budget 2023, and while energy inflation shows signs of moderating, it is important people and workers don’t face a cliff edge on fuel and energy costs in the coming months ahead of another Budget in October.”
Minister Eamon Ryan said: “The brutal invasion of Ukraine has caused prices to increase across the board but it’s clear that some people are finding it extremely difficult right now. It is only right that children, families and those relying on social welfare payments should be the focus of this latest round of supports. The Government had promised it would help people to weather these rising costs and that is exactly what we are doing”.
Social Protection Minister Heather Humphreys said: “The cost-of-living pressures are continuing to affect people right across this country. In February, I was delighted to secure Government approval for over €410million in additional supports to be paid to families in the coming months. This package of measures, in addition to the €2.2billion of supports secured as part of Budget 2023, underlines our continued commitment to address the increased cost of living being experienced by our citizens.”
It is difficult to see how these measures will help in the long run as, according to the recent CSO report for March, prices on average, as measured by the CPI, were 7.7% higher in March 2023 compared with March 2022. Housing, water, electricity, gas and other fuels up 20.8%, food and non-alcoholic beverages up 13.1%, restaurants and hotels up 8.9% and clothing and footwear up 6.7%, giving an overall CPI increase of 1.1% for the month.
And regarding gas and wholesale electricity prices, they have been falling here and in Europe since hitting a peak late last year, but Irish suppliers say “hedging” deals prevent them from passing these cuts on to customers.
And what is the Electric Association of Ireland doing? Very little it seems other than giving “in debt” customers some space to pay their arrears and a promise that customers who engage with them will not be cut off.
Dara Lynott, Chief Executive of the Electricity Association, in a recent Irish Times article conceded that they may have “hedged badly” and as a consequence locked themselves into forward contracts at high prices that may take time to unwind. “It’s only in hindsight that you can tell,” he said. “It really comes down to decisions by traders on the basis of the company that they’re in and its appetite for risk.”
Maybe they should feel a little more pain? Hopefully the Government approved draft legislation that will implement the windfall tax will get through before the summer recess.