THE OPPOSITION ACCUSED the government this week of “sitting on its hands” as families struggle with the cost-of-living crisis against the backdrop of inflation that has started to slow but still remains very high.
As the cost of day-to-day goods continues to put many households under pressure, attention turned in the Dáil in recent days to the price of food.
Minister of State with responsibility for retail business Neale Richmond said that the government has the power to introduce price caps on products but did not want to take that approach, attracting the ire of Sinn Féin and other opposition parties.
“People’s finances are pushed to the very brink. They are hammered by sky-high energy bills, soaring food bills, runaway rents, mortgage interest rate hikes and a cost-of-living crisis that is hitting them from all sides,” Sinn Féin Leader Mary Lou McDonald said in the Dáil.
Taoiseach Leo Varadkar said the Competition and Consumer Protection Commission gave the government preliminary advice “strongly” cautioning against introducing price controls on food.
Before the spiralling inflation and energy price hikes throughout last year, the cost of living in Ireland was already notably high.
Data published by Eurostat at the end of last year for 2021 showed that Ireland had the highest price level for consumer goods and services of all EU member states. It was closely followed by wealthy countries like Denmark, Luxembourg, Sweden, Finland and the Netherlands.
As of March 2023, inflation in the eurozone is at its lowest in Luxembourg at 2.9% and highest in Latvia at a staggering 17.2%.
The eurozone average was 6.9%, which Ireland was slightly above at 7%.
Many countries have experienced similar increases in the cost of living as what Ireland has seen over the last year – but how have their governments responded?
We’ve taken a look at some of the measures that have been introduced by a few of our nearest neighbours.
Germany
Germany has introduced several one-off payments aimed at reducing energy costs similar to those implemented in Ireland.
In May, the German government approved a €300 allowance for workers called the Energiepreispauschale, which was to be paid by employers for employees or deducted from tax for self-employed workers. Additionally, a €300 energy voucher was paid to people in receipt of pensions and a €200 energy voucher was given to students.
A price cap was introduced for energy costs from the start of this year up to a certain level of energy consumption, beyond which rates are charged as normal. Residential gas rates were capped at €120/MWh and industry gas rates were capped at €70/MWh for 70% of 2021 levels of energy consumption.
Similarly, electricity prices were capped for households and small businesses at €400/MWh for 80% of 2021 consumption and for larger businesses at €130/MWh for 70% of 2021 consumption.
Housing benefits were extended from 640,000 to two million people in January and the basic rate of jobseeker’s allowance increased from €449 to €500 per month.
France
Like Germany, France also imposed limits on the cost of energy. Gas prices were frozen last year and electricity bill increases were capped at 4%, which rose to a 15% cap on increases for both electricity and gas rates for households from the start of this year.
In the rental sector, a cap was set on rent increases of 3.5%.
Several welfare payments and pensions received a 4% increase and means-tested student grants were also boosted. In September, low-income families in receipt of social welfare received an additional €100, plus another €50 for each child.
A state-funded rebate (refund) on petrol and diesel was increased from 18 cent per litre to 30 cent in September and October, though decreased again in November to just 10 cent.
The TV licence, which was charged at €138 per year, was scrapped.
A previous limit of €1,000 on the amount that companies could pay their employees as an annual tax-free bonus was increased significantly to €6,000.
Spain
In December, the Spanish government announced a €10 billion package of measures aimed at reducing cost of living pressures.
VAT was eliminated on basic food items from 4% to 0% for a six-month period. Food items on the list included milk, eggs, bread, fruit, vegetables, and cheese. Additionally, VAT on oil and pasta was cut in half from 10% to 5%.
Families with incomes lower than €27,000 received a one-off €200 payment to go towards food.
A discount on electricity and gas bills, and a ban on cutting off power to vulnerable households, were both extended, as well as a 50% discount on season tickets for public transport in urban areas.
However, at the same time, the government scaled back a discount that had been in place on the price of fuel. A 20c discount per litre that had been available for all purchasers was instead offered only to workers in “most affected sectors”, such truck drivers, shipping companies, farmers and fishers.
More recently, the Spanish government signed an agreement with banks to allow low-income households to extend their mortgage payments by up to seven years.
Households could qualify if they earned less than €25,200 and had to spend more than half of their monthly income on their mortgage payments.
Households earning less than €29,400 and spending more than 30% of their income on mortgage payments would also be eligible for an extension, and for a year-long freeze on payments.
UK
The UK has introduced several one-off payments to try to alleviate households’ financial burdens.
Around one million eligible households receiving tax credits but no other means-tested benefits received the first of three payments worth £301 each over the last week, with another seven million households that do receive some form of benefits also set to receive a £301 payment by the middle of May.
A £150 disability payment will be given to eligible people during the summer and a £300 payment will be given to people in receipt of pensions during the winter.
Supports provided in 2022 included a £400 discount on energy bills for all households, multiple one-off payments, a £150 council tax rebate for some households, and a permanent increase to the amount of income an individual can earn before they are charged the National Insurance Contributions tax (similar to Ireland’s PRSI tax).
A 5p reduction on fuel duty was introduced last year and extended until 2024.
An energy price guarantee is setting a maximum per-unit costs for gas and electricity that will vary over the next year and a half.
An energy bill relief for businesses from October to March reduced the cost of gas and electricity bills for non-domestic energy users, with a similar energy bills discount scheme introduced in April that is set to run until the same month next year.
Additional reporting by AFP and Press Association
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