The Government has signalled that it intends to roll out a significant package of supports to assist people with rising costs, in particular with spiralling energy charges. This week saw further hikes in the price of gas and electricity, the latest in a series of increases which began before the war in Ukraine but have accelerated sharply since then. And there are, the Taoiseach warned this week, more to come. Ordinary people are being squeezed by forces beyond their or their government’s control.
For many of them the squeeze will be unbearable. The St Vincent de Paul charity said this week that it was inundated with calls from parents unable to meet back to school costs. Others have echoed the warnings. The truth is that for a large number of people, the increases in their bills will be unaffordable. They are already struggling. They simply won’t be able to pay.
This is where the Government is right to step in. Those who cannot afford their energy bills must be assisted, and no household should be allowed to go cold, or have to choose between heating their home or putting food on the table.
The State demonstrated during the pandemic that it can take extraordinary, previously unthinkable, measures in order to sustain society during times of great stress or dislocation. The coming energy crunch demands a response that is similar in spirit, if not in scale. Once again, the State must do everything necessary to protect citizens from the approaching economic storm. Energy companies must be told that disconnections are not, for now, an option. And the Government should urgently support EU efforts to impose a price cap on non-gas energy sources.
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The good news is that Exchequer figures published yesterday show that the public finances remain in robust good health. A budget surplus of €5 billion in July has grown to more than €6 billion, driven mostly but not exclusively by surging corporation tax revenues. The Coalition has the fiscal firepower to help people in need, and it should use it.
But ministers must also be wary that the cost-of-living crisis may be with us for some time. At the most optimistic reading, it could be well into next year before inflationary pressures ease, and even then there is no guarantee that energy price rises will abate. Bills may stop going up, but they may not start going down.
In other words, the Government should hold on to some of its plentiful financial ammunition because it may need it in the future. Ministers have been warned often enough that the bumper corporation tax revenues that have lately flooded into State coffers may not last forever. Minister for Finance Paschal Donohoe is in the fortunate position of having enough cash to spend big and also to save for the rainy day. That is just what he should do.