Sir, – Tom McDonnell (“Once-off payments are not the answer to the cost-of-living crisis”, Opinion & Analysis, September 24th) advocates that the allocation of welfare payments to households suffering deprivation should be related to these households’ cost of living and living standards.
This is a perfectly feasible and defensible proposal, but it does not address the question why the cost of living is so high in Ireland and pushes so many households into deprivation.
Eurostat data shows that the price level of household final consumption in Ireland in 2023 was 38 per cent above the euro area average.
Only Luxembourg, at 44 per cent, had a higher level, and Ireland and Luxembourg were the only two members with a price level more than one standard deviation above the average. The major euro area economies, Germany, France, Italy and Spain, cluster in a 4 per cent to minus 11 per cent range around the euro area average.
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Of course, Eurostat data also shows that the median equivalised income in Ireland was 36 per cent above the euro area average in 2023.
This means that those securing income around or above this median should be able to deal with Ireland’s high price regime.
But those securing well below the median will suffer varying extents of deprivation.
Various excuses and explanations are advanced to justify Ireland’s high price regime. For example, the small size of the national market, its geographical dispersion and the accompanying absence of economies of scope and scale are often advanced, as is Ireland’s peripheral location that increases transport costs.
The use of imputed rents by Eurostat to capture some of the housing costs of owner-occupiers when calculating relative price levels is also seized on. But imputed rentals are based on actual rental costs and in Ireland imputed rentals as a share of final consumption expenditure are 41 per cent above the euro area average. As a share of final consumption expenditure the expenditure on housing, water, electricity, gas and other fuels is 8 per cent above the euro area average.
The self-serving excuses and explanations hold very little water and it is impossible to avoid the conclusion that multiple policy and regulatory failures are facilitating the gross inefficiencies that are generating Ireland’s high price regime. Even a limited reduction in the current level would alleviate much of the deprivation lower-income households are experiencing and reduce the cost of living for all. But far too many people across the political spectrum are benefitting from the current arrangements and there will be no change. – Yours, etc,
PAUL HUNT,
Haywards Heath,
West Sussex,
UK.