Government to fund cost-of-living measures from energy scheme underspend 

Taoiseach Leo Varadkar told the Dáil there was room for manoeuvre due to an underspend on the Temporary Business Energy Support Scheme, which means the Government would be able to do more for businesses.

Taoiseach Leo Varadkar has said the Government will fund additional cost-of-living measures from an underspend on the energy scheme for business and a windfall tax.

However, Public Expenditure Minister Paschal Donohoe ruled out a mini-budget and said the Government could not sustain cost-of-living supports on a "year-round" basis.

Mr Donohoe said he and Finance Minister Michael McGrath would make recommendations to the coalition leaders in the coming days. Mr Varadkar confirmed the measures will go to Cabinet on Tuesday.

Mr Donohoe said he had a "clear idea" of the size of the war chest available to the Government but would not be drawn on how much money will be spent.

However, he did say supports of a year-round nature could prove to be unaffordable, meaning the 9% Vat rate on hospitality could be in line to be reversed.

During Leaders’ Questions, Mr Varadkar told the Dáil there was room for manoeuvre due to an underspend on the Temporary Business Energy Support Scheme, which means the Government would be able to do more for businesses.

“We have some reserve funds. We will also have revenue coming in from the windfall tax on energy companies, that allows us some room for manoeuvre within the budget parameters of this year,” Mr Varadkar said.

There will be no requirement at all for a mini-budget between now and Budget 2024, in the autumn.”

Government ministers will meet on Thursday at the Cabinet sub-committee on economic recovery to thrash out what cost-of-living supports will be extended.

It is expected there will be a double weekly welfare payment to recipients including pensioners and jobseekers. This measure could cost the State €330m.

A double monthly payment of child benefit is also expected for parents, which will cost €200m and another €200 energy credit for households will likely be agreed to help families with energy costs.

It is anticipated the excise cut on petrol and diesel will be phased back in over the coming months.

Mr Varadkar said the Government would be looking at both universal and targeted measures for people and a finance bill may be required.

Mr Donohoe said further help needed to be affordable and the measures already put in place last year will not be affordable to maintain at that level across an entire year. 

“While we are grappling with risks that are beyond our control, such as the rising price of energy, we don't want to create risks of our own."