'Cost of living' budget to include cuts to childcare costs

Emergency measures ruled out as reduced childcare costs, the largest ever welfare package and lower taxes to form basis of October’s budget

Taoiseach Micheál Martin said cuts to childcare costs could be in place by Christmas.

Reduced childcare costs, the largest ever welfare package and lower taxes will form the basis of October’s “Cost of Living” Budget, the Government has said.

Appearing to rule out an emergency budget, Taoiseach Micheál Martin said the measures will have to be “comprehensive and sustainable over a longer period of time”.

Tánaiste Leo Varadkar said a welfare package of more than €5 a week on the pension will be needed in October’s Budget.

Mr Varadkar said there will have to be a substantial welfare and pension package greater than that of 2022.

Last October’s budget saw the Government announce a package to bring in a €5-per-week increase in core welfare payments costing some €450 million. The increase in the payments came into effect in January.

While Mr Varadkar said the scale and detail have yet to be established, the determination of Government to address the cost of living is clear across all three parties.

Mr Varadkar said this is because the spike in inflation is not temporary, adding “it could go on for years”.

Mr Martin said cuts to childcare costs could be in place by Christmas while Mr Varadkar said: “We're determined to improve child care provision, quality of child care, in terms of conditions for staff and particularly reducing the cost of child care for working families."

Finance Minister Paschal Donohoe and Public Expenditure Minister Michael McGrath briefed the three government party leaders on the broad parameters for October’s Budget, to be set out in the Summer Economic Statement, due for publication in a couple of weeks.

Ministers are increasingly at odds as to whether to introduce measures to address the cost of living before the budget. 

While Mr Martin, Mr Varadkar, Mr Donohoe and Mr McGrath have appeared to rule out any short term measures, other members of Cabinet said last night such interventions are “entirely possible”.

Holiday earnings

At Cabinet today, ministers will approve a plan to allow students to earn up to €6,552 during the summer without impacting on their grant.

Higher Education Minister Simon Harris will seek Government approval to allow students earn more over the summer break and ensure students do not lose eligibility for their grant.

This will allow the holiday earnings income disregard to increase from €4,500 to €6,552.

The move is also designed to help businesses – in particular tourism and hospitality – with skills shortages over the coming months.

Supply concerns 

Meanwhile, the European Union has drawn up emergency plans to decide what happens in case of supply shortages, European Commission president Ursula von der Leyen has said.

“If we would decrease the heating in Europe by two degrees, or the cooling, less air conditioning, this would compensate the whole delivery of Nord Stream 1,” Dr von der Leyen told journalists, referring to the major gas pipeline that runs from Russia to Germany.

“We have emergency plans in place that have the whole width of necessary steps, from the efficiency element, to energy savings, to prioritising the needs.”