Bumper budget will have an 'immediate' inflation-busting impact 

Government will have €2bn extra to spend on an early budget which will focus on the cost of living crisis

Senior Coalition sources say Budget 2023 must ease the burden of Irish families stunned by surging prices — and healthy exchequer figures suggest the Government can afford to do so. Stock picture

The Government will now have up to €2bn extra to spend in Budget 2023, which will focus on measures that will have an “immediate impact” on easing runaway inflation for families.

Households are facing record price hikes, with Electric Ireland announcing a jump of up to €500 in annual energy bills for some customers with further increases expected in the coming months.

An extra fuel allowance payment is expected to be part of a package of immediate budget measures to help with spiralling heating and energy costs. 

The summer economic statement due to go to Cabinet is expected to give the Government up to €2bn in extra unallocated spending, meaning a total budget package of €5bn. This is significantly more than the €1.5bn in additional funds that had been forecast and should provide more wriggle room to provide supports for low-income families and the squeezed middle.

A senior source said the Government “has resources” due to a good tax take, record employment, and corporate profits — but that these are “not unlimited” and there will be a lot of competing demands ahead of the budget.

“We just need to be careful,” said the source. “The worst thing is to have to take it back if things sour.”

It is understood that Fianna Fáil wants to ensure cost-of-living measures are targeted, with senior sources pouring cold water on the suggestion of a second universal €200 energy rebate.

Instead, options such as providing immediate one-off targeted supports — such as a bonus fuel allowance payment and increasing the threshold for family income support — are being assessed ahead of the budget, which will be moved forward to September.

Ireland’s inflation reached 9.6% in June, according to the latest figures from Eurostat.

It comes as Electric Ireland announced its second price hike this year, with average electricity bills to rise a further €164 a year while gas bills will rise €311 a year from next month. The move will affect Electric Ireland’s 1.1m electricity customers and 145,000 gas customers.

It is feared that other suppliers may follow suit, with Electric Ireland blaming an “unprecedented price escalation in wholesale gas”.

Asked about the latest price increases, Taoiseach Micheál Martin said: “By the time that increase comes in, the gap between that and the budget will be relatively short.”

Speaking after a special meeting of the Fianna Fáil party, he said members had raised childcare, pensions, and measures to mitigate costs for families as their key priorities ahead of Budget 2023.

“The budget gives us an opportunity to do something in the immediate and we will be, in terms of funding going to people this calendar year to offset increases that will be coming,” Mr Martin said after listening to calls from his backbench TDs and senators, who put forward over 100 budget proposals.

While a minimum increase of €10 to old-age pensions has already been floated, Government sources are keen to stress that increasing all social protection payments by €10 a week would cost €750m a year.

It is understood that parents could see hundreds of euro slashed from childcare fees under proposals being considered.

While some senior Government sources suggested the enhanced supports could be introduced from early next year, others pointed to the fact that this measure would have a significant cost attached and could be delayed until further into 2023 as way of saving money.

“Childcare was one that a large number felt we should really do something significant [about] in the budget,” said Mr Martin.

“That was the request of the members of the parliamentary party, in addition to the housing issue, particularly around existing Central Bank regulatory framework around lending or people borrowing.”

Mr Martin said the Government had to balance measures to ensure supports do not spark more inflation, while helping families with the cost of living.

The Taoiseach said: “We’re looking at ... a budget that has to combine pay, tax, the core expenditure envelopes for every department going into the next 12 months, along with a cost of living package which will have immediate application or certainly application in this calendar year to take the pressure off.

Minister for Public Expenditure Michael McGrath told party members that a cost of living package would deliver immediate tangible benefits for the most vulnerable and said working families would see a reduction in health and childcare costs.