Cost-of-living package to include €200 payment for OAPs and carers but no energy credit

Previous cuts to fuel excise will be slowly reintroduced following a 'robust discussion' at the Cabinet table.

Parents are set to get a €100 child benefit lump sum, while the back-to-school clothing & footwear allowance set to increase by €100.

Pensioners, carers, people with disabilities, and lone parents will all receive a €200 lump sum as part of a cost-of-living package that was approved by Cabinet on Tuesday. 

Parents are set to get a €100 child benefit lump sum while the Government has also agreed to increase the back-to-school clothing & footwear allowance by €100 in a bid to protect the most vulnerable.

All of these bonus payments will be paid in April and May.

Government leaders met late last night to agree the final details of the supports, which will also include a significant overhaul of a scheme to help businesses with electricity and fuel bills.

However, another €200 energy rebate for households has been ruled out. Government leaders will announce the full package later on Tuesday.

"The current thinking is that there's still another energy credit for due in March," a Government source said last night. 

So that's still a measure that is yet to come. But there is nothing beyond that at this point."

9% Vat rate survives

In a major win for hoteliers, the 9% Vat rate for the hospitality sector is to be retained throughout the summer.

It is understood that Finance Minister Michael McGrath brought forward a proposal to keep the reduced rate, but it was agreed that this would be the final extension and Vat will be brought back up to 13.5% at the end of August.

"This is the final extension, but it will give the industry a chance to make the transition," a source said, adding that the measure will cost €280m.

There was a "robust discussion" on the cuts to petrol and diesel excise introduced last year.

Government leaders felt that reintroducing fuel excise in one go could cause a significant disruption to fuel supply, particularly in the case of diesel, as the logistics industry depends on it for trucks and lorries.

As a result, the 20c cut will now be reversed in three stages, with a 6c increase from the beginning of June, a further 7c hike from the start of September and the final 8c being added on October 31.

Likewise, the 15c that was shaved off diesel will be put back on in increments of 5c in June and a further 6c in September and October.

Among the measures due to be announced on Tuesday are:

• An extension of the 9% Vat rate on electricity and gas until the end of October, at a cost of €15m per month;
• A €100 top-up for every child on the child benefit scheme;
• A €200 payment, similar to the Christmas bonus for pensioners, for those on disability allowance, carers, and widows;
• An expansion of the Hot School Meals Programme in primary schools.

The total cost of social protection measures secured by minister Heather Humphreys to help ease the pressure on families and households is over €400m.

Business supports

Meanwhile, the Government will be making adjustments to simplify the temporary business energy support scheme (TBESS).

"Red tape is probably the principal factor around this, but also looking at the criteria as well," a Government source said. We want to increase the uptake, as the uptake has been very limited."

It is understood that the total monthly amount a single business can claim against electricity and fuel costs each month will increase from €10,000 to €15,000. The scheme, which was due to expire at the end of March, will be extended for another three months.

Simon Coveney's Department of Enterprise, Trade and Employment had carried out an audit of the €650m scheme and the minister is now confident that these two adjustments, as well as a change to the qualification criteria, will allow tens of thousands more companies to apply for funding.

Up until now, companies had to show a 50% increase in bills based on 2021 payments, however this was seen as a "very high bar".

Businesses that have seen their bills increase by 30% on 2021 levels will now qualify, and this percentage will be applied retrospectively to the beginning of the scheme.