Government to consider extending cost-of-living measures beyond February

By David Young, PA

The Taoiseach has raised the prospect of extending some cost-of-living and business measures that are due to expire at the end of February.

Leo Varadkar said he wanted to avoid a “cliff edge” in two months’ time.

As it stands, a series of measures will stop at the end of February.

These include the energy credit scheme for households, a reduced 9 per cent VAT rate on hospitality, electricity and gas; and the Temporary Business Energy Scheme (TBES). Excise is also due to go up on petrol and diesel.

“I think it’s fair to say that we can’t have that kind of cliff edge happen at the end of February,” Mr Varadkar said.

“We’re not going to have inflation and the cost of living under control by then. So in the new year, certainly by the end of January, or early February, the government will have to give consideration as to what we can do in the spring to help people with cost of living, it won’t be possible to extend all of those measures, I think that’s clear, the public finances just wouldn’t that.

“But I think it’s equally clear that we can’t have all of those helps for families and businesses end suddenly at the end of February. So that’s going to be an early item for consideration by government in January, with a view of coming up with a plan to help people with the cost of living through the spring and summer.”

Mr Varadkar made clear that no decision had yet been made on extensions.

“It would not be a decision for me as Taoiseach, it would have to be a government decision,” he added.

“My view is that there can’t be a cliff edge at the end of February, so if we do nothing at the end of February, the energy credits run out, the TBES Scheme for business ends, VAT goes up on hospitality, electricity and gas, and excise goes up on petrol and diesel. I don’t think that’s a credible proposition at the end of February.

“I don’t think that inflation will be under control by the end of February, so what we will do in January is sit down as a government and work out which of those measures will continue, which won’t and where we’re not continuing with a certain measure, are there alternative, more targeted measures that we could put in place.

“I think we’d need to be able to give people certainty and visibility around that, not at the last minute in February, rather at the end of January or early February.”

Mr Varadkar was asked about the potential for increasing VAT on certain hospitality businesses, for example hotels, while retaining a reduced rate for others, such as restaurants and bars.

He replied: “Again, no decision made on that. I know the reason why people speculate on that and that’s because that was not legally possible in the past to separate food service from accommodation because the VAT directive has been changed, that is now possible legally.

“But just because it’s possible legally doesn’t mean that we’ll do it. But it’s an option that we can consider as part of the mix.”