Measures to help people struggling with their energy bills - Claire Byrne
With the ESRI’s latest study declaring that 29% of Irish households are living in energy poverty, Head of Communications at bonkers.ie Daragh Cassidy sat down with Claire Byrne and a panel of experts to discuss what measures can be taken to help those struggling to pay their bills.
What is energy poverty?
According to the ESRI, a household is in energy poverty when it is spending more than 10% of its disposable income on energy.
29% of Irish households are now experiencing this, showing the impact the energy crisis is having across the country.
Across Ireland, energy bills are increasing by €20 a week, which amounts to €1,000 per year. This figure is expected to rise as the war in Ukraine continues.
Some experts are predicting that energy costs may increase by an extra 25% which means energy bills could increase by €2,000 per year.
Low-income households and rural dwellers are the most susceptible to energy poverty.
The Government has implemented blanket measures to help those struggling to pay their bills such as the €200 credit and the reduction in VAT. Although these measures offered quick fixes to the energy crisis problem, they benefited everyone, including those who do not need any financial help such as high-income earners.
For example, if another universal credit payment was provided to the general public, then those people who have second houses or holiday homes, who previously benefited from receiving the credit for each of their homes should be excluded from the payment.
This will help ensure that those who need the most support are receiving it.
The squeezed middle
I am concerned about the ‘squeezed middle’.
These are people who pay a lot of taxes yet they get very little support from the Government.
As gas, electricity and home heating oil prices reach record levels, this big cohort of people who would’ve never previously struggled are struggling now and don’t qualify for social welfare payments.
The problem with means-testing
In my opinion, it is not a good idea to only target and provide support for those who are on social welfare payments as other people such as the squeezed middle will be left vulnerable.
This is the problem with means-testing people for these financial aids as some households are going to be left struggling, especially as everybody’s financial circumstances are so unique.
- If you take a family of four in Dublin with a combined income of €60,000, living in rented accommodation because they can’t afford to get on the property ladder, and their home has a poor BER rating.
- They’re going to be spending a lot more money on fuel and have a completely different financial circumstance, than someone living in Roscommon with no kids, is almost mortgage-free and lives in an A-rated home.
- If you use the social welfare measure the Dublin family might get some support, but so will the household in Roscommon who doesn’t suffer the same financial strains as the family in Dublin do.
This is why for now, blanket measures may be more beneficial than means-tested ones as many families and households who are struggling will be excluded from getting any support.
Providing support to people with incomes
There are different measures the Government can take to target the ‘squeezed middle’ or those in low or average wage employment such as:
- Commit to a living wage
- Make tax credit refundable
- Then increase the value of a tax credit
- Change the taxes
Although the Government has lowered the VAT on energy from 13.5% to 9% until October, because the VAT is levied on the NET price of gas and electricity costs, the Government is earning more money than they were 3 years ago on energy prices.
I do not believe that their finances are as tight as the Government is making out, and I think taxes in this country need to be tweaked and reassessed.
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Check out our other articles
- If you’re struggling to pay your bills, take a look at this guide on the supports available to you.
- Read our essential savings guide for Irish households here.
- Check out 15 ways to lower your electricity usage and bills.