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Dáil
‹ Ceisteanna ó Cheannairí - Leaders' Questions

Cost of living and energy security

Summary

Deputy Alan Kelly warns of rising inflation, higher energy bills, social welfare stagnation and possible blackouts, asking what contingency plans exist and whether EirGrid has issued stop requests to industry. The Tánaiste acknowledges the cost-of-living squeeze, says he will check the stop-request data, and cautions against blunt price caps.

Moving on from that sideshow, the cost of living is dramatically increasing and as the Tánaiste can appreciate, it is going to hit electricity and gas prices pretty hard. This will also have major consequences for renters and on food prices. In August, inflation hit a three-year high of 3%, which is the highest it has been since 2008, and according to all economists it is only going in one direction. The Government is genuinely facing a winter of discontent unless it acts on these issues, which affect people's everyday lives and living standards. Those renting will face more unsustainable rises because the Government refuses to put in place a rent freeze.

We know that in housing there are supply disruptions because of Brexit, Covid-19 and unreal construction material price inflation, which is having a massive impact. Contractors are pulling out of housing projects and other projects all around the country. I am sure other Deputies have heard that as well. People living on fixed incomes and social welfare payments who rely on gas and electricity to heat their homes face a very worrying winter.

Social welfare rates-----

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Is it ever going to stop, a Cheann Comhairle? Every single day - are you ever going to do anything about mobile phones?

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Are you doing a Roy Keane on it now?

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It is just continuous.

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They will not ring you anyway.

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That is your answer. You want to remove-----

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Please, Deputy.

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-----doing anything for anyone. You are only here yapping. If you minded your own business, you would be a great man.

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The two caricatures again. Enough.

Social welfare rates have not increased for two years and tens of thousands of people are out of work. We have multiple warnings about electricity blackouts due to rising demand from data centres and two gas plants are closed for maintenance. As the Tánaiste is aware, we recently had amber alerts in this area. Gas prices are soaring across Europe and we are worried about investment opportunities now, particularly the Intel issue. While the fuel allowance payment starts next week, the increase from last year has already been eaten up due to inflation. We all know the fuel allowance will rise again in the budget but it is a means-tested payment. Energy suppliers have been rapidly increasing their prices in recent weeks. Energia's latest increases were of 15.7% for electricity and 18.5% for gas. Many families are worried about these price increases and how to heat their homes. If there is a cold snap this winter, will the Government guarantee that we will have enough gas supply to keep the lights on and the radiators warm? What will the Government do to control prices? Will it freeze rents now? How will it protect vulnerable households at risk of increased bills, particularly when it comes to utilities? For those who do not qualify, will the Government commit to broadening the means test of the fuel allowance, a step which would be welcomed across this House?

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Leo Varadkar The Tánaiste Fine Gael

The Deputy is absolutely correct in his initial remarks. The cost of living is rising and everyone can see that. We see it in the forecourts, the supermarkets and when people fill their oil tank for the winter. The cost of 1,000 l of home heating oil was €450 this time last year. It is €750 now; up to the level it was in 2019. We are seeing a return to inflation, a matter I spoke about months ago and which people were dismissive of at the time. It is now very much a reality. It is hurting families, consumers and businesses. It is a feature of two major international factors. Nobody in this House, this Government or this country controls the price of oil or gas. It is rising due to international reasons as demand outstrips supply. It is also down to the policies of central banks lending money at 0%. Quantitative easing is something which some people in this House believe should continue forever. Of course, when central banks print €9 billion or $9 billion, items that cannot be printed go up in price and that includes property and commodities. Part of the reason for this is due to the policy of central banks printing money and lending money at 0%. It was the right thing to do during the pandemic crisis but it will need to be reined in. Otherwise we will continue to see inflation rise unless there is a change in that regard. We will see central banks tightening monetary policy next year precisely because we need to restore price stability and for no other reason.

In terms of what the Government can do, there will need to be a welfare package in the next budget. There is broad agreement on that but not on its composition as of yet. That still needs to be worked out. There will need to be a welfare package in the budget because people on pensions and on social welfare will end up worse off unless there is an increase this year. That will need to be done. We will need to do something about the fuel allowance. We have committed to ring-fencing some proceeds from the carbon tax in order to increase the fuel allowance, which we will do. The fuel allowance kicks in from next week. We will give consideration to amending the means test. However, all these things come at a cost and we will have to get that right. We will need pay increases. Pay increases are happening across the economy and they are necessary. We will also need a tax package to make sure that those who get a pay increase do not lose most of it in income tax, universal social charge and PRSI. That is why we have committed to the indexation of tax credits and tax bands. I hope the parties opposite will support that.

On electricity supply, we have had a number of briefings, meetings and consultations about this. There is a concern about supply being tight this winter and even more so next winter but contingency plans are being put in place to avoid that.

We are confident that even in a very cold winter, when it is calm and the wind is not blowing and we have to produce our electricity from oil, gas and coal or import it from elsewhere, we will not see brownouts or blackouts. We are doing everything to ensure that does not arise.

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Respectfully, the Tánaiste was being open enough but I did not get much comfort from his answer. In the context of our energy supplies, brownouts and blackouts, what contingency plans are being put in place? I understand this is a real fear, particularly if we have a very harsh winter. We cannot predict anything with climate change. Can the Tánaiste confirm to the House whether EirGrid has issued a number of stop requests to heavy industries in the past few weeks, perhaps numbering more in that period than in the whole of last year put together? If this is the case now, then we are facing into big problems. What are the contingency plans for this?

I respect what the Tánaiste said in regard to the fuel allowance but we will see how it is widened out. I want to raise a particular issue. If gas and electricity prices soar this winter, in the light of what he and I have just outlined, will the Government use the opportunity to make maximum price orders under the Consumer Protection Act to ensure consumers will still able to afford to heat their homes and have electricity in them? Such orders have been used in the past. Will the Tánaiste consider using them if that is the scenario this year?

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Leo Varadkar The Tánaiste Fine Gael

I do not have data on stop requests but I will find out the position. I am interested to know myself. I will find out and pass the information on to the Deputy.

We are not going to rule out using maximum price orders, but I am conscious of what has happened in the UK. One can impose a maximum price order on the electricity or fuel retailer but the latter still needs to get the fuel from somewhere else. Retailers still have to pay the international wholesale price. If the fuel retailer buys a barrel of oil or canister of gas for a certain amount and we have a price that is lower than that amount, what happens then? The company goes bust. In the UK, where there is a system of maximum price orders, we are now seeing energy companies going bust, because they are not able to offer energy at that price, and looking for a bailout from the state. That is not necessarily an example to follow but it is certainly not something we will rule out. That is the problem with a maximum price order - ultimately, it is the wholesale international price of oil and coal gas that determines what consumers have to pay.

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