Nearly a third of households live in energy poverty: ESRI

The number of households in energy poverty in the State is estimated at 29%, according to a new report published by the Economic and Social Research Institute (ESRI).

This level exceeds the highest level of energy poverty ever recorded, which reached 23% in 1995.

Energy poverty in this study is defined as households that spend more than 10% of their net income on energy, excluding motor fuel.

Energy inflation from January last year to April this year increased the cost of household consumption by €21 per week and if fuel costs are included, the weekly increase amounts to almost €39.

Should energy costs continue to rise another quarter, the report says the proportion of households in energy poverty would rise to 43%.

The report also finds that increases in energy prices disproportionately affect those with lower incomes.

It suggests that measures targeting the least well-off, such as welfare increases, lump-sum payments or increased fuel allowances, would be more effective in tackling the problem, rather than reducing VAT, fuel tax or import tax. carbon, which would benefit better-off households as well.

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The future of fuel prices will depend on many factors, including the war in Ukraine, said Dr. Barra Roantree, ESRI and co-author of the report on poverty and energy deprivation.

By winter, the average household could be facing an increase in energy costs of €37 a week, he said.

Dr. Roantree told RTÉ’s Morning Ireland that rural households, those with lower incomes, as well as the elderly, bear the brunt of rising energy costs, spending a greater proportion of their fuel revenue.

The future of fuel prices will depend on many factors, including the war in Ukraine, ESRI said.

While the increases hover around 2.3% of net income, that equates to 3.8% for those with the lowest incomes, so households are affected differently, he explained.

“The government can’t really compensate everyone. If it were to try to do that, it could cost more than 4 billion euros a year,” he said, which would risk fueling inflation.

“Reducing excise taxes on fuel, reducing VAT on electricity, electricity and gas, those kinds of things are not particularly well targeted.

“And the reason for that is simply that higher income households have been less affected, they spend more in absolute terms.

“So, therefore, by reducing indirect taxes, they make more profit. In fact, we estimate that in terms of, for example, if you imagine having a large amount of money to spend on compensating households, if you did to Through things like indirect taxes, actually more than half of that gain goes to higher-income households, which, again, have been less affected than lower-income households.”

While cutting indirect taxes won’t help those hardest hit by price increases, a type of Christmas bonus payment is an effective way to target those with lower incomes and receiving welfare payments, he said.

Dr Roantree said the Government could also consider making changes to the PRSI or increasing the PAYE income credit to help people in the middle income bracket.

The report “screams loudly” that the government must do more, Sinn Fein finance spokesman Pearse Doherty said.

Speaking on RTÉ’s Morning Ireland, he called for a “targeted” emergency budget and lump sum payments, which he said have been introduced in other jurisdictions to help low- and middle-income people.

People on welfare are feeling “the brunt of this cost-of-living crisis,” Doherty said. “We need the basic payments to increase by 7.50 euros to keep us in line with inflation.”

His party wants more attention to be paid to helping those who rent houses.

“The tenants feel great pressure. It’s unaffordable, which is why we want to see a month’s rent put back in the pockets of tenants,” he said.

The Tánaiste has said that the findings of an ESRI report on the cost of living are not surprising, but very clear.

Leo Varadkar said it is clear to people every time they look at their bills how much energy prices are rising.

Varadkar said the government remains focused on delivering a package of measures by budget day, which is “just over three months away.”

He added that the Government does not rule out provisional measures but for now the focus is on Budget day.

Varadkar said there were no plans to remove the motor tax, despite calls from some politicians to do so.

Instead, he told reporters the government was looking at welfare measures, pensions and taxes.

Additional Information Tommy Meskill

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