Demands for €10bn Exchequer war chest
Ministers want Covid fund and €6m surplus to bail out families
COALITION leaders are coming under intense pressure from Cabinet colleagues to unleash a €10bn Exchequer war chest to protect families from soaring energy costs and price hikes, the Irish Mail on Sunday has learned.
Several ministers are calling for €4bn remaining in the Covid emergency fund and the current Exchequer surplus of €6bn to be used to support households struggling to pay their monthly bills.
The revelation comes as incoming Taoiseach Leo Varadkar warned his Cabinet colleagues this week that the country’s full employment and economic stability is under serious threat from the energy crisis.
Mr Varadkar’s fears were echoed publicly by Green Party leader Eamon Ryan yesterday, who issued a stark warning of further crippling energy hikes over the coming months.
The Environment Minister told RTÉ’s News At One: ‘We have to prepare and provide for potentially high bills of that nature [€6,000 a year for households] .
‘The energy market is broken and it is impossible to predict what will happen.’
The prospect of further price rises is causing growing unease within Cabinet.
One senior Government source told the MoS: ‘This raft of increases is only the beginning. This is going to last until March before the market eases. Our information is that this will not bleed out until next March; there are six more months of this.’
The source said of the pre-Budget negotiations: ‘Energy is devouring everything.’
Another senior Coalition source added: ‘This is a time for mature politics; no playacting. This is war time.’
Addressing TDs and Senators at the Fine Gael think-in in Kilkenny on Friday, Mr Varadkar said: ‘People will need help after Christmas and perhaps throughout next year and we need to bear in mind that that’s a possibility.’
The Cabinet was informed this week that households face a trebling of their energy costs, which will result in annual costs of up to €6,000 for gas and electricity.
The escalating crisis has sparked calls for the Government to deploy the Covid contingency fund and its current Exchequer surplus .
One minister told the MoS: ‘This crisis is in the same realm as Brexit and Covid and may require a similar scale of response.’
Referring to the International Monetary Fund (IMF) bailout in the wake of the economic collapse in 2008, another minister noted: ‘The only difference between this and austerity is that
Ireland is, on this occasion, not
isolated. All of Europe is in this together. We have €6bn of a surplus, but we also have €4bn in the Covid support fund. Do the maths; there is €10bn there if necessary.’
Public Expenditure Minister Michael McGrath confirmed just under €4bn of the fund remains.
In response to parliamentary queries from Sinn Féin finance spokesman Pearse Doherty, Mr McGrath
said: ‘Budget 2022 made provision for up to €7.5bn in funding to continue our response to the Covid pandemic and for the Brexit Adjustment Reserve. Following the Revised Estimates in December 2021, €3.9bn of this funding remained unallocated.
‘This contingency is held in reserve centrally to allow Government flexibility to respond to emerging needs during the year.’
Finance Minister Paschal Donohoe and Mr McGrath are likely to fight calls to unlock the Covid fund and Exchequer surplus to help offset soaring energy costs.
A Government source said: ‘Any attempt to raid the Covid fund will be fought tooth and nail by Paschal
and McGrath.’ But one minister
insisted: ‘Nothing is off the table; tax cuts, the [proposed new] 30% rate, whatever is required to get people through the winter and the spring will be done.’
In an indication of the escalating scale of the crisis, Mr Varadkar also issued a stark warning to senior colleagues about the impact of spiralling energy costs on the country’s increasingly vulnerable multinational sector.
The Tánaiste told the Irish Mail on Sunday that: ‘On the large energy users, my department has made a submission. These are mostly manufacturing facilities like pharma, food, microchips [not data centres].
‘We need to stay competitive. We can’t have higher energy costs that
are all that much higher than other developed Northern European nations or we will lose future jobs and future investment.’
Mr Varadkar expressed unease over the impact of rampant fuel inflation on ordinary households.
He told the MoS: ‘Of course we’re concerned about the impact high energy bills will have on businesses and the people who work there.
‘We have record levels of employment all across the country now, but we can’t take that for granted.’
But he vowed that, ‘having saved so many businesses and jobs during the pandemic we’re simply not going to allow viable businesses to fail now as a consequence of Putin’s war on Ukraine.’