Money For Members

What's in Germany's support package for rising energy bills?

The Local
The Local - [email protected] • 5 Sep, 2022 Updated Mon 5 Sep 2022 10:44 CEST
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A woman in Germany holds cash notes in her hand. Photo: picture alliance/dpa | Daniel Karmann

From payments to pensioners and students to a new public transport ticket, here's what the German government is planning to help people with rising energy prices this winter.

What's happening?

The German government has unveiled a fresh €65 billion plan to help residents cope with soaring energy prices. 

Among the headline measures are one-off payments to pensioners and a plan to skim off energy firms’ windfall profits.

They were agreed by the ruling traffic light coalition, made up of the Social Democrats (SPD), Greens and Free Democrats (FDP). 

It came days after Russian energy giant Gazprom said it would not restart gas deliveries via the Nord Stream 1 pipeline on Saturday as planned after a three-day maintenance.

On Sunday during the unveiling of the plans, Chancellor Olaf Scholz said: "We will get through this difficult period as a country."

READ ALSO: Germany agrees €65 billion energy relief package

A glance at the key measures:

€9 ticket successor: Germany's hugely popular €9 ticket, which allowed people to travel on local public transport networks across the country, will be followed up. A new nationwide ticket is to be introduced by the coalition - and it is likely to cost somewhere between €49 and €69 per month.

According to the resolution paper, the government will contribute €1.5 billion a year to a ticket. The prerequisite is that the states provide at least the same amount, so this will need to be thrashed out and agreed. 

Electricity price brake: The coalition wants to introduce an electricity price brake for 'basic consumption'. This would mean that for a certain amount of electricity use, a discounted price should apply in the future. For additional consumption beyond that, the price would not be capped.

Plans to clamp down on energy firms' profits: Germany wants to work with the EU to stop firms from profiting from the crisis. Energy companies are earning "insane amounts of money" under the current system, Economy Minister Robert Habeck said in a statement. The EU said on Monday it would prepare "emergency" action to reform the electricity market and bring prices under control.

The trimming of windfall profits would create “financial headroom that should be used specifically to relieve the burden for consumers in Europe,” the German government said in its policy paper.

Home office allowance continues: Those who work from home will be able to deduct €5 per working day in income-related expenses from their taxes up to a maximum of €600 per year. The regulation was supposed to expire at the end of the year - now there is no end date. The measure was originally brought in during the pandemic. 

One-off payment for pensioners: A €300 payment for pensions is set to be paid out on December 1st. Under the plans it will be paid out with pension insurance in a bid to make it quick and unbureaucratic.

One-off payment for students: Students in Germany will receive a one-time payment of €200 in December. However, the payment method still has to be discussed with the states.

Heating allowance for those on housing benefit: From September to December 2022, a further one-off heating cost allowance is to be paid to recipients of housing benefit. After that, the subsidy for those entitled to housing allowance will be permanently integrated into the housing allowance. And the number of people entitled to housing benefit will be increased to two million under government plans. The housing allowance is also to include a permanent climate component and a permanent heating cost component to cushion rising energy prices to a greater extent.

No-one cut off from supplies: The government says that no households will be disconnected from electricity and gas if customers are unable to pay their energy bills - even if they are receiving assistance.

Help for lower earners: The limit above which social security contributions have to be paid will be raised to €2,000 for so-called midi jobs from 2023. This means lower earners will be able to keep more of their income.

What else do we know?

The package will also include some of the measures already outlined by the government, such as the plans by the Finance Ministry to help employees from seeing their pay increase be eaten up by inflation in a phenomenon, called “cold progression".

READ ALSO: Germany pledges inflation relief tax worth €10 billion

There will also be more support for families: Germany is planning to increase child benefits for families from the start of 2023.

Meanwhile, with the introduction of Bürgergeld at the beginning of next year, the coalition plans to increase the standard rates for the long-term unemployed to around €500 per month. Today, single people on basic benefits receive €449 per month.

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The Local 2022/09/05 10:44

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