Budget day 2022: 17 billion euros to repair purchasing power | News report

News item | 20-09-2022 | 15:30

The Netherlands is struggling with historically high inflation. Energy bills have risen sharply this year and will remain high until the announced price cap. Many people worry about whether they can continue to pay their bills. With a package of 17 billion euros for 2023, the government wants to mitigate the negative effects of high inflation as much as possible. And thus protect a growing group of vulnerable households. The government also wants to offer prospects to lower and middle income earners. Based on the principle that work must pay. In addition, in line with the coalition agreement, the government is taking steps to make the labor market future-proof, fight poverty and improve the relationship between citizens and government. Ministers Van Gennip (Social Affairs and Employment) and Schouten (Poverty, Participation and Pensions) write this in their budget presented to the House of Representatives today.

After the far-reaching corona crisis, Dutch society and our economy have shown great resilience. We are still experiencing strong economic growth and unemployment is unusually low. At the same time, the Netherlands is currently facing new challenges. Due to historically high inflation, many people are struggling to make ends meet. Therefore, the government is taking measures to improve people’s purchasing power.

Purchasing power target

The government is making €17 billion available to protect the most vulnerable people and offer lower middle income prospects. Never before has the government invested so much money in purchasing power repairs for households. Just under 12 billion euros of this is for ongoing measures in 2023, such as a continuation of the energy supplement of 1,300 euros via municipalities, which they can partially pay out this year. In addition, there is an increase in the health benefit, an increase in the children’s budget, a reduction in the energy tax (this changes if there is a price ceiling) and a reduction in fuel taxes.

It is important to improve the starting position of people with lower incomes. The government also wants to offer prospects to middle-income households. An important principle here is that work must pay. After all, work is the most important source of income for most people. That is why almost 5 billion euros will go to structural measures, including: a 10% increase in the statutory minimum wage (WML), an increase in the employee’s tax credit, a reduction in the rate of the first wage and income tax level and an increase in the housing allowance. A higher child-related budget will also remain structurally available, for which an additional €100 million will be made available per year. Furthermore, the higher minimum wage also affects the associated benefits (such as AOW and social assistance) and is expected to lead to wage increases in the pay scale just above the minimum wage.

As a result of these measures, we generally see a positive picture of the purchasing power of Dutch households in 2023. This plus does not offset the unusual decrease of 6.8% in 2022. The purchasing power picture of 2023 must therefore be seen in the context of 2022. Furthermore, there are large differences on how the increase in the energy bill affects households. This largely depends on income, the type of energy contract, energy consumption and the type of house you live in.

To help residents of the Caribbean Netherlands meet their necessary living costs, the cabinet also wants to increase the minimum wage and minimum benefits there. The energy grant will also be extended next year, the personal contribution to care will fall and the child grant will increase.

Fighting money problems, poverty and debt

The government is committed to reducing poverty and paying special attention to children. The purchasing power measures will reduce poverty among both children (6.9%) and adults (5.1%) in 2023 and fall below the level in 2021. Without the measures, poverty would increase further next year.

More and more households are threatened with financial problems due to the sharp rise in energy prices. The government is taking measures to prevent them from being cut off from energy and to avoid debt as much as possible. Nevertheless, it is expected that more households and entrepreneurs will call for municipal debt relief. The municipalities therefore get extra resources to be able to offer debt advice to more people. In addition, the government wants to make extra use of voluntary organizations to support people with money worries. The cabinet also makes more money available to national institutions working to reduce child poverty and for food aid.

It also makes €35 million available to help students in serious financial difficulties as a result of high energy bills.

Labor market plans

Many employers are looking for staff, but at the same time there is a significant difference between people who have a fixed and a flexible contract. The risk of flexible contracts lies with the workers. Therefore, the cabinet abolishes guard contracts, except for pupils and students. It also tackles bogus self-employment and there will be a certification requirement for temporary agencies.

The government also wants to strengthen the learning-developing culture in the workplace. Therefore, there will be learning rights for those with a practical education and the STAP scheme will get an additional €500 million (over four years) specifically for people with a maximum of an MBO-4 diploma.

The relationship between citizen and government

The government wants to improve relations with citizens. It does this, among other things, by simplifying laws so that people who are entitled to benefits or benefits actually receive them. Implementing organizations will also provide more customization. To make this possible, the cabinet will invest a total of 600 million euros in the implementation of and services provided by UWV, SVB, the tax authorities and DJI in the coming years.

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