Cities call for housing benefit hike to offset rising heating costs

With rising energy prices posing a major concern to low-income families in Germany ahead of winter, the German Association of Cities is calling for the government to provide financial assistance via social security and tax relief. 

Raise housing benefit to offset cost of heating, German cities demand

“The high energy prices at the beginning of the cold season are worrying us,” said Helmut Dedy, chief executive of the association, in an interview with the Rheinische Post. “The federal government should support those affected - with electricity price support and housing benefits.” He added that no one should sit in a cold home this winter because they cannot afford heating. 

Specifically, the Association of Cities is calling for the heating subsidy - part of housing benefit - to be increased for households with low incomes. “This affects over 660.000 households in Germany, 153.000 of them in North Rhine-Westphalia alone,” said Dedy. 

Last year, the government offset a rise in the CO2 tax for low-income households receiving housing benefits with compensation for heating costs. Dedy indicated that this approach could be used as a model for the coming winter. 

Association calls for shakeup of taxes on energy in Germany

He also suggested that the government could further relieve households by abolishing the so-called EEG surcharge, a tax added on to the price of electricity in Germany to fund renewable energy sources. According to Dedy’s proposals, this could be part of a wider shakeup of taxes and charges in the German energy market.  

The government has already announced that it will slash the surcharge by 40 percent in the coming year - bringing it down to its lowest level in 10 years - but according to Dedy, that does not go far enough. “The new federal government should abolish the EEG surcharge,” he demanded. 

The SPD, Green and FDP parties, which are likely to form Germany’s next government, have said they want to stop funding the EEG levy via electricity costs as soon as possible - but they are yet to say exactly when, and how renewable energy will be financed after it is abolished. 

The cost of heating a house has risen significantly over the past 12 months, by as much as 25 percent for some households. In late 2020, the average price of a kilowatt-hour had fallen to a 15-year low of 5,44 cents, but by October the price had climbed to 7,01 cents. Industry experts believe that prices might soon exceed the previous peak of 8,09 cents per kilowatt-hour, set in 2008.