MPs pass France’s purchasing power law: What does it include?

From the end of the TV licence to continued caps on fuel price rises, we summarise the key points of the new bill, which now goes before senators

Close-up view of the sign 'Assemblee Nationale' in golden letters at the entrance of the Palais Bourbon, seat of the French National Assembly in Paris, France
MPs in Parliament have now voted through the text but it must still be approved by the Senate
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A second bill aimed at increasing people's spending power (pouvoir d’achat) has now passed through France’s lower house of Parliament. This is another step forward as the government tries to introduce a series of packages to help combat rising prices due to inflation.

The Assemblée nationale voted the bill through overnight on Tuesday, July 26. This allows France’s annual budget to be modified to finance new measures and is tied to another emergency spending power bill that MPs agreed to last week. Last week’s bill included measures such as allowing people to use cooking oil as fuel and increasing pensions.

Read more: Cooking oil as fuel, pensions: MPs approve French spending power bill

This latest bill, which includes plans to end the TV licence, increase a nationwide fuel discount and re-nationalise EDF, will now have to be voted through by the Senate before it comes into law.

We outline below the key measures that currently make up the bill, although some elements may change after amendments by senators.

The end of the TV licence

MPs agreed to this key part of President Emmanuel Macron’s election campaign promises, mainly due to support from the right-wing Les Republicains (LR) and far-right Rassemblement National.

The measure will save 23 million households €138 per year.

Minister for Public Accounts, Gabriel Attal, said that the measure would not impact the independence or quality of broadcasting content, despite some critics saying that the move is a “bad idea”.

Culture Minister Rima Abdul Malak said that "it is not the licence fee that guarantees independence" but Arcom (ex-CSA), the body that appoints the heads of public broadcasting.

The money will be replaced by a minimal part of VAT funds – amounting to about €3.7 billion overall.

Read more: MPs vote to formally end licence fee in France

The fuel rebate

A compromise on the rebate was reached with MPs agreeing that the fuel discount should increase from 18 cents per litre to 30 cents in September and October, and then drop to 10 cents in November and December.

The MPs also voted to double the tax-free aid that companies can pay to employees to cover their fuel costs, raising the ceiling from €200 to €400.

Read more: France set to increase fuel refund from 18 to 30 cents in September

Continuation of the energy price rise cap

The bill also provides for the continuation of the energy price rise cap, which was introduced at the end of 2021.

This scheme caps the increase in electricity bills at 4% and freezes gas prices at their October 2021 level. It is expected to be extended throughout 2022.

Economy Minister Bruno Le Maire also confirmed that "by the end of 2023, we will put an end to regulated tariffs [for gas] to comply with European rules".

On Monday, MPs already approved a €230 million funding package to help households that still heat their homes with fuel oil, against the advice of the government, which favoured “more targeted” aid of €50 million.

Read more: France approves €230m aid for households that heat homes with oil

Nationalisation of EDF

As expected, MPs approved state funding for the 100% re-nationalisation of EDF, a €9.7 billion deal designed to get the electricity generation and supply group out of its financial rut.

The measure was adopted by 209 votes to 156.

Economy Minister Mr Le Maire argued for the "relaunch of the nuclear programme in France", with six new EPR reactors set to open.

He said: "Nuclear power has suffered terribly from industrial abandonment in recent years”. However, he was criticised by members of the French Green party (Europe Écologie Les Verts) and the hard-left La France Insoumise, who voted against an "all-nuclear" approach.

Instead, they called for a national debate “on the energy future of France".

Raising the cap on tax-free overtime

The MPs agree that overtime should be tax-free this year up to €7,500, compared to €5,000 previously, for income in 2022.

Mathieu Lefèvre, MP for the government’s Renaissance party and text rapporteur said: “We want work to pay and to pay better.”

LR MP Isabelle Valentin even called for "a complete exemption from tax for overtime", with no cap, but her amendment was rejected.

However, Green MP Sophie Taillé-Polian warned that the bill could encourage burnout. She said: "In our country, there is an intensification of work…we must not wear out employees!"

The conversion of RTT (paid leave) into salary

The bill also allows for employees to be paid for unused leave, and convert these days into salary. As with the de-taxation of overtime, a ceiling was set at €7,500 per year.

€120 million in compensation for each department

In a somewhat-surprise amendment, MPs agreed that departments should receive this funding to compensate them for an increase in the revenu de solidarité active (RSA) benefit, which aims to provide an income for unemployed and underemployed people in order to encourage them to work.

Read more: RSA: What is France’s back-to-work social benefit and who is eligible?

Index point revaluation for civil servants

MPs agreed that the index point for civil servants should be increased by 3.5% (this is used to calculate their wages). This was expected, however, and was only a formality.

The measure had already been announced at the end of June by Civil Service Minister Stanislas Guérini. The decree was published on July 8 in the Journal Officiel, with retrospective effect from July 1.

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