Dáil Éireann Debate, Thursday - 23 May 2024
50. Deputy Matt Shanahan asked the Minister for Enterprise, Trade and Employment the main supports to the SME sector his Department is proposing, including additions to the increased cost of business scheme; and if he will make a statement on the matter. [23223/24]
View answerIt is refreshing to see three Ministers from the Department taking questions. It shows the importance of the Department. My question relates to the main supports for the SME sector the Department is proposing, including additions to the increased cost of business scheme.
I thank Deputy Shanahan for posing this important question. The Government has adopted a proactive approach in supporting the Irish SME sector across multiple crises over recent years. Over the two-year period to budget 2024, a total of €12 billion was provided in cost-of-living and doing business supports, comprising a mix of permanent and one-off measures, most significantly the temporary emergency support scheme.
Budget 2024 also continued several measures which will support businesses, like the €257 million in support announced through the increased cost of business grant; the 9% VAT reduction for gas and electricity which was extended for an additional 12 months until 31 October 2024; the temporary excise rate reduction applying to auto diesel, petrol and marked gas oil which was extended until 31 March 2024; and an increase in VAT registration thresholds for the SME sector.
I recognise that costs are impacting firms and this motivated the recent introduction of a range of additional measures aimed at reducing costs for small and medium-sized businesses. These include: ensuring the employer PRSI threshold is explicitly considered as part of the Low Pay Commission deliberations and is reviewed on each occasion that the minimum wage is increased; increasing the employer PRSI threshold from €441 to €496 with effect from 1 October 2024; reopening the increased cost of business scheme for another 14 days and launching a second phase of the scheme targeted at businesses in the retail and hospitality sector; doubling the innovation grant voucher from €5,000 to €10,000; increasing the maximum amount available under the energy efficiency grant scheme to €10,000 and reducing the business contribution rate from 50% to 25%; widening the eligibility for the trading online voucher and doubling the grant to €5,000; increasing the lending limit for Microfinance Ireland loans to €50,000 from €25,000; widening the eligibility for the digital for business consultancy scheme; launching a new Ireland’s best entrepreneur programme to encourage entrepreneurship; and launching a new online national enterprise hub for SMEs to access information on the wide range of Government supports.
I welcome the extension of the increased cost of business, ICOB, scheme and the changes to the PRSI and VAT thresholds, which is something I and my colleagues in the Regional Group brought to Government some weeks back in a Private Member's motion. I wish to ask about the participation rate. How many businesses are accessing ICOB? What consideration has been given to those businesses that are not paying rates because their rates are bundled up with their rent, specifically those whose landlords cannot apply either, which means they cannot access to the scheme? How are those businesses to be supported?
Has the Government looked at other businesses that are very exposed because they are in labour-intensive sectors? These businesses face increases in associated employment costs, particularly in the areas of childcare, grooming, leisure and homes industries. Some of these businesses are really suffering, and while the ICOB scheme and some of the other initiatives the Minister announced are welcome, they are not going to fundamentally change the cost perspective for these businesses.
When the scheme closed a week ago, we had about 76,000 registrations. That was roughly 60% of all businesses that qualified for the increased cost of business grant. A decision was then taken to open the scheme for a further two weeks and to run a very strong and robust advertising campaign, which we hope will encourage additional uptake in the run down to next Wednesday. I appeal to businesses to apply because this money is there for them.
Regarding businesses that do not qualify because they are over the €30,000 threshold, there are other supports contained in my package, working with Ministers of State, Deputies Calleary and Higgins, that will meet their requirements. These include the PRSI change Deputy Shanahan referenced and the supports for energy efficiency, which can reduce their monthly bills by more than €1,000 with simple measures like changing their LED lighting and refrigeration and helping with other capital costs, which will assist businesses into the future. This is a strong package, working under the budgetary framework. I have met with a number of business groups and am working with them to develop a very strong package in the next budget.
As the Minister knows, some of the burden in costs is due to the environment of increased costs inflation, but a large part has been brought about by the progressive costs introduced by the Government. I have advocated for quite some time to Deputy Varadkar, when he was Taoiseach, and to Deputy Coveney, when he was Minister, and now I am saying it to Deputy Burke as Minister, as I have said it to the Minister of State, Deputy Calleary, about the importance of having a proper consultation on the Labour Employer Economic Forum, LEEF. I ask the Minister to assist in bringing ISME onto the Labour Employer Economic Forum so that we have a proper discussion on costs and we do not go off on a solo run, as we did the last time, in terms of adding costs of employment onto businesses. The SME sector has to be considered in those negotiations.
The most obvious thing in terms of the food and hospitality sector is a return to the 9% VAT rate. It is absolutely critical in that sector. The Minister has outlined that some costs are going to be deferred for a number of months, such as excise and so on, but does he have any concerns about the four months of declining consumer confidence? This is being seen in footfall, especially in the food and hospitality sector and most notably in small café sector. The Minister is going to have to look again and I ask him again for a return to the 9% VAT rate.
Again, I thank the Deputy for his question. We have worked with all sectors. I met ISME yesterday, along with another number of business sectoral groups. We are working with them to progressively keep improving the business environment in which they operate. I point out that inflation has halved since November 2022. That demonstrates that Government policies are working. We really did tackle it in the best way we could by mitigating the pressure on vulnerable people and by introducing strong business packages of €12 billion over the previous two budgets. We will continue to work closely with businesses. I also point out that other robust evidence we have seen is that we have approximately 2.8 million people employed and that, for every ten businesses opening in our economy, only one is closing. It is very important to look at the evidence.
However, I am absolutely aware there are pressure points. We are very much aware that 60% of our national minimum wage workers rely on the retail and hospitality sectors for their employment. We will be working closely with those sectors in the horizon up to the next budget. That will give us a chance, as three Ministers, to put down a strong mark that we are really listening to businesses. We have done it with the package we introduced in the past week and I am happy to say it has received a good welcome from businesses, notwithstanding it is modest, and we have to be honest about that. It shows, however, that we as a Government are listening and are doing our very best to support businesses at a time when consumer and discretionary incomes are under pressure, and we accept that.
