Mr. Neil McDonnell:

Deputy Bruton addressed two issues to me. The first was on the rebate and the notion that it would be temporary. If I can be blunt for a moment, we say that the removal of the rebate ten years ago was a mistake. Therefore, the mistake should be reversed and the rebate should be reinstituted because the 0.5% charge on employers' PRSI is quite permanent. We are simply saying that the money is paid into the Social Insurance Fund by employers to fund statutory redundancy and one can only recover 60% of statutory redundancy. We understand that as well, because there had to be some moral hazard on employers to stop them laying off people willy-nilly. An employer bears 40% of the cost of laying people off. It was a mistake. If you make it very hard for businesses to lay off people when times are bad, they will be extremely reluctant to hire people full-time when times change. By way of illustration of that, one of the queries we get now from the grooming sector is that people are setting up hair dressing salons where they are not employing anyone: what they are doing is setting up a nicely branded salon and doing what is known as "rent a chair". They are letting people come in, which is discouraging full-time employment. The Government really needs to think about the unintended consequences of the actions that are taken.

On the zombie company issue, post the small company administrative rescue process, SCARP, there is no greater risk of zombies emerging from SCARP than there is from examinership. When an insolvency practitioner looks at an insolvent company and tries to put in a scheme of arrangement, in most cases he or she will be seeking equity. If no one is willing to put in equity, that is the first red flag that we are not dealing with a business that is going to survive. There is moral hazard in this system. If the creditors do not like it and if the insolvency practitioners themselves do not like it then it is not going to happen. Perhaps one of the advantages of the pandemic is that we are going to see a lot of zombie companies exit the economy because there is a considerable number of them. I know it is something that the Department of Enterprise, Trade and Employment tracks. We must bear in mind that where there is a good examinership regime, if we look at the UK, they will only rescue 10% to 15% of businesses that become insolvent. To be honest, I do not see a risk of maintenance of zombie companies.