Peter Fitzpatrick (Louth, Independent) | Oireachtas source

The Regional Group and I have remained steadfast in our commitment to advocating for the prosperity and growth of SMEs within our towns and villages to ensure that the voices and needs of small business owners are not only heard, but also acted upon. Microenterprises and SMEs are not merely a segment of our economy, they are its very pulse. SMEs constitute 95% to 98% of all businesses, produce 50% of GDP and generate 1.2 million jobs in Ireland, representing 99.8% of active enterprises. Their ability to innovate, generate employment and contribute to regional development makes them indispensable.

Many SMEs, including rural and regional businesses, have been hit by a wave of cost drivers. They have to deal with the cumulative impact of increases in energy, inflation and insurance along with enhanced wage costs as workers seek higher wages to compensate for higher living costs and on the back of successive increases in the national minimum wage and higher PRSI. For example, the minimum wage was increased to €12.70 in January but employers argue they were landed with higher costs because the PRSI threshold for the higher rate remained the same. On top of this, local businesses in my constituency of Louth and east Meath have highlighted their concerns over plans for pension auto-enrolment and extended sick-pay entitlements on top of VAT increases. SMEs are finding it very difficult to continue trading. According to the Restaurants Association of Ireland, the single biggest driver of costs, accounting for €37,000, relates to the increased VAT rate, which is why I and my colleagues in the Regional Group brought a motion in February to cut VAT and PRSI rates for struggling SMEs.

I am grateful that the new Minister for enterprise, Deputy Peter Burke, has listened and taken action. The new enterprise support package for small and medium-sized businesses, particularly those in the hard-pressed hospitality sector, signals a new approach to addressing the very significant competitiveness pressures facing businesses.

According to PwC, SME insolvencies accounted for 85% of the total recorded in the first three months of this year. Four out of every eight insolvencies were within the hospitality and retail sectors. These numbers do not capture the many small businesses that are currently teetering on the edge of insolvency or those that decided to shut up shop before they went bankrupt. The Government needs to target these businesses with this plan, the centrepiece of which will allow them to claim up to €10,000 back against their commercial rates.

The increased cost of business grant was very well received in Louth, so it is great to see it reopened for new registrations, as well as the announcement that a second payment will be made to all businesses in the retail and hospitality sectors, as these are the businesses most exposed to increased costs. This will mean a further payment of up to €5,000 will be available to all such businesses, paid directly into their bank accounts. On top of this, it is encouraging to see the increase in energy grants. Any business in my constituency of Louth and east Meath, and indeed across the country, that wants to upgrade its equipment to ensure better energy efficiency and lower bills will now only have to pay 25%, with the Department providing a 75% grant of up to €10,000. An example of equipment covered includes heating or lighting upgrades.

One of the Government's 2024 goals is to actively promote loans among entrepreneurs, especially among minority groups such as women, migrants, seniors, youth and people with disabilities, to ensure that these missing entrepreneurs have an opportunity to start a business and realise their dreams. This aligns with the 2020 programme for Government, which includes a commitment to scale up Microfinance Ireland in order to support greater numbers of small businesses and start-ups in accessing finance. Increasing the lending limit for Microfinance Ireland loans to €50,000 from €25,000 and launching a new Ireland’s best entrepreneur programme to encourage entrepreneurship and start-ups in under-represented groups are promising steps forward.

Nevertheless, although the grants are available to approximately 143,000 businesses across the State, it must be noted that, with the deadline imminent, a low percentage of businesses have registered for the support package offered by the Government in the budget. While launching the new online national enterprise hub within this plan for SMEs to access information on the wide range of Government business supports is welcome, we need to consider why businesses are not registering. From speaking with people in various businesses in my constituency, the process needs to be simplified.

It is also important to note the interdepartmental work progressing within this support package. The Minister for Social Protection, Deputy Humphreys, has confirmed that she will increase the employer PRSI threshold from €441 to €496 with effect from 1 October 2024. This means that employers will not be required to pay the higher rate of employer PRSI of 11.05% and will instead pay the lower rate of 8.8%. This will be a lifeline for many businesses. In addition, the Minister for Housing, Local Government and Heritage will shortly issue a circular letter to local authorities informing them that no fees shall be charged or levied on tables and chairs for the purpose of outdoor dining up to 31 December 2024. This is expected to save €125 per table for hotels, restaurants, public houses and other establishments where food is sold for consumption on the premises.

The head of the Restaurants Association of Ireland highlights, however, that although these measures will give additional headroom to SMEs that are struggling, fundamental cost issues remain, given the scale and nature of the problems facing the sector, especially the current string of restaurant closures.

The only way the Government can halt closures and secure the vibrancy of towns and villages across the country into the future is by reinstating the 9% VAT rate.

Our small businesses are the backbone of our economy and provide much-valued employment in communities across the country. It is not only important that we relieve the pressures and costs put on these sectors, but also that we safeguard jobs and protect the industry. I have spoken to many businesspeople in Dundalk, Louth and east Meath over recent months. I am been flabbergasted at the cost increases they are facing. These businesses need every support we can give them to keep their doors open. These measures represent agreement from across Government on the need to support our SMEs in the face of rising costs. I will continue to advocate on behalf of small businesses and traders. I look forward to budget 2025 to highlight further Government commitment to this critical sector, ensuring that the voices and needs of small business owners are not only heard but also acted on.

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