Louise O'Reilly (Dublin Fingal, Sinn Fein) | Oireachtas source

There is no doubt that our small companies are struggling. Small and medium-sized enterprises are, as everyone has said, and as I know the Minister of State will acknowledge, the backbone of our economy. I thank Teachtaí Dála for engaging with the food and catering sector, listening to its concerns and bringing forward this constructive motion.

This issue resonates far beyond the employers and business owners and beyond the many people who work in the sector. When well-known restaurants and pubs close down, it is felt right across society. These businesses make up an important part of our culture and are part of the social fabric of every city, town and village. We cannot have vibrant communities without a viable hospitality sector.

Covid had a profound impact on the sector. That fact cannot be overstated. Since then, SMEs up and down the State, like households, have endured an unprecedented energy shock. There is no doubt that some of that was caused by international events and some of it was caused by Government inaction, even opposing attempts to address the runaway energy bills at EU level. This was further compounded by rapid increases in import costs. This has placed a real strain on many sectors.

The temporary business energy support scheme, TBESS, rolled out by the Government to support small businesses with their increased costs, was an abject failure. It excluded far too many businesses. Many rural businesses rely on LPG and many restaurants rely on forms of non-metered gas for cooking, and they were also excluded. That is why the CEO of the Restaurants Association said, in response to budget 2025, "We fully expect this new grant to be as ineffective as the failed Temporary Business Energy Support Scheme". I therefore ask the Minister of State not to take my word for it but to listen to the people representing the sector. It is no surprise that only a small fraction of the money allocated made its way into the accounts of small businesses. Many businesses are struggling because of the impact of Covid, energy shocks and the increased cost of doing business, including increases in labour costs.

I absolutely reject the Government narrative of constantly pitting business against workers and workers against business. It is absolutely shameful. All sectors of the wider economy need to move away from low pay. Sinn Féin is committed to making work pay in every sector, but we know that we need to protect employment. We need to help businesses adjust. We are keenly aware of the challenges the food and catering sector faces. That is why in our alternative budget Sinn Féin proposed a €250 million PRSI rebate scheme to help business with rising wages without incentivising or rewarding low pay. We are also looking very seriously at how we target supports specifically to the hospitality sector and how we protect low-margin, high-employment businesses, particularly small independent operators. We are listening to the sector. Sinn Féin recognises the need to make a clear distinction between the wider hospitality sector and hotels that use aggressive dynamic pricing, a practice that actually harms the rest of the hospitality sector, which is made up of businesses providing a lot of employment.

The motion calls for food and catering services to be specifically targeted for a reduction in VAT. It should be noted that alcoholic drinks currently have a VAT rate of 23% as well as excise duty and will not be reduced by this measure. Many pubs in Ireland have been forced to close their doors. Rural towns have been left without a local pub. Many large areas in Dublin no longer have a local pub, and more than 2,000 pubs have closed in the past 20 years. What is really concerning is the rate of closures we have seen over the past five years. Pubs are part of our culture and should always be given equal consideration to restaurants. Pubs under this measure will benefit only insofar as they serve food and non-alcoholic drinks. It is a positive side of this proposal that they will benefit in any way, but not all pubs should have to become restaurants just to survive.

It should also be noted that by specifically reducing the VAT rate on food service, hotels will benefit as the vast majority also incorporate a restaurant on site. Hotels that engage in aggressive dynamic pricing will benefit, although not directly, because, as we know, accommodation is not included, but I am not comfortable with tens of millions of euro being given over to hotels that have priced ordinary people out of a trip to the capital city just to see a concert, watch a match, do a bit of shopping or whatever. They are simply way out of the reach of ordinary people. My colleague Deputy Pearse Doherty raised previously a situation where it was €200 cheaper to fly to Rome for a concert than to travel up the road to Dublin and stay a night in a hotel here after the concert. That is a scandal. That is not, and should never be accepted as, normal, and that should absolutely not be rewarded.

The cost of a VAT reduction to 9% for a full year is estimated to be €764 million. Even where the measure is restricted to food and catering, the estimated full-year cost is €545 million. The reduction of the VAT rate must be considered in terms of the policy aim of such a reduction. It is clear that in the context of this motion the policy aim is to provide a fiscal support specific to the food and catering services rather than as an incentive to reduce prices. That is a legitimate aim and should be considered. The approach being taken in this motion is to limit the 9% VAT rate to food and catering. This would mean that other important sectors of hospitality such as entertainment and hairdressing would not benefit. The cost of including those two subsectors, which, along with accommodation, make up the tourism and hospitality sectors, would be €24 million and €36 million, respectively. Those subsectors should be included in any form of support. Pubs, restaurants, cafés and entertainment venues, and hairdressers that are classed as hospitality for VAT purposes, are vital parts of our economy. It is estimated that 170,000 people are employed in the food and hospitality sector alone. There has been a decline in the total number employed in the sector since 2019. Analysis reveals that insolvencies reached the highest level in five years after a 25% rise in 2023. Of the 663 insolvencies last year, hospitality and construction experienced a 62% increase, showing that inflation is having a particularly potent impact on these sectors. This trend has continued. Insolvencies in the food and hospitality sector more than doubled in the first three months of this year. The issue at stake here is jobs and livelihoods and no measure should be off the table.

In the time I have left, I want to raise with the Minister of State the issue of sick pay because I am confused, as are many workers. As she knows, as regards the sick pay scheme the Government eventually brought in having come under serious pressure not just from us in the Opposition but also from the trade union movement and wider lobby groups, there were already huge difficulties with low-income workers accessing it, but it was due to expand in January. I have seen the Fine Gael leaflet that promises that it will not expanded. I also asked the Minister of State, Deputy Calleary, in a Topical Issue debate last week if the planned increase would go ahead. He told me that it is under review. The Government should not mess with people's sick leave entitlements. They are an important public health instrument and not something it should play with. Low-income workers absolutely need it, and to say on the one hand that it will be increased but, on the other, that it will not and then, on the third hand, if that is possible, that it is under review is deeply unfair.

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