Thursday, 16 December 2021
Ceisteanna ar Sonraíodh Uain Dóibh - Priority Questions
Covid-19 Pandemic Supports
90. To ask the Minister for Finance the position regarding the employment wage subsidy scheme, EWSS, in response to further public health restrictions imposed to reduce the spread of Covid-19; and if he will make a statement on the matter. [62420/21]
As the Minister will be aware, the EWSS has been instrumental in saving thousands upon thousands of jobs across the country over the past couple of years. There have been some recent changes to it, however. Perhaps he could outline these changes because I am receiving many queries from small and microbusinesses across my constituency.
I propose to take Questions Nos. 90 and 91 together.
The objective of the wage subsidy scheme is to support employment and maintain the link between the employer and the employee insofar as is possible. The EWSS has been a key component of the Government's response to the Covid-19 crisis. It is an economy-wide scheme that operates across all sectors. In monetary terms, the overall support provided today by the EWSS is more than €6.6 billion, comprising direct subsidies of almost €5.7 billion and PRSI forgone of €902 million to 51,700 employers in respect of more than 696,900 employees.
The eligibility criteria for the EWSS are based on self-assessment principles. The legislation provides that an employer must be able to demonstrate that his or her business will experience a 30% reduction in turnover or customer orders between 1 January and 31 December 2021, by reference to the corresponding period in 2019, as a result of the business disruption caused by the pandemic.
I draw attention to the fact that despite the exit from most public health restrictions during the summer, eligibility criteria were not tightened in the Finance (Covid-19 and Miscellaneous Provisions) Bill 2021, which was enacted in the summer and which extends the scheme beyond the end of June 2021. Indeed, the reference period to which the metric must be applied was broadened in that Act to span a full year, thus relaxing the conditionality to qualify to benefit from the scheme in most cases.
Many businesses were fully closed or limited in their capacity to trade due to the public health restrictions in place during the earlier months of 2021. This change in the assessment period meant that such businesses could generate the equivalent of up to 70% of their calendar year turnover from 2019 or customer orders for the remainder of 2021 and still remain eligible to claim support under the scheme.
To address the specific question regarding businesses, for example, hotels that are operating at just over 70%, such businesses would not be eligible for the EWSS as their turnover exceeds the threshold for support. The scheme is a calibrated in such a way as to ensure support is available for those businesses most adversely impacted by the pandemic. The eligibility requirement of a 30% reduction in turnover has been a key feature of the scheme since its since introduction. I have no plans to alter that criterion.
Deputies will be aware that against the background of the imposition of revised public health restrictions, the Government decided last Thursday that the enhanced rates of the EWSS subsidy will apply for a further two months, that is, December of this year and January of next. This will give certainty to businesses when they need it most.
In addition, the Covid restrictions support scheme, CRSS, is being extended to the end of January. Provision is also made to allow me to extend this scheme up to 30 April 2022 by ministerial order if deemed necessary. As Deputies are aware, and I thank them for their support last night, amendments to the Bill were tabled this week to give effect to the EWSS and CRSS schemes mentioned.
To conclude, the Government will, as we have done since the onslaught of this pandemic, continue to monitor developments closely and make the right decision at the right point.
I thank the Minister for that very useful response. I have a specific question. I am glad he brought up the hospitality industry. As we all know, there is quite a large fluctuation in turnover in hospitality businesses because of the seasonality associated with their sector. Is it a case that if a hotel, for instance, is not enrolled in the EWSS scheme for the month of December, it is also not eligible for entry to the scheme for January? If it is the case that it is also ineligible with regard to turnover for January, is that something the Minister might wish to consider amending?
The answer to the Deputy's first question is "Yes". In order for a company to participate in this scheme from next year, it must be participating in the scheme for the month of December. I am aware of concerns that have been raised by a number of hotels that have a very high seasonal dimension to their business.
For a hotel or any business to be excluded from the scheme at the moment, however, means that its business performance is better than a 30% decline against the period in 2019. That means that business is trading probably not in line with how it would have hoped given the pandemic but is still trading better than a 30% decline in its turnover. The challenge is that any threshold I fix will have businesses that fall just outside of it. I am aware that is the case for some.
I thank the Minister for that clarification. To address the final part of my question, I accept his bona fides that the EWSS is to support jobs and employees. Reports have emerged over the past 48 hours, however, that some of the money used to subsidise companies went on to basically provide dividends for shareholders, which is not the intended goal of the scheme. I know the Minister is not happy with that and has gone on record to say that he is seeking to tighten up the restrictions or conditionality associated with it. When are we likely to see higher levels of conditionality associated with the EWSS? Will it require any changes to primary legislation to bring that in?
The overwhelming majority of companies that have participated in the EWSS went into it because they genuinely believed they would need it at that point. They did so based on the effect of the pandemic on their business. The near overwhelming experience both Revenue and I have had is that of employers participating in the scheme in good faith. It is the case that a number of companies that found that their business performance was better than expected have returned the EWSS payment that was available. I will repeat what I said yesterday. Companies that find themselves in that position should consider their choices with regard to a scheme that has played such a vital role in protecting our economy and should continue to act in good faith.
With regard to the commitment I have given, I have said at this point that I will consider this matter. I want to be very careful that we do not make changes to the scheme that might preclude businesses that may well be profitable but are far less profitable than they were in the past from participating into the future and still need this scheme to have a viable and successful future.
My question to the Minister is on the 18% of hotels that will be excluded from the scheme due to their turnover going over the 30% threshold. Some of these companies have earned 71% and 72% on projected turnovers. This stops them from entering the EWSS. These 11,000 jobs must be protected. These 11,000 employees will end up being on the pandemic unemployment payment, PUP. At least if these employees are on the scheme, their employer is still paying a PRSI contribution into the system. It will help keep 11,000 people in jobs this year.
I thank the Deputy for raising this issue. I acknowledge that he has raised this with me on a number of occasions. I appreciate that a number of businesses we value and that provide very valuable employment to our country find themselves in a position that they are slightly outside the entry threshold of a 30% decline in their business.
This figure of 70% has now been consistently in place since our wage subsidy schemes have been introduced - both for temporary wage subsidy scheme, TWSS, and the EWSS. We have always had and clearly communicated an unchanging reference period for turnover and reference decline threshold. For some time now, under the EWSS in particular, we have maintained the approach that a business can only enter the scheme if their its turnover decline is 30% or more. I have no plans to change it because of how clear it has been for so long. Any threshold I fix is will face the challenges of business that are slightly outside of it.
Some 11,000 people could end up on the live register, which will cost money to the taxpayer anyway. If they are in employment, while there is a reduced PRSI contribution, their employer is still giving money back to the State. It does not cost the full amount to have somebody on a PUP payment. This keeps people employed. It keeps people within the sector that has been hit not only last Christmas, but now this Christmas. The Minister is interfering with their margins into next year. Not only are they down 28% or 29% this year, the Minister is now putting them in a position where they have no working capital for the first two months of next year. That is putting hotels in trouble, which may mean that he will have to correct that. They could end up with the banking system or the social welfare system. This is a way bigger picture altogether. This can be fixed for €7.5 million. Other companies have received €108 million under the scheme and they have been in the newspapers this week.
I am not interfering with any business; I am supporting business. While I appreciate the companies to which the Deputy has referred are facing many difficulties and challenges and they have like many other businesses had a tough couple of years, I reiterate that fundamentally the reason they are outside the scheme at the moment is their trading performance is better than a 30% decline versus 2019. For some time, we have made clear that to enter the scheme, a company’s change in business and change in turnover has to be greater than a certain figure. That was clearly communicated in budget 2022 and in many other statements from me during the year. Therefore, while I appreciate that not being able to access this scheme can have an effect on the business, equally it is important that I am consistent in saying that if the entry into this scheme is a certain figure, it does not change suddenly. It is for that reason that this figure is being maintained.