Thursday, 8 February 2024
Ceisteanna Eile - Other Questions
5. To ask the Minister for Enterprise, Trade and Employment how many businesses in Clare are likely to qualify for the increased cost of business grant; what discussions his Department has had with Clare County Council in relation to this; and if he will make a statement on the matter. [5563/24]
17. To ask the Minister for Enterprise, Trade and Employment when is the rollout of the increased cost of business scheme going to happen and will he elaborate on the mechanics of the scheme; whether it has sufficient funding to address the crisis in small businesses and prevent a further raft of closures, especially among the hospitality businesses such as cafés and pubs; and if he will make a statement on the matter. [5439/24]
20. To ask the Minister for Enterprise, Trade and Employment for details of the increased costs of business grants announced in the budget; the amount per grant and when the scheme will begin. [5280/24]
22. To ask the Minister for Enterprise, Trade and Employment when the increased cost of business scheme will be activated as part of budget 2024; and if he will make a statement on the matter. [5546/24]
25. To ask the Minister for Enterprise, Trade and Employment to outline supports for the SME sector, particularly enterprises with less than ten employees, to assist with escalating operating costs; and if he will make a statement on the matter. [5756/24]
26. To ask the Minister for Enterprise, Trade and Employment the number of Carlow businesses that are likely to qualify for the increased cost of business grant; the discussions his Department has had with Carlow County Council in relation to this; and if he will make a statement on the matter. [5509/24]
32. To ask the Minister for Enterprise, Trade and Employment how many businesses in Tipperary are likely to qualify for the increased cost of business grant; what discussions his Department has had with Tipperary County Council in relation to this; and if he will make a statement on the matter. [5565/24]
38. To ask the Minister for Enterprise, Trade and Employment the number of Kildare businesses that are likely to qualify for the increased cost of business (ICOB) grant; the discussions his Department has had with Kildare County Council in relation to this; and if he will make a statement on the matter. [5511/24]
I thank the Minister for taking the questions. On budget day, the Minister announced that a €257 million pot is being made available for an increased cost of business grant scheme. I would like to know how many Clare businesses he expects to be able to avail of the scheme and, additionally, what engagement he and his departmental officials have had with Clare County Council in advance of this scheme being launched.
I propose to take Questions Nos. 5, 17, 20 to 22, inclusive, 25, 26, 32 and 38 together.
To give a direct answer on Clare, we think that 3,955 businesses will potentially benefit. I will now answer the question more broadly because other Deputies have questions in this regard.
The increased cost of business grant, announced in budget 2024, is intended to benefit particularly small and medium sized businesses operating from a rateable premises. The grant is intended to aid firms that have been affected by rising costs but is not intended to compensate directly for all increases in wages or other costs for every business. The total allocation for the grant is €257 million.
Officials within my Department are leading the introduction of this scheme, working in conjunction with the local authorities, the Local Government Management Agency, LGMA, the County and City Management Association, CCMA, and the Department of Housing, Local Government, and Heritage. A service level agreement is currently being drafted between my Department and the local authorities to underpin the operation of the scheme. This SLA will cover the delivery, funding and oversight arrangements for the grant scheme.
The administration of the grant will be carried out by local authorities with a view to providing relief in the first quarter of this year. Businesses will be contacted directly by their local authority. The grant has been set up in this way to ensure that the scheme is accessible to smaller businesses, which may have had difficulties availing of previous schemes because of form filling and bureaucracy. There is no intention to limit the scheme in any way related to employee numbers. A business must, at a minimum, meet the following eligibility conditions: it is a commercially trading business operating directly within a premises that is commercially rateable by a local authority; it has provided confirmation of its bank details to the respective local authority; it is rates compliant, including those businesses with a phased payment arrangement in place; and it is tax compliant and in possession of a valid tax registration number.
Data analysis was undertaken by my officials, based on data provided by Tailte Éireann, to estimate the number of potentially eligible businesses. With regard to each local authority, this analysis estimated that up to 3,955 premises in County Clare, 1,909 premises in County Carlow, 5,161 premises in County Tipperary and 4,639 premises in County Kildare could be eligible for the grant, and I can give figures for any county as Deputies wish. However, the final number of qualifying premises may differ as exclusions for vacant premises, non-rates compliant and non-tax compliant businesses are considered.
In relation to further supports for the SME sector, the local enterprise offices provide productivity and competitiveness supports to small businesses to cover lean, green and digital concerns. These include the trading online voucher, green for business and the energy efficiency grant. The “All in a Day's Work” national campaign also emphasises the benefits of these supports for businesses, namely, saving time, energy and money.
In short, what we are hoping is that businesses will get letters by the middle of February, or in and around that timeline. This is a busy time of year for local authorities, particularly their rates offices, but we certainly want to get those letters out. The letters are essentially to confirm with the business that it is still trading and that its bank account details are correct. Then, by the end of the first quarter, we want to have payments going out to businesses right across the country. There are over 140,000 businesses that we think will be eligible for the scheme, so it is a significant job for local authorities to get that funding out.
This is grant aid, not a rates rebate. We have simply calculated the grant on the basis of what businesses paid in rates last year, so any business that paid rates of between €10,000 and €30,000 last year will get a grant of €5,000 under this scheme, and there are about 15,000 businesses in that category. The other businesses paid rates of up to €10,000 and whatever they paid in rates last year, they will get grant aid of 50% of that amount this year, hopefully before the end of the first quarter, through the local authority SLA that we have in place.
I thank the Minister for the reply. It is a good scheme and I am glad that 3,955 Clare businesses will benefit.
The whole way of calculating and working out who will get what needs a little more thought, because this is based on the square footage of the floor space. It is based on the rate space. I found during the Covid period that there was real agility in the Government in identifying what businesses were suffering most and how best to support them. A model like that could be looked at once more. A rate space is just a matter of how much floor space a business takes up, but there are other metrics. I think the Revenue Commissioners could help in that regard.
I recently met with RGDATA, which represents many small- and medium-sized enterprises and retailers. They told me that the increase in cost per employee has been €4,200 per annum for business owners. I recently met with the owner of a very small supermarket in Clare. They have 15 employees. They have additional costs each year of €60,000 owing to the increased national minimum wage, the additional bank holiday, the additional statutory sick leave and auto-enrolment. It is crippling them. I think we need a little more than this scheme to ensure these businesses stay afloat.
I refer to everybody who is struggling and has been crippled by the huge increases in costs for small businesses, including staff costs, energy costs and professional costs. The Minister mentioned the rates. There are also higher maintenance costs and higher entertainment costs for small, non-chain pubs. There needs to be a look at the rates. The Minister is correct that €5,000 would be welcomed by any small business that is struggling. Yet, for many of those businesses, this will not ensure they will be open this time next year. One of the issues in Dublin, for instance, is that a huge portion of the property tax goes outside the city. That needs to be looked at. This means that Dubliners and Dublin businesses are not benefiting from the rates they pay. That needs to be looked at to ensure that rates are paid, or at least that they come down to address some of the problems. That is one of the big bugbears of small companies. The Minister needs to look beyond this one-off grant.
The Minister referenced the service level agreements. In his response can he indicate when that is sought to be finalised? He referenced that discussions were ongoing.
I welcome the acknowledgement from the Minister that the previous schemes - I assume he was referring to TBESS - were not taken up because of form-filling, bureaucracy and costs. I had heard the suggestion that small- and medium-sized enterprises were somehow part of some group scheme, etc., and did not need the money. It was money that they very much needed. I have already expressed my view on the return of €1.1 billion to the Exchequer. I think that money would and could have been drawn down had the processes been simpler or had more assistance been made available to people.
From the figures the Minister provided, €75 million from the sum of €257 million will go to larger premises. I assume the balance will go to the 135,000 other businesses. This will be what is left in the pot when the €75 million for the larger ratepayers is taken out. It will be split among the approximately 135,000 that are left.
I welcome the Minister’s response. There was a fair bit of detail in it. We woke up to news this morning that there has been 2.2% growth and 3.8% growth has been forecast for the economy for next year, which is obviously very welcome. Yet, all of us in this Chamber will know, including the Minister and Ministers of State, that many small businesses in particular are at the pin of their collars when it comes to the costs of running their businesses. The Minister has a list of figures before him. I would appreciate it if in his response he could mention the figures for Cork city and Cork county-----
-----and the businesses there that will be eligible for this scheme. Can he give people a realistic target for when we hope to have the money going into their accounts? Timing will be crucial in this. We are again waking up to headlines that state that two businesses are closing per day. Timing is therefore crucial for many small businesses. If we could expedite the process as quickly as possible, that would be very welcome.
I would like to ask about the number of Carlow businesses that are likely to qualify for the increased cost of business grants. As the Minister will know, and as previous speakers have said, small businesses are very heavily impacted by payroll, taxes, the higher minimum wage, PRSI, paid sick leave and now the new deposit scheme. This tax is an issue that has been raised with me a lot recently.
Businesses are under pressure and there is no doubt about that. I have seen a few recently closing in my own area in Carlow. Other companies have said to me that the warehoused taxes that will be due could have a huge impact on them as well. While I appreciate the work that has been done, I ask the Minister about the commercial rates system, which has been used to identify qualifying businesses. The key payment under the scheme is to be structured as a grant and not as a rates rebate. Therefore, what engagement has occurred with Carlow County Council so they can absorb the loss in any rates?
There were a lot of questions there and I will go through them. First, I refer to the Deputies who have raised their areas. From a Cork perspective, in Cork County Council, we expect that 15,718 businesses may be eligible. In Cork City Council, the figure is 6,857. Therefore, across Cork city and county, there are approximately 23,000 businesses that may be eligible. These are not small numbers. In Dublin City Council the number is 17,558; in Dún Laoghaire-Rathdown County Council it is 4,409; and in Fingal County Council it is 5,481. In Carlow, the figure is 1,909.
Approximately 96% of rate-paying businesses, or virtually all of them, are eligible for this scheme. The ones that are not eligible, of course, are larger businesses that are paying much larger rates, such as large retailers, large manufacturing facilities, etc., that may be paying rates of €40,000, €50,000, €60,000 or €100,000. Of course, very big businesses are paying much more than that. The idea here was to find a mechanism to get cash to businesses because we knew they would be under some pressure in the first quarter of this year as they are adapting to policy and other factors that have been increasing the cost of running their businesses. We wanted to acknowledge that as a Government, and to help them with cash flow. We wanted to concentrate on small- and medium-sized businesses.
We know that the experience of TBESS and other schemes is that when there is a lot of form-filling and bureaucracy, many of the smallest businesses will not get involved. This is because they would need to take on an accountant to do it and they would need to interact with the Revenue Commissioners to do it, etc. For all sorts of reasons, they are not inclined to respond. Having said that, there were 50,000 applications under TBESS. We spent close to €150 million in taxpayers’ money helping businesses with their energy bills. It was not a small contribution.
However, this is significantly more than that. This is more than €250 million. For some businesses, this will be a relatively small amount of money. We used the rates base because it was one of the few datasets that we knew we could access quickly. We could work with local authorities to effectively get money out to businesses without them having to apply or fill out forms at all. They only have to confirm that they are an operating business, they are tax compliant and they are rates compliant in terms of having an arrangement with local authorities. It was therefore a quick way of getting a lot of money out to a lot of businesses in a relatively short space of time. This is not an easy thing to do - trust me - but that is what we have done.
I will acknowledge that for many businesses, particularly in the areas of food retail and other forms of retail, there has been a combination of an increase in the minimum wage, the extension of statutory sick leave, planning for future auto-enrolment, a VAT increase since the last budget, particularly for the hospitality sector, parental leave, energy costs and supply chain costs. All these things together are making it very difficult for businesses in some sectors to make margins at the moment. We are looking at what we can do beyond this support to help those businesses.
The Minister, Deputy Michael McGrath-----
I thank the Minister for his response. He has listed some of the additional challenges and costs these businesses are facing. I would like to highlight one of them. Just last week, we all saw supermarkets unveiling new bottle and tin can recycling machines.
They cost €15,000 apiece but there is no Government support for that. They have all had to go down this route. There is a whole lot more that can be done for these businesses. Many are on the brink. Since 2019 our local shop and local pub in our village have closed. That is it. There is no more. That is our village gone. We are left with just a church, a school and a GAA field. That is so typical in many Irish communities. My worry is that this grant, while very welcome, and businesses will be glad to get it, will not be enough, given the rising costs they are facing. A sum of €4,200 per employee per annum is a hell of a lot of money, especially if one is employing 12 or 15 people in a village. Again, I do not think the rates base is enough. We used other metrics during Covid to drive supports to businesses. The rates base just reflects the floor space a business occupies but there is a lot more that we could consider.
It is good that the Minister acknowledges the huge costs being faced by small retail businesses, especially cafés and similar. Some of these costs have hit them quite suddenly and while they can plan for some, many small businesses are only surviving at this stage because the owner is not taking a full wage or has a second job. As Deputy Crowe just mentioned, in small villages owners have a loyalty to their community and they try hard to stay open. They need to know that there is an intervention coming down the track and while this one is welcome, they need to know that the Government will go beyond this. They also need to know that now so they can plan for the future because they cannot keep stretching the money that is coming into their businesses. Otherwise, they will have to shut up shop.
Just over 10% of the TBESS money was actually drawn down. I am not suggesting for a moment that it is an insignificant sum but there was a massive miscalculation on the part of the Government, either for the appetite for the scheme - I would contend that the appetite was most definitely there - or the capacity for small to medium enterprises to actually engage with the scheme. The Department returned €1.1 billion to the Exchequer. This was money that the Department negotiated, set aside and thought would be used, but then it was not used. It is welcome that the Minister has recognised the reasons for that but there is no denying that a drawdown of just over 10% is really not good enough.
Regarding the current scheme, €75 million will be taken out for the larger ratepayers. Based on the figures the Minister quoted, that leaves an average of €1,300 for the remaining business, assuming everyone gets the same amount. I appreciate that averages do not tell us everything but does the Minister anticipate that those businesses that qualify in the remainder category, that is, not the larger ratepayers, will receive around €1,300? When will the money be delivered? I know the Department is in talks about the service-level agreement and so forth but if he could give us a timeline on when the money will actually hit people's bank accounts, that would be appreciated.
I would like to reiterate a lot of what has been said by Deputies Crowe and Murnane O'Connor regarding the challenges. It is good to see that the Minister is also considering additional measures over the coming months to help businesses to meet those challenges. I agree with Deputy O'Reilly in relation to the timing. I have used my Dáil speaking time over the last couple of weeks, particularly in engagements with the Ministers of State, Deputies Richmond and Calleary, to stress the importance of timing here. I would hope that we can shave weeks off the processing time. I acknowledge that, in the case of Cork for example, processing 22,000 businesses is no mean feat. It is quite a big challenge for any local authority to undertake but shaving days, and hopefully weeks, off that processing time could make a really big difference to the various businesses. Again, I stress the urgency of this.
I also welcome the Minister's full support, particularly for the smaller businesses that are feeling all of the extra costs. In rural Ireland and in small towns and villages in counties Carlow and Kilkenny and other areas, small family businesses are part of the community and the environment. They play such a huge part and we do not want to see them closing. We want to keep all of our small businesses open. The Minister said he now realises that smaller businesses are under so much pressure. I know that he will consider funding mechanisms that will support them and keep them open. As the Minister of State, Deputy Calleary, is here I would like to refer to the most beautiful IDA business park in Carlow town which was built in the last year or two. Given that promoting businesses and getting investment into our rural towns and villages is so important, is there any update on the IDA park in Carlow town?
We are very reliant on the local authorities to get this payment out as quickly as possible. They have been hugely helpful. The CCMA and the LGMA have been very helpful. This was a big ask of them with very little notice, in truth. We put this scheme in place at budget time. It involved a lot of money going out to a lot of businesses in a relatively short space of time and it became very clear that we could not do it before the end of the year, which we would have liked to do. What the local authorities and the Department of housing, which has also been very helpful, have said is that they would endeavour to get it out in the first quarter of this year and that is still the target. However, there are lots of moving parts involved in making that happen which is why we are putting a service level agreement in place. That will be finalised shortly. My understanding is that letters should go out by the middle of February confirming bank account details and active businesses with a view to getting payments out before the end of the first quarter, or at least a lot of the payments, and if there are any further payments outstanding, they will be made very shortly after that. We are trying to get these payments done in the first quarter of this year for all the reasons that Deputies have rightly outlined, including the pressure that many businesses, particularly those in specific sectors like cafés and restaurants, are feeling at the moment. I have met a lot of business owners over the last number of weeks, as have the Ministers of State in this Department.
More generally, I do not think we should be questioning some of the policy decisions that are resulting in increased costs to businesses. Is anybody suggesting that we should backtrack on the increase in the minimum wage to €12.70? Is anybody seriously suggesting that we should not go from three to five days statutory sick pay, when we are actually only catching up with other countries around Europe? Is anyone suggesting that we should not plan for auto-enrolment in terms of pension provision for the future? Is anybody considering that we should go backwards in terms of parental leave? All of these things are the right things to do but there is a cost to employers as a result of them and we need to respond to that, from a policy point of view. The Minister for Finance, Michael McGrath, has been hugely helpful in this regard in the context of working with Revenue. We are now going to treat warehoused debt with a lot more flexibility and with zero interest. This will enable businesses to manage that debt out into the future. My Department is considering what else it can do to assist businesses that are under pressure from a cost base point of view to remain competitive and to stay afloat this year.