Seanad debates

Thursday, 1 October 2020

Nithe i dtosach suíonna - Commencement Matters

Covid-19 Pandemic Supports

10:30 am

John Cummins (Fine Gael)
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I welcome the Minister of State to the Chamber. The Covid-19 crisis has had a devastating effect on many thousands of companies and employees throughout the State. To assist with the dramatic fall-off in revenue, the previous Government approved the introduction of the temporary wage subsidy scheme, TWSS, which has had a hugely positive impact in keeping employees linked with their companies and providing much needed cash flow support for companies to enable them to continue to trade through what has been, and continues to be, an exceptionally difficult time. Since its introduction, more than 65,000 firms have availed of the TWSS. That amounts to almost one third of all employers, according to the 2019 figures. More than 660,000 jobs have been directly supported over the period, with a value of payments made to date in excess of €2.8 billion.

On 1 September, the TWSS was replaced by the employment wage subsidy scheme, EWSS, with payments being made at two flat rates of €203 and €151.50 per employee, depending on gross weekly pay. No subsidy is paid for employees earning below €151.50, which I will deal with presently. One of the main advantages of the EWSS over its predecessor is that it is open to new employees. Under the TWSS, companies that had to hire additional staff to meet requirements of social distancing and enhanced cleaning rotas did not have access to support. I acknowledge this change, which certainly is a huge step in the right direction.

However, unlike its predecessor, under which payments were made promptly within the week in which the claim was submitted to Revenue, the EWSS is paid on a monthly basis. This is having a negative effect on the cash flow of SMEs throughout the country because it can take between four to six weeks to get a refund of moneys owed under the scheme. In my own county of Waterford, I recently met representatives of Dungarvan and West Waterford Chamber of Commerce and local publicans who expressed to me in the strongest terms possible that the changes are having a detrimental impact on cash flow and resulting in the forced closures of some businesses and the early laying off of seasonal staff in others. Many businesses, particularly in the tourism and hospitality sector, are operating with a reduced capacity and a reduced turnover but the same outgoings. The lifeline offered by the EWSS is critical but if refunds are only being paid on a four to six-week basis, then one must question whether the scheme is having the desired effect of assisting with the cash flow of businesses.As the Minister of State is aware, many people in that sector are paid on a weekly basis and businesses are being put on the back foot due to delays in payments. This matter needs to be addressed urgently. To put it plainly, if it was not broken, why did Revenue and the Department try to fix it?

On the employees who are below the €151.50 threshold, and the fact that no flat-rate subsidy is available to them, these are employees who are perhaps students who are availing of weekend work in small companies. Those companies that are giving the students the bit of work are effectively being penalised because they are not reaching the €151.50 threshold. Perhaps the Minister of State could take on board the possibility of introducing a third subsidy at a lower rate of €75 to assist in those companies which only have employees on that rate.

Photo of Seán FlemingSeán Fleming (Laois-Offaly, Fianna Fail)
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I thank Senator Cummins for raising this issue, which, as he pointed out, is a significant one for many smaller businesses due to the cashflow implications.

The EWSS is an economy-wide enterprise support that gives a flat-rate subsidy to qualifying employers to preserve the link between employee and employer and to support the firm's viability insofar as is possible. The design of the EWSS reflects the changing environment around the Covid-19 pandemic which has shifted from crisis mode to one of living alongside the virus, in line with the recently announced Resilience and Recovery 2020-2021: Plan for Living with COVID-19. It important to emphasise that the EWSS is a subsidy to the employer, unlike TWSS, which was an income support to the employee paid via the employer. The payment under the TWSS was listed on the person's payslip. Some people did not like the stigma of that on their payslips, but it was there to show that it was coming directly to the employee.

The EWSS is a lump-sum grant to the employer based on the number of employees who qualify. It is not geared to any particular employee. It is based on the number of employees. A company may submit that it has two staff in a category or ten or 50 employees in a category, as the case may be. It is a subsidy to the employer to keep the business open and to maintain links with the employees. In that situation there is no direct reference on any of the payslips for employees in that situations because it is not based on the individual employee situation, it is based on the employer's overall position.

As the Senator has mentioned, the timeline of payments under the EWSS has also moved into line with regular monthly payroll returns to Revenue, which has always been the case for companies dealing with the latter. We had the shorter timescale because we were in the height of the emergency with many more people on the pandemic unemployment payment and the TWSS payments. It was essential that we had emergency payments on a weekly basis. Having to make returns weekly increased administrative work for all the businesses involved. Now we are trying to get to living with Covid in the longer term, and trying to get employers back to the ways they have always operated in making monthly returns to Revenue.

When businesses make their returns to Revenue on the 14th of the month following their payroll payments they generally get the subsidy payments turned around within two days of receipt of the payroll submission, which is the 16th of the month. Depending on the pay date used by the employer it may be as short a turnaround as 16 days but it could be up to six weeks in some cases, which is the crux of the issue. Those companies with monthly payrolls have the two week period delay. Where it had been a weekly payment, now it depends on the start of the employer's pay date. As of 30 September, some 37,165 employers had successfully registered for the scheme. There was a look-back at seasonal entrants and new employments, with 2,700 people who were not eligible under TWSS now in receipt of the EWSS payment. This is an improvement for new hires or seasonal workers back in the scheme. I would consider this to be a benefit.

There are various grant schemes that could help the cashflow of smaller businesses, including the restart scheme and the restart grant plus scheme. The Senator referred to the tourism, hotel and hospitality sector.The stay and spend scheme is in operation from today. I advise everyone in a locality, if he or she cannot travel to another county, to get out in a county where it is safe to do so and spend money in a restaurant with his or her family at the weekend. This would create extra business at local level. Revenue will provide a tax credit for those people next year.

John Cummins (Fine Gael)
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I appreciate the Minister of State's response, but I would like him to consider those sectors with particular cash flow issues, namely, tourism and hospitality. People in those sectors are mainly paid on a weekly basis. While I appreciate that people who are paid on a monthly basis are not facing this scenario, the very businesses that we are trying to assist have a cash flow issue and are citing this as a major concern. I ask that the matter be addressed. Businesses are willing to put the extra work in on the payroll side if Revenue can, on the other side, pay on a weekly basis, as was the case with the temporary wage subsidy scheme. This issue needs to be addressed. Otherwise, more situations will arise than have been outlined to me in my county of Waterford. Yesterday, the Chawke Group cited this issue as one of the major reasons for laying off 300 staff. I urge the Minister of State to take it seriously and address it as urgently as possible.

Photo of Seán FlemingSeán Fleming (Laois-Offaly, Fianna Fail)
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I thank the Senator. He hit the nail on the head in everything he said. There is a cash flow implication. It is a good scheme for many people, but for businesses, the cash flow crisis could be fatal. It is important to remember that. While I am not in a position to give a commitment, we will ask Revenue to examine the scheme's operation. Revenue will quickly see the scale of the payments it will make every month or so versus the scale when they were being made on a weekly basis. If some operational measure can be introduced, we will ask about it.

I have spoken to the Ministers for Finance and Public Expenditure and Reform about the issue this week. They are aware of the difficulties. Cash is king. People do not look at their profit and loss when they go into work every morning.

Photo of Seán FlemingSeán Fleming (Laois-Offaly, Fianna Fail)
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They want to know what they have in the bank account and who they can pay this week. I understand that. Although it does not mean there is a solution, we are fully aware and are examining the matter carefully.

John Cummins (Fine Gael)
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I thank the Minister of State.