Seanad debates
Tuesday, 12 July 2022
Nithe i dtosach suíonna - Commencement Matters
Job Creation
10:00 am
Ollie Crowe (Fianna Fail)
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I welcome the Minister of State back to the Chamber. I would like him to outline the situation regarding bars and pubs throughout the country. As background, over the past two decades before the Covid-19 pandemic, 1,500 pubs closed and hundreds more have followed during the pandemic. The vast majority of the pub industry comprises independent pubs, small businesses and family-run operations. Pubs do not merely serve their local communities but are a major factor in our tourism success, as has been reflected in all the research carried out. Survey after survey shows that up to 80% of visitors to this country indicate the Irish pub is a major factor in choosing Ireland as a travel destination. As we are aware, the Guinness Storehouse is the number one visitor attraction for tourists.
As the Minister of State and Senators will appreciate, the tourism sector is vital to Ireland's economy. Prior to the pandemic, it employed in the region of 260,000 people and was worth €9.5 billion to the economy. As I have noted consistently, the Irish pub was one of the main attractions cited by tourists who choose to holiday here and that needs to be recognised.That is in addition to the 40,000 staff directly employed by Irish pubs, many of them in small towns and villages right across the country.
I played my part, and the Government did offer substantial supports throughout Covid. They played a significant part in ensuring the number of pubs that shut down was not even higher. The new initiative to revitalise the night-time economy is also particularly welcome. A pilot scheme to support rural pubs as community hubs, as part of Our Rural Future, is also a programme with considerable potential and it is proving very successful.
These measures are extremely welcome, but there is a major crisis and staff shortages. During the pandemic, many qualified and extremely capable workers left the trade because they could not rely on it for their income in the way it was possible in other sectors that were not subject to the same level of restrictions. Those two years of closures and restrictions had a devastating impact on staff retention. It is estimated that one third of all staff departed the sector. Before the pandemic, it was already challenging to retain and recruit quality chefs, bar managers and senior bar staff. Many operators in the sector tell me it is next to impossible now. Job offers remain open for months, with few if any applicants.
Figures from the two representative bodies of the trade, the Vintners Federation of Ireland and the Licensed Vintners Association show that staff shortages are a major issue for 90% of pubs. Such is the scale of the problem, many pubs have been forced to close for two days in the early part of the week. This means that in some areas of the country it is now challenging to get a booking for food on those nights. That is creating a very negative image for tourists and it must be addressed urgently by the Government. We must take measures in that regard. In particular, as the Minister of State is aware, the work permit rules for non-EU workers must be examined. The process must be simplified and prioritised.
The hospitality VAT rate of 9%, which is scheduled to increase next year, is something that also needs to be reviewed before any increase should even be considered. Many pubs and all restaurants face spiralling costs for their food offerings. Raising VAT from 9% could compound the threat to pubs and restaurants that support local producers in every part of the country.
Damien English (Meath West, Fine Gael)
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I thank Senator Crowe for raising this issue. It is important that we have this discussion given the importance of pubs and restaurants in the hospitality sector, and all they do for this country. The pub trade has been very much affected during the Covid-19 pandemic. I thank all involved in both representative bodies for their work in assisting the Government. I am conscious that Padraig Cribben has moved on as chief executive of the VFI, and John Clendennen is the new chief executive. It is great to have those associations working closely with us to help us design supports and policies at difficult times, but also to try to get policy right in the long run.
Senator Crowe is correct to raise the skills, talent and availability of staff. I will come back to the matter at a later stage in the discussion because it is very important that we focus on developing the career path and opportunities within the pub trade and the wider hospitality sector. Pubs are a vital component of the hospitality sector and there is a great opportunity for employment in every region throughout the country.
I again thank Senator Crowe for raising this issue today. I am providing a response on behalf of the Minister for Finance because he was not able to make it here due to a Cabinet meeting. I am informed by the Revenue Commissioners that the latest data available on the number of publican licences issued across each turnover band is for the 2018-19 licensing period. The reason for this is due to one of the supports the Government provided for the sector during the pandemic, namely, the licence fee waiver. As the renewal fees were waived and no payment was required in 2020 or 2021, pub turnover data for these licensing periods is not available yet.
While I do not have a breakdown by band for the publicans' licences, the total uptake of publican licences for 2021 shows that there has not been a significant decrease over the period. Senator Crowe referred to a number of pubs. In 2021 there were just over 200 fewer publican licences issued than in 2019, which was approximately a 3% reduction over the period. I am conscious that might not capture all the changes in the system. We all know there are some difficult situations.
Details of the precise number of licences for the year can be made available to the Senator in tabular form. These licence figures show that, despite the significant difficulties the sector faced in the context of a global pandemic, Government supports assisted in the vast majority of pubs surviving. A number of supports specific to the sector were provided throughout the last two years. I thank Senator Crowe for his work in designing those schemes, and for his efforts in this House. We had the same discussions in the other House about trying to target supports at this sector.
The Government introduced a support package of measures for vintners impacted by Covid-19 restrictions in August 2020, including a provision to waive excise duty for on-trade liquor licences on renewal in 2020 until 30 September 2021, which was subsequently extended to the end of September 2022, additional support for vintners under the tourism adaptation fund and a 40% top-up to the restart grant for all pubs and bars. A Government decision in October 2021 provided for a waiver of court fees, and associated excise duty, in respect of applications for special exemption orders, which allow the sale and consumption of alcohol in licensed premises beyond normal trading hours by holders of on-licences. The waiver covered a court fee of €300, which goes to the Department of Justice and an excise duty of €110, which is collected by the courts on behalf of Revenue and applied until the end of December 2021. In January 2022, a further application of the waiver for special exemption orders for late licences was provided until 30 April 2022.
At the outset of the pandemic, Revenue also put measures in place that allowed alcohol products, on which excise tax had been paid, but which was spoiled due to the closure of premises, to be returned to a tax warehouse. The excise duty previously paid on the alcohol was refunded or remitted by agreement with the returning trader's local Revenue control officer.
As the Senator will be aware, in May this year the Government extended the 9% VAT rate that currently applies to the tourism and hospitality sector for a further six months until 28 February 2023, at an estimated cost of €250 million. In addition to these support measures, it is worth noting that there has been no increase in excise on alcohol since 2014. This means that excise as a percentage of the price of a pint as sold in the on-trade is at the lowest level in approximately 20 years.
I recognise that the sector has come through a very difficult time and it will take time to get fully back up and running. There are the added pressures of trying to deal with increased costs due to the war in Ukraine and delivery and supply chains. Most people involved in the hospitality sector raise with me the issue of attracting staff. I am willing to work with the various organisations in individual sectors - the education system, the Department of Social Protection and my Department, the Department of Enterprise, Trade and Employment, to try to bring forward solutions to the development of skills, upskilling and training but also to try to develop a long-term career to make the sector more attractive as well. It is important that we do focus on that.
The Tánaiste co-chairs the hospitality forum with the Minister for Tourism, Culture, Arts, Sport, Gaeltacht and Media, Deputy Martin, and they are focused on issues to develop the hospitality sector, provide supports and also the development of talents and skills.
Ollie Crowe (Fianna Fail)
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I thank the Minister of State, Deputy English, for his detailed response. He indicated that there are only 200 fewer licences, but as he alluded to, it is unclear as to whether that figure is accurate on the ground. I ask him if his Department could furnish me with the details when they are available later in the year.
In terms of the staff shortage crisis, could he advise if the Department will reduce the red tape associated with the visa process for non-EU citizens? That is something that could be looked at. From speaking to publicans, I know the challenges the staff shortages are causing during this crisis. Simplifying the EU process for non-EU citizens is something that could have a real impact in terms of tackling the issue. I am familiar with a case in Galway. The Minister of State will be aware of the system. All the details were provided, but even though we cannot get chefs, there was a line in the application process which stated that the job had to be advertised for a month nationally. The person had to go back to the start of the process again, even though it was impossible to get a chef. The permit situation is having an impact. The Minister of State will be aware that in Galway there are certain top class bars and restaurants that have only 50%, 60% or 70% of their tables allocated because they do not have the resources in the kitchen. That is causing an issue in a tourist city like Galway.
Damien English (Meath West, Fine Gael)
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I thank Senator Crowe for raising this issue. I will close by reminding the House of the importance the Government has placed on supporting business, including publicans, during the pandemic. Most businesses recognise that too. We want to support businesses and jobs, but we also recognise the pressures on the SME community when its trade was restricted. We are aware of the importance of small businesses such as publicans and others in the hospitality sector right throughout the country in terms of creating jobs and helping us to keep 2.5 million people in work now and also in the future.
As referenced earlier, there are no figures available for 2021 broken down by excise band, but I will provide them to Senator Crowe when we have the updates. Unfortunately, given the nature of a pandemic such as the one we recently suffered, some closures were inevitable. It is recorded as 200, but it is possibly slightly more. I am thankful, as I am sure is the Senator, that the majority of the 7,000 plus pubs are still in operation, although some are open for fewer hours because of staffing issues.The Senator raised the issue of permits. We have made major reforms in this regard and have trebled the number of staff available in the sector. Last week, nearly 1,100 permits were processed. In an equivalent week last year, fewer than 400 permits were processed. The time taken to process a general permit has been reduced to 13 weeks from 22 weeks. Critical skills permits take five weeks. We will continue to focus on that.
We are trying to cut away much of the red tape. We have made as many changes as we could in the Department under the existing legislation. We have new teams and streamlined methods. We engage clearly with people who submit applications. By law, the job has to be advertised. That is clear and well flagged, and I think most people now understand it. Many people come to us who have missed that for some reason. We try to deal with them too but under the legislation, the law has to be advertised. Permits are not meant to be the first step to filling a job. They are meant to be the last resort. We try to source talent within the country, then in Europe and then we go beyond that. The system responds and we have prioritised the hospitality sector at this time of year, as we did last year. Hundreds of permits for chefs have been granted. We will do more in the next couple of weeks. New legislation will soon come to the House, in which we will introduce the flexibility that the system needs for the future.
Ollie Crowe (Fianna Fail)
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The Minister of State referred to the retirement of Padraig Cribben. He gave great service to the Vintners Federation of Ireland and I wish him well in his retirement. He played a significant role in helping publicans across the country. I wish Paul Clancy well in his new chief executive role.
Emer Currie (Fine Gael)
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I concur with that.