That Dáil Éireann approves the following Regulations in draft:
Taxes Consolidation Act 1997 (Covid Restrictions Support Scheme) (Date Adjustment) Order 2021,
a copy of which was laid in draft form before Dáil Éireann on 8th April, 2021.
I am pleased to move two resolutions today, seeking the approval of the House for the following draft orders which provide for the extensions up to the end of June of two support schemes, the employment wage subsidy scheme, EWSS, and the Covid restrictions support Scheme, CRSS.
Speed and scale of response to the supply and demand shocks created by the pandemic have been the focus of our economic response. Since March last year, we have moved rapidly, using the balance sheet of our country to replace lost private sector demand, to ensure firms, workers and incomes were supported and protected through wage subsidies, the deferral of liabilities and income supports. Our overarching objective has been to support homes and firms as well as to limit the scarring or permanent effects of the pandemic.
The schemes we are seeking to extend today are part of the broad range of supports provided by the Government to help businesses through the pandemic. The level of support provided to businesses has been unprecedented. Significant levels of support have been provided by way of direct income supports via the pandemic unemployment payment, PUP, and the wage subsidy schemes, which represent real payments to our citizens and businesses to help manage financially in these very difficult times.
The temporary wage subsidy scheme, TWSS, cost almost €3 billion, the EWSS has cost €2.8 billion with almost half a billion in PRSI forgone, the CRSS is approaching €500 million, and €2.3 billion of tax debt has been warehoused. This gives a total of €9 billion in supports for businesses under the aegis of my Department alone. In addition, €6.5 billion has been paid by the Department of Social Protection under the pandemic unemployment payment.
The wage subsidy schemes have been central to our efforts. The TWSS was in place until the end of August last year. It was replaced by the employment wage subsidy scheme, which began on 1 September 2020. In addition to these schemes, a number of other Departments are also providing direct supports.
Of course, we have to look at the motions before the Dáil today in the context of where we are in relation to the reopening of our country. We are already seeing the start of the reopening process, with the full return to schools from last Monday week, travel limits extended to 20 km or within the county, the resumption of residential construction, as well as early learning and childcare projects. This week, inter-county GAA training and elite athlete training was permitted to resume. As we look towards this cautious reopening of our economy, it is clear from last week’s stability programme update that the relationship between economic activity and public health restrictions has weakened with every wave.
Much of this is due to the flexibility of domestic enterprises but consumers have adjusted also. Last month’s VAT data was up 8.5% on the first quarter alone. Our consumers are buying local. They are buying online.
In the medium term, the speed at which the economy can recover depends uniquely on our vaccination programme. This was a consistent theme of the IMF and World Bank spring meetings that I attended recently.
Our vaccination programme will be the touchstone for our economic recovery. However, this will take time. In recognition of the challenges facing so many businesses I want to reiterate today that there will be no cliff edge in the removal of support. We will put in place supports to continue for as long as they are needed to ensure the beginnings and the taking hold of the strong recovery we all know is needed. We have not fought this pandemic and its economic fallout for just over a year on a scale that is unprecedented in Irish economic history to fall at the final hurdle.
The motions are required as part of the process of extending the schemes until the end of June. In the case of the Covid restrictions support scheme, CRSS, subparagraph (ii) of section 484(2)(a) of the Taxes Consolidation Act 1997 inserted by section 11 of the Finance Act 2020 provides that the Minister for Finance may vary the scheme by extending the end date of the measure beyond 31 March but not later than 31 December of this year.
The draft Taxes Consolidation Act 1997 (Covid Restrictions Support Scheme) (Date Adjustment) Order 2021 provides for this extension and was laid before the Dáil on 8 April. The legislation requires that the order shall not be made unless a resolution approving the draft has been passed by the Dáil.
In regard to the employment wage subsidy scheme, EWSS, section 28B(21) of the Emergency Measures in the Public Interest (Covid-19) Act 2020 provides that the Minister for Finance may vary the employment wage subsidy scheme by extending the end date of the measure beyond 31 March 2021 but not later than 30 June 2021. I have formally consulted my colleagues, the Minister for Public Expenditure and Reform, Deputy McGrath, and, in respect of the EWSS, the Minister for Social Protection, Deputy Humphreys, and have determined it is necessary for both schemes to remain in place until 30 June.
It is fair to say, and I hope the House will agree, that the two schemes have provided much-needed support as they endeavour to help businesses cope with the effects of the pandemic. They have helped businesses remain viable as we start the process of reopening the economy.
The numbers are striking. I think we should recall them. As of today, 22 April, 22,100 businesses have registered 25,900 premises for the CRSS with Revenue. A total of 148,400 claims for CRSS payments of €478.9 million in respect of 24,600 premises have been made to date and €475.5 million of this has been processed for payment.
With regard to the EWSS, 48,900 employers have currently registered with Revenue and over half a million employees have benefited. A total of €2.8 billion has been paid and, as of last week, there were more than 420,000 people in receipt of the pandemic unemployment payment, PUP.
I want to take this opportunity to acknowledge the huge amount of work of the Revenue Commissioners. Without their efforts we would not be where we are today.
I wish to say a word about the extension of the EWSS to 30 June 2021. This policy represents a substantial and key part of the Government’s response to the pandemic. This is the second extension of the scheme, thus demonstrating that this is a successful and vital policy instrument.
The primary employer qualification for the EWSS is based on the employer's turnover in the current six-month period being less compared with the same pre-pandemic position period in 2019. The legislation provides that the employer must be able to demonstrate it is operating at no more than 70% in either the turnover of the business or the customer orders received by the employer by reference to the period from 1 January to 30 June 2021 compared with the same period in 2019. This is a very flexible policy tool designed to take account of potentially sudden changes in turnover. If there is a reduction in turnover in the future because of a change in circumstances, the employer may be entitled to make a claim for a later period. The amount of subsidy given to the employer is based on the number of paid workers on payroll per week combined with a flat, per head value rate which is applied based on prospective pay levels so that claims may also be made for new hires or seasonal workers.
Following the reintroduction of level 5 restrictions in October 2020, the Government decided that from 20 October the amount of the EWSS subsidy paid per employer would be up to €350 per week, graduated on the basis of the income of the employee. As set out in the Finance Act 2020, the enhanced rates were to be in place until 31 January 2021 after which they were due to return to the original rates of €151 for those paid more than €151 per week and €203 for those paid more than €203 per week. However, given the current circumstances with this pandemic, the Government decided on 23 February last to maintain the current EWSS rates to 30 June. This is aligned with the rates of payment of the pandemic unemployment payment. This is a very important alignment. Otherwise there would be a risk of migration of employees from the EWSS to the pandemic unemployment payment. That could undermine the very work of the employment wage subsidy scheme. It is also an important bridge between social welfare payments such as the PUP and regular employment, which is the ultimate goal.
The relevant legislation provides that, as Minister for Finance, I may vary certain aspects of the scheme such as the end date, the rate of subsidy and the criteria of the turnover test for qualifying employers by ministerial order. This affords the Minister sufficient flexibility to ensure the scheme remains agile and responsive. In terms of direct subsidy payments, the estimated cost of the extension of the enhanced rates for quarter 2 is €1.167 billion. This is to be met from the voted expenditure of the Department of Social Protection. In addition, it is estimated that a further €180 million will arise from the continuation of the 0.5% reduced rate of employers’ PRSI, with an estimated total cost of approximately €1.3 billion.
Turning to the CRSS, this scheme has provided much-needed support to businesses that have been forced to close. The vast majority of businesses in Ireland are affected by Covid but the CRSS is intended to target specific businesses where access by customers is restricted. This was intended to be and has been implemented as a targeted scheme. It was never meant to be a general support measure. As I have said, the economy is only slowly and cautiously beginning to reopen and therefore the Government has agreed that the CRSS should be extended for now to 30 June. The restart week provided for in the CRSS, which allows a business to claim for an extra week upon reopening after restrictions are lifted, will be of particular benefit as businesses start to reopen. The estimated cost of the extension of the CRSS is in excess of €240 million, to be met out of resources allocated for Covid contingency funding.
As we look forward to reopening the economy and our society in the coming weeks and months, we can and should expect an initial rebound, in part fuelled by pent-up demand, but this is not the same as a full recovery. I recognise that reopening will be costly and will pose new challenges that will need to be sustained by supports and corrective measures to allow us get the balance right between supporting the recovery and the cost to the taxpayer. I want to restate the Government’s commitment that there will be no cliff edge to the supports at the end of June. We are conscious that continued support is required to assist sectors of the economy on the path to recovery and we will set out these plans in the coming weeks.
I am very much aware of the value of the supports I have outlined but I am equally aware of the huge level of strain many businesses are facing at the moment, particularly small and medium enterprises, SMEs, with all the major challenges they faced so suddenly.
I strongly contend the support plans in place have played a major role in helping companies to be viable when closed while also giving them the foundations they need to reopen. I know much needs to be done. Even yesterday, when I attended the Oireachtas finance committee I heard views of different colleagues regarding supports, how they should be changed and what their future should be. For example, I heard of the challenges retailers are facing and was reminded of the challenges being faced by the hospitality sector. I listened to those views and look forward in the coming weeks to working with other Ministers to bring forward plans that will play another role in getting the balance right between supporting our economy at this really difficult time, meeting the many public health challenges we have and which we are getting the better of while continuing to get the balance right between those costs and those that the taxpayer will ultimately pay.