Dáil Éireann Debate, Thursday - 10 February 2022
4. Deputy Peadar Tóibín asked the Tánaiste and Minister for Enterprise, Trade and Employment the number of business closures over the past five years; and the total value of business supports that have been provided by his Department as a result of the Covid-19 pandemic in 2020 and 2021. [6406/22]
View answerOver the past two years Ireland has seen the implementation of the longest and most severe restrictions anywhere in Europe. That has had a massive negative effect on many elements of society, from cancer care to domestic violence, mental health etc. Small businesses especially have suffered significantly over that period. Many were hammered and are now what are called zombie businesses, only functioning because of the supports they have got. What supports will they be given now to ensure they survive?
We certainly had prolonged restrictions in Ireland, perhaps longer than in many other countries, including other countries in Europe. It does depend on how you define restrictions. Some people define it as working from home and other people define it as business closures and so on. It is worth pointing out that Ireland is now one of the most open countries in the world. Most European countries still have restrictions in place. Businesses are closed and there are restrictions on opening hours. People are not able to stand at a bar and nightclubs are closed, among other measures. We are now one of the most open countries in Europe. Much of south-east Asia is still pursuing a zero-Covid policy and is still in lockdown. Restrictions were tightened in Hong Kong the other day, for example.
In terms of business supports, it is fair to say that the Government has not been found wanting when it comes to supporting the economy and jobs, providing a robust and sustained multibillion euro package that compares well internationally. The employment wage subsidy scheme, EWSS, has been extended even though many other countries ended their furlough schemes months ago.
At around €40 billion, the cumulative level of fiscal support made available in 2020 and 2021 has been unprecedented. It is the largest single intervention in the Irish economy since the banking crisis, but I think we would all agree it is a much better one. The ability to apply countercyclical fiscal policy in this way has been made possible only by the prudent management of the public finances in the preceding years. The official and most comprehensive data on business closures is provided by the Central Statistics Office. The data are only available for up to 2018 because the Revenue Commissioners need two years of inactivity to count a company as closed. The latest information indicates there were 15,337 closures in 2014 and 17,807 in 2018. A full table will be provided to the Deputy in written form.
Data from my Department can provide a proxy for business closures but with some caveats. The CRO provides data on companies liquidated, including where members or creditors wind up a company or if liquidation is by a court order. Total liquidations in 2016 were 1,754 and 1,489 in 2020. Again, I will provide the Deputy with further data in written form.
I am glad the Tánaiste did compare the monetary elements of the crisis to the banking crisis because it is in that space financially. A figure of €40 billion is a phenomenal amount of money that has built up cost-wise over the past two years. A lot of that was necessary. The Tánaiste should not get me wrong; I am aware the Government had to make difficult decisions over that period, but we are talking about an enormous economic impact. Last year, we had a deficit of €9 billion, and we have a deficit this year in the billions as well and a national debt approaching a quarter of a trillion euro currently in the State. We are talking about a situation where interest rates are about to take off and the effect that will have on society, families and businesses. Inflation is another issue.
Approximately €3 billion in business taxes is being warehoused as businesses have not been able to pay them. That cohort of businesses is in a precarious situation going forward. How will they be helped?
Deputy Tóibín is correct; a €40 billion rescue for the economy is huge. It is probably the second biggest intervention in the history of the State and the biggest after the banking crisis. We all agree it is a much better one in terms of the number of jobs and livelihoods that were protected, but we do now have a national debt approaching a quarter of a trillion euro, which is enormous. We had a relatively low national debt before the banking crisis ten or 12 years ago. We accumulated a lot of debt dealing with the financial crisis. We had started to pay it down and along comes the pandemic. In the context of people calling for measures earlier such as the abolition of the USC, for example, or much better packages than the Government can do today, we must not forget the point Deputy Tóibín made, that we owe a quarter of a trillion euro. We cannot lose sight of that. It may have appeared that there is no limitation on Government spending in recent years, but that is not true and that is going to come back to affect us.
I am sorry, I am digressing. When it comes to what we can do, the EWSS stays in place for a period. The main thing we can do with companies is restructuring. We brought in the SCARP process, which is now under way exactly for that reason, so that companies can restructure their debts and survive.
We know there are 4,700 childcare providers in limbo at the moment due to the difficulty regarding funding. We also know that approximately 40,000 people who worked in the hospitality industry in 2019 are not expected to be there in 2022. We further know that there is a significant number of zombie businesses. I do not like using that term because it seems sensationalist, but it does convey the true picture of a whole lot of businesses that stayed alive simply because they have had Government supports and, as the supports fall away, they have to start to deal with the debt and difficulties they are in. Could the Tánaiste tell me exactly how many businesses have had restructuring facilitated for them so that they now have a restructuring plan in place that they can work through?
How many businesses does the Minister expect will be lost in 2022 as collateral damage of the restrictions and what has happened over the last two years?
Even before the pandemic, there was a churn in businesses and, in any given year, some businesses close and new businesses are established. In fact, businesses that would have closed anyway perhaps survived because of the measures that we took in regard to the wage subsidy scheme and so on. We expect that when the wage subsidy scheme and the other financial supports are withdrawn, and they are being withdrawn over the next couple of months, we will see some of those non-viable businesses fail, and that is inevitable. One of the effects of that, though, will be freeing up employees to work in businesses that are viable. We have a huge issue at the moment, which the Deputy mentioned, of people in certain sectors who are unable to get staff yet we are subsidising employment in businesses that are no longer viable. When that happens, I think we will see a certain churn in the economy and the labour market of people moving into those businesses that actually are viable.
Obviously, our objective is to save any business that can be saved. I do not have numbers on the small company administrative rescue process, SCARP, yet because it is only new. There are the existing mechanisms such as examinership and so on, but we think SCARP is a much better one and we are only starting to see the first few companies coming through that.
