Dáil Éireann Debate, Thursday - 27 October 2022
6. Deputy Alan Dillon asked the Tánaiste and Minister for Enterprise, Trade and Employment the measures his Department is taking to help businesses deal with rising energy costs, given that their bills have increased by over 200%; and if he will make a statement on the matter. [53896/22]
Amharc ar fhreagra12. Deputy Kieran O'Donnell asked the Tánaiste and Minister for Enterprise, Trade and Employment the measures being taken to help businesses deal with rising energy prices; and if he will make a statement on the matter. [53863/22]
Amharc ar fhreagra19. Deputy Fergus O'Dowd asked the Tánaiste and Minister for Enterprise, Trade and Employment if he will provide an update on the available supports for businesses to deal with the crippling energy prices being encountered across the country; and if he will make a statement on the matter. [53405/22]
Amharc ar fhreagraI was asked by Deputy Dillon, who is in a meeting of the Committee of Public Accounts, to ask this question on his behalf. It is similar to other questions other Members of the House have asked. It relates to the manner and means by which the Department is expected to respond in a meaningful way to the retail sector and the general small and medium-sized business sector in the face of dramatic oil price increases.
I propose to take Questions Nos. 6, 12 and 19 together.
I thank the Deputies for their questions. Understandably, a lot of businesses are very worried heading into the winter. The cost of energy and the cost of doing business more broadly is rising. Interest rates are going up and consumer confidence is waning. Businesses need help with their energy bills so the Government has introduced a significant package in the budget to help them over the coming months.
As the Deputies will be aware, the temporary business energy support scheme has been designed to help eligible businesses that have experienced a significant increase in their electricity or natural gas costs. It will apply to trades, professions and new businesses and is currently being finalised as part of the Finance Bill, which is progressing through the Houses.
This morning, along with the Minister, Deputy Michael McGrath, I launched the new €200 million Ukraine enterprise crisis scheme. That is for manufacturers and internationally traded firms. It will provide up to €500,000 per firm to ensure there is sufficient liquidity available and up to €2 million per firm for those businesses that are particularly energy-intensive.
In addition, a new €1.2 billion State-backed Ukraine credit guarantee scheme will help the wider business sector with liquidity and help it invest in energy efficiency. I received Government approval earlier this week to publish the legislation to underpin this, which I will bring through the Oireachtas in the coming weeks. Also, a new State-backed growth and sustainability loan scheme will be opened next year and will be the successor to the future growth loan scheme.
The reduced rate of VAT on gas and electricity from 13.5% to 9% has been extended until 28 February 2023.
This is very much an evolving situation, though. We understand the scale of the energy crisis and I assure the Deputies that we will respond with scale.
I thank the Tánaiste for that very informative and supportive reply. To what extent might a short-term and longer-term response be forthcoming if it is found necessary, given that many of the contributory factors to the dramatic oil price increases are likely to continue for a considerable time? In those circumstances what might now be the best approach to make provision for the long battle that lies ahead?
I call Deputy Kieran O'Donnell.
On a point of order, what question-----
The rules have not changed. When questions are grouped, the Member in whose name the first question is tabled gets the 30 seconds and the other Members lose their 30 seconds. The same rules apply. You will get the amount of time you normally get, Deputy O'Dowd-----
I will get an opportunity then.
I will call you straight after Deputy O'Donnell.
Thank you very much, a Leas-Cheann Comhairle. That is in my own interest.
You are more than welcome, Deputy.
The Minister will appreciate that, as I am a Deputy for Limerick City, I get a lot of people on to me about business. The schemes being announced are very welcome and will make an enormous difference, but the energy costs of businesses like the retail businesses ringing me, particularly supermarkets, are now going up threefold. Those businesses are very genuine. They are huge employers in the area and they are asking if there will be latitude in the level of support provided. The temporary business energy support scheme provides 40% off their energy costs, but in many cases their energy costs have now trebled. I had one supermarket on to me whose costs have gone from €16,000 per month to €48,000 in the past month alone, and they will go even higher again.
All the schemes are great. I just want to know if there will be latitude in the percentage discount the Government can give under the temporary business energy support scheme. Will the Department have further flexibility in being able to extend the scheme beyond February of next year if the energy crisis continues? Furthermore, is there flexibility under the scheme to allow for charities, which operate very much in supporting sectors?
The Bare Food Company in Drogheda is a small business.
It received an electricity bill of €3,500 in April. Its latest bill is for €8,000. The story relating to the company is on the front page of our local paper as a result of the fact that it is asking its customers to leave early in the afternoon because it cannot afford to light the shop, cook the food or keep the fridges going the way it wants to. I welcome all of the Tánaiste's announcements and the work he is doing but businesses under a certain size find it much harder to bear the increased costs of their heating and cooling operations, particularly butchers like Callaghans in Ardee, the Bare Food Company and Tuites Butchers in Drogheda. Many people have serious worries. I ask the Tánaiste to look again at smaller businesses, which do not have the margin capacity of larger businesses to shift their profit and losses on different accounts.
It is fair to say that when we were in the teeth of the pandemic, we intervened and intervened at scale to save as many businesses and jobs as possible because it was not just about businesses, it was also about saving the jobs of the people who worked in them. However, there are constraints - much more so than would have been the case during the pandemic. Now that the cost of Government borrowing is rising, we are in a different place compared with where we were two or three years ago. There are budget limits and we are not in a position to say to any household or business that we cover the full cost of its increased energy bills. In fairness, I do not think anyone is calling for or expects that.
We are also constrained by the EU temporary crisis framework, which comprises a set of European rules that are not just there to annoy us. Those rules are there for a good reason, namely, to ensure that taxpayers' money is protected and that different countries do not out-compete each other with better subsidies all the time. That is just a beggar-my-neighbour attitude. The temporary crisis framework is there to protect us from that. Under the framework, we are only permitted to cover 30% of the increase in energy costs. We are trying to push that to 40% but I do not want to raise expectations that it will be possible to do better than 40% because that is not the feedback we are getting from the Commission or other member states. We can always look at other ways of helping businesses beyond energy supports. We have done that with the VAT reduction and perhaps there are other ways.
In the short term, the focus will be on the Government-backed loans, the energy subsidy and the new emergency scheme we announced today. In the medium to long term, the EU temporary crisis framework will allow us to extend these interventions beyond the end of February. They can be extended to the end of next year, but, obviously, no decision has been made on that nor can it be at this stage. The longer-term approach is quite different. It involves ramping up investment in renewables so we are less dependent on oil and gas and encouraging businesses to adopt energy efficiency. I have heard of some businesses that have reduced their energy bills dramatically just by covering their fridges, but I also know of plenty of businesses that have done everything right and are still facing very high energy bills.
Under the schemes operated by my Department and the Department of Finance, charities are not covered unless they have a trading income. There is a fund to help charities and sports clubs in a different way. This is run by the Department of Tourism, Culture, Arts, Gaeltacht, Sport and Media.
I thank the Tánaiste for his substantial reply. In the event of there being a long battle, for want of a better word, against fuel price increases, has there been any investigation into the possibility of replacement by renewables? Can that be speeded up to give confidence to those in the sector in order that they can plan ahead knowing what is likely to happen in the future and knowing the necessity of competing in the marketplace among their peers and those who might be hostile?
I thank the Tánaiste for his comprehensive overview. I welcome the fact that he is willing to consider with businesses and understand the constraints under which he is operating regarding energy supports and the European Commission, that he will keep other supports under consideration and that he has the flexibility to extend the supports beyond the end of February depending on the position regarding the energy crisis. When will businesses see the money hit their bank accounts under the temporary business energy support scheme and when they will get the arrears back to September?
I also welcome the Tánaiste's comments. There may be grants available to businesses, particularly smaller ones, to upgrade their heating facilities and find the most efficient and effective way of using energy, although I am not familiar with them. Is advice available to them regarding how they can reduce their costs in this regard? Is there a possibility of special grants to allow them to upgrade their fridges or cooking facilities to make them more efficient? We need to put pressure on energy companies as well. In particular, the ESB makes huge profits. I know the money is going to the State, but I am concerned that not enough is coming back down to smaller businesses.
It may not be a major issue but is there an option to introduce rates relief for businesses, particularly smaller businesses, that can prove their energy costs have increased exponentially? Are there any other supports or strategies in other countries that we could look at?
I thank the Deputies for their contributions. There is room for bio-renewables as part of the new energy mix. One company in Cork, whose representatives I met recently makes boilers. It was explained to me how you could move away from using oil for those boilers to a blend or bio-renewables. I do not know enough about the matter to comment too much, but I take the Deputy's point that we need to give confidence to people around price and policy before they invest. I will take the matter up with the Minister for Environment, Climate and Communications.
Like many people in this House, I engage with business a lot, whether that be on an individual level, with businesspeople and employers, representative groups headquartered in Dublin or chambers of commerce all around the country. All of them are raising the issue of energy costs with me. I still say that the difficulty involved in finding staff is probably as significant an issue, perhaps even more so. It is interesting to hear that. We must think about the policy wisdom of subsidising businesses while other businesses cannot get staff. You could have two restaurants in the one town, one of which is doing okay and could do better but cannot get staff and another that is really struggling but has staff. We must think about the wisdom of subsidising businesses at a time when other businesses cannot get any staff at all.
The temporary business energy support scheme is contingent on the Finance Bill being passed. The Minister for Finance's target is to get it through by the end of November, which means the scheme can be open at the end of November or in early December. The subsidy will be backdated to September, so we anticipate businesses getting a substantial amount of cash from Revenue to cover some of their energy bills before Christmas. That is certainly the plan at the moment. In fairness to Revenue, it has proven to be very efficient with the employment wage subsidy scheme and the Covid restrictions support scheme in the past. In such circumstances, I would have a lot of confidence in it.
The Government has 20 schemes to help businesses to reduce their energy use and use renewables. The best port of call for small businesses would be the local enterprise office but much of it is doing through the Sustainable Energy Authority of Ireland. The rules around solar panels have been changed so that pretty much any business in the country can put a solar panel on its roof without needing planning permission. There are few exceptions but not many. We hope to launch a new grant scheme in the very near future that will help businesses with the capital cost of investing in renewables and energy saving - up to 50% in some cases.
Businesses tell me that there is a great deal of help with audits, consultancy and advice, but maybe not enough when it comes to doing the work that needs to be done, whether it is with the small turbine, the solar panel, the insulation, the fridge doors or whatever. This is on the way.
Turning to the issue of relief from commercial rates, there is no plan to do this at present. Commercial rates are an important source of income for local authorities. This is a tool that has been used in the past, however.
