Dáil Éireann Debate, Thursday - 18 January 2024
178. Deputy Brendan Smith asked the Minister for Enterprise, Trade and Employment if he will give detailed consideration to the issues outlined in correspondence (details supplied) concerning increased costs for small businesses; the measures that will be implemented to ease such pressures on small and medium enterprises; and if he will make a statement on the matter. [2300/24]
Amharc ar fhreagraIt is understandable that businesses – particularly SMEs – are concerned about the impact of rising costs. Inflation for consumer prices – although still elevated at 4.6 per cent in December – is generally declining. There have also been reductions in wholesale price inflation throughout much of 2023. Wholesale electricity prices are down. The latest forecasts from the Central Bank of Ireland indicate that inflation will continue to moderate to 3.2 and 2.3 per cent in 2024 and 2025, respectively.
This Government has provided significant support to business throughout the period of increasing costs and has been proactive in limiting the fallout from higher rates of inflation in input costs and prices. However, it is not possible to insulate every business from the total impact of these costs.
Over the two-year period prior to Budget 2024 a total of €12 billion – 4½ per cent of national income – was provided in cost of living and doing business supports, comprising a mix of permanent and one-off measures, to ease the burden of inflation on households and businesses. The main programme introduced by Government to alleviate cost pressures for small businesses was the €1.3 billion Temporary Business Energy Support Scheme. Budget 2024 also contained several measures which will support businesses facing increased costs. This includes, among others:
• The 9% VAT reduction for gas and electricity was extended for an additional 12 months, until the 31st of October 2024;
• The temporary excise rate reductions applying to auto diesel, petrol and marked gas oil were extended until the 31st of March 2024; and,
• There was an increase in VAT registration thresholds for SMEs to €40,000 for services and €80,000 for goods.
As part of Budget 2024, this Government also signed off on a package of €257 million for the Increased Cost of Business (ICOB) grant scheme, specifically intended to assist small and medium sized businesses operating throughout the country. This scheme is a once-off grant and not a commercial rates waiver. The grant is intended to aid firms but is not intended to directly compensate for all cost increases for every business. Analysis suggests that 143,000, or 95% of commercially trading business (operating directly from a premises that is rateable by a Local Authority) will qualify for the scheme, assuming that they satisfy the minimum eligibility conditions.
Over the last several years, this Government has also advanced a range of measures to improve working conditions in Ireland, including the transition to a Living Wage, Pension Auto-Enrolment, Parent’s Leave and Benefit, Statutory Sick Pay, an Additional Public Holiday, the Living Wage, and Remote Working. These measures have only been introduced following extensive consultation and are being phased-in over an extended period. While these measures will bring additional costs for some businesses, they will also bring economic and societal benefits, by means of increasing disposable incomes and addressing in-work poverty. These measures will also assist enterprises with issues of recruitment and retention.
These changes will also bring Ireland in line with other advanced economies. Following a recommendation by the National Competitiveness and Productivity Council, my Department is working with the Department of Social Protection on a report that examines the combined impact of these measures. This report is supported by evidence received from both employer and trade union perspectives and will be finalised in the coming weeks.
This Government has adopted an active approach in supporting Irish businesses across multiple crises over the last number of years, including the introduction of unemployment supports during the COVID-19 pandemic, the provision of financial supports to firms facing the implications of Brexit, and more recently, through the period of increasing overhead costs. This Government will continue to monitor what remains a challenging businesses environment and continue to support Irish businesses.
