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SMEs in retail, hospitality sectors to receive grants of up to €5,000

Small and medium businesses in the retail and hospitality sectors are to receive grants of up to €5,000 under a new round of the Increased Cost of Business scheme worth €66 million.

The package of supports, which will be launched by Minister for Enterprise Peter Burke, will also increase the maximum amount available under the Energy Efficiency Grant for small businesses to €10,000.

From today, the Increased Cost of Business scheme will open for a fortnight for any business which did not register to date.

Minister Burke is also set to announce a change to the PRSI threshold from €441 to €496 from next October.

The change, costing €54 million a year, will ensure businesses with staff earning the minimum wage will pay a lower rate of employer PRSI at 8.8%.

Minister for Enterprise Peter Burke will launch the package of supports (file photo)

The Government has agreed that employers' PRSI must be considered by the Low Pay Commission when recommending future changes to the minimum wage.

Meanwhile, the grant which helps businesses develop an idea or product called the Innovation Voucher Scheme will also be doubled from €5,000 to €10,000.

Minister Burke is to review new ERSI research on the impact of statutory sick leave before deciding on further increases.

The number of statutory sick leave days had been due to increase from the current five days to ten days by 2026.

The Restaurants Association of Ireland has welcomed the top up in cash support for businesses in the retail and hospitality sector.

However, the Association said the key measure to help restaurants and food led businesses is a reduction VAT to 9%.

Minister for Finance Michael McGrath said the planned supports are "fair and balanced".

Speaking on RTÉ's Morning Ireland, he said costs have increased significantly for many SMEs and the measures are designed to help them.

He also said the energy efficiency grant trading online voucher scheme is being improved and the Government is "asking the ESRI to examine the impact of changes the statutory sick pay, among other measures."

Asked about debt outstanding to the State from the Covid-19 pandemic, the minister said the tax warehousing scheme "has been very successful".

He said today is the "very final day", for any remaining businesses that have not engaged.

Mr McGrath said there are around 11,700 businesses which have not yet submitted a phase payment arrangement and "they need to do that by the close of business today".

Retail Excellence Ireland says measures do not go far enough

Retail Excellence Ireland, the largest representative body for the retail industry in Ireland, has given a cautious welcome to the new supports announced today.

But it warned that the measures do not go far enough to offset soaring sick pay costs and the new minimum wage increases.

Jean McCabe, CEO of REI, said the new support package is welcome, particularly for those businesses that are eligible for the Increased Cost of Business scheme, but added that it will be of little comfort for many retailers and will not make a meaningful impact on their bottom line.

"Even though the Government may be constrained in what it can introduce before the next Budget, this package doesn't nearly match the cost increases that have been imposed on businesses this year," Ms McCabe said.

She said that the supports were dwarfed by the increased sick pay costs that retailers were facing.

"In some cases, retailers are seeing an eight-fold increase in sick pay costs compared to this time last year. This is unsustainable, especially for smaller operations," she noted.

She also said that the PRSI amendment was weighted in favour of larger businesses that may not be able avail of the Increased Cost of Business scheme.

While the increased energy efficiency grant was a good thing in theory, she also said that few retailers had the capital to take on a project of this nature, pay for it upfront, and claim back the grant at a later date.

She said this was a barrier Government needed to consider amending.

The Irish Hotels Federation also said the measures announced today are disappointing and fall far short of what is required to support small and medium sized regional hotels that are heavily dependent on food services.

"This is a missed opportunity to provide meaningful assistance to our sector at a time of ever-increasing business costs, much of which are a result of the Government's own policy interventions," said IHF President Michael Magner.

Ibec hopes measures signal new approach from Government

Business group Ibec said it hoped today's announcement by Government signals a new approach to addressing the very significant competitiveness pressures facing business.

It added that its looked forward to further material delivery on the commitments made today in Budget 2025.

Danny McCoy, CEO of Ibec, said that through its cost competitiveness campaign and engagement with the Government, the group has been highlighting the impact that increased labour costs are having on businesses and the unrealistic burdens they face.

"We look forward to the implementation of a commitment to keep the threshold for the higher rate of Employer PRSI above the minimum wage, a renewed commitment to unlock the National Training Fund and the announcement of reviews of the implementation of changes in Statutory Sick Leave and future changes in our work permit regime," he added.

Retail Ireland said the measures are a welcome acknowledgement of the scale of the challenges facing the sector.

But it added that further significant measures will be needed in the budget, along with a fundamental revision of the timeline for the introduction of planned government-initiated cost increases.

"There is a new appreciation that the scale of cost increases hitting many retail businesses is simply too much to bear," said director Arnold Dillon.

"The additional allocation of the Increased Cost of Doing Business grant to the retail sector and the adjustment to the PRSI threshold is positive, but is a first step. A fresh approach from Government is required."

The Small Firms Association welcomed the double ICOB payment and the increase in the PRSI threshold.

"Recent increases in the National Minimum Wage and the incoming Living Wage rates have significantly increased input business costs," said director David Broderick.

"Along with high energy costs, unstable supply chains and fluctuating commodity prices, many small firms have struggled for viability in the aftermath of the pandemic era."

The Vintners' Federation of Ireland said while elements of the supports are welcome, the hospitality sector requires strategic measures that will support the pub trade over the long-term.

"While we welcome the reopening of the Increased Cost of Doing Business (ICOB) scheme for a further 14 days and an additional payment for businesses in the hospitality sector, grants are not the answer to the crisis facing our members," said Pat Crotty, VFI Chief Executive.

"Publicans require meaningful changes to their cost base, such as lowering the standard VAT rate and a reduction in the alcohol excise rate, currently the second highest in Europe."

Chambers Ireland said that overall it commends the Government for the action it is taking on costs.

"Protecting and promoting small and medium indigenous businesses is crucial, as they form the backbone of the Irish economy, offering employment, delivering essential products and services, and representing the heart of communities right across the country," said Ian Talbot, CEO of the organisation.

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