Backing firms on paying wages to cost State €3.7bn, says Donohoe

The Government subsidy scheme to support companies paying employee wages could cost as much as €3.7 billion for three months, Minister for Finance Paschal Donohoe has said.

As of Sunday, 14,300 companies have signed up to the income-subsidy scheme. And the number people being supported through it will become clear later this week.

"The modelling that we have done in relation to it indicated that we believe the cost of this could be approximately €300 million per week with a likely cost of between €3.5 and 3.7 billion over a three-month period," Mr Donohoe told RTÉ radio.

“The whole point of the scheme is that we will pay wages for a period of time up to a certain level. And by providing the subsidy directly to the employer for that time period, hopefully, give them a fighting chance of emerging from this crisis at the other end.”

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However, Mr Donohoe said the cost of the State “leasing” the use of 19 private hospitals to help with anticipated demand on intensive care beds was not yet clear.

“When we are in a position to be clearer regarding how much use we will be making of the beds and the facilities of course we will be in a position then to be clear on what the cost is going to be,” he said.

He described it as a partnership between the private and public sector in order to deal with the crisis.

What about insurance companies?

Asked about his position on insurance companies not paying out to clients hit by the virus outbreak, he replied “now should not be the time to reinterpret insurance contracts in such a way that only favours the company”.

He said he accepted these are unique circumstances but that he wanted to see insurers being more aware of the consequences of their decisions on companies. The Minister has been in touch with Insurance Ireland on this point and is awaiting a response.

“We do need a viable insurance sector, absolutely. It is a really, really critical part of our economy as an employer alone,” he said. “But all that being said, if we don’t ensure that across this crisis, that if we can’t find a way of helping the cost of insurance be managed in as fair a way possible it will be an impediment to companies reopening.”