Politics

Retail and hospitality businesses in line for cash injection worth thousands

New enterprise support package expected to be approved by Cabinet on Tuesday

Ministers were putting the finishing touches to the plans over the weekend, with the final package due to be approved by Cabinet on Tuesday. Photograph: iStock

Jennifer Bray
Mon May 13 2024 - 06:00

Retail and hospitality businesses could be set for a “cash injection” worth thousands of euro as part of a new enterprise support package being considered by the Government.

Ministers were putting the finishing touches to the plans over the weekend, with the final package due to be approved by Cabinet on Tuesday.

Taoiseach Simon Harris pledged to unveil a range of supports for businesses when he took up office last month, and Government sources have confirmed that a key plank of the plan will come in the form of additional grants for the hospitality and retail sector.

While talks were ongoing with the Department of Public Expenditure over the weekend it is understood that leftover funding from an existing €257 million scheme to support businesses could be used to give a cash injection to the sectors worst hit by the increased cost-of-living and doing business.

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Under the Increased Cost of Business scheme businesses can claim 50 per cent of last year’s rates bill up to €10,000, giving business owners a maximum grant of €5,000. Under fresh plans a second round of the scheme could give eligible businesses in the retail and hospitality sector a second grant of up to €5,000.

“It now looks likely that an immediate double payment of the cost of doing business grant to those who qualify in hospitality and retail is the quickest way of getting more cash to small businesses,” a senior Government source said. ”If you already applied and got the grant, you can get same again. If you didn’t apply yet you can get double.”

There will also be a separate measure worth €50 million to increase the PRSI threshold for employers.

At present an employer who pays someone up to €441 a week pays an employers PRSI rate of 8.8 per cent, and as soon as the employee goes above that income the rate goes up to 11.05 per cent on all of the income.

The minimum wage was increased to €12.70 this January but the PRSI threshold for the higher rate did not move up to €495. This means that employers paying a minimum wage for a 39 hour week are paying the higher 11.05 per cent rate.

The threshold will now be moved up to that €495 level which could save businesses hundreds of euro every week, a source said.

Ministers are also mulling over a decision to pause future increases to the number of sick days an employee can take. It had been planned that workers would be entitled to seven statutory sick leave days from next January, up from five. This was then supposed to increase to 10 days in 2026.

Further increases to the national minimum wage could also be phased in at a slower pace. One Government source said this plan, however, would be subject to decisions made by the Low Pay Commission.

Furthermore, a €1.5 billion surplus in the National Training Fund could also be used to improve incentives for employers to take advantage of education and training for their employees.

The new plans will be brought to Cabinet by Minister for Enterprise Peter Burke after talks with a number of different departments.

Mr Burke revealed earlier this month that of the 125,000 businesses that could qualify for the increased cost of business grant, only over 50 per cent had actually applied.

Sources within Government said there is particular concern around the hospitality sector, and that decisions to provide a cash injection come after figures showed an increase in the number of those businesses becoming insolvent.

A PwC report earlier this year found that the hospitality sector was “feeling the pressure”, followed by retail, with these two sectors accounting for 89 – or 40 per cent – of all insolvencies in the first quarter, up from 68 in the same period last year.

Jennifer Bray

Jennifer Bray

Jennifer Bray is a Political Correspondent with The Irish Times

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