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Govt says it was 'too complicated' to bring in targeted hospitality supports and instead extends EWSS

MIinister Paschal Donohoe says it was too complex to do it before Christmas.

LAST UPDATE | 9 Dec 2021

THE GOVERNMENT HAS said that it would be “too complicated” to introduce targeted supports for the hospitality industry before Christmas and has instead decided to extend wider business supports. 

Speaking in the Dáil last week, Tánaiste Leo Varadkar said that most companies in receipt of the Employment Wage Subsidy Scheme (EWSS) were not in the hospitality sector and the government was looking at more targeted supports. 

The context of his comments were fresh Covid-19 restrictions introduced last week that closed nightclubs, placed limits on people per table in bars and restaurants and reinforced social distancing requirements. 

The restrictions coincided with a cut to the EWSS on 1 December but Finance Minister Paschal Donohoe confirmed today that this cut has now been reversed and the higher rate would continue until the end of January.

Planned reductions building up to the end of the scheme on 30 April will continue, however. 

Separately, the Covid Restrictions Support Scheme (CRSS) is also to be extended from the end of December to 31 January 2022. A further amendment to the Finance Bill 2021 will allow CRSS to be further extended by the minister if required. 

Speaking this morning, Finance Minister Paschal Donohoe said: “it was intended to develop further targeted support for those sectors that are most affected by these restrictions and to have this support in place quickly.

Upon further analysis of the proposal by my Department and the Revenue Commissioners, it became clear that it would be complex to develop an appropriate and effective scheme in the immediate term. 

“Instead, I have decided to extend the enhanced rates of EWSS for the months of December and January to give certainty to businesses when they need it most,” he said.

Asked about the lack of targeted measures, Donohoe said that “while sectoral plans may indeed be possible, they’re not possible as quickly as we would want”. 

He added: “Throughout this public health crisis, speed has to trump perfection of design.”

In the Dáil this morning following Donohoe’s announcement, Varadkar also noted that the government “hoped to do something more targeted”.

When we tried to do it it turned out to be too complicated. Restoration (of the full EWS rate) will be for all companies, but only for companies that can show 30% reduction in turnover, and that will include the hospitality sector and the arts, to help get them through this difficult period, at least until the end of January. There will be some companies that won’t need it as much but it will mean additional money in the economy and will lift all boats. 

The Restaurants Association of Ireland this morning welcomed the continuation of the EWSS for another two months and said it was “the correct decision due to severe loss in business due to public health advice”.

RAI CEO Adrian Cummins has however called for “a medium to long-term plan for recovery and viability of hospitality due to Covid”.

Cannot continue

Both Donohoe and Minister for Public Expenditure Michael McGrath described the EWSS as “costly” and reiterated that it “cannot continue indefinitely”. 

McGrath said that over €9 billion has been paid out in wage supports during the pandemic, supporting 700,000 workers.

“The government has been clear that there will be no cliff edge to supports for employers”, Donohoe said.

But we have also been clear that the EWSS cannot run indefinitely, nor is it sustainable to continue with the enhanced rates for a prolonged period of time given the very substantial costs to the Exchequer.

Asked how many firms are estimated to close when supports are removed, Donohoe said that this was difficult to calculate but acknowledged that it was a “moment of risk”. 

“It is very difficult to be able to model what will be the impact of the withdrawal of these supports when we get into 2022 and the health and viability of employers because there are currently so many employers on the scheme and their business and economic circumstances are all very, very different. It will be a moment of risk when we begin to reduce and ultimately exit from the supports. But we have to do without the right time,” he said. 

The Pandemic Unemployment Payment reopened on Tuesday for people who have been laid off as a result of the latest restrictions. However, further supports for businesses had not been announced until this morning. 

- With reporting by Hayley Halpin

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