Government reverses plans to cut wage subsidy scheme

Paschal Donohoe said the enhanced rates will be extended for a further two months, backdated to December 1.

Minister for Finance Paschal Donohoe (Julien Behal Photograph/PA) (PA Media)

The Government has abandoned plans to cut the Employment Wage Subsidy Scheme (EWSS) in a bid to help businesses affected by new Covid-19 restrictions.

Minister for Finance Paschal Donohoe said other plans to modify the Covid Restrictions Support Scheme (CRSS) will not go ahead as it will be too “costly” to put in place before Christmas.

The Government is to extend the enhanced rates of the EWSS for a further two months, and it will be backdated to the start of December.

The CRSS will also be extended to the end of January as nightclubs remain closed over the Christmas period.

Mr Donohoe said: “We and the Government absolutely accept that the impact on public health guidance on the hospitality sector in particular has been significant.

“We’re also aware, as we approach into the Christmas period, of the unheightened uncertainty that is there with regard to how businesses will be able to work and how they will be able to employ and who they will be able to employ.”

He said further consideration and analysis of the CRSS shows it would be “administratively very complex and potentially costly” to have it in place and operational ahead of Christmas.

“I recognise in particular that for the hospitality sector, speed is vital in trying to meet their needs as we work our way through a trading period that is so important to so many restaurants and hotels,” Mr Donohoe added.

“They need additional support and they need it now and a potential risk developed of our being able to modify the Covid Restrictions Support Scheme, but not being able to deal with in time and not being able to have the impact that we wanted to have.

“Therefore I have decided, and will be recommending to Government, that we maintain the enhanced EWSS subsidies for a further two months period across December and January.

“This is a quicker way of responding to the need of how we support businesses in the medium term.

“This scheme and its operation has been the cornerstone of how the Government has helped our employers respond back to the current crisis.

“It has played a central role in supporting businesses, encouraging employment, and helping to maintain the link between employers and employees.

“To date, the overall cost of the Employment Wage Subsidy Scheme alone is 6.5 billion euro.

“I propose to extend the CRSS scheme up to the 31st of January, to allow any businesses which are prohibited from opening to continue to avail of the scheme.

Minister for Finance Paschal Donohoe, left, and Michael McGrath, the Minister for Public Expenditure and Reform (Julien Behal Photography/PA) (PA Media)

“I will give the further option to extend the scheme by order out to the end of next April.”

Mr Donohoe is to introduce the amendments in the Finance Bill in the Seanad next week.

The additional cost of extending the scheme will be funded by the contingency pot announced in October’s budget.

Minister for Public Expenditure Michael McGrath said: “We are deeply conscious that the latest restrictions and indeed the necessary public health messaging that we have heard in the last number of weeks has had a significantly negative impact on the hospitality and the events sector.

“We know that they have faced many cancellations, especially for group bookings, events, Christmas parties and so on.

“In response to the latest restrictions, we are extending the local authority commercial rates waiver to the end of March 2022 for the hospitality, entertainment, events and tourism sectors.

“This is a cost of over 62 million euro and brings the value of commercial rates waivers to date to almost one-and-a-half billion euro.”

The Vintners’ Federation of Ireland (VFI) welcomed the decision, saying the extension will keep people in their jobs over the festive season.

Chief executive Padraig Cribben said: “The restoration of the EWSS to its full rate backdated to December 1 is welcome news as the trade approaches Christmas.

“It will mean keeping staff in their jobs through the festive season and into the new year, which is hugely important.

“However, Government will need to engage with the sector on an ongoing basis as it remains unclear if restrictions will be extended. If that’s the case, further supports will be required.

“Even with these supports, there is huge uncertainty for the pub trade as it heads into the new year and the upcoming second anniversary of the crisis.

“Government must talk to us about a long-term plan for the sector, because without one the trade will collapse.”