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Changes to Govt cost of business scheme “backward step”

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Small and medium sized businesses have expressed disappointment at planned changes to the Government’s proposed Increased Cost of Business Scheme (ICOB), which will result in those that pay higher commercial rates receiving less than originally thought.

The one-off €250m scheme was originally expected to provide firms that pay rates of up to €20,000 in 2023 with a grant equivalent to up to 50% of their bill.

However, today the Minister for Enterprise, Simon Coveney, said the plan now is that businesses that have paid up to €10,000 in rates will receive a grant equivalent to a 50% return.

While those who have paid between €10,000 and €30,000 will get a flat payment worth €5,000 each.

No grant will be available for firms paying more than €30,000.

“That is a really backward step,” said Neil McDonnell, chief executive of Irish Small and Medium Sized Enterprises organisation, ISME.

He said the €5,000 grant for many larger organisations, particularly those in Dublin that pay high rates, would do little to help them meet the increased costs of doing business next year, including the hike in the minimum wage.

He said the cost of the that pay adjustment per employee would be €2,841 a year, or €3,155 including employer’s PRSI.

“The €5,000 maximum is going to cover one a half people,” he said.

“Across retail, hospitality and childcare, this is going to be extremely serious.”

He added that it would be particularly difficult in sectors with price controls in place, like childcare and nursing homes.

“The pie stays the same size, but the slices are smaller,” he said.

Speaking on the News at One earlier, Mr Coveney defended the scheme, which he said would benefit 143,000 businesses across the country, representing 95% of those that pay rates.

“Businesses will automatically get this money,” he said.

“All they will have to do is confirm to local authorities their bank account details, as long as they are rate paying and tax complying business, will get it in the first quarter of next year.”

But employers’ organisation, Ibec, said the fund would be spread too thin.

“Businesses are facing several concurrent and substantial changes in the labour market in coming months and into next year,” it said.

“Along with the recent announcement to increase PSRI and statutory sick pay, businesses will face a rise in the minimum wage, the introduction of auto-enrolment for pensions, the right to request remote work, new revenue reporting requirements, and enhanced protective leave entitlements related to parental, medical, and domestic violence – all of which will create significant costs.”

“Whilst Budget 2024 saw the announcement of a €250 million fund as a partial recognition of these additional costs, it will be spread far too thinly across the economy and doesn’t come close to offsetting the cumulative costs involved.”

But Mr Coveney said Ibec had been involved in the conversation on many of the policy decisions and are part of the discussion, as are trade unions.

“We are trying to use a substantial amount of money to make sure every small business gets some level of support,” he said.

“We are not suggesting that this will make up the difference in terms of all of the increased cost, it will be a welcome cash injection for many small businesses across the country in the early part of next year.”

– additional reporting Cathy Lee

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