Government aims to get firms through another storm with Finance Bill

The supports introduced to get businesses through the Covid-19 lockdowns were remarkably successful, even if the full implications for many businesses have still to play out. But will the same playbook work for the energy crisis, as the Government unveils another acronym — the TBESS or Temporary Business Energy Support Scheme — to try to help businesses through another storm?

Details of the scheme — which needs approval from Brussels — were outlined in the Finance Bill, published on Thursday. It broadly follows the commitments made in the budget, which is to meet 40 per cent of the increase in energy costs up to a limit of €10,000. The Finance Bill extended the supports to the professions as well as manufacturing and service firms and also came up with new arrangements which can provide support to a monthly limit of €30,000 when firms are working from multiple locations. Businesses warn that more flexibility may be needed, for example in the case of retailers with multiple locations.

There are a few lessons from the Covid-19 schemes. One is that these supports can be effective in keeping doors open, though do need to be tweaked. Another is that companies can, with support, take the strain for a while. That’s important as energy prices may stay high for some time. The new TBESS scheme is likely to be extended to the end of February initially and there is scope to extend it further to April. Beyond that, there may be pressure to extend it again in some form, as happened with Covid supports, though wholesale gas prices recently have shown more encouraging trends.

Time limit

For many businesses, even with supports, the strain of another crisis following so quickly on the last one will be significant. Already the Revenue has extended the time limit for people to pay taxes warehoused during Covid and insolvency experts are warning that many firms may have to run up the white flag in the months ahead. The bounce back from the pandemic had been encouraging, but now the consumer-facing parts of the economy face new threats as spending is squeezed by the cost-of-living crisis. The cumulative impact on many small firms of the two crises could yet be costly, despite the encouraging rise in employment and wages coming out of Covid and the remarkably low unemployment rate.

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Elsewhere, the Bill implemented the budget measures as expected and included the new amended concrete block levy and tidying-up measures in areas like pensions. It also included new reporting requirements for businesses to Revenue for payment of the €3.20 per day remote working allowance to employees and the payment of travel and subsistence payments.

One area of controversy relates to measures in the 2019 Finance Bill tied to company cars which are only due to come into force next January. This introduces a new method of calculating the cash equivalent of the car, based on its CO2 emissions. The result could be an increased bill running into the thousands of euro for many who have cars from their employer. In a statement after the finance Bill Ibec’s chief economist Gerard Brady said that while the rationale was sound, it is causing significant concern among businesses as the costs could be significant even on modest salaries. Ibec is calling for the change to apply only to new cars and not to existing fleets.

It is just another example of how contentious changes are in light of the cost-of-living crisis.