Covid business supports set to be extended beyond March

The Government is set to extend pandemic-era business supports beyond their expiry date at the end of next month, with Tánaiste Leo Varadkar saying they "cannot end on March 31st".

A key Cabinet subcommittee will meet on Thursday to discuss extensions to the scheme and assess measures for sectors fundamentally exposed to the impact of Covid-19.

The future requirements of industries such as aviation, tourism, hospitality and entertainment, which will face “prolonged difficulties”, will also be on the agenda of a Cabinet subcommittee on the economy, a spokesman for the Department of Business said.

The meeting, chaired by Mr Varadkar, will review the impact of the third wave of Covid and the associated lockdown on the economy, as well as the vaccine rollout and Brexit.

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Extensions to the pandemic unemployment payment (PUP), employment wage subsidy scheme (EWSS) and Covid restrictions support scheme (CRSS) will be discussed, as will proposals to support businesses that do not qualify for weekly payments.

Speaking before the meeting, Mr Varadkar told The Irish Times in a statement that programmes such as these “cannot end on March 31st as many businesses will still be closed by then and will still need help even after they reopen”.

“Government has yet to make a decision on these matters but I think we all agree that it would help build confidence if a decision is made on extending these programmes this month, rather than waiting until next.”

Extra borrowing

The committee will also discuss how to deploy the €1 billion awarded to the state under the Brexit Adjustment Reserve and the National Recovery Fund.

Minister for Finance Paschal Donohoe and Minister for Public Expenditure Michael McGrath will update the committee on the public finances, while Minister for Social Protection Heather Humphreys will present employment data.

Government sources said that the impact of the pandemic on the economy and public finances, as well as the ongoing cost of pandemic supports – estimated at about €1 billion a month – will form part of the meeting.

Sources said there is a growing view that the worst economic effects of Covid are concentrated in a few sectors, with some confidence drawn from recent income tax and VAT returns.

However, the ongoing impact of the pandemic and the harsh lockdown associated with the third wave has pushed back any discussion of tapering supports, most likely until the third quarter of the year, sources said. The prospect of topping up about €5.5 billion in Brexit and Covid contingency funds with extra borrowing is also likely to be discussed.

‘No cliff edge’

Mr Varadkar said the budget was predicated on pessimistic assumptions around Brexit and vaccine development. However, while both have turned out better than expected, he said “we did not expect a prolonged third wave and lockdown that is having a very negative impact on employment and business”.

Speaking in the Dáil on Wednesday, Mr Donohoe said businesses affected by the pandemic are expected to require support until the end of the year.

Mr Donohoe pledged in a Dáil debate that there would be no “cliff edge” to the EWSS that provides a subsidy to qualifying employers based on the number of employees.

The scheme is due to finish at the end of March but can be extended to the end of June under current legislation. Mr Donohoe said that the operation of the scheme and its effectiveness is under close review.

He said there were “no plans to revisit the core eligibility criteria for the EWSS” but “the Government’s position is that there will be no cliff edge to the EWSS”.

Outlining details of Government supports, the Minister said the TWSS, in place from March until the end of August last year provided almost €2.9 billion subsidy to 66,500 employers for more than 664,000 employees. Under the EWSS direct subsidies of €1.7 billion were paid to 44,800 employers and 505,600 employees with €303 million in PRSI credit up to January 28th.