‘It has been a huge missed opportunity’
Businesses foresee bleak prospects as energy prices not capped
‘My main concern is the VAT rate’
A SHOP owner has said he is ‘furious’ that the Government has not introduced energy price caps to help businesses this winter.
Will Diamond, founder of Diamond Furniture in Dublin, said the energy measures in the Budget do not go far enough to address soaring energy prices.
‘The dog on the street knows they don’t go far enough. It’s a huge missed opportunity.’
Finance Minister Paschal Donohoe announced a temporary business energy support scheme that will pay for 40% of the increase in gas and electricity that businesses are facing.
‘We look across the water and see in the UK a Tory government has put a floor underneath their citizens. They have made sure they have an energy cap... We’re looking at France who are putting in an energy cap. We’re looking at Spain, at Italy doing the same. Ireland is still dragging its heels.
‘The Government’s excuse is that this is writing a blank cheque for energy companies. That’s rubbish, absolute rubbish.’
He added: ‘There’s too much uncertainty out there. There’s too much volatility.
Mr Diamond, who set up Diamond Furniture in 1998, employs 28 people at its showrooms at Dublin’s Long Mile Road. He said he is grappling with energy bills that have more than doubled since the start of the year.
‘Our energy bills have gone from about €21,000 a year to about €50,000 a year. It’s a massive increase,’ he said.
But Mr Diamond remains worried about the ‘palpable sense of uncertainty’ among customers.
‘People are terrified... It is the uncertainty. They don’t know how much their bills will be. I think the Government has underestimated the damage that this is going to cause to the economy.’
Publicans and hoteliers are also fearful customers will be ‘turned off’ by rising prices following the Government’s decision not to extend the special hospitality VAT rate of 9% past February – described as a ‘devastating blow’ to places serving food.
The rate, introduced in 2020 to help lessen the impact of the Covid pandemic, will rise to 13.5% next March – with customers taking the hit.
It comes as the new Business Energy Support Scheme, set up to cover 40% of energy price hikes for SMEs, has left hospitality services ‘depressed’ as they will still be faced with ‘fourfold increases’ in bills this winter, according to the Vintners’ Association of Ireland.
The temporary scheme, administered by Revenue, provides support of up to €10,000 a month per business.
Publican David Courtney of Smyth’s bar in Ballsbridge, Dublin 4, said that while he fears the pub will not be able to cope with the limited support on offer for energy costs, his ‘biggest concern’ is the impact of VAT rates on customers.
‘It’s toughest on the customers,’ he told the Mail, ‘and it’s all about them at the end of the day. If they’re hit it’s going to affect them coming in. ‘My main concern is the VAT rate that’s finishing in February. We would like to have had it extending on so that’s disappointing. If customers get hit, we all get hit. ‘With the tough years we’ve had during Covid, any support is needed, and customers are what generate our business and what keep us going.’ And the restaurant industry will crash as businesses are forced to pay energy bills with a 300% increase, says a Galway chef. JP McMahon, owner of three restaurants in Galway, said he knows at least six restaurateurs who are saying they will have to close down, despite the offer of support to struggling businesses in the Budget. He described Ireland as being almost ‘split in two’, with one half full of wealthy corporations and the other an ‘independent poor cousin’ full of struggling businesses.
Last year, the Galway chef said his entire energy bill was around €25,000 but for the first six months of this year it has been roughly €50,000.
He said: ‘Post-Covid, the industry was already withered and now there are just going to be people who have given up and no longer want to be an employer.
‘I know restaurants that are saying they are not going to pay their energy bill because they can’t, and they’re just hoping the Government will not shut everyone down.
‘The food industry, the culture, it is all going to shrink. We were due to open up another restaurant in Galway in January but I couldn’t even imagine trying to do that. It will be a telling winter.’
Speaking about the Budget, he added: ‘People will see this as saying we get a 40% grant, but you’re just going to give that back in VAT and be in the same position come March.
‘My biggest fear is that a lot of restaurants will now turn their back on local organic producers. Irish food has developed so much over the last few years and now that is going to all be washed away, which doesn’t help anyone.
‘The only good thing, I hope, that might come of this is that the younger generation weather the storm and take advantage of this imminent crash.’
He described the situation for restaurants as being like ‘a weird game of poker’ and said larger companies will be able to survive and potentially even benefit from the closures.
Adrian Cummins, CEO of the Restaurants Association of Ireland, said the Budget measures do not go far enough to protect small Irish hospitality employers.
He said: ‘The devil will be in the detail on this and we are calling for Revenue to open and administer the scheme immediately. Some businesses are already struggling to pay the bills coming in.’
‘The food industry is all going to shrink’