Friday, 24 July 2020
July Stimulus Reaction: Stimulus for some and ‘a start’ for others
VAT reduction for on-trade alcohol, while welcome, does nothing for the 3,500 pubs that remain closed
- Two-tier sector exists in drinks industry with over half of Ireland’s pubs still closed
- Government guidelines and Covid measures limit the capacity of pubs to trade in the long term – with reduced demand and reduced capacity, consumers ability to spend in pubs is capped
- Nominal VAT reduction is a start for 7,000 businesses and 50,000 jobs but it will end
- Measures largely welcomed: extension of the TWSS welcome while Stay and Spend scheme ‘good for hotels’ says industry
Drinks Ireland, the Licensed Vintners Association (LVA) and the Vintners Federation of Ireland (VFI) said that the Government’s July Stimulus package will deliver a stimulus for some but expressed a deep concern for the 3,500 pubs that remain closed today.
Reacting to the detail of the package announced this evening, the group welcomed the provisions but said in the context of the current situation where a two tier sector exists in the drinks industry – with some pubs open and others still closed indefinitely - the measures will not deliver.
‘The reduction in VAT is a start but we need to consider the reality of the new business model within which pubs are operating - Government guidelines and Covid measures limit the capacity of pubs to trade which means demand is reduced, capacity is significantly decreased and consumers ability to spend in pubs is capped. Government support needs to be cognisant of this reality and we remain open and willing to engage with government in meaningful consultation in the period ahead to fully consider this employment-intensive, domestic sector,’ said Donall O’Keeffe, Chief Executive, LVA.
The group welcomed the extension of the Temporary Wage Subsidy Scheme which will provide additional certainty to businesses and to employees, while acknowledging that the proposed Stay and Spend scheme would deliver for hotels.
The group sought a reduction in the VAT rate for on-trade alcohol to support Ireland’s 7,000 pubs and maintain the 50,000 jobs in the sector. The measure was intended to boost the viability of the businesses, rather than stimulate demand.
Commenting, Padraig Cribben, Chief Executive, VFI said: ‘Ireland’s publicans are businesspeople, employing over 50,000 people in every corner of Ireland, the real economy. While the measures announced are welcome, they are only a start. The temporary reduction in the VAT rate on on-trade alcohol will assist in the short term but it will end. We need to consider the pubs that are closed, we need to get them open and provide support to get people back to work in businesses that are supported to be sustainable in the long term.’
Commenting, Patricia Callan, Director, Drinks Ireland said: ‘While any and all supports are welcome, we need to continue to assess and review their impact. The environment in which the drinks and hospitality industry is operating is abnormal and this is set to continue. We must look to the Covid measures implemented in the EU and consider their impact while also reviewing the progress of our own measures announced today. This is important ahead of the National Economic Plan in October and in protecting the longer-term viability of Irish pubs as they continue to alter their business model to operate within the confines and realities of Covid in the long term.’