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Credit unions seek role in financing social housing

The Irish League of Credit Unions is calling on the Government to make changes that would allow the sector to finance social housing and a National Retrofitting Plan for up to half a million older homes.

It is among a number of proposals being put forward by the league, which represents 226 member credit unions across the country. 

The ILCU accuses successive governments of having failed to work with credit unions to better utilise their assets and ‘unlock their potential to give back to communities’.

“Policymakers continue to view credit unions’ strong and growing asset base as a problem which needs ever more regulation,” ILCU President Gerry Thompson said.

“They are failing to grasp the opportunity to leverage these significant funds to support the development of communities across the country.”

The league believes its asset base of €18 billion could be used to fund social and community development as the country seeks to recover economically from Covid-19.

In order to achieve this, the ILCU said it is necessary to immediately reduce the capital reserve requirements from the current 10% to 8%, bringing them into line with international norms.

It said the current reserve requirements are contributing to a situation whereby credit unions are restricting deposits from members, in some cases as low as €15,000 per saver.

Increased savings from some members during the pandemic shutdown – in parallel with reduced lending volumes – has created what the ILCU refers to as a ‘perfect storm.’

“We now have a scenario where a member cannot save, in full, with us for important but relatively modest purchases such as a new small car, their wedding or a deposit for a first home. The ability of credit unions to meet the needs of members and be the ‘peoples’ bank’ is being undermined,” Mr Thompson said.

The ILCU is also seeking policy reforms to allow credit unions to expand their mortgage and business lending services.

Speaking on RTÉ’s Morning Ireland, Mr Thompson: “The report is clear. Ultimately nothing short of structural change is really going to allow us reach our potential.” 

He said the Covid-19 pandemic has brought numerous challenges and “amplified the limitations” of the credit union.

He said they are hindered by regulations that have prevented the expansion of mortgage and business lending and want to be allowed more, adding, that “dipping our toe” into it is not enough. 

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Most employees want to retain option to work from home

Over 80% of Irish employees want to continue to spend at least part of their week working from home when normal life resumes after the coronavirus pandemic, a survey shows. 

Like much of Europe, most workers here were forced to work from home when the economy went into lockdown in March.

The Government’s advice remains for people to do so where they can as it prepares to lift the last of the restrictions. 

When asked what their ideal working arrangement would be when normal life resumes, the highest preference – 24% – was to work two to three days a week from home, according to the AIB/Amárach Research survey of over 1,000 adults carried out over the last four weeks. 

Another 20% said they would like to work one to two days a week at home and the rest in the office, with the same level expressing a preference to work three to four days a week from home and 14% saying they would go to the office during the week only if needed. 

That left just 15% preferring to go back to the office the way it was before. 

The survey also showed that 88% of people agreed it would be better for the environment if many people continue to work from home.  

77% agreed it would be better for employers if many of their employees continued to work from home, while 72% agreed it would be better for family life if many people continued to work from home. 

One reason many people feel sustainability has become more important post Covid-19 is that it is easier for them to adopt some lifestyle changes that are more sustainable.

Since the start of Covid-19 restrictions 56% of people said they do more home cooking, while 53% said they do more DIY, and another 53% said they are they attempting to reduce food waste.

The survey also showed that 45% of respondents said they go more on bicycle/foot while 24% are growing their own fruit, herbs or vegetables more than before, and 24% are more involved in helping in the community.

The Government has pledged to bring in measures to permanently increase remote working – including potential tax incentives – in a bid to promote better work life balance, higher female participation, greater regional balance and address climate change via less commuting.

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Call to spread wage subsidy tax burden over four years

The group representing Irish accountancy bodies has called on the Government to spread the taxation burden for recipients of the pandemic wage subsidy schemes over a four year period.

Workers are liable for tax on the income they have received via the Temporary Wage Subsidy Scheme (TWSS).

But the liability will not arise until the end of the year rather than paying it on a monthly, fortnightly or weekly basis, as they do with the portion of the earnings that they receive from their employer.

More than 66,500 employers have registered with Revenue for the scheme. Almost 700,000 workers have received at least one payment through the scheme.

The same taxation treatment will apply to recipients of the Pandemic Unemployment Payment.

As part of its pre-budget submission, the Consultative Committee of Accountancy Bodies said concessions were urgently needed.

“If an employee receives €350 per week under the TWSS, this amounts to €7,700 over 22 weeks and is a substantial amount of untaxed income for a worker to deal with at the end of the year.

“Tax due on these payments should be spread over four years or more to avoid a significant drop in the worker’s take home pay,” the committee says its submission.

The submission also proposes a write-down on the first €10,000 of balance of 2019 tax liability for self-employed people who are in severe financial difficulty as a result of the pandemic.
 
While acknowledging the supports already introduced, the group warns that without further extraordinary state measures, many SMEs in Ireland cannot survive. 

Among its other proposals are the introduction of a digital tax credit for small and medium sized enterprises (SMEs) and the tailoring of R&D (Research and Development) tax credits to facilitate the recovery of the SME sector.  

“When we talk about small businesses, we mean local retailers, manufacturers, hospitality, and service providers. They are reeling from the economic impact of Covid-19and face liquidity pressures which could result in business closures without Government support”, Norah Collender, Professional Tax Lead, Chartered Accountants Ireland said. 

“The tax system is a powerful means of getting supports to SMEs, which in turn always respond positively with increased economic activity,” Norah Collender said.

“SMEs account for over 1 million employees, or 68.4% of total employment in the Irish business economy and economic recovery is simply impossible if these businesses don’t get the tax supports they need,” they added.

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Donohoe to push for changes to EU Covid-19 recovery fund

The Minister for Finance, Paschal Donohoe has said he will be pushing for changes to the EU Covid-19 recovery fund so countries like Ireland might receive more funding.

Speaking on Morning Ireland, Minister Donohoe said he does not think the EU funding allocated to a country like Ireland reflects the challenges faced here as a result of the pandemic.

Mr Donohoe said change needs to be made and that work will happen at the end of next week.  

“I will be playing my role from an Irish point of view in doing that,” he said.

The newly elected leader of the Eurogroup said it is a time in which very big decisions are being made at EU level and there are always going to be differences of opinion.

He said as great as the challenges are, he is confident they will be able to find common ground.

Mr Donohoe said they have to look at how to get jobs back and national and European economies growing again.

“There is a shared desire to look at how we can get jobs back in the face of huge economic difficulty and getting economies growing again,” he said.

He said he sees the initial focus on trying to find a way to get agreement on the EU recovery fund and then taking care to ensure the right budgetary policies are in place to get people back to work.

He said there is discussion on how to deliver it and said it will be his job in turning that into a reality quickly.

On the issue of a digital tax, he said his overall view is that we do need to change how we tax digital companies.

“They will need to pay more tax now and in the future and Ireland will play its role in doing that,” he said.

Mr Donohoe said it is about finding a way in doing that which does not cause further difficulties to global trade.

“I believe we can get agreement on this matter. I will simply be making the case, let’s find a way of doing it with all the big countries in the world playing their role and reducing their risk for Ireland and Europe,” he added.

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Dublin Port volumes down in the first half of the year, but not as much as expected

There was a near 11% reduction in the volume of goods passing through Dublin Port in the first six months of this year, according to figures from the Dublin Port Company.

Overall port tonnage was 10.9% lower than in the same six month period last year.

A first quarter decline of almost 5% – which was attributed to ‘Brexit stockpiling’ in the first three months of 2019 – was followed by a steeper decline of 17% in the second quarter as the pandemic impacted the economy.

However, the decline was not as severe as expected.

A 26.2% decline in tonnage in April was followed by a smaller decline of 20.5% in May and a fall of just 5.5% in June.

Ferry passenger numbers were down by over 78% to 120,000 – the majority of whom were HGV drivers and other critical supply chain workers.  

The number of tourist vehicles fell by over 84% to 24,000.

There were no cruise ship calls to Dublin Port in the second three months and none is anticipated for the remainder of the year.

“The Q2 decline of 17% in cargo volumes was less than we had feared it might be. After the first six months of the year, our volumes are down by 10.9%. At this level, our throughput for the full year would be back to where it was in 2016,” Eamonn O’Reilly, Chief Executive of Dublin Port said.

“We saw after the 2008 recession how rapidly the Irish economy can recover from a deep recession and we seem to be seeing some evidence of this resilience in recent months where a 26.2% fall off in April was followed by a smaller decline of 20.5% in May and by a decline of just 5.5% in June.”

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51% of Irish firms expecting ‘U’ shaped recovery

Over 65% of global firms expect Covid-19 to have a negative impact on revenues in 2020, according to the Grant Thornton International Business Report, which provides insight into the views and expectations of more than 10,000 businesses across 29 economies.

It reveals that 40% of businesses anticipate a decline of less than 20% in revenues, while 1-in-4 expect a fall of more 20%.

Commenting on the report Michael McAteer Managing Partner of Grant Thornton Ireland said the findings are encouraging.

“A small number of Irish firms anticipate a positive impact of Covid-19 on their 2020 revenues (16.4%) with a further 19.7% not expecting to see any change at all in their revenue this year and just 23% predicting a revenue decrease of 20% of more. Whilst there has undoubtedly been a decline in revenue and profit expectations, and it will not be an easy year ahead as the economy emerges from lockdown, it is reassuring to see Irish business retains some optimistic outlooks,” he said.

Looking ahead to the next 12 months, the report reveals that revenue expectations by Irish businesses are slightly higher than the EU average, 33% versus 27% and on par with global at 34%.

According to the report 26% of Irish business are expecting a revenue increase in 2021.

Optimism levels among Irish businesses however have fallen significantly from the same time last year, with only 39% of Irish businesses stating they are optimistic for the outlook of the country’s economy over the next 12 months by comparison to 78% this time last year.

When asked about the market outlook in Ireland for 2021, 25% are expecting to see a ‘V’ shaped recovery in 2021 with 51% prepared to experience a slower ‘U’ shaped recovery.

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Govt urged to reduce alcohol, hospitality VAT rate to 5%

The Irish drink and hospitality sector is urging the Government to deliver a VAT reduction in the July stimulus economic plan.

The call comes after the UK announced it was cutting VAT (Value Added Tax) on hospitality services from 20% to 5%.

At present, there is a 13.5% VAT rate in Ireland for hotel, tourism, food and drink services.

The Restaurants Association of Ireland (RAI) has called for the immediate reduction of the tourism and hospitality VAT rate to 5%.

It also wants to see alcohol on sales included in the 5% rate. On-trade sales applies to alcohol sold in pubs, restaurants and hotel bars.

RAI Chief Executive Adrian Cummins said: “The UK has cut Value Added Tax on hospitality services from the current 20% standard rate to the reduced rate of 5%. The measure will be in place until 12 January 2021.

“This is the kind of action we need to see happen here. EU member states are also taking action, so why haven’t we seen any reduction in Ireland?”

“It is also worth noting that pre Covid-19, Ireland had one of the highest VAT rates [13.5%] for tourism and hospitality in the EU. The supports currently being offered to businesses simply do not go far enough.”

Donall O’Keeffe, CEO of the Licensed Vintners’ Association (representing Dublin pubs), said: “We are seeking a temporary reduction in the on-trade VAT rate on alcohol as a support measure to help businesses meet the 50% shortfall in trading due to Covid.

“This is for businesses and is not intended as a demand stimulus, which VAT rate changes tend to be.

“This is a new ask which has never been considered in Ireland and is achievable and easy to implement quickly. Ireland’s VAT rate on alcohol is already significantly higher than EU averages.”

Padraig Cribben, chief executive of the Vintners Federation of Ireland (representing rural publicans), warned that “new trading conditions and guidelines on social distancing and reduced capacity make meeting business costs an impossible challenge” for rural pubs.

“These businesses need a short-term stimulus to get through the next few months. Our ask for a reduced VAT rate for on-trade alcohol is one that can be done with relative ease and will provide an immediate impact,” he said.

Patricia Callan, director of Drinks Ireland, said: “The Government should grasp the opportunity to support the on-licenced sector efficiently and effectively by lowering the VAT rate for on-licenced alcohol sales.”

The drinks sector said a temporary cut in VAT on on-trade alcohol in the July stimulus programme would support and safeguard up to 50,000 jobs and a network of 7,000 businesses as the drinks and hospitality sector builds up its trade over the coming months.

Meanwhile, the Chief Executive of the Irish Tourism Industry Confederation has called for people to be given a “staycation voucher” as part of the July stimulus package. 

Eoghan O’Mara Walsh said every effort must be made to “incentivise and stimulate the domestic market”.

He said ITIC has called for a “staycation voucher to ensure that Irish people go out there and see what’s on their doorstep, and support the industry”.

Mr O’Mara Walsh described the British government’s stimulus package as “very bold and ambitious” and he called for the Irish government to “follow suit”.

And he added his voice to the calls for the VAT rate in the tourism and hospitality sector to be cut to 5%.

Eoghan O’Mara Walsh said not doing so could result in “wide scale job losses and wide scale business closures”. 

Earlier, the Chief Executive Officer of Ibec, Danny McCoy, has said the Irish economy can afford to match the 5% VAT rate for the of the tourism and hospitality sector. 

In Northern Ireland, measures to boost the hospitality and tourism industries after the coronavirus pandemic have been welcomed by a range of groups involved in the sectors.

The Northern Ireland Hotels Federation chief Janice Gault described them as a “game changer” that will “increase our chances of survival”.

“The news of a cut in VAT on food, accommodation and attractions from 20% to 5% until 12 January is a tremendous result for the sector, under the Chancellor’s plans to kick-start the economy,” she said.

“It will allow us as an industry to compete on an all-island basis and it also helps hoteliers address a number of challenges as they return to trading.”

Howard Hastings, managing director of the Hastings Hotels group, said the move will allow his hotels to update their rates to offer cheaper accommodation.

“These measures will go a long way in helping the local economy recover in the coming weeks and months ahead and will hopefully encourage more people to visit restaurants and book a staycation this summer,” he said.

“We hope this will also give an extra incentive to visitors from the Republic of Ireland and the UK to book a visit to Northern Ireland this summer as it certainly adds extra value to what we already offer.”

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Govt may extend rent freeze

The Government will consider extending a rent freeze and moratorium on evictions which was introduced as an emergency measure at the start of the Covid 19 crisis.

The measures were due to expire on July 20th, but the Minister for Housing, Darragh O’Brien, has told the Dail he will write to the Minister for Health, Stephen Donnelly, to ask if the public health advice merits an extension. 

“If it is justified, I will bring a proposal to Government accordingly,” Minister O’Brien said. “I will consider the economic situation as well and possible further measures that maybe put in place should they be needed.”  

He was responding to a motion tabled by the Labour Party calling for further state supports for tenants in rental accommodation  who, the party said, have been disproportionately effected by job losses as a result of Covid 19.  

The party’s spokesperson on education, Aodhán O Riordáin, said more than a third of those working in the hospitality and food sector, 27% in the retail sector 21% of those in construction are living in rental accommodation.    

He said some 200,000 renters are in sectors most severely effected by job losses: “Renters are less well able to weather this storm,” he said.  “So are we going to leave them to the market, to the private sector, or are we going to leave them with the protection of the state?” 

The Solidarity- People Before Profit TD, Richard Boyd Barrett, said there was no need to consult with the Health Minister on whether to extend the measures, because it is “self-evident” that evicting people to hostels, hotels or the streets was “utterly incompatible” with public health guidelines. 

The Sinn Féin Housing spokesperson Eoin O’Broin said the Minister must extend the ban on rent increases as a matter of urgency. 

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Hotels report occupancy rates of between 23-26% for summer months

Hoteliers here are reporting occupancy rates of between 23 and 26% for the summer months, according to figures from the Irish Hotels’ Federation. 

This is based on confirmed bookings and compares to an average 90% occupancy over the summer months last year.

The IHF said that occupancy for September, traditionally a popular time for US visitors, currently stands at 22%.

Elaina Fitzgerald Kane, the IHF president, said the substantial drop in occupancy levels highlighted the unprecedented challenges facing the sector and the requirement for immediate interventions to support tourism businesses.

She said the move by the UK government to cut the VAT rate there from 20% to 5% was a clear sign of their commitment to support the recovery of their tourism and hospitality industry. 

“Given how closely our economies are intertwined a similar cut here is necessary. The UK is not only our biggest market for overseas tourists, it is also our biggest competitor,” she said.

Almost 90% of hotels across the country are expected to be open again by the middle of the month. 

Ms Fitzgerald Kane said that hotel and guesthouse owners have been heartened by the strong support from people who are taking a “staycation” this year. 

However, she said this continues to be a critical time for the tourism industry and the almost 270,000 livelihoods it supports.
 
The IHF is calling on the Government to implement the following measures as a matter of urgency – the continuation of the wage subsidy scheme and inclusion of seasonal employees, a reduction in the tourism VAT rate to 5% until December 2021, new liquidity measures and the extension of the three month waiver of Local Authority rates and charges.

The group also said that the size of gatherings should be linked to venue capacity as opposed to an arbitrary cap on numbers. Greater clarity is now urgently required for gatherings beyond July, it added.

“Time and again, tourism has proven itself as a hugely successful engine for economic growth, particularly in regional Ireland. In the aftermath of the last recession, tourism created 90,000 new jobs. Last year alone it generated over €9 billion in revenue,” the IHF president said. 

“We are committed to working closely with the Government and with Minister Catherine Martin to safeguard tourism, Ireland’s largest indigenous employer, so that it can play a key role again and be a significant lever in the country’s economic recovery,” she added.

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House prices down 3.3% so far this year, rents up 0.2% – Daft.ie

House sale prices fell by an average of 3.3% in the year to June, according to the latest Daft.ie Housing Market Report. 

Daft.ie’s new monthly report looks at the health of both the sale and rental markets, with figures showing a 0.2% rise in rents nationwide in the year to June this year.

The report reveals that the average listed sale price nationwide last month stood at €253,868, while the average monthly listed rent was €1,402. 

Average Dublin house prices stood at €369,000 in June, while the average Dublin rent reached €2,023, Daft.ie said.

Most parts of the country showed similar trends, with an annual fall in sale prices ranging from 2.9% in Leinster to 4.9% in Munster. House prices sales fell by 3.8% in Dublin.

However, sale prices were up by a modest 0.7% on average in Connacht and Ulster, Daft.ie said. 

Rents were also fairly stable in the year to June, rising by 0.5% year-on-year in Dublin while they rose by 1.2% in the rest of Leinster.

But rents in Connacht and Ulster are down 2% year-on-year, Daft.ie added.

Today’s report also noted that the number of properties posted for sale or to rent during June showed a sharp recovery in market activity in June, compared to April and May. 

There were over 5,200 properties listed for sale in June, compared to roughly 2,000 in both April and May. 

Daft.ie said that while those two months had seen activity collapse by three quarters, the number of homes advertised in June was just 15% lower than in the same month in 2019. 

In the rental segment, there were 38% more homes advertised to rent in June 2020 than a year previously, with Dublin driving this trend.

Ronan Lyons, economist at Trinity College Dublin and author of the Daft Report, said that market activity rebounded strongly in June, perhaps reflecting an element of pent-up demand carried over from April and May due to the Covid-19 outbreak.

“This is particularly the case for sales, where over 5,200 homes were listed for sale during the month, compared to roughly 2,000 in both April and May. Nonetheless, the figure remains below the total for June 2019,” he noted. 

He noted that significantly more homes were listed for rent in June this year than last, adding that the concern remains that policymakers see this as the underlying problem solved. 

“While the new government may want to favour the construction of owner-occupied homes, the fundamental shortages are in the social and market rental segments and it is those segments that must be the focus for policymakers over the coming years,” he stressed.

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