Holistic paper has over 100 recommendations to improve the business operating environment, meet individual business needs, and those of employees
3rd annual edition of ‘The Next Financial Year’ informed by insights of Institute’s 30,000 members North and South
5 July 2022: Chartered Accountants Ireland today published its annual blueprint for creating a better business environment on the island of Ireland. This is the third year that the largest accountancy body on the island of Ireland has published ‘The Next Financial Year’, informed by the insights of its 30,000 members.
The blueprint contains over 100 individual recommendations to optimise the business environment, particularly for SMEs; to meet individual business needs; and to address personal finance and societal issues so that employees can survive and succeed as well as businesses.
Commenting, Dr Brian Keegan, Director of Public Policy, Chartered Accountants Ireland said:
“This document sets out what is required for well-functioning economies and societies into the next year. Is it informed by the views of our members across the island of Ireland, and speaks to structural challenges in the business environment, the individual needs of businesses, and critically, the need of employees living in our communities.”
The business environment
Supporting business
The Institute identifies ways to address pinch points that can slow fast-moving businesses down. It prioritises developing greater capacity for business to success, particularly in the vital SME sector by ensuring supports and systems of compliance reduce burdens on business and promote adherence.
Dr Keegan notes:
“Last year, we noted that government in the future will be bigger, and this needs to happens in a way that helps business flourish. SMEs face increasing financial and administrative burdens in the coming months, from necessary legislative developments on auto-enrolment, the right to request remote working, and statutory sick pay. The timing of these, and their impact on business needs to be considered and balanced. Equally, for each, comprehensive guidance on the new rules is needed well in advance of introduction.”
The broad range of grants and supports in existence, aimed at manufacturing or internationally traded services sectors need to be adapted for SMEs. The Institute suggests widening the eligibility criteria to include ‘traditional’ industries and service sectors so important to local economies and communities. It suggests that the basis on which many grants and supports are offered should be adapted, with value rather than headcount the key performance indicator.
Business rescue process (SCARP)
As we emerge from the effects of the pandemic, and geopolitical and economic shocks continue, the Small Company Administrative Rescue Process (SCARP) can help viable SMEs and save jobs. The criteria for companies wishing to avail of the process mean that SCARP will effectively be available to 98% of companies in Ireland. The Institute recommends that renewed attention is devoted to encouraging the use of this mechanism and suggests that the Government employs an extensive communications campaign to promote it.
Meeting business needs
Access to finance
The Institute notes the detrimental effect that a lack of competition in the business lending market is having, with the exit of Ulster Bank and KBC. The paper suggests Government review the reasons why Ireland lost these banks, as well as examining what can be done to increase competition.
Dr Keegan commented:
“There is widespread support for creating a third pillar bank with many suggesting that role could be fulfilled by Permanent TSB, given the apparent lack of interest by foreign institutions in the Irish market. In addition, credit unions should be supported in their ambition to deepen their involvement as community-based lenders to small enterprises.
“As well as supporting competition in business banking, the Government should also recognise the importance of next-tier, alternative lenders. The non-bank funding market in Ireland is far too small and requires state support to grow. The SBCI needs to continue to grow and develop partnerships to create competition that will benefit and support SMEs.”
Ensuring regional connectivity
Recognising the importance of reliable digital connectivity, the Institute highlights the importance of making up for lost time in the roll-out of the National Broadband Plan. The original 2021 target of 102,000 premises connecting was revised down to 60,000, with just 34,500 premises connected. The paper notes that regional growth and new ways of working will depend on the availability of reliable broadband, which will substantially increase Ireland’s standing globally and bring economic benefits.
Meeting employee needs
Dr Keegan notes:
“Employee needs are at the very core of a successful business environment. ‘The Next Financial Year’ provides measures to address some of the most pressing societal issues facing Ireland, as the cost of living continues to increase for citizens. All around us we can see the impacts of a property market in crisis, the impact of taxation decisions on our competitiveness as a business environment. Many of the 100 + recommendations we are making today will, if adopted, have a real impact on people’s lives.”
Housing the workforce
While affordable housing remains a priority for government, unless there are profound and sudden changes in the housing market, Ireland will not be able to house its population. A sustainable economy requires a functioning housing market. Chartered Accountants Ireland recognises that the rental market is intrinsically linked with the owner-occupier market, and in the short term, increases in supply in the rental market may be achieved at the cost of a reduction in supply in the owner-occupier market, and vice versa.
‘The Next Financial Year’ notes that tax policy is one of several tools at the Government’s disposal to help with the ongoing supply issues. Targeted tax incentives should prioritise measures that reduce development costs, easing cash-flow concerns and making investment more appealing. At the same time, the return on investment for the Exchequer from such measures should be appropriate.
Retirement planning
Part of meeting employee needs and business needs is helping people to undertake long term planning to ensure financial security in later years. Today, the Institute reaffirms its call for a clear and coherent long-term government pensions strategy, with adequate lead-in time for any changes to allow workers to plan. The Institute also recommends the abolition of mandatory retirement to allow people to work for as long as they choose.
Dr Keegan commented:
“Delay in addressing the pension issue over the last 20 years is storing up a considerable problem for another day, both for employers and employees, so we need to start moving, and keep moving on this reform journey. A consistent long-term strategy for the State Pension, including eligible age increases, we feel must be communicated 10 years in advance to allow people to plan, so there is simply no time for further delay.
“We have long been clear that reform of the State Pension cannot happen without commitment and action to increase private pension coverage. Again, for the ambitious timeline towards auto enrolment to succeed, we need to see the minutiae of what is planned.”
ENDS
For more information contact
Jill Farrelly
PR & Communications Manager
LOADING...