1. Presentation from Hardware Association Ireland (HAI) to
Joint Committee on Jobs, Enterprise and Innovation Attending:
Annemarie Harte, Chief Executive Hardware Association Ireland Alex
Taylor, Sales Director Uppercross Enterprises Ltd Jim Copeland,
Head of Member Relations Hardware Association Ireland Subject:
Policy options to support business growth and job creation and
retention in town and village centres. Introduction Hardware
Association Ireland (HAI) is the national representative body for
hardware, builders merchants, DIY, homewares, garden and
agricultural suppliers, at retail, wholesale and manufacturing
level. From family run businesses to publicly quoted companies,
HAIs 300+ members serve their local communities competitively,
representing and employing over 20,000 people throughout the
country. HAI is a truly representative body, monitoring the
interests of independent retailers with single outlets as well as
larger national retailers with outlets nationwide. Our sector has
been particularly badly affected by the downturn given the direct
consequences of the collapse in both the construction and retail
markets. HAI members, both suppliers and hardware merchants,
continue to face huge challenges and difficulties. Increased taxes
and ever increasing business costs applying to the domestic economy
have hoovered out any disposable income from consumers. Our members
are making every effort to provide consumers with the best value
products and services. However, the market is still struggling as
is evidenced by the latest HAI members' survey conducted in June
2014 by Behaviour and Attitudes, which indicates overall business
activity is the same or lower than the previous 12 month period for
half of hardware merchants. All the indications continue to suggest
that the market remains most challenging for firms in rural Ireland
and any uptake in business activity is focused primarily in the
Dublin/Leinster region. Our policy proposals to support growth in
town and village centres fundamentally seek to address this
imbalance. Being in a niche sector means we are closer than most
representative organisations to our members concerns and needs. We
call for and support the following policy proposals: 1. Rural
Investment In recent months there have been two strategy documents
published which are to be welcomed. They are the CEDRA report
Energising Irelands Rural Economy published in April by The
Commission for the Economic Development of Rural Areas and the
Governments Construction 2020 Strategy for Ireland published in
May. September 30th 2014 1
2. a) Implementation of CEDRA report The CEDRA Report has over
30 excellent recommendations which would energise social and
economic life in rural Ireland. A number of the recommendations
made in this study could be implemented immediately without any
significant cost to the State. For example: Recommendation 8 -
State agencies to strengthen their collaboration to bring small and
niche FDI to rural areas. Recommendation 5 - the facilitation of
Rural Economic Development Zones (REDZs). Recommendation 14 - the
introduction of a funding mechanism, either stand alone or in
partnership with other finance instruments, to incentivise and
support the early stage development of social enterprises. Allied
to the need to energise rural economic conditions is the need to
stimulate consumer spending with the inevitable benefit of
increasing employment, particularly among SMEs. In rural Ireland,
outside the five main cities 92% of economic activity is generated
by SMEs. b) Implementation of Construction 2020 Strategy
Construction 2020 contains 75 specific actions and while it is
welcome it will take some time for any benefits to accrue. The
change proposed in the strategy for the National Pension Reserve
Fund (NPRF) to become the Ireland Strategic Investment Fund (ISIF)
and have the ability to invest in commercial activities is one very
welcome proposal. Both of these strategy documents are welcomed by
HAI because they deal with two of the fundamental policy needs that
impact on the business of our members. They are the need to
rebalance economic activity with a greater focus on towns and
villages in rural Ireland and stimulating the building/construction
industry. 2. Construction / Building Stimulation a) Home Renovation
Incentive (HRI) scheme Extend the scheme beyond 2015. The scheme
has taken some time to be recognised by homeowners and building
contractors. The latest Revenue information, as of 15th September,
is that the value of the works registered to date is 171 million,
with an average job value of 16,500. HAI believes that this scheme
has increased employment levels among builders and helped maintain
employment in the hardware sector. However, the bulk of the work
registered for the scheme to date is focused in the Dublin/Leinster
area (77%). HAI believes that an extension of the scheme would
allow time for it to be better promoted in more rural areas. The
Revenue has stated that it is considering ways of promoting the
scheme and we, as an association, are prepared to assist in that
promotion as our members are a key point of contact with consumers
and builders requiring building material and household goods. We
could combine promotion of the scheme with a drive to support the
local independent merchant whilst this in no way disenfranchises
our wider membership, a buoyant local economy in towns and villages
will help the overall sector to recover more quickly and will
support local job creation. September 30th 2014 2
3. b) Help to Buy We understand that the Government has
requested the Department of Finance to consider a Mortgage
Insurance Scheme based in part on the Help-to-Buy scheme in the UK,
which has been a success, in particular outside London. Outside the
M25, the Help-to-Buy scheme has resuscitated new building,
especially for first time buyers. Our proposal is that help-to-buy
should be thought of in terms of help-to-build also. The
availability and accessibility of appropriately zoned land to meet
current demand is vital. Unlike the UK where the threshold is
600,000, we would recommend that the threshold for an Irish scheme
should be lower to focus first on the family-type home in areas of
need and disadvantage. Nowhere has the collapse in the construction
market been more obvious than on the fringes of towns and villages.
Adoption of such a scheme will support housing regeneration and
will stimulate commercial activity in town centres. c) Credit
Guarantee Schemes Obtaining working capital through credit or loan
facilities is currently a major problem for small builders and SMEs
in the building construction industry. In an effort to alleviate
this problem in the UK there is currently a pilot scheme in
operation whereby trade customers can apply for a credit account in
builders merchants of up to 25,000 underwritten by the Government.
Many small businesses struggle to secure credit due to lack of
security or adequate credit history and would only have been
eligible for a fraction of this amount. That made it more difficult
for them to take on projects due to being unable to afford the
upfront cost of the materials. The pilot scheme is being backed by
the UK Government with a multi-million pound fund in order to
stimulate viable small and sole trader construction businesses and
in an effort to provide alternatives to bank lending. We understand
that there is an ongoing review of the Credit Guarantee Scheme and
we would recommend this proposal as part of that review. 3. Support
local entrepreneurship a) Expand and promote Microenterprise Loan
Fund Scheme The existing Microenterprise loan fund scheme, which
was introduced in October 2012, originally intended to provide over
90m in extra lending to 5,500 businesses and create an estimated
7,700 jobs over a ten year period, needs to be revamped. The latest
report up to 31st March 2014, after a year and a half in operation,
shows that only 3m in loans have been approved and 437 jobs (net)
created in 192 businesses. Only 51% of applications were approved
and 83% of the approvals were for businesses employing three people
or less. These figures are so far off the original target that it
is clear a revamp is required. The current eligibility thresholds
for micro businesses are that they have been declined bank credit,
employ less than 10 people and have turnover less than 2m. These
should be changed to include those companies employing up to 20
employees with a turnover of up to 5m. September 30th 2014 3
4. The loans available of between 2,000 and 25,000 are welcome,
but must be promoted and made available to all companies within
retail, especially in our hardware, building material, DIY sector
where the economic downturn has been most evident. Local Enterprise
Offices must work in partnership with Micro Finance Ireland to
proactively assist with training and guidance in preparing the
applicants business plan. This includes initial evaluation of the
quality of the business proposal for the loan application,
mentoring and advice on an on-going basis. 3. Social policy reform
a) Introduce voucher system for winter fuel allowance We urge the
introduction of a fuel voucher system where those who currently
receive a winter fuel allowance, would have to use a dedicated fuel
voucher/smart card to purchase a fuel product only, from registered
and tax compliant retail fuel outlets. Currently the allowance is
paid by way of a cash top up on the recipients current payment,
which can be spent on anything, not exclusively solid fuel, and
from any source of supply without any traceability or recovery for
the State. The Department of Social Protection says that a total of
410,000 people currently claim 20 in fuel allowance per week,
including those in receipt of social welfare and HSE payments. The
allowance costs the State 211m per year. The fuel allowance is paid
for 26 weeks from October to April. A fuel voucher system scheme
would allow the Government to recoup some of this 211m back through
legitimate outlets tax returns; ensure that the money was spent
with legitimate suppliers and not those operating in the shadow
economy and ensure that the payment was fully used to help in
reducing fuel poverty. This could again be combined with a support
your local independent merchant campaign driving much needed
support to the local retailer. a) Incentivise jobseekers to take up
temporary seasonal positions We propose a revamp of the social
welfare conditions to incentivise job seekers to apply for seasonal
temporary employment positions. The situation whereby temporary
seasonal positions are not taken up by the unemployed due to the
fact that it could take a number of weeks to re-register on the
live register is archaic. The hardware, building materials, DIY
industry can create thousands of part-time positions at peak
trading periods including Summer and Christmas. We see this as
another boost to job creation at local level. Conclusion Despite
huge job losses over the past 6 years, the retail sector continues
to play a significant role in the Irish economy. It accounts for
approximately 10% of GDP (approx. 16bn) and together with the
wholesale sector, is still the largest private sector industry
employer with over 270,000 employed. It is a sector represented in
every city, town and village in the country (c. 15% of the
workforce). (Retail Consultation Forum June 2014) HAI members both
suppliers and merchants, are directly affected by weaknesses in
construction activity, as well as by continued weakness in consumer
demand generally. So as to ensure an equitable spread of the green
shoots we have heard of over the last couple of months in consumer
September 30th 2014 4
5. confidence and increase in commercial activity we need to
target our local town centres and villages with a proactive and
realistic approach. We hope our suggestions are both practical and
helpful. September 30th 2014 5
6. confidence and increase in commercial activity we need to
target our local town centres and villages with a proactive and
realistic approach. We hope our suggestions are both practical and
helpful. September 30th 2014 5