RETAIL EXCELLENCE IRELAND PRE-BUDGET SUBMISSION 2013

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2 RETAIL EXCELLENCE IRELAND PRE-BUDGET SUBMISSION 2013 THURSDAY 4 TH OCTOBER 2012

3 Introduction The Irish retail industry continues to face huge challenges and difficulties. The latest figures show that VAT returns are greater than anticipated but consumer confidence and spending is down. Increased taxes and VAT specifically, as well as additional charges applying to the domestic economy have had a devastating impact on the industry. Whilst retailers are making every effort to provide consumers with the best value products and services, the market is still in decline and high business costs are crippling retailers. Without targeted and immediate political action, Retail Excellence Ireland forecasts that the coming months will see more retail businesses close and an accelerated rate of retail failure in Ireland. In the context of a severely depressed retail industry, increasing and untenable business costs and a very cautious consumer, we urge you on behalf of over 11,000 store members across the country to address and consider the following matters in the forthcoming budget: Communication To date, the Government has demonstrated an inability to communicate to the public in a professional and credible manner. Ministers have flown flags and contradicted one another. The impending property tax is a case in point. Every announcement is undermining spending in the domestic economy. We would appreciate if the Government could implement the following communication process - Stage 1 Say nothing until a full and final decision has been made - Stage 2 Communicate the decision with clarity, transparency and authority - Stage 3 Revert to stage 1 Develop a Domestic Economy Stimulus Group REI proposes that the Government set up this group to address the concerns of retailers and to promote an environment that will help secure businesses and jobs. Matters which could form part of this groups work include - Motivating work seekers to apply for seasonal temporary retail positions - Reducing crime and black economy activity - Reducing the cost base - Rewarding labour intensive retail businesses served rather than self-serve

4 Appoint a Junior Minister for Retail The retail industry is the largest industry in Ireland, and it employs over 250,000 people. At present, Retail is not represented at Cabinet level and we request that this changes immediately. We request that the Government appoints a Junior Minister for Retail or alternatively, assign this portfolio to the current Minister in the Department of Jobs, Enterprise and Innovation. Review of the VAT rate Given the financial pressures that many retail businesses and consumers face throughout Ireland, we encourage Government to review the current VAT rate in Ireland. While we recognise the pressure on the public finances, it is important to note that a reduced VAT rate will stimulate consumer spending and confidence. Once this review has taken place, we propose that an on-going formal review of the VAT rate takes place every 6 months. Local authority services to business At a time when retailers are trying to deal with excessive business costs, maintain staff levels and fight to keep their business alive, local government must play their part and review services being delivered to local businesses. We encourage local government to adopt recommendations from the Retail Excellence Ireland Town and City Centre Management Framework which proposes a collaborate approach amongst all stakeholders to town management. Additionally, the provision of legislation to permit Local Authorities to apply rates inducements to certain business types or locations in the town or city is worth consideration. Adopt a flexible social welfare system and review sick pay costs Ireland pays the 3rd highest social welfare rates in Europe. The Irish social welfare system is based on a 6 day week: so those who are unemployed are paid for 6 days, whilst those who are employed are paid for a 5 days week. This payment methodology has negatively impacted on our will to work. We call on the Government to review this. The Minister for Social Welfare, Joan Burton T.D now wishes to transfer responsibility for paying sick pay in the first month of illness from the Department of Social Protection to individual employers. Selfemployed business owners are excluded from the majority of social welfare benefits, leaving them financially exposed. We urge the Government not to pass sick pay costs on to the private sector.

5 Include a Retail Representative on the board of NAMA While REI welcomes the publication of the NAMA guidelines to assist vulnerable tenants, it is disappointing that the Agency s Board does not include a tenant representative. NAMA s primary objective is to realise asset values. These values are determined by the rent which derives. Our members pay many hundred million euros of rent annually which is central to the protection of asset yield. Cuts rather than tax increases We encourage the Government to focus on spending cuts rather than increasing taxes, which will do less damage to our domestic economy and consumer spending. UORR/ Rents regarding Public Bodies and NAMA At present, Local Authorities and Public Bodies are still trying to impose rent increases on tenants who have legacy leases containing upward only rent review clauses. Similar to how Government has instructed NAMA in this regard, we ask that you also commit to instruct all Public Bodies, including Local Authorities to do the same. It is the experience of some tenants of commercial properties, where Public Bodies (including Local Authorities) are the Landlords, that notwithstanding the collapse in rents by as much as 60%, some Public Bodies are insisting on enforcing the terms of leases including the payment of rents fixed at market peaks; the futile pursuit of overdue rent reviews and any arrears arising; and a refusal to engage in meaningful negotiations on lease restructuring to reflect current market realities. Change of Budget date The Government must become more aware of its central role in setting the mood of the nation. The scaremongering that has happened in recent weeks is doing nothing for consumer confidence and this is clearly evident in the latest ESRI consumer sentiment report. The timing of the budget must change. To schedule the budget in the busiest retail period in the year negatively impacts retail and domestic economy sales.

6 In Summary The 11,000 store members of Retail Excellence Ireland and the 250,000 people employed in the Irish Retail Industry require immediate assistance; we require action on these matters now. Retail is the largest employer in Ireland and is in every community throughout the country. Irish Retailers are playing their part; it is time now for the Irish Government to do the same. Yours Sincerely, David Fitzsimons CEO Retail Excellence Ireland 1 Barrack Street, Ennis, Co. Clare Fitzwilliam Square, Dublin 2 T: