With its dark wood panelled corridors, bronze doors, art deco windows, and stern grey exterior, the home of the Department of Enterprise, Trade and Employment cuts an imposing presence. There is an element of communist chic about the place; motifs of muscular young men undertaking heavy-duty industrial work are even etched onto a balcony on the front of the Kildare Street building. It is all very Soviet.

Arriving straight from the Dáil, Simon Coveney leads me to a first-floor boardroom that seems to roll on forever. Wood panelled, naturally, and immaculately maintained, the room has a large, stern picture of Countess Markievicz in full military attire in one corner. 

Wearing a crisp blue suit, white shirt, and dark tie, Coveney cuts an imposing presence also. He has been an ever-present fixture at the cabinet table since early 2011, and it shows. He is polite, inquisitive, and clear on facts, but it is evident that he is also in a quiet, understated control of the room. 

He has been in this portfolio for ten months, succeeding his party leader Leo Varadkar as minister for enterprise, trade and employment. He has had elements of economic policy in some of his other briefs, but this is his first bona fide economic portfolio. 

He entered the office midway through the Dáil term, and with no guarantee that he will return to this office or even government. “Normally when you come into a ministry, it is at the start of a term of government,” he says. “You have four to five years to map out what you want to achieve over that time. That was very much the space I was in when I was in foreign affairs, when I was in agriculture, or in defence.”

Nonetheless, he says he is determined to make his time count. “I’ve always wanted a direct economic brief, so this is a ministry that I am really enjoying. For me, it is about trying to build a new economy and plan for that. It sounds like a soundbite but it is a lot more than that,” he says.

So what is Simon Coveney’s plan for the “new economy”? And where does Budget 2024 fit into that?

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We met two days after Budget 2024 has been unveiled. Coveney is preparing for a trade mission to Chicago, Indianapolis and Kalamazoo, a US region he says has heavy economic ties with Ireland. 

The budget, he says, will form part of his Ireland Inc sales pitch. Certainly, by any metric, he will have a lot to talk about. The budget was littered with a host of enhancements to existing schemes to aid business and investment, and the unwrapping of a number of new ones also.

The headline act is a new €250 million Cost of Business Scheme, a one-off initiative that Coveney says will benefit 130,000 small and medium businesses that are struggling with rising inflation and heightened costs. There is a new Angel Investment Scheme, offering investors a reduced capital gains tax of 16 per cent for gains of up to €3 million. 

The Enterprise Investment and Incentive Scheme (EIIS) and the Keep scheme for share options, two schemes maligned within Ireland’s start-up and scale-up community, are to be simplified and enhanced. The R&D tax credit is being bulked up from 25 per cent to 30 per cent. The tax relief for the film and television industry is being enhanced, with the suggestion that it could soon be extended to non-scripted, so-called shiny-floor shows down the line.

The business lobby has been calling for many of these initiatives for a number of years, requests that were gently batted away. Finally, the government has moved. 

Given the slight tremors in multinational corporation tax receipts and the imposition of the new 15 per cent corporation tax rate on large multinationals, I ask Coveney if Budget 2024 was the moment when this government turned its attention toward indigenous businesses.

“This is really to reinforce the message that the Government is on the side of business. It’s a pro-enterprise government. We not only recognise that we have to spend money to support vulnerable people and families and households that are under pressure, but we’ve also got to work to raise money,” he says.

“I think a lot of the time in Irish politics there’s not enough focus on how you create the wealth to run a country, and perhaps too much focus on who can spend the most in different areas.”

Pointing to the fact the country is now running a budgetary surplus, Coveney said that there was a sense “amongst some in politics that they don’t need to focus on the economy, on businesses and competitiveness, on job creation, on our proposition in terms of international investment and FDI”. 

Coveney acknowledges that the changes to the corporation tax regime globally next year will have an impact, arguing that is why the government has made changes to the R&D tax credit, in particular, to assist multinationals. 

“We looked at what we needed to change and alter to compliment that change that would keep Ireland very much in the space of being a competitive and attractive destination,” he said, arguing that a country’s attractiveness for foreign direct investment was moving beyond tax rates: “Outside of the tax space, Ireland is a very attractive place to run a global business. In fact, we have become an even more attractive place post Brexit, post Covid and because of the geopolitical tension that is happening linked to the US and China, and what is happening in Ukraine in terms of the aggression there.”

Coveney said that the change to the R&D tax credit will be on the agenda when he meets with multinationals in Chicago in the coming days. However, he stressed it would assist indigenous companies also: “If you are a small business in Ireland, this sends a good signal that the government wants to help you finance your R&D and your investment, because we want to support digitisation, decarbonisation and innovation.”

A cost-of-business package

What is it they say about the best-laid plans? Last year, the government announced the Temporary Business Support Scheme (TBESS), which enabled companies to claim back 40 per cent of the increase in their electricity or gas bills. Despite heavy marketing, the scheme had a low uptake, viewed by most as too complex and too burdensome to work.

Coveney said that the government had learned lessons from the scheme and that it had helped inform the strategy for the €250 million Increased Cost of Business grant. In addition, he said that with the current trend in electricity prices, it would have been difficult to get state approval from Brussels to extend TBESS. 

Under the new initiative, the payments will come in the form of tiered grants equivalent to 50 per cent of the commercial rates paid by firms this year. 

Announced as a once-off measure, Coveney was non-committal when I asked if it might be extended, pointing to the impact of inflation on the cost of doing business at present.

He said: “I know that the combination of minimum wage increases, energy cost, which is still increasing, not at the pace it did last year, but it’s still increasing, supply chain challenges, extension of leave entitlements for employees – all of those things cost businesses more money, and some of them have come together at the same time, and I wanted just to acknowledge the pressure that that’s putting on employers and businesses,” he said.

He said the scheme would operate differently from TBESS to ensure that it reached the 130,000 businesses that will receive it. “We had to find another way of doing it.  I was trying to simplify this, and actually, we’ve simplified it to such an extent that companies don’t even have to apply.  They will automatically qualify under what we’re proposing,” he said.

While many businesses had hedged their energy bills, meaning they did not qualify for TBESS, Coveney said the new scheme would be further-reaching, adding that the rates office of local authorities would get the funds to companies.

Currently, the scheme deals with 87 per cent of businesses, but Coveney said the qualifying criteria might be examined to help companies who are marginally out of the eligibility grid.

“This is going to impact positively on hairdressers, small shoe shops, small fashion clothes shops on the main street, small retail outlets, it’ll be lots of family businesses right across the country, businesses that may have decided not to apply for TBESS because it was a bureaucratic headache, because, in many of these businesses, the boss is the owner, the accountant, the marketeer, the person who meets the public,” according to Coveney.

Fixing broken schemes

Brian Caulfield is a serial technology entrepreneur turned venture capital investor. Currently the chair of Scale Ireland, he wrote an annual pre-budget piece for The Currency outlining what supports would aid the start-up and scale-up community. In recent years, Caulfield has highlighted the failure of the EIIS and Keep schemes, initiatives that have essentially drowned in their own complexity and lack of ambition. 

This year, the government has announced initiatives it believes will help. Investor relief for EIIS is being equalised for all investments from €250,000 to €500,000 while the share-based Keep scheme is being overhauled. 

I ask Coveney why it has taken so long to fix the schemes. “Well first of all, the Keep scheme didn’t have EU approval,” he said, adding: “The first thing we had to do was to make sure that we could continue that scheme. I mean the whole idea of Keep is that we can allow small businesses to compete for skills.”

In relation to its poor design, the minister acknowledged that it was “cumbersome”, but argued that the changes to limits and the application process would help. 

“We’d certainly like to see an awful lot of these application processes for schemes going online,” he said.

Coveney is particularly bullish about the new Angel Investor Initiative, arguing that it will help small innovative companies raise funds. He said the definition of innovative would extend beyond high-potential start-ups, but that the companies that qualify would have to be doing something new, “something different”.

“Michael McGrath is on the same page as me here. We saw a gap and we worked together to put a good scheme in place,” he said.

The scheme, which Coveney said would likely be assessed by Enterprise Ireland, has a clause saying that the investor must retain a 5 per cent stake in the business to qualify. This, according to the start-up community, is too high as most angel investors have smaller stakes.

Coveney acknowledges the issue, saying that he would work with the community and with the finance minister to resolve it in the Finance Bill. “The 5 per cent threshold might be a problem,” he said, adding that the Department of Finance would be open to solving it. “It is the kind of thing we can look into,” he said.

The big idea

When I asked Simon Coveney about his priorities for his time in this department, he spoke about his desire to help build the new economy. In our interview, he outlined what he meant by that.

“If you look at what our white paper on enterprise is asking us to do, we have to find a way of dramatically decarbonising the Irish economy and ultimately Irish society. But actually, we can build a whole new economy on the back of that challenge, particularly around offshore wind, which is why I insisted on this department doing an industrial strategy for offshore wind – not looking at that through the lens of climate or environment, but actually looking at it through the lens of industry and innovation and job creation,” he said. 

“How we can create very large clusters of employment around places like the Shannon estuary, for example, that I think will see significant economic activity around offshore wind.”

Coveney said that there were strategic things Ireland could do around the decarbonisation and digitalisation of our economy, while at the same time protecting what is working within the country such as multinationals.

“We are the envy of the world in terms of being a small country that’s more globalised than any other in Europe, and has this extraordinary benefit of having some of the world’s largest companies here, a lot of them here, employing well over 300,000 people in Ireland. So, how do we leverage that for the future? Because for me, I want to keep those big names coming to Ireland, but I also want us to build big names out of Ireland. What I mean by that is, there are a lot of innovative Irish companies that I believe can become the multinationals of the future, and so I want to see that emphasis remain on keeping Ireland competitive for foreign direct investment,” he said.

“But I want to see a dramatic increase of ambition in terms of the number of Irish companies that can become multinationals out of Ireland, whether it’s in the tech space, the pharma space, the med-tech space, the environmental space around energy management and so on.”

He added that many founders had experience of running offices for multinationals. “We have this incredible resource that, if we support and encourage and help them grow their businesses, I think it’s a very exciting future for the Irish economy.”