I thank the Cathaoirleach for allowing me to raise this important matter, namely, the need for the Minister for Finance to outline the plans he has, if any, to put pressure on banks to make more funds available to small businesses.
I do not know whether the Minister of State is aware that the Joint Committee on Finance and the Public Service met representatives of the banks, the Small Business Association and Irish Hotels Federation on Tuesday. The groups could not have put more diametrically opposed views. The message from the meeting was simple. On the one hand, the banks stated they continue to lend money to small businesses as they have always done while, on the other, small businesses argued that this was simply not the case. Perhaps there is a question about who one believes but few people are in doubt that they do not believe the banks.
As the Minister of State will have noted from her constituency, a chorus of protest is coming from small business. Deputies, Senators and the media are hearing small businesses squealing because they are being squeezed by the banks and not being given the type of facilities they received in the past. Businesses are not making up this for the sake of amusing themselves.
Approximately 1.1 million are employed in small businesses. The number of small businesses stood at 250,000 in January 2008 but may have declined to approximately 240,000 as a result of the credit squeeze and economic circumstances. The small business sector is more vital for the economy than the banks which are depriving business of funds. It is imperative that the Government is not a spectator in the crisis which has hit small business. Although it does not have money to lend to small businesses, the Government must not invite various organisations to the Oireachtas to bleat and act as a spectator as the banks come here and claim they are lending a large amount of money.
It is imperative that the Government's role in this matter is one of arbiter and catalyst and that it recognises the needs of small businesses and finds out immediately which side is telling the truth. Both sides cannot be telling the truth and if the Government finds out it is the banks which are not telling the truth, it is not beyond its power to expose them. Never has a Government been in a potentially more powerful position vis-à-vis the banks than it is today. It has two nominees on the board of each of the six banks participating in the guarantee scheme. These individuals are accountable to the Government for the behaviour of the banks and can, if they so wish, put irresistible pressure on the banks to behave in a manner that is in the interests of the economy. Whatever about the past, banks now have an obligation to the economy as well as to their shareholders. This is acknowledged by the banks, as a representative of the AIB did at the meeting of the joint committee on Tuesday.
It appears the banks are not lending to small businesses because they have lent so much money to developers they do not have money left to lend to small business. It is also apparent that they will not get their money back from developers whom they are not pushing hard because they are frightened they will make them bankrupt. As a result, money which could have been lent to solvent small businesses providing major employment is not available. These businesses are starved of funds and some will go under.
While I have not examined specific complaints made by small businesses, there are so many of them they must be true. Many companies complain that all they lack is working capital. These are healthy businesses which have always operated on the basis that the banks provide them with working capital to tide them over weekends, months, etc. They cannot access capital because the banks will not give them money and businesses are not paying each other.
A problem has arisen in the area of prompt payments from one business to another. An even greater problem has arisen because some of the larger chains, particularly UK companies, are not paying small businesses. Thriving businesses are starved of cash as a result because they are not being paid by their large customers. They need the banks to lend them money, even if only on a temporary basis, or they will go under. Thriving businesses, which could easily survive if the banks lent them funds on a short-term basis, will go under for no good reason. In the meantime banks are storing capital, calling in large sums from small businesses and not offering them the facilities they should be given.
I appeal to the Minister of State to give the House an assurance that profitable businesses under temporary pressure will be able to survive because the Government will force the banks to give them the funds they need to remain commercial. I make this plea on behalf of healthy businesses, rather than those which are not profitable or commercially viable. Failing this, healthy businesses will go under.