COMMITTEE OF PUBLIC ACCOUNTS debate -
Thursday, 23 Mar 2023

2021 Financial Statements of Enterprise Ireland: Discussion

Mr. Leo Clancy (Chief Executive Officer, Enterprise Ireland) called and examined.

An Cathaoirleach (Deputy Brian Stanley)

I welcome everyone to this morning's meeting. We have apologies from Deputy Imelda Munster, who may be late or may not make it this morning due to another appointment.

If attending within the committee room, members and witnesses are asked to exercise personal responsibility to protect themselves and others from the risk of Covid-19.

Members of the committee attending remotely must continue to do so from within the precincts of Leinster House, and this is due to the constitutional requirement that in order to participate in public meetings, members must be physically present within the confines of the place where Parliament has chosen to sit.

The Comptroller and Auditor General, Mr. Seamus McCarthy, is a permanent witness to the committee, and he is accompanied this morning by Mr. Peter Kingsley, deputy director of Audit at the Office of the Comptroller and Auditor General. They are very welcome.

This morning, we are going to engage with officials from Enterprise Ireland to examine the financial statements 2021 for Enterprise Ireland. We are joined by the following officials from Enterprise Ireland: Mr. Leo Clancy, the new CEO; Ms Gillian Brennan, divisional manager of business operations; Mr. Kevin Sherry, executive director of investment services and local markets; Dr. Carol Gibbons, divisional manager for regions and local enterprise; and Mr. Richard Murphy, department manager for the local enterprise office centre of excellence. We are also joined by Ms Karen Hynes, principal officer in the Department of Enterprise, Trade and Employment. The witnesses are very welcome.

I remind all those in attendance to ensure that their mobile phones are on silent mode or switched off, and before we start, I want to explain some limitations to parliamentary privilege, and the practices of the Houses with regard to references witnesses may make to other persons in their evidence. The evidence of witnesses physically present, or who give evidence from within the parliamentary precincts, is protected pursuant to both the Constitution and statute by absolute privilege. As witnesses are within the precincts of Leinster House, they are protected by absolute privilege in respect of the presentations they make to the committee. This means that they have an absolute defence against any defamation actions for anything they say at the meeting. However, they are expected not to abuse this privilege, and it is my duty as Cathaoirleach to make sure that it is not abused. Therefore, if their statements are potentially defamatory in relation to an identifiable person or entity, they will be directed to discontinue their remarks. It is imperative that witnesses comply with this direction.

Members are reminded of the provision of Standing Order 218 that the committee shall refrain from inquiring into the merits of a policy or policies of the Government, or a Minister of the Government, or the merits of the objectives of such policies. Members are also reminded of the long-standing parliamentary practice that they should not comment on, criticise, or make charges against a person outside the Houses, or an official, either by name or in such a way as to make him or her identifiable.

To begin this morning, I call on the Comptroller and Auditor General, Mr. Seamus McCarthy for his opening statement.

Mr. Seamus McCarthy

As members are aware, Enterprise Ireland is tasked with assisting the development of Irish industry and enterprise with the aim of contributing to employment and economic growth. It provides financial supports to business enterprises by way of grants and equity investments, as well as non-financial supports in the form of assistance and advice.

Enterprise Ireland funding is also used to promote research and development activity, including funding for collaborations between industry and the higher education sector. It also funds local enterprise offices, operating as units of local authorities, to provide supports to micro-enterprises.

Enterprise Ireland’s main source of income is Oireachtas grants paid from the Vote for Enterprise, Trade and Employment. In 2021, this amounted to €582 million. Enterprise Ireland generated income of €18 million, in the form of financial returns on its investment portfolio, refunds of financial supports and grants, and fee income. The agency also realised a profit of €61 million on the disposal of investments in 2021.

Expenditure in 2021 totalled almost €512 million. Financial support to industry accounted for €405 million of this, including €163 million on company development; €153 million for science and technology development; €60 million for the local enterprise offices; and €21 million for the small business aid scheme for Covid-19. Administration costs in the year comprised pay costs of almost €65 million, and €22 million of other costs.

Enterprise Ireland had significant financial assets valued at €534 million at the end of 2021. This included €399 million in seed and venture capital fund investments, and €128 million in share investments, mainly in unquoted shares.

At the end of 2021, almost €87 million was outstanding in respect of concessionary loans issued to companies by Enterprise Ireland and the local enterprise offices. In 2021, €47 million in such repayable supports was advanced to companies, mainly under the sustaining enterprise fund scheme, which was introduced in 2020 to support enterprises affected by the economic impact of Covid-19.

I issued a clear audit opinion on the 2021 financial statements. Go raibh maith agat, a Chathaoirligh.

An Cathaoirleach (Deputy Brian Stanley)

I thank Mr. McCarthy. As detailed in the letter of invitation, Mr. Clancy has five minutes for his opening statement, and may proceed.

Mr. Leo Clancy

I welcome the opportunity to be present here today and to assist the committee in its examination of Enterprise Ireland’s financial statements 2021 and its area of particular interest in relation to funding for local enterprise offices, LEOs.

Enterprise Ireland’s purpose is helping Irish companies to start, grow, innovate and win export sales. We work with internationally focused Irish enterprises across all sectors of the economy, most of them small and medium enterprises, supporting them to strengthen their competitiveness and productivity, increase innovation, and realise their growth potential, contributing to employment and economic growth across all regions. We also work with the network of 31 local enterprise offices through our centre of excellence to support the growth of micro-enterprises across the country. The local enterprise offices are at the very heart of business development and entrepreneurship in towns and communities right across the country. The local enterprise offices sit within the remit of the local authorities and carry out their functions on behalf of Enterprise Ireland and the Department of Enterprise, Trade and Employment through an agreed service level agreement with each local authority. Local enterprise offices operate with a broader set of clients - from individuals considering whether to start a business through to those having initial success in exporting - through a set of financial and non-financial supports. Between local enterprise offices and Enterprise Ireland, we offer a continuum of service for Irish-owned enterprises.

In 2021, 4,265 Enterprise Ireland-backed companies employed 207,894 individuals across Ireland, generated €27.3 billion in exports and directly invested €9.79 billion in the Irish economy in the form of wages and salaries, as well as €15 billion in materials produced in Ireland and €6.4 billion in Irish services. Some 68% of the employment from this space is outside Dublin.

In 2021, continuing from a very difficult year in 2020, both Enterprise Ireland and the local enterprise offices were very focused on assisting clients with managing the negative consequences of the Covid-19 pandemic. Some €154 million of Enterprise Ireland’s budget in 2021 was allocated to fund Covid-19 response supports for businesses such as the sustaining enterprise fund, the online retail scheme, the accelerated recovery fund and the regional enterprise transition scheme. These funds played a critical role in helping businesses to sustain employment and adapt as they faced liquidity and business continuity issues.

Some €60 million of Enterprise Ireland’s budget in 2021 was allocated to the local enterprise offices. The local enterprise offices, in an eighth consecutive year of growth in 2021, saw their clients add 7,400 new jobs during 2021, financially supporting 7,158 companies across their 31 offices and bringing total employment to 35,729, of which 85% is outside Dublin. Over 60,000 businesses were trained by LEOs, with 14,000 mentoring assignments taking place, while almost 6,000 people took part in the Start Your Own Business programme that year. Upskilling and retraining were essential supports for businesses which needed to pivot or change their business model due to the impact of Covid-19. During the pandemic across 2020 and 2021, the LEOs facilitated over 17,000 trading online vouchers, enabling small businesses to keep their virtual doors open when physical ones had to close. In addition, the LEOs support thousands more small businesses nationwide with key supports and interventions.

In 2022, I am glad to report, this strong performance in job growth and wider supports has continued, as seen in our announcement and that of the LEO network in January 2023. In 2022, Enterprise Ireland clients created almost 11,000 net new jobs and total employment increased by 5% to 218,178, with two thirds based outside the Dublin region. During the same period, local enterprise office clients increased employment by 10% and now directly employ 37,863 people nationwide. We are currently gathering information on the wider economic impact of firms in exports, spending and other data during 2022.

In recent years, business has had to weather various storms, including the initial phase of Brexit and the Covid-19 pandemic, as well as having endured a very challenging environment in 2022 due to the war in Ukraine and increasing inflation more generally. Enterprise Ireland and the local enterprise offices have stayed close to our clients throughout that time and will continue to do so. Current issues facing business include: the availability of labour and skills; dealing with inflation and supply chain challenges and maintaining competitiveness; decarbonisation and planning for future sustainability requirements; accelerating the transition to more digitally-enabled operating models; and the funding of businesses for ongoing operations and growth. Notwithstanding the challenges, I assure the committee that underlying business sentiment is strong and there are many opportunities for Irish companies in our global markets.

In the interests of time, I will close on that point. I thank committee members for their time and for the opportunity to make an opening statement.

An Cathaoirleach

Thank you. Does Enterprise Ireland have a regional and county breakdown of the number of firms supported, as well as a breakdown of the number of jobs in those firms? I do not expect Mr. Clancy to be able to rattle that off here and now, but I flag that some of the officials might have that information for us during the meeting.

Mr. Leo Clancy

We have certain data in that respect and we are happy to share the county-level analysis. I might ask Ms Brennan to deal with that.

An Cathaoirleach

We can get that at any time during the meeting.

Mr. Leo Clancy

We are happy to come back on that. When would suit?

An Cathaoirleach (Deputy Brian Stanley)

During any part of the meeting.

Mr. Leo Clancy

We will let the Chair know when we have it to hand. We certainly have the breakdown of funding by county. I just want to check whether we have the number of companies also. We will come back on that.

An Cathaoirleach (Deputy Brian Stanley)

Thank you. I call Deputy Catherine Murphy.

Deputy Catherine Murphy

I welcome the witnesses. As we are going to be limited on time, I will keep my questions short and I ask that the replies are succinct, if possible.

In regard to the €24 million in direct financial assistance approved for nearly 1,100 business projects in 2021, with 35,000 people employed, that is very impressive. Does Mr. Clancy have a figure in regard to the income generated or what kind of income there is within the firms? When Mr. Clancy talks about jobs, what kind of incomes are we looking at? The survival of a business in the first year while not making money is a big issue in terms of sustaining that business.

Mr. Leo Clancy

Is that in terms of the revenue of the firms and how much money they are making, or how much they are paying to their staff in respect of their incomes?

Deputy Catherine Murphy

It is both.

Mr. Leo Clancy

On the first one, it will vary by firm. We will see there are some companies that are early-stage start-ups.

Deputy Catherine Murphy

I mean generally.

Mr. Leo Clancy

Per employee, we have a target around productivity. We want to see the amount of income that the firms are making per employee grow on a year-on-year basis, and that is a target we have set out in our strategy so we will see good growth on an annual basis. However, it is highly variable and it is hard to make any general statement on income. Some firms make no money for many years and that would be their business model. If they are in advanced medical technology that does not come to market until it has US Food and Drug Administration, FDA, approval, for instance, they could be waiting seven or eight years to make any income, whereas some companies are long-standing and have honed business models that are highly profitable, so it is very variable on that front.

What we do have is the total sales of Irish companies. I might ask my colleague, Mr. Sherry, to locate those data and we can certainly comment on that. We also measure the exports of our clients every year. As I mentioned, we are now in the course of surveying clients on the incomes of the companies during 2022. We have seen strong growth. We saw exports grow by, I believe, 12% in 2021, which is a good proxy for how companies are growing their incomes more generally and there is a lot of positivity around that.

We have data on salary bands and I will go to Mr. Sherry shortly on any further data from our annual business review. I have salary data to hand. We have banded the data by industry because, again, it is highly variable across industries, and I will not go through every category. The average salary that we see in dairy and functional foods, one of our food sectors, is €72,000 per employee in 2021; the sub-total for the entire food sector is €49,272; for life sciences, engineering, paper, print, packaging, clean tech and electronics, the average salary is €49,959; for construction, timber and consumer, it is €59,738; and for ICT and international services, it is €59,303. These are good jobs. The average salary across our entire base is €54,389.

Deputy Catherine Murphy

Obviously, that will influence investment.

Obviously, there was the challenge of Covid in 2020 and 2021. Has there been a noticeable change in energy input costs post the war in Ukraine? Is that having a significant impact, and how is it manifesting?

Mr. Leo Clancy

Energy is having a significant impact on business, as it is across the entire economy. It is fortunately less bad than it might have been. If we look back to last August and September there were fears that energy prices might prove catastrophic for businesses during the winter. That has not been the case. Yesterday I met a client who is in an energy susceptible business, who said their wholesale energy prices are now in the early 20s, versus a normal level of the mid teens over a year ago. It is less bad than we might have worried about with regard to the energy costs to business. As the Deputy knows, we launched the Ukraine enterprise crisis scheme with our parent Department of Enterprise, Trade and Employment to respond directly to the energy crisis. The take-up on that has been relatively low. We relaunched it this week, and went out with a revised scheme, which allows businesses a slightly lower bar in terms of access. Overall, the impact on business has been much lower than might have been feared with regard to energy prices but it remains a significant risk.

Deputy Catherine Murphy

I turn to Mr. Clancy's opening statement. Of the issues currently facing business he did not mention housing. Does he regard that as an issue facing business?

Mr. Leo Clancy

Housing is certainly an issue facing business. I mentioned the availability of labour and skills. One of the contributory factors to availability of labour and skills is housing. I intended for it to be broadly covered under that category.

Deputy Catherine Murphy

Okay. I have a question on the write-off of investments. Since 2018, Enterprise Ireland has written off €44 million. I acknowledge there will always be an element of write-offs because the survival of businesses is not guaranteed. Will Mr. Clancy describe the process for writing off shares and investments?

Mr. Leo Clancy

I will defer presently to my colleague Mr. Sherry who leads our investment services division, among others. He will be able to give a detailed answer on that element. First, I want to come back to the Deputy on the subject of sales. The total sales of clients supported in 2021 by Enterprise Ireland was €51.766 billion. Of that, €24.474 billion were domestic sales, and €27.292 billion were international or export sales. That is the measure. By way of comparison, the €51.766 billion was up from €46.404 billion in the prior year. It was good. We had seen that 2020 was challenging.

Deputy Catherine Murphy

I am sorry, but I do need Mr. Sherry's reply.

Mr. Kevin Sherry

Enterprise Ireland supports early-stage companies by way of direct investment because they need capital at that stage. We also support them in leveraging other capital. Some companies that will result in a loss over the period. Over the past five years, the total write-off has been €47 million in respect of 250-----

Deputy Catherine Murphy

I am interested in the process and investment decision-making that follow what has been learned in cases where companies have not survived. That is the point I am trying to get to.

Mr. Kevin Sherry

Basically, what we do for early-stage companies is work with them to help them develop a business plan. When they get to the stage of having a business plan together and are ready to start, we will assess it from a financial and commercial due diligence point of view. In many cases, we will also undertake a technical due diligence because quite often these are technology-based companies. Based on that, we will agree an investment in those companies. Enterprise Ireland has a policy of not taking more than a 10% ordinary shareholding in the company. We use that as a lever to encourage and support external investors to put capital into the company. The focus for Enterprise Ireland, and the reason we put in money is not for the financial return, but for the jobs and value added these companies create in Ireland. We work closely with those companies as they implement those plans.

Deputy Catherine Murphy

I am asking about the write-off process.

Mr. Kevin Sherry

If some companies are not successful, they will decide they need to wind up the company.

Deputy Catherine Murphy

Is it at that point?

Mr. Kevin Sherry

It is at that point. It is only at that point. I will make one other point.

Deputy Catherine Murphy

Very quickly, please.

Mr. Kevin Sherry

While there are write-offs, the gain on investments for the same period is far in excess of those write-offs.

Deputy Catherine Murphy

I accept that. I just wanted to know what the process is.

With regard to leasehold properties, Enterprise Ireland rents 16 offices from the Department of Foreign Affairs. The Department presumably own those buildings, which Enterprise Ireland leases from it. There were 28, and there are 16 that are due to expire in the immediate future. Is Enterprise Ireland looking at whether it is better to lease or buy in those scenarios? These accounts predate the war in Ukraine but since the war started, what has happened to the annual rent of €30,000 that was being paid for an office in Moscow?

Mr. Leo Clancy

It is not our policy to purchase offices overseas. We will not do that. We have a policy that, wherever feasible, we will colocate with the Department of Foreign Affairs in its offices. From the point of view of value for money to the State, it tends to makes sense. The exceptions to that are where there is a market we are testing, and where we do not want to make a long-term commitment that at would be similar to the Department of Foreign Affairs. There are certain offices where we have had recent investments. However, outside our core markets, which include New York, London and other locations, we want to ensure we have flexibility to remove offices from our footprint if they are not delivering for Ireland. On the Moscow office, we still have a leasehold arrangement, which we are reviewing with the Departments of Foreign Affairs and Enterprise, Trade and Employment.

Deputy Catherine Murphy

Is that subject to the sanctions?

Mr. Leo Clancy

Is the Deputy referring to the lease itself?

Deputy Catherine Murphy

The activities.

Mr. Leo Clancy

We have wound down activity in our Moscow office in terms of our people and market.

Deputy Catherine Murphy

Are there people in the Moscow office?

Mr. Leo Clancy

At present, no.

Deputy Catherine Murphy

Has Enterprise Ireland ever carried out a cost-benefit analysis where it sees the need for a longer-term commitment and where there might be a benefit in purchasing as opposed to leasing?

Mr. Leo Clancy

I do not think we have ever considered purchasing rather than leasing offices. However, it tends to be more beneficial to lease and we lease with other State bodies, including the Department of Foreign Affairs, IDA Ireland, Bord Bia and others. We are colocated where possible for efficiency purposes . If we were to consider purchasing at any point, we would also do that together with other parties.

Deputy Catherine Murphy

I have a question on companies headed by males as opposed to females. I attended an event some time ago and it appeared that the survivability rate was better where women were involved. Has Mr. Clancy figures relating to that?

Mr. Leo Clancy

It does not at all surprise me that survivability rates are higher where there are balanced teams. We are very focused on ensuring more gender balance. We have certain data on this, particularly with regard to our startups. We have a broad programme to ensure our companies have gender balanced, where possible, boards and leadership teams. We encourage female founded startups in particular. I will ask Mr. Sherry to share some of the key statistics on startups and the changes we have made in recent years.

Deputy Catherine Murphy

Very quickly, please.

Mr. Kevin Sherry

Encouraging increased diversity is a huge priority for us. There is also a focus on female entrepreneurship. Last year saw the highest number of startups ever. We supported 161 new startups, and 36% of those were led by female founders. That is up from approximately 7% ten years ago.

Deputy Catherine Murphy

Finally, I am intrigued by the UK figures that increased by 15% to 8.4 billion and the eurozone increased by 10%% to 6 billion.

Obviously, the eurozone is a much bigger area. It is one of the reasons we argue that it is a benefit in being involved in the European Union. I am surprised at that figure. Is there a Brexit issue in relation to an adjustment in how those figures are presented in terms of them being exports because the UK is now a third country or what accounts for that?

Mr. Leo Clancy

It surprised us a little last year when the exports to the UK went up and got to 31% of total exports. In the context of Brexit, what we are always mindful of is that Brexit has the potential to provide certain barriers for Irish exporters but it is our nearest neighbour and our nearest trading partner. Also, we are the nearest trading partner of the UK. That long-standing relationship is strong and beneficial. We are keen to see that the UK remains a strong party.

I, like the Deputy, believe there is huge potential in the wider eurozone though. As a proportion of our exports, it can be larger. We have a eurozone strategy, which we launched a number of years ago. It is bearing fruit, in terms of continued growth in the eurozone. We have also got a specific training programme which is focused on helping companies accessing the eurozone. It is called "Enter the Eurozone", as the Deputy might expect. It is focused on helping our companies to be more aware of the opportunity. Over time, Irish companies have defaulted to a certain extent to the comfort of English-speaking markets - UK, US, Canada, Australia even. We are trying. I did a count, and I just need to be check on this. I think we have 13 offices across the eurozone or, more properly, if we look at the European Union, the Single Market. We certainly have a huge effort in terms of increasing that number.

Deputy Catherine Murphy

I thank Mr. Clancy.

An Cathaoirleach (Deputy Brian Stanley)

I thank Deputy Catherine Murphy and call Deputy O'Connor.

Deputy James O'Connor

I thank the Chairperson and welcome everybody from Enterprise Ireland to the committee this morning. Generally, I have been monitoring its work and it is quite good.

On the embassy point, and cohabiting, it is a great idea because it gives Enterprise Ireland that opportunity to work closely with the ambassadors and open up doors in countries where it might not be so easy to do so. That is a clever idea.

In relation to the seed and venture capital scheme, obviously, there is a significant amount of capital. According to the 2021 figures, the value of that stood at approximately €400 million. The world economy has moved from a situation two or three years ago. Even during the pandemic, angel investing was quite popular. Venture capital firms were flying investment into new businesses that were trying to get established with the hope of going on to become unicorns. It was quite a popular theory. In the past six months, there has been a bit of a crisis in that pattern. In terms of the risk factors as of today, what are Mr. Clancy's thoughts on the value of the investments that Enterprise Ireland would have had as per the 2021 book value and what are the major risks? From the outside looking in, it seems to be a troublesome period for a lot of start-ups, and particularly ones that one would have felt two or three years ago would go on and become potentially multi-million euro or, indeed, billion euro businesses. There seems to be a serious shaking on the foundations that we would have had a few years ago. I might open up on that one, particularly pertaining to the investments that Enterprise Ireland currently has.

Mr. Leo Clancy

I thank the Deputy for the question. Is the Deputy thinking specifically in the first instance about the funds or our direct investments, or would he like comment on both?

Deputy James O'Connor

The direct investments and the funds as well. I ask Mr. Clancy to start with the direct investments, if that is okay.

Mr. Leo Clancy

I will ask Mr. Sherry in a minute to give a bit more detail on the direct investments and on the funds.

In respect of direct investments, we are very large. If you look at us in international terms, we are one of the largest venture capital, VC, companies in the world by deal volume. We are a small investor in early stage seed and pre-seed investor. Typically, it is investments between €50,000 and €300,000, as a typical starting point, in companies matched by private money in many cases, particularly at the seed stage. Over time, we have accumulated a large body of investments in a lot of Irish companies. Mr. Sherry will share with the committee in a second.

What we are seeing is there is still a huge appetite among companies to start and grow. Some companies are seeing opportunities in the changed economic circumstance, in that it is easier to access labour - that certain costs have gone down. Actually, start-ups sometimes benefit from economic turmoil to a certain extent. That said, the global funding environment for companies as they scale and as they try to raise more money, which, I think, is the point the Deputy was asking us about, is more difficult than it has been. There is less abundant money around.

Deputy James O'Connor

Before I move on, in terms of the risk factor of what Enterprise Ireland's current investments have been, is there any analysis being done by Enterprise Ireland, for example, on platform-based technology in the likes of major international conglomerates that were revenue generating but were not able to turn a significant profit and are now having a rude awakening, particularly by their lenders who are seeking to get their money back for their investments? In terms of that climate, where are the exposures there? Enterprise Ireland certainly has them. It is fair to say that it is probably common knowledge that there are investments that Enterprise Ireland made - it is seen by write-offs - and that failed, but is there a growing exposure there given the climate we are in now versus where we were two or three years ago? That is pretty much what I am trying to get to the bottom of with Mr. Clancy.

Mr. Leo Clancy

I do not think it is a-----

Deputy James O'Connor

I am not trying to trip Mr. Clancy up, by the way. I just think it is interesting.

Mr. Leo Clancy

I am trying to give a good reflective answer to the Deputy's question - an honest one. The important thing to remember is we are a financial investor but we are also a development agency. For any of the companies we invest in, we not only have our financial investment - Mr. Sherry will describe how those are governed and how we monitor them - but we also have development advisers working with those companies. We have market advisers working with the companies out in our network around the world and we have a good sense of how the companies are doing. You know, I was with seven or eight of our-----

Deputy James O'Connor

Okay, Mr. Clancy. I will have to ask my question again, and I will.

Mr. Leo Clancy

On what is our process?

Deputy James O'Connor

In the climate of today, which is very different from that of two or three years ago and where the values set down here are €391 million as per 2020 instead of €399 million, which were the seed and venture capital, SVC, funds, as of 2021, all I am trying to get an answer to is where we are in today's climate. In terms of the investments that Enterprise Ireland has made, what are the major risks? I ask Mr. Clancy to answer that question. If not, we might just go on to Mr. Sherry because my time is limited.

Mr. Leo Clancy

I would say the risks are elevated, as I mentioned in my opening statement. Have we quantified that to a financial number? We have not. Do we expect more risks to arise for our clients? We certainly do in the context of the climate.

Deputy James O'Connor

To be more generic, are there particular sectors that with the benefit of hindsight, Enterprise Ireland may wish to outline where there are significant substantial risks?

Mr. Leo Clancy

Not in particular. We have seen growth across all sectors in 2022. We saw all our sectors grow broadly. There is no particular sector we are invested in that I would be worried about beyond others. The Deputy may have - I do not know if he had - one in mind but I would be happy to comment on it.

Deputy James O'Connor

I suppose tech, and some consulting firms.

Mr. Leo Clancy

Tech, not really. If I have a concern for tech, it is the ability of our firms to raise more money for themselves as they grow. That is probably the risk, that their growth will be suppressed.

Tech has not gone away. I led the tech sector at IDA Ireland for eight years before I took on this job. We are seeing, as the Deputy mentioned, very significant losses in the global tech sector. The demand for tech, while muted in certain areas as a result of the economic circumstances, has not gone away. Actually, we are seeing the demand for tech accelerate.

The issue will be one of funding, confidence and probably around valuations as well. We see a risk on the financial side. It is, are the valuations that were proposed still valid? That is probably the most significant risk. I will ask Mr. Sherry to add to this because he is working on this portfolio every day.

Deputy James O'Connor

My own logic and auspices on this is that at the end of the day, when you are involved in investing obviously it is a very well-educated gamble from Mr. Clancy's particular point of view. I understand that. I am not being critical. I just want to get an idea, from the taxpayers' point of view, of where those growing risks are.

I would be delighted to hear from Mr. Sherry as well.

Mr. Kevin Sherry

I suppose the first thing to say is that when we support companies, either directly or through seed and venture funds, it is not for the short term. It is for the long term. It is for the long-term growth and development of the company. That is the approach we take as an investor and is the approach that is taken by the seed and venture funds in which we invest. Absolutely, there will be short-term changes in the marketplace and valuations, which certainly affect listed companies and will affect the availability and cost of capital for early stage companies and, indeed, for companies at a later stage.

Maybe just to give the Deputy some data, first, in terms of companies that Enterprise Ireland has invested in and supported and have been sold through trade sales, we have realised directly over the past five years €242 million. The difference between the cost of those and that €242 million, in other words, the profit on them, was €129 million. I mentioned earlier on about the €47 million write-off during the same period in other companies. In terms of the write-off in terms of those companies, 46% of the companies in which those funds were written off were investments of €50,000 or less. It was a very early stage where we had put in a small amount of money to a company to help that company see whether there was a viable business there, typically, in the form of what we call our competitive start fund.

Similarly, in terms of our seed and venture side, if you look at what Enterprise Ireland has supported over the past ten years in terms of seed and venture capital funds, you can see that we have put in €361 million. A total of €304 million was repaid to Enterprise Ireland during that same period. The residual value as of December 2022, and this is an estimate because we have not done the final figures in terms of what we get from the seed and venture funds, was €306 million. Of a €361 million investment, €304 million has already been paid back to Enterprise Ireland and in turn to the State and there is a residual value of €306 million. This has happened over the past ten years. It is important to look at it over a long period as opposed to what happens over a short period. Certainly we are seeing in the marketplace that valuations in tech are down and the availability of capital at early stage, which is the stage at which Enterprise Ireland intervenes in particular, is more challenging. I think we will see more of that in the short term. For Enterprise Ireland, this is a key area in which it intervenes and encourages and supports other parties such as private investors.

Deputy James O'Connor

We are in a world that moves incredibly fast. The pandemic showed how quickly things can be done economically. There are certain cities around the world where there has been very forward and progressive thinking on the part of administrations. Miami is one example that is really rising in the ranks. In the next 15 to 20 years, Poland will have a higher standard of living than the UK. In terms of Enterprise Ireland's ability to get into an emerging market or a city that is increasing economic activity, particularly from a venture capital point of view, is there anything the State could do to help to speed up the process of Enterprise Ireland getting boots on the ground there?

Mr. Leo Clancy

That is a great question. We are constantly reviewing our office network and will make adjustments where we need to. The last office we opened formally was in Manchester and the one before that was in Lyon. I think they opened around the same time for different reasons. The Deputy is right. It is important for us always to look at where the opportunities are and where things are happening so it is under review. Post Covid, we will let things settle a bit. Simply reopening the offices we already had was challenging in itself. Now we are reviewing where we might need new offices. The Government has been very helpful. We have opened many new offices under the Global Ireland strategy and we know the State remains open through Ireland Houses in collaboration with the Department of Foreign Affairs to house us. We get great support from the Department in locations where we are not located in terms of departmental staff being open to help us with the economic agenda. From a Team Ireland point of view, we get great support across the system and there is always an openness to us.

Deputy Colm Burke

I thank Mr. Clancy for his presentation and the work he and his staff do and deliver on. In real terms, job growth in Ireland has gone up by about 730,000 jobs in the past ten years and much of that has been due to the performance of Mr. Clancy and his staff.

I will touch on the issue of the seed and venture capital fund in the IT sector. There has been significant change in the ICT sector. With regard to the funds provided by Enterprise Ireland, are we very exposed because of the change in the ICT sector? Does Mr. Clancy think we will not get the same level of payback on that area, in which Enterprise Ireland has invested over the past few years?

Mr. Leo Clancy

Mr. Sherry will provide a more detailed view on that in a second. We are long-term investors. I think Mr. Sherry said this a few minutes ago. Some of the investments that are realising for us even in recent years were investments we made in the early 2000s, so we can be patient as to what are generally short- to medium-term economic cycles in the window of our investment. That is on our direct investments. I said to Deputy O'Connor a few minutes ago that I do not think the fundamental benefits of technology have gone away and I firmly believe it.

Deputy Colm Burke

I presume Enterprise Ireland is being more careful regarding making moneys available in that area. I presume that would have changed over the past 12 to 18 months.

Mr. Leo Clancy

Absolutely - we are always very careful though and always very business case-based. Everything that happens in the global environment enters into our deliberations at our investment committee where we make those decisions.

Deputy Colm Burke

Looking at the various figures, and this is not just the ICT sector, over the past four years, out of 234 companies, over €44 million was written off. Was there a big change in the write-off in 2022? Obviously, a lot of companies were affected by the Covid lockdown so was there an adverse outcome in 2022 in that regard?

Mr. Leo Clancy

The opposite happened. The write-offs we had in 2022 were €3.1 million versus €10.4 million in 2021, €8.9 million in 2020 and €10.5 million in-----

Deputy Colm Burke

Does Mr. Clancy expect that to change in 2023? In 2022, Enterprise Ireland would have been more careful because companies would have gone through a difficult time for two years. Is there likely to be a greater write-off in 2023, given that some decisions were delayed in 2022?

Mr. Leo Clancy

We are not seeing signs of it at the moment. There will always be cases where companies' business models do not work or the markets do not succeed but we are not seeing significant signs of it. I will ask Mr. Sherry to build on that and to talk about what we see as the overall risks in the portfolio but we are confident that the investment decisions we are making are still in the context of everything that is happening.

Deputy Colm Burke

Regarding the assessment of projects, and checks and balances, I heard of one person who was making a big issue about the innovation fund and how it was administered in the sense that there are no checks and balances. This person had a project and wanted a group to assess it. An innovation voucher was provided and the person alleged that the work was never done but the money was still paid out even though Enterprise Ireland was asked not to pay out on it. Is Mr. Clancy satisfied that there are sufficient checks and balances there?

Mr. Leo Clancy

I am satisfied. Our innovation vouchers are €5,000 vouchers that are given to companies to spend with third level institutions. In those cases, the company decides where to place the work to be done and with which institution. We then pay the institution once the individual has signed off that he or she is satisfied with the work that was done by the institution.

Deputy Colm Burke

Rather than going into that here, I will drop Mr. Clancy a line about it.

Mr. Leo Clancy

I would be glad to speak to the Deputy.

Deputy Colm Burke

On the areas on which Enterprise Ireland is now focusing, we have done very well in terms of jobs coming into this country in the pharmaceutical industry and the ICT area. In view of Brexit, will there be a change in our approach? The UK is no longer a part of the EU. Does that change in any way the approach that will be taken?

Mr. Leo Clancy

It always changes the approach. We are watching the Windsor Framework to see what its impact on us and implications for us might be. We have been remarkably successful over the past five years. Since 2016, Enterprise Ireland has reacted very quickly to Brexit and has helped companies to get up to speed and understand their customs obligations to adapt to the changing market. We have helped thousands of companies to get their heads around how to continue to trade with the UK and that has been very successful. In terms of the sectors into the UK, I spoke to someone yesterday who supplies into the construction industry who told me that they are seeing a resurgence in demand for materials in the UK. That was my experience. I was in the UK over the past two months and our own team said the same thing to me. It said that the worst predictions we would have had for the UK economy in terms of financial matters have not transpired and the UK economy seems to be holding up well. In terms of the mix of clients selling into the UK, I do not think we anticipate any major change. There will be things at the edge like-----

Deputy Colm Burke

Does Mr. Clancy see an opportunity for Irish companies to get more involved in the UK market in view of the fact that they may not be turning towards European countries now? Is there an opportunity for Ireland to use that connection with the UK more?

Mr. Leo Clancy

As I said in response to Deputy Catherine Murphy earlier, I was pleasantly surprised to see more business being done with the UK but I still think there is more we can do with the eurozone. We can do both. We can continue to do more business into the UK and see the eurozone grow.

However, I would not discriminate on the basis of whether it is UK or eurozone. Hopefully we will see a smoothing of trade relationships with the UK that lets us continue to trade.

To answer the first part of the Deputy’s question, looking at the sectors that have done well for us last year, climate and sustainability was our top-performing sector in terms of job growth in 2022 at 13%. Digital has grown strongly. Notwithstanding the challenges of global technology, digital is the next strongest growing sector. We have seen growth across the board. Construction is doing remarkably well.

Deputy Colm Burke

On challenges that companies are now facing, one is the challenge employees face in relation to accommodation. Therefore, there must be a huge emphasis now on locating outside of the capital. What can be done? Obviously, the job growth outside of Dublin is welcome. What more can be done in order to assist companies? They want to get the employees and the employees have to get accommodation. What further action can be taken to assist, especially working with local authorities on that whole area?

Mr. Leo Clancy

We have close relationships with local authorities. We are involved in the Housing for All project in respect of a couple of core actions. We have actions around improving innovation and productivity of house builder and construction firms in order to see more housing come on stream. That is a domestic lens on what we normally do with companies that are exporting. We are working hard on that.

There are significant challenges for our clients in terms of their employees being able to find housing, attracting new employees into all regions of Ireland at this stage and the availability of rental and accommodation to purchase. We are doing a huge amount in the regions as well. We have regional staff in quite a number of offices all around the country, from Donegal to Cork and everywhere in between. Those teams on the ground do three different things: they work with companies locally to create jobs; they work with local authorities and other actors to make sure that conditions are improved as far as we possibly can on behalf of our companies in the regions; and we invest heavily in regional infrastructure. Through the regional enterprise development fund, we have made huge commitments there.

Deputy Colm Burke

On the innovation in the building sector, my understanding is that we have a higher labour content per square foot of residential property that we build compared with other European countries. Is Enterprise Ireland getting involved in any way to assist that whole industry to be more innovative and able to produce faster and a larger volume? What has been done in respect of innovation in that area?

Mr. Leo Clancy

I am conscious of time. There are two major actions. We funded a construction technology centre in Galway, which is focused on housing as one of its two major streams. That centre was announced last year and was formally launched just before Christmas. That will help early stage and established companies to access innovation where they have not before. The other programme we have called “build to innovate”. We are working directly with house builders and construction firms with things such as off-site construction. For example, a modular off-site facility can be built in a factory and have the houses come ready to assemble to site. We are working with a number of companies in that regard. We are also working with on-site construction firms and how they apply lean technology, for example, how they take waste out of their processes and become more efficient at developing and delivering houses.

Deputy Colm Burke

In doing that, have we looked at other jurisdictions as regards how we can make progress in that area? One of the big challenges is the shortage of labour in the whole construction industry. Therefore, we have to get more efficient with the labour we have to produce the volume we require.

Mr. Leo Clancy

We have. We have people who work in the construction industry across Europe and beyond who are feeding into this activity on an ongoing basis. In addition, the Government’s Housing for All subcommittee is looking at benchmarks across Europe in terms of labour content and cost, as well as material content and cost. Those are under examination.

An Cathaoirleach (Deputy Brian Stanley)

Deputy Devlin is online. If he uses his raise hand signal, I can let him in.

I will ask about the cost of new jobs from Enterprise Ireland's point of view. In 2021, there were 7,400 new jobs and a net gain of 2,999. When it is counted as the net gain, the cost per job, I notice, has tumbled down to just over €3,000 per job from I think around €12,000. Is Enterprise Ireland counting the total number of new jobs or just the net gains?

Mr. Leo Clancy

There is a formula for how we calculate this. I will ask my colleague, Ms Brennan, to dig it out. We are calculating it based on a rolling seven-year basis. The cost per job calculation is done based on historical factors. The document I am looking at is a different document, so let me come back to this. We have a formula that I can never remember off the top of my head.

The formula is: cost per jobs sustained is the first-time jobs created and sustained over a seven-year period over the grant payments net of any refunds over that period. It is over a seven-year lens. The two comparison numbers that the Cathaoirleach had, the €3,000 that we reported in 2021 versus in the teens back ten years ago, would mean that we are creating and sustaining far more jobs for the money we spend. That number has declined significantly and we are happy to see that. It means that we are spending less State money per job sustained over the previous seven-year period.

An Cathaoirleach (Deputy Brian Stanley)

Enterprise Ireland is counting jobs sustained over a seven-year period.

Mr. Leo Clancy

Yes, over a seven-year period.

An Cathaoirleach (Deputy Brian Stanley)

What is the survival rate percentage of companies that EI has invested in over a seven-year period? I understand the logic of doing it over a seven-year period.

Mr. Leo Clancy

I do not believe we have that number to hand in aggregate terms but we will see if we can get it and come back to the Cathaoirleach later in the committee.

An Cathaoirleach (Deputy Brian Stanley)

Even an estimate of the figure. What are we looking at? From the State’s point of view, it is significant investment. Everyone is wondering and EI knows that. It is risky and we understand that. EI is competing and it is fairly vicious out there for new start-up companies. Is it generally, for example, a 70% survival rate or a 40% survival rate?

Mr. Leo Clancy

It depends on stage of company, but I would say must more the first number than the latter. We see very small rates of company closures. The exception to that would be at micro and local enterprise. My colleague, Mr. Murphy, may have further comment on early stage micro enterprise but he may not have details to hand either. We see low rates of company closures. What one does see in our numbers - the Cathaoirleach quoted the net number and the gain number - is there are losses on an ongoing basis. Some companies flex their employment up and down and that is where the net comes in. Much more of a factor is companies that are doing well and need to maintain or potentially trim their employment slightly and those that are growing create the net positive results.

An Cathaoirleach (Deputy Brian Stanley)

It is a much higher percentage with smaller, micro industries with local enterprise offices, LEOs.

Mr. Leo Clancy

That would certainly be the case anecdotally. You are much more likely to fail earlier on.

An Cathaoirleach (Deputy Brian Stanley)

At early stages.

Mr. Leo Clancy

I will ask Mr. Murphy if there is anything to add to that.

Mr. Richard Murphy

We have looked at the survival rate of the companies funded through the local enterprise office and it is quite positive. We see upwards of 85% of the companies that are funded remaining in business over a period of time and are going on to grow jobs.

An Cathaoirleach (Deputy Brian Stanley)

Over a period of time. Is that seven years?

Mr. Richard Murphy

It is seven years. We do not have the length of history of Enterprise Ireland, obviously.

An Cathaoirleach (Deputy Brian Stanley)

On environmental, social and governance, ESG, investments, that is, on environmental and social good investments, is that a factor when EI is assisting companies or new start-ups or investing further money in companies perhaps that are at a certain stage but need to expand or need further development? Does EI examine that part of it? Does it look the environmental issues and what the company is doing?

Mr. Leo Clancy

We do. I mentioned earlier that 13% job growth was the highest we had in any sector. That was in the sustainability and agritech sector, which is increasingly sustainability-focused itself. That was certainly a strong statistic coming out of 2022. It shows that those sustainability-related companies are the ones that do very well. We actively target sustainability investments as well.

We are constantly looking for them. These are, first of all, companies whose business is sustainability. We love to see those because, first of all, they are good for Ireland. Second, they will have great markets because there is a lot of global focus on ESG among people who buy from them. One specific thing to mention is that we have just launched the latest call for the destructive technology innovation fund, which is a €500 million Government fund for early-stage, future-focused innovation. This year we are focusing, with the Department of Enterprise, Trade and Employment, on sustainability and built environment so we want to see calls come in for innovation in that space-----

An Cathaoirleach (Deputy Brian Stanley)

What involvement does Enterprise Ireland have with the semi-State companies? I am thinking of Bord na Móna in particular. There is somersaulting involved in having to innovate and change from being a massive carbon producer to becoming a massive carbon solution company. What involvement does Enterprise Ireland have with Bord na Móna, a very important semi-State company?

Mr. Leo Clancy

I might turn to Dr. Gibbons in a moment to give an update on Bord na Móna and what we have done in that regard. I will first finish my reply to your question, though, Chairman. We are very focused on greening the companies we have. We are focused not only on new companies in sustainability but also on making sure that our companies decarbonise. Enterprise Ireland has a target in respect of the enterprise sector of reducing emissions by 35% by 2030. We have numerous supports which we can come back to and talk about, if the committee would like, but, in the interest of time, I will hand over to Dr. Gibbons to talk a little about Bord na Móna and our relationship with it.

Dr. Carol Gibbons

We collaborate hugely with Bord na Móna to try to see what we can do from an enterprise development perspective. We have worked with it closely on Accelerate Green, which looks at start-up companies, particularly in the green area. We have done that across recent years. That budget has been taken up by Bord na Móna through, I believe, the just transition fund as well. That is available around the midlands area.

An Cathaoirleach (Deputy Brian Stanley)

Is Enterprise Ireland providing funding to Bord na Móna? It was the case that the lock was nearly being put on the gate. Fortunately, that has been turned around in that Bord na Móna has grasped this and is trying to innovate, develop and expand into a whole range of areas, including hydrogen, as the witnesses will probably know. Does Enterprise Ireland provide direct funding to Bord na Móna or attached companies?

Dr. Carol Gibbons

Our support is wider. I might revert to my colleague, Mr. Sherry, on Bord na Móna specifically, but our work is wider with respect to the region itself in terms of looking at that enterprise agenda. We concentrated and continue to concentrate our efforts with Bord na Móna on seeing what we can do in terms of innovation. We were there at the early stages of those discussions as well in respect of new product development, etc. Our most recent work with Bord na Móna is on that start-up enterprise agenda, particularly the green aspect. I will revert to my colleague, Mr. Sherry, if he has anything to add to that.

An Cathaoirleach (Deputy Brian Stanley)

Thank you for that, Dr. Gibbons. Mr. Sherry, do you wish to add to that in respect of Bord na Móna in particular?

Mr. Kevin Sherry

As my colleague, Dr. Gibbons, said, we work with Bord na Móna closely and where it has supported individual companies, early-stage companies, to help those companies to incubate and to get off the ground.

An Cathaoirleach (Deputy Brian Stanley)

The question I asked, to which I have not yet got an answer, is whether Enterprise Ireland provides the funding directly to Bord na Móna or attached or subsidiary companies.

Mr. Kevin Sherry

No, not directly to Bord na Móna for its activities. We are not providing-----

An Cathaoirleach (Deputy Brian Stanley)

Is that because of state aid rules?

Mr. Kevin Sherry

It is.

An Cathaoirleach (Deputy Brian Stanley)

That would not stop Enterprise Ireland from providing financial assistance to subsidiaries or attached companies.

Mr. Leo Clancy

It is a matter of Bord na Móna as a client in respect of its potential to export. We hope, like you, Chairman, that as it transforms its activities there will be opportunity for it in other markets. We constantly talk to Bord na Móna about the opportunities to support-----

An Cathaoirleach (Deputy Brian Stanley)

I am talking about related companies.

Mr. Leo Clancy

Yes, we can certainly-----

An Cathaoirleach (Deputy Brian Stanley)

Enterprise Ireland can with those-----

Mr. Leo Clancy

Anything we can do under our legislation-----

An Cathaoirleach (Deputy Brian Stanley)

Has Enterprise Ireland done so? That is what I want to know.

Mr. Leo Clancy

We have provided funding in the past to related companies.

An Cathaoirleach (Deputy Brian Stanley)

I know that the just transition money came in. That is very welcome. Many of us, particularly in the midlands, have raised that for obvious reasons and because of the demise of the peat harvest and the black hole, pardon the pun, in a number of ways, particularly in respect of jobs.

What level of protection do we have from the significant transition and the changes taking place in the tech sector? It was mentioned earlier that it does not appear there will be a steep fall-off, which is important, but there have been a number of significant job losses in the tech sector. What kind of work is Enterprise Ireland doing in that regard? Is there any work it can do or strategies it can have to try to counter that or to help companies?

Mr. Leo Clancy

We have been engaged with this since the first wobbles in the tech sector about a year ago. We have been engaged with our clients. As I mentioned to Deputy O'Connor, we have a set of development advisers who work with the companies on a day-to-day basis, so they are on the pulse of what is happening with the companies. Our investment goes in, but then we continue to work with the companies through their life cycles. Effectively, it comes back to our approach with any company. We look at companies and try to help them to innovate, to be more productive and to apply digital in order to make sure their business models are sustainability-oriented. All those things are to get them ready to compete in global markets. I think the best support we can give to companies is to make sure they are match-fit for the markets into which they are trying to trade and doing very well. We provide a whole range of supports to companies in that regard.

Protecting against global factors is always difficult in Ireland. We are a small, globally exposed economy. We need to be very conscious of that. That said, I think-----

An Cathaoirleach (Deputy Brian Stanley)

I understand that we are a small fish in a big sea, but are you concerned there will be a significant drop-off in respect of the tech sector in terms of the level of this in this country?

Mr. Leo Clancy

At this point, no.

An Cathaoirleach (Deputy Brian Stanley)

You do not see a steep fall.

Mr. Leo Clancy

At this point, no.

An Cathaoirleach (Deputy Brian Stanley)

Many people will be reassured by that because, obviously, Enterprise Ireland is following this very closely.

Mr. Leo Clancy

We are, and I believe in tech. I believe that tech is resilient.

I will hand over to Mr. Sherry, who wants to make a comment on this.

Mr. Kevin Sherry

I wish to clarify one thing in respect of Bord na Móna and the Chairman's question on whether we can provide support to it. There are certain areas where we can provide and have provided support to Bord na Móna, but that was in business transformation, where it was diversifying away from peat, and which was aligned with state aid rules. Normally, however-----

An Cathaoirleach (Deputy Brian Stanley)

Enterprise Ireland was doing that directly.

Mr. Kevin Sherry

Correct. I wanted to clarify that point.

An Cathaoirleach (Deputy Brian Stanley)

Obviously, Enterprise Ireland can do it directly with the greater number of related companies now. Thank you for that, Mr. Sherry.

Deputy Alan Dillon

I welcome the witnesses and thank them for their work over recent months, especially in response to Covid and the inflationary crisis we face and what businesses face.

I ask Mr. Clancy for an overview of the key performance indicators that Enterprise Ireland uses to measure success and effectiveness. I ask him also to provide an overview of the strategy Enterprise Ireland has adopted to ensure there is balanced regional distribution of funding for micro and small businesses.

Mr. Leo Clancy

I will give the Deputy an overview, first of the KPIs we use in respect of our operations. I will not go through every one because I have a couple of pages of them here, but as for some of the key ones that we talk about every year, employment is at the core of what we do. The purpose of this agency is to provide economic opportunity to people in Ireland, and I firmly believe that, as does my team. One of the KPIs we have set for ourselves in this strategy period is that we will create 45,000 new jobs over the period. We have set a target that exports will reach €30 billion by the end of 2024 and we have set a target for research and development conducted by our clients of €1.4 billion by the end of 2024. I am pleased to say we are well on track on all three of those at the end of the first year of our strategy. We are now in year two of a three-year strategy and we are well on track on those three KPIs because they are the ones that bring economic benefit and future performance for Irish companies. We are also very focused on productivity and sustainability. I am happy to go further but I am conscious of the Deputy's time.

Deputy Alan Dillon

May I talk about the 45,000 jobs to be created by 2024, two thirds of which will be outside of Dublin? Can the witnesses give us a breakdown per region as to where we are currently?

We are talking about over 30,000 jobs being created outside of Dublin by 2024. In relation to the breakdown of funding, do our guests have figures for the west?

Mr. Leo Clancy

We do. We have the funding figures for the west to hand so I can give the Deputy that number now. I will ask Ms Brennan to provide more detail.

Ms Gillian Brennan

Funding for the west in 2021 amounted to €32.2 million. That is direct funding to companies and includes funding for capability research, innovation and so on.

Deputy Alan Dillon

That is out of what total?

Ms Gillian Brennan

That is out of a total of €325 million. We will distribute the regional and county breakdown.

Deputy Alan Dillon

That equates to 10% of the overall budget for the west. In the context of the €1.4 billion for research and development, what are the key sectors or points of focus for Enterprise Ireland?

Mr. Leo Clancy

It is broad based. We make research and development support available to any sector where there is something innovative happening, apart from proscribed sectors, such as that relating to tobacco and other areas, in which we are not allowed to operate. We make innovation funding available to any business that seems like it can compete and where innovation will give a boost to its productivity and future success. I do not have the numbers on how innovation funding by Enterprise Ireland breaks down in front of me. Anecdotally, however, I would say that the primary areas of focus are medical technologies and life sciences, technology and engineering.

Deputy Alan Dillon

Out of the €1.4 billion, how much has been spent to date?

Mr. Leo Clancy

That is not a spending target. That is a target for research and development performed by our clients. We want to see that Irish companies are spending €1.4 billion on research and development.

Deputy Alan Dillon

How is that supported by Enterprise Ireland?

Mr. Leo Clancy

Sometimes it is not supported by us at all. If companies are capable and if we have done work with companies over the years on helping them to create a research and development base, we will certainly support them further to do that, but we may not need to do so. Investment may have been made early and may mean that they are self-supporting in research and development. The research and development tax credit is obviously a huge support to companies, at up to 25% of eligible expenditure, but for us it is based on a need for our money, as with all of our grants.

Deputy Alan Dillon

On Enterprise Ireland's role in innovation, is there a team that is dealing with the green transition? An Cathaoirleach mentioned green hydrogen. That will certainly be an important area of focus in the years ahead. What is Enterprise Ireland doing to promote businesses entering this type of sector? What type of support will be available in the coming years and will there be calls for that? I ask our guests to provide us with an overview in that regard.

Mr. Leo Clancy

Is the Deputy interested in the innovation agenda within that or in the sustainability agenda more broadly?

Deputy Alan Dillon

I am interested in both.

Mr. Leo Clancy

Very broadly, we have a number of supports directly to companies for sustainability. Companies that are looking to improve their sustainability stance can access the climate action voucher. That is an €1,800 voucher that is open to all companies to allow them to carry an initial assessment of their activities. We then have green start, green plus and environmental aid programmes which help people to progressively to do more to improve their sustainability performance. Historically, those have been focused on green issues like reducing energy use and carbon emissions, but we are broadening them out to the wider sustainability agenda now.

Deputy Alan Dillon

I would like to focus on large-scale operations that will provide a supply chain of green hydrogen across the country. This is a sector that needs attention. Is there a skill set within Enterprise Ireland to support private investors or the State in order to move more quickly on this? Scotland is moving very quickly on this. Across Europe orders are being placed for electrolysers but the projected time lines are over four to five years before these orders can be filled. Where is Enterprise Ireland in relation to the green transition?

Mr. Leo Clancy

We are very actively involved with our clients. In the past three days I spoke to two companies with ambitious plans in respect of green hydrogen alone. At the start of our strategy period, recognising exactly what the Deputy outlined, we set up a sustainability team. It brings together our sustainability companies in one area so that we can leverage their strengths for one another. The team also has a number of experts on it who are very accomplished in this area, including someone on offshore wind and someone who has worked in the European Commission on the green energy agenda, as well as a couple of very strong development advisers from our wider organisation. We have that focused team working on sustainability. We are also about to commence, in conjunction with the Department of Enterprise, Trade and Employment, the formation of an industry strategy for offshore wind and we will be contributing people to that.

The Deputy mentioned green hydrogen but the opportunities from that will be unlocked by offshore wind so the two are inextricably linked. In terms of those direct companies-----

Deputy Alan Dillon

I would not agree with that assertion. Green hydrogen is not based on offshore wind. There is huge viability in onshore wind. The wind speeds in my county of Mayo are some of the best in Europe. The cost associated with offshore wind, especially in the west where it will be floating, is prohibitive. Two companies, Shell and Equinor, removed themselves from committed offshore projects. There has been disappointment in respect of the offshore sector and confidence within the market. I invite Mr. Clancy to expand on this matter. There are indigenous Irish companies that want to provide a service in this space but feel there is too much regulation and bureaucracy. They are finding it difficult. It is not fair to say that green hydrogen will be specifically dependent on offshore wind.

Mr. Leo Clancy

The Deputy is right. We will see green hydrogen projects that will not rely on offshore wind. The larger future opportunity in green hydrogen will depend on more and more renewables. That is the point I was trying to make but I absolutely take the Deputy's point and agree with him. On that point, we have had an offshore wind cluster develop over the past number of years. We will continue to work with those companies on opportunities for offshore and onshore wind in Ireland and overseas. We see this as a massive export opportunity and indeed, it is an export reality currently. We are seeing Irish companies supplying offshore and onshore markets across Europe.

Activity relating to green hydrogen is increasing. As stated, I spoke to two companies in past three days about their green hydrogen ambitions. I have spoken to quite a number of others over the past three months. There is a growing momentum, and we will get behind that. I mentioned that we launched the latest call in respect of the disruptive technology innovation fund the week before last. That call is focused on sustainability and the built environment. We are keen to see green hydrogen projects come through in response to that. It is a very generous scheme for clients in terms of ability to access funding. We would like to see more on that.

Deputy Alan Dillon

At what stage do companies need to be at in order to access this funding? Is there a specific point? Do they need planning permission or an exhaustive business plan in order to be eligible for this funding? For some, it is just not feasible to apply for it.

Mr. Leo Clancy

Is the Deputy referring to the disruptive technology fund in particular?

Deputy Alan Dillon

Yes.

Mr. Leo Clancy

We are talking about early-stage companies. It is done on a consortium basis, so it must have an SME involved. That is the first point to note. We have seen a lot of early-stage SMEs coming into it. They have tended to be companies that are more research oriented because it is a research funding programme, but it allows for companies of all sizes to come in. It is broad and open. We would be delighted to engage with companies that are trying to understand whether they could, as part of a consortium, apply. We would be happy to do that on a bilateral basis.

Deputy Alan Dillon

I have one final question.

An Cathaoirleach (Deputy Brian Stanley)

I will let the Deputy back in on the second round. Deputy Murphy is next.

Deputy Catherine Murphy

Enterprise Ireland makes a great effort to show the balance in terms of the regions but there can be regions within regions, as well as different stories between regions. Kildare, Meath and Wicklow, for example, would be part of a region but there is a world of difference between Kildare and Meath, even though both have experienced very strong population growth. One can see that clearly from the commercial rates base of both counties. Admittedly, the figures can be distorted somewhat by one very big employer, but that is not the total explanation. When one looks at Dublin, one sees that the real growth has happened in Fingal over the past 25 years, with more than 100,000 additional people living there now.

It is the fastest growing part of the country. There is a climate aspect to this. People should be able to work closer to home if possible and I am not even talking about people working from home. Does that come into play when Enterprise Ireland considers this type of issue or those subcategories? Are these targeted or limited or is the regional balance simply happening by default?

Mr. Leo Clancy

We are unlike the IDA, when a client approaches us. If it is a multinational company coming to Ireland, it is possible to directly invest money and direct the investment to any part of the country. That is not always possible. Many of our clients come out of the places they come out of because they are typically Irish-owned businesses. To the Deputy's point, that tends to be the main determining factor in where companies start, but not always in where they grow. We have certainly worked with companies over time to establish second sites in areas where more labour is available or where conditions are better. It is in the interests of companies to do that. As the Deputy stated, a company can locate in a place where there are many commuters who are happy to move to that company rather than be stuck with a two or three-hour commute. Irish companies are pretty agile in availing of those opportunities. It is a bit of both. It is more founded on where the company started because most of our clients are regionally based and are proud of the places they came out of. However, that said, we work with companies when they run out of options in local areas or when they are finding it difficult to look at new places.

Deputy Catherine Murphy

I can think of one. Kerry Group is a case in point. The perception is that it is all in Kerry. In fact it also has a strong base in Kildare. One cannot but see it from the motorway. I have heard from people who have availed of the LEO services that the mentoring programme is valuable but I hear of people who have an idea they believe is viable and getting a start becomes a problem as regards the available supports. Are there any additional supports the witnesses think would be viable that are not in place at this stage or are they satisfied with the programmes?

Mr. Leo Clancy

I will come to my colleague, Mr. Murphy, who runs our centre of excellence for local enterprise offices in a moment. I am lucky to have had a lot of time to spend with the LEOs in the past almost-two years since I took up this role. As I go around the country, I am extremely impressed with the focus on business and care for business. I think that has also been the Deputy's experience.

Deputy Catherine Murphy

Yes it has.

Mr. Leo Clancy

We have the right programmes. We are always loath to add programmes or new variations on programmes as State agencies can often be confusing enough for people from the outside. We have the right programmes and crucially we have the right people. The more I meet staff in LEOs, the more confident I become about the kinds of people we have who care about business. I will ask Mr. Murphy to speak about how we ensure we are getting a good service.

Mr. Richard Murphy

The LEOs operate in two specific areas on entrepreneurship. The first is in providing capital funding to clients who are emerging from a start-up perspective. Those funds are generally aimed at internationally traded services companies or manufacturing companies. Equally, a significant amount of work goes on for all entrepreneurs which is driven through what we call a start your own business programme. People are invited to participate in those. Approximately 3,000 people operate those programmes.

Deputy Catherine Murphy

I have some engagement, so I understand. I wondered whether there are any gaps.

Mr. Richard Murphy

Gaps are always assessed on an individual basis. We evaluate programmes such as the start your own business programme to see where there are gaps or failings and from that, we try to change the level of mentoring. That is an issue I am aware the Deputy raised. We evaluate the mentors via the reports they bring back to us and to the client and we also take soundings from the client as to how the engagement worked or did not work. On the basis of that, decisions are made to continue with mentors or not.

Deputy Catherine Murphy

I will go back to the point I made earlier about male and female participation. Some of the big lessons of the crash were groupthink, risk and trying to balance male-female participation to ensure a different approach to risk. Risk, and research appears to be one of the other reasons. Has Enterprise Ireland determined any other reasons more women are coming in and more companies are doing better with better gender balance on their boards?

Mr. Leo Clancy

I think it is due to the diversity of opinion when more women are included. A gender-balanced group is beneficial in any conversation. That is what we are seeing. We are seeing the statistics to support that. I will ask Mr. Sherry to talk about the success of female entrepreneurs in our high potential start-up programme. It has been increasing. We have also launched a project called the level project, which encourages companies to think more and to engage with the toolkit we custom designed with the Department of Enterprise Trade and Employment to work out how to increase diversity at all levels in their businesses. It is hard to go beyond the anecdotal. Some of the statistics are in our favour as regards global business but I do not have them to hand.

Deputy Catherine Murphy

Will Enterprise Ireland send them on?

Mr. Leo Clancy

We will. Will Mr. Sherry cover the success we have seen in the high potential start-ups?

Mr. Kevin Sherry

As I mentioned earlier on high-potential start-ups, a lot of work has gone into us trying to drive up the level of new starts being established by female founders. We have gone from a position ten years ago where the percentage of high-potential start-ups we supported was approximately 7%. Last year it was 36% in total. That has involved a series of activities focusing on encouraging female entrepreneurship. We have done dedicated, competitive start-fund calls in which we specifically focused on females to encourage them to start their own businesses. We have also focused on ensuring mentor availability, that is, that similar female founders are available to provide support. Our attitude is that as you cannot be it if you cannot see it, we try to profile successful founders and to build networks. Increasing and encouraging the participation of diversity in the various leadership programmes Enterprise Ireland runs is also key. It is key to build up cohorts and networks. It has been successful over time. The other aspect that is important is encouraging diversity in the management teams and boards of established businesses.

Deputy Catherine Murphy

When Mr. Sherry talks about diversity, is the focus exclusively male-female or does it include different cohorts, people from different origins and with different abilities?

Mr. Kevin Sherry

That is correct. It is not only about females. It is also about diversity in individuals in start-ups that are coming to Ireland and establishing businesses or other communities in Ireland we encourage to-----

Deputy Catherine Murphy

Does Mr. Sherry have any statistics on people coming from different origins, for example?

Mr. Kevin Sherry

I do not have statistics to hand but I can say that approximately 10% of the start-ups we support come from outside Ireland. They are started by individuals coming to Ireland to establish their businesses. One of the other things we have done is-----

Deputy Catherine Murphy

It would be useful if Mr. Sherry could send the committee some information on that.

Mr. Kevin Sherry

I will. One of the other things we have done is modify some of our programmes - for example, our key appointment programme - to encourage greater female participation. We found that in key-person appointments, it was sometimes a challenge for a manager in a company looking for a senior appointment in the company to attract a female on a full-time basis. We provided support to enable companies to hire people on a half-time basis. We are trying to lower the barriers to encourage that activity.

Sitting suspended at 10.59 a.m. and resumed at 11.10 a.m.

An Cathaoirleach (Deputy Brian Stanley)

Deputy Dillon is next to contribute.

Deputy Alan Dillon

On the initiatives that Enterprise Ireland provides to encourage business growth in economically disadvantaged or less developed regions, I refer to the example of the strategic development zone of 246 acres assigned to Ireland West Airport Knock in 2019. This zone has yet to be activated, but it has huge potential. Can I ask Mr. Clancy about Enterprise Ireland's work to try to develop this site? I knot what a feasibility study is being undertaken, or that grant funding has been assigned. What additional support can we get through State agencies in order to try to unlock the potential that this strategic development zone has for east Mayo and for the west and north-west regions?

Mr. Leo Clancy

Is Deputy Dillon asking about the zone at Ireland West Airport?

Deputy Alan Dillon

That is correct.

Mr. Leo Clancy

I had conversations, including with the director of services of Mayo County Council, about this matter recently. Enterprise Ireland had conversations with the enterprise development people, including our colleagues in local enterprise. As the Deputy stated, we have just assigned funding for a feasibility study to be carried out. Our view on this is that we will wait for the feasibility study to be completed in order to decide what some of the strategic investment options, if there are any from a State perspective, might be. I would also say that in the course of our informal discussions following the approval of the feasibility study we have decided to engage with Ireland West Airport Knock and look at the potential for other services to come in. Given that there is a large airport there and a runway and related facilities, there should be propositions that can be evolved around things like maintenance and repair of aircraft and related matters. We are at a very early stage in that. The feasibility study will inform that. We are deeply engaged, myself included, on this matter.

Deputy Alan Dillon

That is very good to hear because Enterprise Ireland, IDA Ireland and the local authority all have roles to play. I thank Mr. Clancy for his response in that regard. I have a question on access to skills and the labour market. Supply pressures are currently affecting certain sectors. Is there a major skills gap affecting the business community as a whole? Perhaps Mr. Clancy could give an overview of how the skills gap might be closed. Is that gap a significant concern for the companies with which Enterprise Ireland works?

Mr. Leo Clancy

The backdrop is that we are in an economy in which, fortunately, almost 2.6 million people are employed. I do not think that any of us anticipated that we would be in this position three years ago. It is a good place to be. However, it puts a lot of pressure on employers. Some of the skills that are hard to get always tend to be high-end engineering skills, whether that is in physical products, scientific products or technology, as we talked about earlier. Those skill are always hard to get. Notwithstanding difficulties with the tech industry, that is probably the most discernible area where there is a tightness in the skills market. Enterprise Ireland is more worried about a generalised labour shortage. In an economy in which there is full, or close to full, employment, we feel it becomes difficult for business. Anecdotally, we are hearing that it has eased somewhat over the past three months and that it is not having a negative impact nationally. We are seeing some easing with certain of our key clients, but we are still very concerned about that. We have a number of actions in place across our teams. We have a specific team that focuses on skills on behalf of our clients. We work very closely with, for example, the national apprenticeship office. We worked with it on its One More Job initiative to try to get more apprentices into as many businesses as possible. We provide critical skills data in respect of skills demand to our parent Department and to the Department of Further and Higher Education, Research, Innovation and Science. We work closely on a weekly basis with agencies such as SOLAS, Skillnets and others to come up with strategies to help build skills. The short answer to Deputy Dillon's question is that a generalised shortage of available labour is probably the biggest concern we have and that we hear about from clients on a daily basis.

Deputy Verona Murphy

I thank the witnesses for attending. I am sorry that I am not in the room, but I have been listening in for most of the meeting. In his submission to a recent meeting of one of the joint committees, Mr. Clancy stated that some companies face a moderation of their growth ambitions. Can he outline what he meant by that statement and why he made it?

Mr. Leo Clancy

I do not have the statement to hand. Was it in regard to any one sector or was it more general in nature? I apologise that I have to ask.

Deputy Verona Murphy

No, that is fine. It was more than six months ago, and it was a general statement. It probably related to energy costs and all of that.

Mr. Leo Clancy

Yes. If we look back on 2022 the financial market challenges, particularly for tech companies, that we saw in the early part of the year - April and May - meant that early-stage venture-backed companies were working on how they would conserve their cash for longer. That included quite a number of our clients. That is partly what I was alluding to, namely, that there were companies which might have planned to hire more people or increase their capital investment but which were pulling back until they saw how things would go. That was probably specific to the tech sector. The other moderation, as the Deputy rightly mentioned, is that as inflation gathered pace in August, September, and October - this was particularly driven by energy costs - many companies that might have made capital investments were at least being careful about doing so. We did not see a massive pull-back in capital investment. We have seen companies take a lot more care about how they deploy their capital. Thankfully, since I wrote that statement, we have had a better winter than we expected in terms of energy prices, so we still see confidence in the market. Those are probably the two key factors that were on my mind when I wrote that statement.

Deputy Verona Murphy

Does Mr. Clancy see any issue with the current housing crisis and how it is affecting companies ability and their ambition to grow? This is an issue, particularly in Wexford. Many of the businesses I visit are Enterprise Ireland clients and larger enterprises. We are very enterprising in Wexford. May of these businesses have to access labour markets abroad. In that context, they are obliged to find accommodation for people. I have had instances where companies have basically not been able to give people jobs because they could not find accommodation for them. As a result, that a growth ambition has been absolutely quashed. Does Mr. Clancy hear much about that issue?

Mr. Leo Clancy

We hear an awful lot about that issue every day of the week. Housing is a major concern for our clients in terms of their ability to hire people.

Deputy Verona Murphy

Does Enterprise Ireland make representations on that? Is information relating to it fed back to the Government, or how does that work?

Mr. Leo Clancy

We do. It is part of our ongoing dialogue with the Department of Enterprise, Trade and Employment, which is our parent Department, and other Departments. As I mentioned earlier, the Government has specific actions under the Housing for All plan to improve innovation and productivity among those who build houses and across the construction sector generally. We have various opportunities to present it at different forums. What I find is that the Government and all Departments are acutely aware of this concern, so it does not come as a surprise to anyone.

Deputy Verona Murphy

I do not agree with that to a certain extent. Maybe they are aware, but their understanding is limited as to the actual reasons for the lack of supply and delivery. I received a document from the Minister for Housing, Local Government and Heritage, Deputy Darragh O'Brien, yesterday. From the point view that viability is the biggest issue that many developers are facing - and it is a combination of planning policy and the planning process - it is really worrying that we will not see houses being built any time soon. A total of 70,000 applications for planning permission have been granted. The issue with builders not going ahead with projects relates to viability. The Government has not addressed that in its latest proposed policy approach. Can Mr. Clancy offer any insight into the viability of the developments to which I refer?

Is Enterprise Ireland hearing that from anybody?

Mr. Leo Clancy

We take the view that we do not comment on policy matters more generally. We stick to the area we are accountable for, which is employment. We certainly feed back the consequence of housing shortages, which is the ability to employ people and to move them within Ireland and in from outside. However, we do not take a policy view on the foundations of-----

Deputy Verona Murphy

I appreciate that. I just think EI should be aware we are not going to solve it any time soon and that it will make our growth in the Enterprise Ireland realm very difficult. I am very concerned for FDI on the basis of our housing crisis and shortage.

I will ask a question relating to County Wexford. The representatives spoke earlier about how many jobs are within the country. I am not sure if they are able to provide me with the actual figures for people EI support in employment in the county.

Mr. Leo Clancy

My colleague, Ms Brennan, will be able to provide that number.

Ms Gillian Brennan

The number of companies supported in Wexford is 85 and the number of jobs is 5,168.

Deputy Verona Murphy

Lovely. I thank Ms Brennan. On development, I hope we are all quite involved as Oireachtas Members, including Deputy Shanahan and myself as the two Independents, in getting Waterford Airport back up and running. What involvement does Enterprise Ireland have with that project?

Mr. Leo Clancy

I am not sure if we have direct involvement in the Waterford Airport project. I will defer to my colleague, Dr. Gibbons, for comment on that. I have not had direct involvement in Waterford Airport.

Deputy Verona Murphy

Before Mr. Clancy moves on, does he see that project as something that is vital to the economic development of the south-east region?

Mr. Leo Clancy

I have not considered it deeply enough to have a view. To say anything else would be the wrong answer at this point

Deputy Verona Murphy

Is it not something that Mr. Clancy feels or hears, if he is asked where the nearest airport in the south-east region is? Does he not get asked that?

Mr. Leo Clancy

Honestly, not frequently, but that is because I do not spend as much time as the Deputy and Deputy Shanahan in the region. I do not doubt it may be the case and I do not want to say it is unimportant. When I do not have an opinion, I will say that.

Deputy Verona Murphy

That is fair, thank you.

Mr. Leo Clancy

I certainly do not want to dismiss the importance of the airport either. I will ask Dr. Gibbons if she has a further view or if we have had any engagement.

Dr. Carol Gibbons

Unfortunately, I do not have that information to hand but I can certainly follow up with the Deputy on it with our regional director. My apologies.

Deputy Verona Murphy

That is fine. Is it a fact, however, that EI has research and information on Waterford Airport as a project and a future development?

Mr. Leo Clancy

We will. Our regional manager would have that. We are more than happy to engage with the Deputy and other Deputies in the region, if that is helpful.

Deputy Verona Murphy

That is grand. I have another question. I am sorry if this has been asked but on LEOs and the LEADER programme, is there any crossover with Enterprise Ireland and LEADER?

Mr. Leo Clancy

We do come across LEADER. I will ask my colleague, Mr. Murphy, to comment on any formal interaction we have or the frequency of any day-to-day interactions.

Mr. Richard Murphy

LEADER and the LEOs have a formal protocol where projects that come before them are discussed to ensure the appropriate agency funds them and the appropriate funding is going into the right companies. There is a formal protocol that addresses that.

Deputy Verona Murphy

Very good. On EI and our local council, how does EI interact with county councils? Are funding streams ever delivered through county councils? Is it just through the LEOs?

Mr. Richard Murphy

The only funding I am involved with is for the LEOs. We distribute the money from the Oireachtas straight towards the office in the area, which is based on banding. I do not have any involvement with council funding.

Deputy Verona Murphy

Does Mr. Murphy mean that EI's involvement is that it pays the rent of the office?

Mr. Richard Murphy

No. We fund the money that is allocated to companies from a grant perspective by the LEO. There is also a significant contribution to the staff who work in the LEO and another fund that goes towards the training and development capability-building of companies in Wexford. The offices-----

Deputy Verona Murphy

Is that channelled through the county council?

Mr. Richard Murphy

It is given to the LEO via the local authority.

Deputy Verona Murphy

Does the local authority charge for that?

Mr. Richard Murphy

No, it does not.

Deputy Verona Murphy

Is that a service provided by the local authority on EI's behalf?

Mr. Richard Murphy

Yes.

Deputy Verona Murphy

There is no benefit to the councils.

Mr. Richard Murphy

No.

Deputy Verona Murphy

The reason I bring that up is it is different from how the LEADER programme operates. We now have a situation where the Minister for Rural and Community Development is giving out money, and LEADER and the county councils are in competition to use that money and have access to it directly. It was the council that administered that money to LEADER at a charge of 3% but now LEADER and the councils are both vying for the same money. That is not the case for the LEOs, however. There is no charge.

Mr. Richard Murphy

That is correct. There is no charge.

Deputy Verona Murphy

That is absolutely fine. I particularly compliment Enterprise Ireland. It is the one organisation I seldom get complaints about. I feel sometimes that because of the way companies have to have so many employees, and on an export percentage level, our indigenous sector sometimes feels rather disadvantaged against companies that are supported by EI. Will Mr. Clancy comment on that or give me some words of comfort for these people?

Mr. Leo Clancy

Our mandate is legislative- and policy-led. It is to support companies in manufacturing and internationally traded services. That is founded on the basis that we do not either displace industries by supporting one domestically traded industry versus another, and other principles. We operate within our mandate. I am delighted the Deputy has had good feedback on us. To follow up on her point on the councils, we work hand in glove with them on broader issues as well. Mr. Murphy's remit is the LEO funding but we have done work on regional enterprise-funded projects in regions to build up capability at an early stage, and infrastructure, to help businesses start. A lot of those infrastructures help domestically traded businesses as well as our own businesses. I would say there is-----

Deputy Verona Murphy

Does EI fund that through the councils?

Mr. Leo Clancy

We fund the projects directly. They are typically set up as companies limited by guarantee, CLGs, and could be joint ventures with the council or some other body.

Deputy Verona Murphy

Okay. Do the CLGs end with the project? Do they just continue if there is another project?

Mr. Leo Clancy

Often, there is a piece of infrastructure so they will continue over time. The ambition usually is that something is created in a region that continues to grow-----

Deputy Verona Murphy

Could Mr. Clancy give me an example of what he is talking about in Wexford, say?

Mr. Leo Clancy

I can. In Wexford, we have the TradeBridge designated activity company, DAC, which the Deputy may be familiar with. TradeBridge was established to assist EI and LEO clients in the south east to secure export sales. It has established leads with various locations in the US. It is working with 30 companies targeting development of incremental export sales of €3.2 million and 90 new jobs. That is just one example in Wexford specifically.

Deputy Verona Murphy

Very good. I am not sure where my time is at but I have just one quick question. Does EI see any significant reason for a review of the criteria to receive EI grants? For instance, some large enterprises do not meet the ten-employee criterion specifically because of what they do, which is more machine-led. These companies make significant investments in machinery and do not need to expand the number of their employees, yet want to grow their exports. Does Mr. Clancy think there should be a review of the criteria?

Mr. Leo Clancy

If they are manufacturing or internationally traded, we can support them. We tend to look at the economic benefit they add. If a company is adding significant economic benefit, whether that is direct jobs, corporation tax or other spend in the economy, we look at all that in the round. Those things would need to stack up but we are very open to talking to all companies. It is just in the-----

Deputy Verona Murphy

What are the two main criteria? Is it ten employees and an export market percentage of what?

Mr. Leo Clancy

LEOs can support companies with under ten employees and we support companies of ten and over. LEOs have recently had their mandate extended so they can also support companies employing between ten and 50 people on a pilot basis this year.

Typically, though, the criteria for our support is that they are manufacturing or that they are internationally traded. Then, there is a continuum between whether the LEO will support them if they employ fewer than ten people. We will support them if they employ more than ten.

Deputy Verona Murphy

Okay.

An Cathaoirleach (Deputy Brian Stanley)

Could Mr. Clancy clarify that? When he said manufacturing and international trading, is it "or" or "either"?

Mr. Leo Clancy

It is either.

An Cathaoirleach (Deputy Brian Stanley)

Okay.

Deputy Verona Murphy

Is there a unique selling point, USP, to what they are manufacturing? Does it have to be a unique product? Can it be something that is manufactured elsewhere?

Mr. Leo Clancy

No, it does not have to be unique. For manufacturing, it is about manufacturing. We want to see Irish companies manufacture products that are like those elsewhere and compete hard and well in global markets. We are all for that.

Deputy Verona Murphy

Great stuff. I thank Mr. Clancy.

An Cathaoirleach (Deputy Brian Stanley)

I thank the Deputy. Deputy Colm Burke has ten minutes.

Deputy Colm Burke

I am sorry; the Chair might want to move on to someone else for the time being.

An Cathaoirleach (Deputy Brian Stanley)

That is okay. I have some questions myself regarding the county breakdown of investments. I asked about and a number of jobs. Can I have those figures? Does Ms Brennan have separate figures for counties Laois and Offaly? I do not want her to go through all 26 counties. She can supply those figures to the committee afterwards.

Ms Gillian Brennan

I thank the Chairman for the opportunity. I can give him the regional breakdown if that is helpful. I can also give the-----

An Cathaoirleach (Deputy Brian Stanley)

That will be helpful.

Ms Gillian Brennan

We can start with that. I can give the funding levels by region and the number of companies supported. In Dublin, it was €88.2 million, and the number of companies was 1,645. This is for the year 2021 and refers to direct funding to clients. In the midlands, it was €43.5 million, and the number of companies supported was 200. In the mid-east, the funding was €43.5 million, and the number of companies supported was 288. In the mid-west, the figure was €35.8 million in funding, and the number of companies supported was 503. In the Border region, the funding was €33.5 million, and the number of companies supported was 421. In the south-east and south-west region, funding was €48.1 million, and the number of companies supported was 867. In the west region, funding was €32.2 million, and the number of companies supported was 341. The Deputy asked specifically about County Laois.

An Cathaoirleach (Deputy Brian Stanley)

Yes, counties Laois and Offaly.

Ms Gillian Brennan

Okay. In County Laois, the number of companies supported was 39 and the funding was €6.9 million in the year 2021.

An Cathaoirleach (Deputy Brian Stanley)

Okay.

Ms Gillian Brennan

In County Offaly, the number of companies supported was 53 and the funding for 2021 was €2.145 million.

An Cathaoirleach (Deputy Brian Stanley)

It was €2.145 million. That is quite low for Offaly. In terms of the figure for the midlands, I know they would compare well. If I heard Ms Brennan correctly, she said the figure was €88.2 million for Dublin. On a basis of population, obviously, that is not high. It looks like the midlands is getting its share there. The Dublin region does very well in terms of direct foreign investment, FDI, whereas the midlands does not. In that regard. the midlands region seems to be lagging behind in terms of development.

I am concerned about the Border region, which includes counties, Cavan, Monaghan and Donegal. Is that it? Does it take in County Louth? Which counties are in it? Does it include Donegal?

Ms Gillian Brennan

Yes, it takes in the north west and north east.

An Cathaoirleach (Deputy Brian Stanley)

Does it include counties Cavan and Monaghan?

Mr. Richard Murphy

I can probably start on this. From memory, it is counties Donegal, Sligo, Leitrim, Cavan, Monaghan and Louth.

An Cathaoirleach (Deputy Brian Stanley)

Okay. It is quite low. That would be concerning, obviously, because it is a large area but also because of the underdevelopment in the Border region in the past. It has suffered over the years because of its peripheral nature. Then, obviously, historically with the conflict as well, job creation was not as good there as it was in other parts of the country. Is Enterprise Ireland taking specific measure with regard to those counties from Donegal around to Louth to try to address that with the LEOs? Is it specifically targeting that.

Mr. Leo Clancy

We are, Chairman. In 2022, the north west grew by 2% in terms of employment and the north east grew by 2%. In the prior year, though, the north west had been one of our highest performing regions. The highest-performing regions in terms of job growth in 2021 were the north west, west and south east outside of Dublin. Therefore, they are good.

Specific measure we are taking include the investments I mentioned earlier in regional enterprise development funded type projects, where we can collaborate locally to make sure there is a future pipeline of businesses. I will come to Mr. Murphy in a minute to comment on how we focus on the regions from a LEO perspective.

We always focus on regions, however, particularly those regions that have the lowest employment per capita. We are very supportive, in that we have various levers we can use to encourage employment. One of those is employment in capital grants. We can give grants to companies for new employment and new capital. We tend to go as far as we possibly can within value for money in grants to those regions because we know it is harder to get investment in there and we want to encourage every job we can.

An Cathaoirleach (Deputy Brian Stanley)

Yes. Those areas have not performed as well as others with regard to FDI. I will ask Mr. Murphy how the LEO offices are performing across those counties on the Border corridor.

Mr. Richard Murphy

Particularly well I must say. We have run a number of significant initiatives with those counties, particularly with concerns about Brexit at the time. For example, the Border counties came together, and we ran specific programmes to address and support retailers, which involved everything from mystery shopping to identify areas within retailers on which they could improve. We put in specific coaching and training to support retailers. We have run specific export programmes across the region that have been focused on encouraging those companies in the area to do more with exporting. We have also run things like innovation programmes and lean programmes. We have, therefore, had a very specific focus on the Border.

An Cathaoirleach (Deputy Brian Stanley)

The LEOs are performing quite well in those.

Mr. Richard Murphy

Yes.

An Cathaoirleach (Deputy Brian Stanley)

With Brexit, obviously, I have seen the figures for North-South trade improve in recent years. That is one of the things that needed to happen. Many of us saw 25 years ago that there was an opportunity with the Good Friday Agreement and the all-Ireland structures. Hopefully, the political all-Ireland structures will follow and get back in place fairly soon. We can only hope on that front. That is the missing piece at the moment. Economically and in terms of jobs North and South, the volume of trade both ways has improved dramatically since Brexit and in spite of Brexit.

With regard to the protocol with the blue and red ribbon on it - the so-called Windsor Framework - do the witnesses feel they will have a better opportunity in those areas in terms of consolidating companies and economies in the North with better harmonisation because of the trading both ways? Is there an opportunity for those Border corridors in counties south of the Border on the Twenty-six Counties side and in the case of Donegal, north of the Border? Does that open up an opportunity for them to develop further generally in terms of economic development?

Mr. Leo Clancy

I will come back in on that one as it is a broader question. We are optimistic that if the Windsor Framework is agreed, we will see increased trade and co-operation and economic development on both sides.

An Cathaoirleach (Deputy Brian Stanley)

It was agreed yesterday in England.

Mr. Leo Clancy

Yes.

An Cathaoirleach (Deputy Brian Stanley)

It is done. That is it; it is over.

Mr. Leo Clancy

It is done and finalised; the Chairman is right. We are very optimistic that we will see renewed economic growth. We had the opportunity over the last week to meet the chief executives of both Invest Northern Ireland and InterTradeIreland. We have agreed to co-operate and collaborate on schemes that help lift the economic fortunes and prospects of both sides of the Border. We are very positive about this.

I know there are certain restrictions on Enterprise Ireland utilising those sites. There is one in Laois. A few years ago, many of us were pushing at a political level for action. At that stage there was a lack of IDA activity, and in some ways there continues to be. Indigenous enterprises wanted to move into the site. As I recall, in one case in Offaly an exception was made by the then Minister, Deputy Bruton, to allow an indigenous company to locate on an IDA site. The IDA has purchased a 55 acre site just outside Portlaoise, south of the town. I hope that will be successful and that the IDA will be able to fill it. The witnesses might be aware the county council has taken its own initiative and set up the Togher business park, which is situated on what I call the crossroads of Ireland. It is not alone the roads, but the rail network crosses it as well with the Dublin to Limerick and Cork lines meeting there. The business park is within metres of the rail line so it is a very strategic location. That is flying. I know Enterprise Ireland has had an involvement there and it is welcome and appreciated. From talking to councillors and council officials I know they feel the business park has been a success. In terms of the IDA site, and the related significant Bord na Móna site, not just in Portlaoise but there are significant sites across Offaly. In terms of the IDA location, is it the case that Enterprise Ireland may be able to utilise part of that site? We do not know what is going to happen with foreign direct investment. Because we are the only English-speaking country attached to a golden market opportunity of 460 million people, that opens up an opportunity for us. However, if indigenous companies want to move in there, is it possible? Has there been any level of discussion with the IDA on that around the country or with the Department?

Mr. Leo Clancy

There has. I have corresponded directly with the IDA on this matter, not in respect of that site, but on a number of other sites. The principle is very simple: we have agreed with the IDA that unless there is a call on the land or it is being reserved for a pre-existing investor, potentially for foreign direct investment, our clients will be able to access those sites as well.

An Cathaoirleach (Deputy Brian Stanley)

It was very restrictive.

Mr. Leo Clancy

Yes, I know a few people over there.

An Cathaoirleach (Deputy Brian Stanley)

In terms of engagement with Bord na Móna, we asked about research and development, product development and all of that. In terms of site utilisation, there are significant sites around the midlands, including the one at Togher business park developed by the county council. Is Enterprise Ireland actively engaged with Bord na Móna in terms of that and other such sites across the midlands? I think of the old machinery yards in particular.

Mr. Leo Clancy

We are. Anecdotally, I have had numerous conversations with our own clients who need to establish manufacturing facilities or other facilities in Ireland. I have cited on numerous occasions that Bord na Móna sites are a golden opportunity for them. I really believe that to be true.

In response to your earlier comments, Chair, I also think Portlaoise is ideally situated in the centre of the country to be both commutable for people from a wide catchment area of employment and to have opportunities for freight and other matters. We are very positive on it. I cannot comment on any specific projects but we are always mindful of Bord na Móna's sites and of Laois in the context of our discussions with clients.

An Cathaoirleach (Deputy Brian Stanley)

One of Mr. Clancy's officials gave me figures for jobs.

I will move on to apprenticeships and the shortage of labour in particular. As a true believer in earning and training at the same time, I do not believe everybody needs to go to third level. Of course it is great that so many are going to third level. Many students are in third level education until their late 20s. I am not sure that we have got the balance right in terms of workforce development and people development. Obviously there is no workforce without people. For cultural reasons there has been a bit of snobbery about apprenticeships. It became fashionable to say that one's son or daughter was going to college. An apprenticeship has perhaps certain connotations and the perception is that one would wear a pair of overalls and have dirty hands. As Mr. Clancy and I know, other countries, Germany in particular, run extensive apprenticeship programmes in accountancy and a range of areas. Enterprise Ireland does not control the levers in regard to apprenticeships, but in terms of influence, does Mr. Clancy see this as an area that needs to be further developed?

Mr. Leo Clancy

Absolutely. We feel there is huge potential for more apprenticeships across the country. You mentioned, Chair, that there are traditional apprenticeships which are great career paths. A lot of companies are delighted to get more apprentices. We see that on an ongoing basis.

As I mentioned earlier, we have a partnership with the National Apprenticeship Office, which is going to get closer in the coming months. We are going to have a very close working relationship with it on its new One More Job initiative and trying to encourage engagement. If lots of companies took one additional apprentice, it would have a significant impact. There are many companies that could take many more.

The other point mentioned was about new types and formats of apprenticeships. I have been involved personally with the ICT apprenticeships for some five to six years and I have seen how that has evolved. The traditional route to ICT is through a degree or diploma, but that need not necessarily be the case. I am a big believer that we can do a lot more in this space. I thoroughly agree with you, Chair. I think business does agree as well.

An Cathaoirleach (Deputy Brian Stanley)

Does Mr. Clancy think there has been a change in culture I mentioned in terms of how apprenticeships are viewed? If a son or daughter is doing an apprenticeship, it could be in ICT or something that could lead to a very high-quality job with very high-earning potential. Is the snobbery, for the want of a better term, something that we need to counter?

Mr. Leo Clancy

I believe it is still a barrier.

An Cathaoirleach (Deputy Brian Stanley)

What could be done to alleviate that?

Mr. Leo Clancy

Steps are being taken by SOLAS. The establishment of the National Apprenticeship Office as a separate body is positive, because apprenticeship now has its own focus. I know the director of the office very well. She is taking steps to further increase the number of apprenticeships. A lot of work has been done to publicise the exact benefits you mention, Chair, that these are good long-term careers. There are different paths: not worse paths and often better paths than degree education, that lead to better living over time. A lot of work has been done on that and we just have to keep saying it. Somebody said to me last week that we have to tell a story about seven times, even to people close to us, to have it heard.

An Cathaoirleach (Deputy Brian Stanley)

That is correct.

Mr. Leo Clancy

That is the journey we are on. We are working very hard to get our companies that are exemplars for apprenticeships talking about having their apprentices out front. I can think of some of our clients who have done a brilliant job on this. Martin McVicar in Combilift, for instance, has been very vocal. He has been a big supporter and ally of the National Apprenticeship Office in getting the message out, but there are many others around the country. We have to keep telling that story. We have to tell it seven times. There is the will to grow it at a policy level, so we are getting behind that wherever we can.

An Cathaoirleach (Deputy Brian Stanley)

It would solve a lot of problems with the labour shortages and also a lot of headaches for parents with children in third level trying to find accommodation at a time of chronic shortages. Third level institutions are fairly maxed out. The competition to get places is very high, but it looks to me that the internal capacity in educational institutions is also at a maximum.

What level of oversight is provided for venture capital schemes?

Mr. Leo Clancy

I will ask my colleague, Mr. Sherry, to take this question.

Mr. Kevin Sherry

First of all, as I mentioned earlier, we invest in seeding venture capital funds. We are a limited partner in those funds. We do not participate in the direct investment of those funds but we do sit on their advisory committees, so we have an oversight role in terms of ensuring that corporate governance is appropriate and also in terms of the schemes and the funds.

An Cathaoirleach (Deputy Brian Stanley)

Is there a nominee on the board?

Mr. Kevin Sherry

Not on a board but-----

An Cathaoirleach (Deputy Brian Stanley)

On the advisory committee.

Mr. Kevin Sherry

That is correct. We ensure they operate to the highest corporate standards and also in line with the mandate of the fund.

In other words, it ensures that they invest in areas where the fund is specifically targeted, both in terms of the sectors and the stage of development.

An Cathaoirleach (Deputy Brian Stanley)

I imagine oversight can be challenging

Mr. Kevin Sherry

No. Before we invest in these funds, we undertake an assessment. We put out a call for proposals. It is a competitive process in terms of the allocation of the funds. We have more call for the funds than we have funds. Part of the process and assessment of their capabilities is their corporate governance.

An Cathaoirleach (Deputy Brian Stanley)

What number of companies fit into that category?

Mr. Kevin Sherry

Over the past ten years, those funds have invested in about 300 companies.

An Cathaoirleach (Deputy Brian Stanley)

What percentage of them have operations outside Ireland?

Mr. Kevin Sherry

I am just talking about companies based in Ireland. Where we invest in a seed and venture capital fund, we require that the fund invest at least twice the amount we have put into it. It may also invest in companies outside of Ireland but the requirement in our agreement is it must invest at least twice as much money in Irish companies as Enterprise Ireland puts into the fund.

An Cathaoirleach (Deputy Brian Stanley)

How does Enterprise Ireland have oversight over that if a significant part of the investment goes out of the State?

Mr. Kevin Sherry

We get regular reports from them and have close involvement with them. Under our reporting requirements, those funds report to us on a quarterly basis on where the funds are being invested, the amount of funds and the companies into which they are invested and the returns from those. That is part of our oversight requirements.

An Cathaoirleach (Deputy Brian Stanley)

One figure I saw - I do not know if it is correct - is that over the past ten years in the region of €480 million has been invested in venture capital. Is that correct?

Mr. Kevin Sherry

Over the past ten years, we have made commitments of €479 million to 32 funds. Not all of those commitments have been drawn down as of yet. Some €361 million of the funds has been drawn down. There has been €304 million paid back to Enterprise Ireland and the residual value Enterprise Ireland has in those funds is €306 million. That is the 2022 estimate figure. It is not the final figure.

An Cathaoirleach (Deputy Brian Stanley)

What is the largest single investment?

Mr. Kevin Sherry

I do not have that information to hand. Typically, in early stage seed funds, they would invest anything from €100,000 up to €2 million. We have restrictions on the amount of funds that can be put into any one company. That is typically between 10% and 15%, depending on the fund.

An Cathaoirleach (Deputy Brian Stanley)

How is the decision made on selling the equity in the investment? At what point does Enterprise Ireland do that? What considerations are involved?

Mr. Kevin Sherry

We are a limited partner in those funds. The venture fund makes the decision on when to sell its equity in a company. Enterprise Ireland does not have a role in that but gets a return when they sell. Usually, the decision is made when a company is being acquired, or else there is a further round of funding by a larger investor coming in as part of which the new investor buys out some existing shareholders, including the funds.

An Cathaoirleach (Deputy Brian Stanley)

Enterprise Ireland retains the investment until the company decides otherwise. At that point, is the return on the State investment fruitful?

Mr. Kevin Sherry

When a company is sold and all shareholders receive a distribution, including the venture fund-----

An Cathaoirleach (Deputy Brian Stanley)

I understand the divvying out. The question I am asking is if it is a beneficial or fruitful return.

Mr. Kevin Sherry

First and foremost, the reason we invest in these seed and venture funds is to ensure the availability of capital for early stage companies and-----

An Cathaoirleach (Deputy Brian Stanley)

I get that. The specific question I am asking concerns the point at which it is sold. Is the return generally fairly good?

Mr. Kevin Sherry

Yes. I have given the figures, by and large. Over that ten-year period, of the €361 million drawn from Enterprise Ireland, €304 million has already been repaid and the remaining value yet to be realised for Enterprise Ireland is in the order of €306 million. “Yes” is the answer.

An Cathaoirleach (Deputy Brian Stanley)

What is the value of investments written off in the past three or five years? Does Enterprise Ireland have a figure for that?

Mr. Leo Clancy

We have those data. In the five years from 2018 to 2022, write-offs totalled €47 million. The amount of income in relation to that was €242 million.

An Cathaoirleach (Deputy Brian Stanley)

How many companies are we talking about?

Mr. Leo Clancy

We are talking about 132 companies that have had trade sale activity, not about write-offs in respect of 132 companies. I ask Mr. Sherry to clarify how many companies the write-offs were in respect of. I believe it was 257. Is that correct?

Mr. Kevin Sherry

The write-offs were in respect of 257 companies, totalling €47 million. Income on trade sales was €242 million from sales of 132 companies. That is in terms of Enterprise Ireland’s direct portfolio. Return less the cost, which is the realised value or, effectively, profit on those sales, was €129.8 million.

An Cathaoirleach (Deputy Brian Stanley)

Does that total figure include companies that were merged?

Mr. Kevin Sherry

The total trade sale figures include any trade sale, including where a company merged and sold.

An Cathaoirleach (Deputy Brian Stanley)

There have been claims that companies have been bought for a nominal fee, such as €10 or €1. Where they were bought by another Enterprise Ireland-funded company, they are not counted as investment losses. Is that the case? Explain how that works. Where there is a write-off and the company is bought by another Enterprise Ireland-funded company, what happens?

Mr. Kevin Sherry

If we have invested a certain amount of money and realise less than that amount, that will appear as a loss.

An Cathaoirleach (Deputy Brian Stanley)

It does not just disappear. One company, as was widely reported in the media in 2008, had unpaid debts to several suppliers. It is reported they are still not paid. Revenue won a significant claim of €250,000 against the company for payroll discrepancies. There were Workplace Relations Commission, WRC, cases. In 2019, it went into examinership. Enterprise Ireland, I understand, had two investments in it. The gross figure was €800,000. There are High Court judgments, etc. I do not want to say too much more on it. In doing due diligence on a company like that, did red flags appear?

Mr. Kevin Sherry

I will explain how we operate. Prior to making an investment, we undertake commercial and financial due diligence and, where it is a technology company, technical due diligence. That includes a market assessment.

That due diligence, by the way, would take place irrespective of whether we were making an equity investment or providing another type of funding support, for example, a capital grant or employment grant support to a company. We have requirements under our shareholders agreement and our branch agreements for specific information from a company. Those would include financial information and regular accounts from the company. As part of our due diligence, we also look at the adequacy of the board of management of a company. That is part of our assessment prior to making an investment. It is the responsibility of-----

An Cathaoirleach (Deputy Brian Stanley)

In a case where a situation like that arises, would there be some red flags waving or orange lights flashing at the point where Enterprise Ireland is doing its due diligence?

Mr. Kevin Sherry

I cannot comment-----

An Cathaoirleach (Deputy Brian Stanley)

In other words, does Enterprise Ireland have to take risks?

Mr. Kevin Sherry

-----on any particular case.

An Cathaoirleach (Deputy Brian Stanley)

I do not want Mr. Sherry to do so.

Mr. Kevin Sherry

If red flags appear prior to us making an investment, it would pause us.

An Cathaoirleach (Deputy Brian Stanley)

That is what I am trying to establish. If there are orange flags, does Enterprise Ireland sometimes have to take the risk?

Mr. Kevin Sherry

What we would typically do in that situation would be to seek to address the issue and ensure it is addressed prior to our making a commitment. We are in the risk business so there are certain commercial risks that we will accept. We would seek to reduce or minimise those commercial risks with the company or put in appropriate conditions relating to our investment which seek to minimise that risk. We would then bring that forward to our investment committee or board, which includes private sector members, and we would make a decision as to whether we are satisfied that on the balance of risk and opportunity, and on the basis of the company's plan, we should proceed.

An Cathaoirleach (Deputy Brian Stanley)

The company's track record and annual financial statements would be examined diligently.

Mr. Kevin Sherry

That is absolutely the case. It is a key part of our due diligence.

Mr. Leo Clancy

We have a commercial valuation team that is expert in examining accounts. There are external people to whom we have recourse. Our investment committee includes external industry members. We have a comprehensive assessment programme that we apply to companies. As Mr. Sherry said, risk can never be eliminated but we must mitigate it, where possible.

An Cathaoirleach (Deputy Brian Stanley)

Is the agency improving in that regard? Problems will arise when Enterprise Ireland is dealing with so many companies. Many things are beyond arm's reach. Enterprise Ireland only has a certain amount of control once it makes an investment. Do our guests feel Enterprise Ireland has improved over the past five or ten years and does not find itself in a situation where it funds companies and later finds that a number of issues arise, some of which are reported in the media? Significant issues might arise. Is Enterprise Ireland finding itself facing greater difficulties and more challenging situations?

Mr. Leo Clancy

Like any organisation, we are working on improving all the time. What you see with our process-----

An Cathaoirleach (Deputy Brian Stanley)

Is that happening?

Mr. Leo Clancy

I believe it is. That can be seen in the results and returns we are getting on our portfolio and the reduced losses last year. We are managing risk adequately but as the Chairman knows, we will never eliminate it.

An Cathaoirleach (Deputy Brian Stanley)

I understand that.

Deputy Colm Burke

My understanding is that in 2022, Enterprise Ireland was involved in and supported 144 climate projects. What types of projects was Enterprise Ireland directly involved in?

Mr. Leo Clancy

There is a range. It starts with our basic one, which is the climate action voucher. Almost exactly two years ago, we made a climate action voucher available to companies. It allowed for €1,800 for an initial assessment of a company's climate action performance. We also have a GreenStart programme. If a company has done the initial analysis and knows it wants to improve, we have a programme that helps it to go on that journey, reduce energy consumption, improve its insulation or energy posture, reduce its consumption for machines and that kind of thing. There is a progression of that called GreenPlus. We can also provide in certain terms environmental aid to companies to help them substantially decarbonise their facilities. Just last summer, we launched a set of energy supports under the European national recovery and resilience fund to intervene directly and help companies with capital investment in things such as energy monitoring infrastructure, carbon monitoring infrastructure and those kind of things. A substantial range of things is available.

Deputy Colm Burke

It is only 144 projects. That is a small number in an overall context. Should we be doing more in that area? Mr. Clancy spoke about European funding. What level of European funding is available to support climate projects?

Mr. Leo Clancy

I will ask my colleague, Ms Brennan, to respond to the question of the exact amount of European funding making its way to us under the national recovery and resilience facility. We should be doing a lot more projects. We have targeted 450 over three years. At 144 in the first year, we are on track for that target although we would like to have done more. Businesses have been through a difficult couple of years. They have had to deal with the pandemic, Brexit and inflation. It all distracts. Our worry is that it distracts businesses from the business of the future, which is being sustainable in their markets. If they are not showing up as sustainable in three years' time, it will be difficult for many businesses to continue to trade. Similar to the Chairman's point about apprenticeships, increasing awareness in a busy environment is the challenge. I will look to Ms Brennan to answer the Deputy's question on the quantum of funding available to us.

Ms Gillian Brennan

For environmental aid, the funding available for approvals in 2022 was €10 million. In 2023, the relevant figure is €16 million.

Deputy Colm Burke

Was all of the €10 million available in 2022 drawn upon?

Ms Gillian Brennan

No, that was the amount that was available for approvals for projects and the amount of approvals was less than that. The drawdown is then over the period of the projects.

Deputy Colm Burke

By 31 December 2023, will we have a greater uptake of the funding that is there? If the money is not drawn down in a particular year, do we then lose that funding?

Ms Gillian Brennan

We work closely with our parent Department to work through our multi-year funding schemes. What does the sanction for approval look like versus the funding profile? We would expect that as part of our Estimates process, we would allow for any of the commitments that are remaining at year-end.

Deputy Colm Burke

Mr. Clancy mentioned a target of 450 companies. Over that time period, it is still a small number of companies in real terms. Should we be doing more? If necessary, should more Government funding be provided to deal with that particular area? It is a small number of companies in an overall context.

Mr. Leo Clancy

I would like to be doing a lot more and the Government would like us to be doing a lot more. Every conversation we have with our colleagues in the Department of Enterprise, Trade and Employment is around how we can do more. If we do see that we might be underfunded on this line, we certainly will be talking to colleagues. There are no closed doors in that regard.

An Cathaoirleach (Deputy Brian Stanley)

That concludes the questioning from committee members. I thank the witnesses, the Department staff and the representatives of Enterprise Ireland, for their attendance, for the work they have done in preparing for today's meeting and for the information they have supplied. I also thank the Comptroller and Auditor General, Mr. Seamus McCarthy, and his staff, including Mr. Peter Kinsley, for their assistance. Is it agreed that the clerk will seek any follow-up information or actions arising from this meeting? Agreed. Our guests might supply a county-by-county breakdown in tabular form to the committee clerk.

Is it also agreed that we note and publish the opening statements and briefings for today's meeting? Agreed.

The witnesses withdrew.

Sitting suspended at 12.09 p.m. and resumed at 1.33 p.m.