Seán Crowe
Question:6. Deputy Seán Crowe asked the Minister for Jobs, Enterprise and Innovation the steps taken to jointly market produce and products on an all-Ireland basis. [24456/13]
Other Questions
Cross-Border Co-operation
Seán Crowe
Question:14. Deputy Seán Crowe asked the Minister for Jobs, Enterprise and Innovation if he will identify additional measures that would promote all-Ireland trade and marketing of Irish produce and products. [24457/13]
Michael Colreavy
Question:16. Deputy Michael Colreavy asked the Minister for Jobs, Enterprise and Innovation the steps taken to reduce the costs to business associated with Border and all-Ireland trade. [24458/13]
I propose to take Questions Nos. 6, 14 and 16 together.
While there is obviously limited scope for the State to be involved in the promotion of products generally, whether on an all-Ireland basis or not, and there are significant EU constraints on giving favourable treatment towards Irish produce, nevertheless the Government is very conscious of the additional difficulties facing companies in the Border region and also of the desirability of encouraging firms to expand their focus to pursue opportunities on an all-island basis. It is vital that we achieve improved competitiveness for such firms, which have faced additional challenges in the past.
The key mechanism to drive this agenda is the work of the cross-Border body InterTradeIreland, one of the six North-South implementation bodies established under the Good Friday Agreement in 1998. InterTradeIreland’s remit includes work on trade, business development and related matters. As many issues affect a company’s decision to engage in cross-Border trading, the work of InterTradeIreland is designed to help eliminate barriers, encouraging firms to test-bed trading with the other jurisdiction on the island which, ultimately, may lead to these firms engaging in exporting to overseas markets.
InterTradeIreland’s range of programmes to assist this process includes practical supports to businesses such as a first stop shop which provides companies with information on what they need to know about doing cross-Border business. This includes the provision of a practical guide and also providing trade accelerator vouchers which offer companies financial support worth £1,000 or €1,200 towards professional advice in areas such as taxation, employment law, currency, sales, marketing or regulation. The voucher allows a company to redeem the cost of practical advice. In addition, InterTradeIreland provides extensive business, market and industry sector information.
Other relevant programmes operated by InterTradeIreland include Acumen, which stimulates cross-Border trade by assisting SMEs with tailored consultancy and salary support mechanisms for market builders across the island, and Innova, which is aimed at stimulating, promoting and supporting research and development co-operation between firms North and South, with the support of public research organisations where required. Participation in any of InterTradeIreland’s initiatives can help improve a company’s overall competitiveness. The effectiveness of InterTradeIreland’s programmes is borne out by the fact that over the past two years these programmes have helped create 1,012 jobs and have generated a business value of €224 million in terms of additional sales, efficiency gains and investments made.
In addition to the work of InterTradeIreland, Enterprise Ireland works closely with its counterpart organisation, Invest Northern Ireland, on a range of initiatives to benefit enterprise development in the Border region. These include activities such as Bridging the Border seminars and partnering events, which are designed to promote joint opportunities between firms North and South in areas such as licensing and commercial agreements, subcontracting, technical co-operation and business partnerships. Clients of Invest Northern Ireland can participate on Enterprise Ireland programmes such as Leadership4Growth and the International Selling programme. Clients of both agencies can access market services, trade fairs, seminars and market development programmes provided by each agency. My Department will continue to work with InterTradeIreland and the other enterprise agencies on developing appropriate supports that encourage cross-Border trade.
If I had asked this question 12 years ago, I probably would have received the same reply. That is the level of development that has taken place in the last 12 years. InterTradeIreland is an output of the Good Friday Agreement and the negotiations in which my party was involved. I worked for it indirectly 14 years ago. Everything in that reply regarding InterTradeIreland has had no input from this Government. There has been no increase in the number of people working for InterTradeIreland. There is a cap on its staffing level so its ability to grow to the needs of the Irish economy is stifled.
There has been a fall in North-South trade in the last number of years. The Border region is suffering more than most in this economic downturn. What advance has the Government made with regard to an all-Ireland fuel price? For people who are competing with each other on both sides of the Border where is the level playing field in respect of an all-Ireland VAT rate? Why is it that the IDA, Enterprise Ireland and Invest Northern Ireland have offices all around the world and sometimes in the same cities? When will the Government use the resources on this island in an efficient manner to promote enterprise on this island? With regard to farming, does a lamb from Louth taste any different to a lamb from Armagh? The Irish product is seen as an Irish product internationally and until we start to use the efficiencies of the all-Ireland economy we will not be able to create the jobs that could be created in such an economy.
InterTradeIreland was set up develop trade within Ireland and to address the disadvantaged areas of cross-Border trade. Obviously, there is a very good working relationship with the Northern Ireland Minister, Ms Arlene Foster, MLA, and with all relevant Ministers. I have been to InterTradeIreland. The body has been insulated from cutbacks, unlike other agencies in the State which have had cutbacks in staffing. The North-South body's objective is to encourage North-South business activity, which is what it is doing. InterTradeIreland currently supports 3,500 companies in the area of technology transfer. It also supports marketing and developing export potential. A strong part of its expertise is the collaboration with Enterprise Ireland. There is great potential in the voucher scheme. Enterprise Ireland provides innovation vouchers and companies in both the North and South can avail of them.
There is also the potential of INTERREG, which is funded by my Department as well. It assists enterprise development and community regeneration. There is a group from Sligo and the North visiting the House today with regard to cross-Border co-operation and community economic regeneration. There is a fantastic opportunity for developing community enterprise.
I compliment InterTradeIreland for the outstanding job it does. The Minister, Deputy Bruton, and I have been there and we have met the Minister, Ms Arlene Foster, MLA. There is a huge level of political co-operation and a great deal of activity at trade fairs. I attended the Seedcorn competition in Belfast a number of months ago. It is an outstanding success, with companies from the North and South participating jointly and doing business. That also happens at trade fairs.
I am not sure where the Deputy is getting his information. There is a great deal of activity taking place with InterTradeIreland.
Nobody is arguing about the benefits InterTradeIreland brings to the table. However, InterTradeIreland would continue to function in the same way today if the Minister of State or Fine Gael did not exist. What has the Minister of State brought to the table with regard to the development of all-Ireland trade? Throughout his reply there was no detail about new developments regarding all-Ireland integration and the development of the economy on an all-Ireland basis. There are great efficiencies we can use to promote our businesses internationally. The last Government conducted some trade missions internationally in which it allowed businesses from the North to get involved, and trade missions from the North included businesses from the South on international trade missions. There have been tentative steps but there appears to be a ceiling on that development and that ceiling has not been broken by this Government. If we wish to energise the region on both sides of the Border to maximise its potential for industry and job creation, we must start thinking not about what is already there and allowing it to continue as it is, but about breaking that ceiling and creating an all-Ireland economy.
The first thing to do is talk to the companies, and I have done that.
I have worked for the companies.
The Deputy did so 15 years ago. I am talking about the companies that have come to the Mansion House.
It was three years ago.
I met the companies and the business people. I know what they are doing; they are doing business. This Government has mobilised the State agencies to work in co-operation. They provide vouchers. The Deputy can shake his head, but that is a fact.
The innovation vouchers were there long before the Minister of State was appointed.
They are available to both the North and the South. The best people are the business people themselves. Look at the opportunity-----
The Minister of State is from a Border constituency.
Yes; I know it well. I also am well aware of the INTERREG funding and it has been very effective in regenerating cross-Border communities. There is also the 2020 EU funding coming to the area. The Government will strongly support that.
The EIF, the representatives of which I met in the past two weeks, is considering developing a fund that would support cross-Border enterprise. There are opportunities. Mr. Hunter McGowan of InterTradeIreland is doing a fantastic job. I met the board of directors and the relevant companies. Most important, I met the business people and the staff who are employed.
The 3,500 companies should be asked what is different now compared with the past. The Government is creating the environment to support jobs and talking to the relevant agencies. Enterprise Ireland does a fantastic job, as does Invest Northern Ireland. INTERREG personnel are working actively on the ground. The bodies are working in partnership with business people and communities. The Minister, Deputy Richard Bruton, has been having cross-Border meetings with Ms Foster, whom I met at a major launch a number of months ago. She is very much focused on the development of the body which is one of the most successful delivering on an all-island mandate to create and retain jobs and explore the potential for export on the part of high-potential start-up companies, which is very important. It is a question of exploring on a cross-Border basis the possibility of exporting to Europe and farther afield.
I suggest the Deputy read the Horizon 2020 document. The Government will be pursuing that agenda which will clearly benefit companies in the North and the South.
Credit Availability
Billy Kelleher
Question:7. Deputy Billy Kelleher asked the Minister for Jobs, Enterprise and Innovation his views on the operation of the credit supply clearing group; and if he will make a statement on the matter. [24432/13]
The credit supply clearing group was established in May 2009 to identify patterns of events where the flow of credit to viable businesses appeared to be blocked and to seek to identify credit supply solutions relating to these patterns. The group worked to provide a clear picture of emerging lending patterns, while facilitating direct discussion by all the relevant interested parties in addressing problems. It was chaired by my Department and included representatives of the banking and business sectors, with departmental representatives and representatives of the primary support agencies. The group met on eight occasions and the last meeting was held on 19 April 2010.
On foot of the work of the credit supply clearing group, the former Government established the Credit Review Office which took over the role of the credit supply clearing group in terms of identifying emerging lending patterns and credit supply solutions relating to these patterns, while at the same time facilitating direct discussion with the relevant interests in addressing these problems.
Access to finance remains a critical element of the current Government’s economic recovery strategy. Oversight and monitoring by the Government are maintained by a Cabinet sub-committee on mortgage arrears and credit availability, of which I am a member. Policy development is supported by a Department of Finance-led State bodies group and a funding consultation forum which includes all relevant stakeholders and comprises representatives of the banking and business sectors, with departmental representatives and representatives of the primary support agencies. The terms of reference of the committee are centred on understanding, exploring and resolving the difficulties facing SMEs seeking credit.
The collapse of the banks has made it more difficult for SMEs to access credit. In response to this challenge the Government has implemented several policy initiatives: the micro-enterprise loan fund and the credit guarantee scheme; the establishment of the development capital scheme, targeted at mid-sized indigenous firms, with a total available fund of €225 million; the development by the National Pensions Reserve Fund, NPRF, of a range of support funds for the SME sector, totalling €850 million; the provision of €175 million of new Exchequer funding through the seed and venture capital schemes - this is leveraged for such projects up to approximately €700 million in line with experience; the pursuit of collaborative initiatives with the European Investment Bank such as the provision of a loan guarantee for some of the Microfinance Ireland portfolio; the Credit Review Office has been strengthened and is now overturning over half of the decisions appealed to it.
While surveys reveal rising demand for SME credit and a decline in bank refusal rates, the challenge remains substantial. As the issue of access to credit remains a major concern for Irish business, the Government maintains a close watch on developments in the area. The Action Plan for Jobs 2013 sets out a number of actions to continue to address matters in the coming year.
Some of my transferred questions were to seek the Minister's views on whether the Credit Review Office had sufficient resources to fulfil its mandate. What are the Minister's views on the success of the office to date? One of my questions sought clarification on whether the Minister agreed there should be formal targets for the banks in respect of debt resolution for SMEs similar to those pertaining to mortgage arrears. I will cheekily ask the Minister these questions now if he can answer them.
It is important to indicate that the February report from the Central Bank on SME lending showed that, of a total of €8 billion in new lending advanced by the pillar banks, only an estimated €2.5 billion was deemed to be new lending, with the balance constituting loans that had been rolled over. Therefore, only €2.5 billion represented new money to support new projects. The pillar banks' SME loan books contracted by €2 billion in 2012 as the €2.5 billion in new lending was outweighed by €4.5 billion in net repayments. Therefore, we are still in very serious circumstances and there are no signs of a resolution.
While the rate of refusal may be declining, it continues to be the case that there are no submissions. Individuals are being advised by local branch management not to proceed with their loan applications because they will not get anywhere. We all know this. No amount of enterprise weeks or radio programmes concerning bank branches will get the Minister beyond that issue.
Businesses must submit formal applications to get into the credit review process. However, when they are being told by their relationship managers not to submit one, they are in a very difficult position. With regard to legacy debt of SMEs, particularly on property, will the Minister consider proposing to the Minister for Finance that targets be set for resolving the issue?
That is quite a range of questions. The Credit Review Office is working extremely well. The real issue is that we need to see more businesses appealing decisions. There have been approximately 25,000 credit refusal decisions in total, not enough of which have been appealed, either internally in the bank or to the Credit Review Office. A strong message to businesses that are refused credit is that they should pursue appeals. I would be very disturbed if there were any suggestion relationship managers were discouraging this, as the Deputy suggested. We are seeking to ensure banks will outline clearly in writing as a standard part of their responses the right to appeal and the availability of alternative loan mechanisms such as the loan guarantee and micro-finance.
The resources of the Credit Review Office are being strengthened. That was part of the decision at budget time by the Minister for Finance. The Central Bank is developing debt resolution targets for the banks. It is addressing this issue in much the same way as it addressed mortgages. It is recognised that we need to see viable businesses put back on a footing where they can continue to develop.
I fully acknowledge what the Deputy is saying on the low level of new funding for SMEs. This is the issue we are targeting. As the Deputy stated, there is only €2.5 billion in new lending to SMEs. As the Deputy knows, the Government has put roughly €2.5 billion in SME funds into place through various models to supplement this. However, we need to see more activity by the banks in this regard.
On the last comment, the overall stock of debt is declining for SMEs. The issues to be examined are new lending and restructuring. Restructuring is not all bad. That some lending amounts to restructuring is not bad because it is a way of resolving some of the issues that arise. We need, however, to continue to focus on this issue. That is what we will do in the course of the year.
Another issue is the delay in approvals from the time an application is submitted. While it is still a problem that applications are not being submitted, the review of a submitted application may be dragged out for months such that the project for which finance is originally sought may no longer be viable. The business may actually have moved on. Will the Minister put turnaround targets in place in order that the pillar banks will have to revert to applicants with a full decision within, perhaps, four working weeks rather than stringing out businesses? I could provide the Minister with many cases in which businesses have been strung out for nearly 12 months from the time of applying for a facility until the reaching of a decision. In many cases, that decision is negative.
What are the Minister's views on other forms of financing that are available? It is not just a case of banks' lines of credit and Government financing. There is crowd funding on the Internet, whereby people can lend their own money to small local enterprises. In the United Kingdom up to €90 million has been lent in this way, with a default rate of only 1%. In Ireland €175,000 has been raised thus far, for only five businesses. There are 1,250 registered lenders willing to lend their own money to small local businesses. Does the Minister support that kind of initiative? How can we encourage that sector to grow?
Recent commentary from the ESRI and the ISME bank watch survey have been damning of the Minister's record on the provision of credit for small companies. A majority of SMEs are still desperately struggling with this problem and the Minister does not seem to have been able to target them. At the end of the day, the disastrous fiscal austerity programme of this Government is a key factor. Levels of demand are depressed. One only has to visit retailers in the jewellery and grocery sectors, and other retail developments, to see that demand is totally depressed after five and a half years of the macroeconomic madness in which we have been engaged. What is the Minister's Department doing in this area? The overall macroeconomic policy is damning in terms of demand.
One point we have raised over the past couple of years is the cost of credit. It is extremely prohibitive. Yesterday representatives of the national organisation for newsagents came before the Joint Committee on Jobs, Enterprise and Innovation. It indicated that while some Government systems were in place prices were too high. Banks are not passing on cuts in interest rates to home owners or business people. That has a significant dampening effect on people drawing down credit and puts those with credit in existence under enormous pressure. This body should act as an interface between businesses and the banks to ensure we get a lower charge for credit. Indeed, if one compares us with the likes of Germany one would find credit costs half the price it does here.
There are many questions. On Deputy Murphy's point, we support crowd funding. It is one issue which is being examined in the course of this year by the group I established. My Department and the Department of Finance are involved in it. It offers potential.
I accept the point made by Deputy Calleary that there is a delay in getting approvals. It is monitored by RedC, formerly Mazars. I hope to see improvement in that. The banks are being made aware of the dissatisfaction that they are not meeting the turnaround targets.
The ESRI was far from damning in its approach. It recognised that there was a problem with access to finance, as was inevitable following the sort of bank collapse that had occurred in this State. We have also received substantial praise for the range of instruments we have brought in. This week the OECD visited Ireland. We have micro-finance, loan guarantees and the SME fund. These are entirely new instruments for the State and innovative approaches by the Government to meet access to finance. We would like to see them rolled out more quickly, but we can still point to at least 400 jobs that are in place today that would not have been if we did not have micro-finance and credit guarantee schemes.
The other schemes involve development capital and seed funding, and are absolutely crucial if we are to see Irish companies start up, develop and go to scale. They are innovative and have never been tried in the country before. The Deputy needs to allow some time for them to work. I share his impatience, but they are innovative. Far from the rant he had about Government strategy, these are the sort of smart innovations that we need in an economy like ours.
The Deputy, above all, should know that we inherited an economy heading for 120% debt, with the huge hole in its public finances. We are providing a jobs strategy which is credible because it takes into account the fact that we need sustainable public finances. If one does not have sustainable public finances one will not be able to build sustainable enterprises. These two approaches have to go in tandem. The stimulus funds, SME finance and using global sourcing of €500 million are all innovative approaches to resolve our huge crisis.
Employment Rights
Richard Boyd Barrett
Question:8. Deputy Richard Boyd Barrett asked the Minister for Jobs, Enterprise and Innovation when he will reply to two direct representations (details supplied), representing four former employees of Connolly Shoes in Dún Laoghaire, who are now in their fourth year of a dispute; and if he will make a statement on the matter. [24468/13]
I am aware of the issues surrounding this dispute since I became Minister and, indeed, before that time. I understand that initially attempts were made to resolve the matter by arbitration through the offices of the Labour Relations Commission; however, no constructive developments came out of these efforts despite the LRC remaining at the parties' disposal should it be again required.
The workers involved referred some complaints to the rights commissioner service and others directly to the Employment Appeals Tribunal, EAT. Awards were made in their favour by both parties. The rights commissioner awards were appealed to the EAT. I understand that the appeal taken by the company concerning the worker that made the representations, which are the subject of this question, had his appeal heard last February. The company did not attend the appeal, and so it failed for want of prosecution.
Under the current system the enforcement of EAT awards is eventually a matter for the courts and civil enforcement process. The holder of an award or his or her trade union may seek to enforce it himself or herself through the Circuit Court or he or she may seek, in most cases, the assistance of the Minister to have this process carried out on his or her behalf. This involves the use of the enforcement services unit of the National Employment Rights Authority, NERA, to have such awards enforced if appropriate through the civil courts. NERA is currently enforcing some of the awards in question and has engaged legal assistance to further this matter.
It is acknowledged that the system that has developed over the years, as illustrated in this case, has become complex and, in some cases, involves unacceptably long delays. However, I have commenced a root and branch reform with the objective of establishing a world-class workplace relations service. It is through the reform of the existing workplace relations structures that we can remove any advantage currently present in delaying a case through appealing and then not taking part in the hearing.
As Minister, I propose to establish a new two-tier workplace relations structure with the result that two statutory independent bodies will replace the current five bodies. There will be a new single body of first instance, the workplace relations commission, and a separate appeals body, which will effectively be an expanded Labour Court. It is intended that the WRC will deal with all first instance claims within three months from the time the case is lodged.
Additional information not given on the floor of the House
I also believe that for a workplace relations system to have credibility it must be supported by proportionate, effective and efficient compliance and enforcement measures. The current system of enforcement of employment rights awards is cumbersome and expensive and not fit for purpose. For this reason, I am proposing to make provision in the workplace relations Bill for a range of enhanced compliance measures, including the use of compliance notices, fixed charge notices and a new mechanism for forcing awards of the WRC adjudicators and labour court determinations. These measures will provide for more proportionate, efficient and effective enforcement of employment law.
I thank the Minister for his reply. It is more than three years since four workers were unfairly dismissed and left without redundancy or wages owed to them by Connolly Shoes in Dún Laoghaire, a firm which they had worked for, in some cases, over 30 years. They were dumped on the scrap heap by an unscrupulous employer. The LRC and the EAT, as the Minister said, have found on every occasion, based on the issues that have been brought before them, that the workers were right and the employer was wrong.
Yet, three and a half years on, John Mulpeter, who has written to the Minister several times, is still picketing outside the premises. The former director or CEO of Connolly Shoes has set up another shoe business under another name and is still operating, with other employees having replaced those who were unfairly dismissed and forced to picket for the past three years. How can it possibly take so long for workers such as those in Connolly Shoes to get justice? Can we have the Minister's assurance that whatever new regime he is considering setting up will prevent this unacceptable situation happening again, and prevent unscrupulous employers treating workers like this and being able to set up the same business under another guise and carry on with impunity?
I note the power of the parliamentary question. John Mulpeter has written to the Minister on several occasions looking for answers and miraculously received a letter yesterday, for which I am sure he is very grateful. He should not have to resort to asking a parliamentary question in order to have a letter answered.
As I said in the reply, the existing system I inherited is not fit for purpose and have I set about seeking to reform it.
We have already introduced a large number of administrative reforms which are already having an impact. For example, we are seeing a turnaround in respect of access to rights commissioner services. Once the time lapse of notification ends, a hearing will generally be scheduled almost immediately. We are also working on new legislation, which I hope will be published before the end of this session, to overhaul the existing system by way of much improved provisions. For instance, we are changing the provision in regard to appeals to ensure they are fast-tracked. An additional provision in this regard will mean that individuals who do not turn up to a hearing and who subsequently lodge an appeal will be subject to additional charges.
We recognise that there are problems with the enforcement regime. We are seeking to reform the regime via the introduction of a determination order for which a worker can apply. On foot of such an order, the Labour Court can enforce its provisions by way of civil proceedings, with a criminal prosecution or both. In short, we are making substantial changes in the system. Unfortunately, however, legislative change takes time. We have had a great deal of consultation and have discussed the proposals at the Oireachtas committee. I recognise that the system needs to be changed and we are already setting about that task.
I welcome the information the Minister has given and his commitment to dealing with these issues. They are applicable not only to the workers at Connolly Footwear, but also those at La Senza, Vita Cortex, Jane Norman and many others. I hope the Minister can prove in the measures he proposes to take that we have a machinery that is capable of delivering justice for workers who are unfairly treated. Looking at the experience of the past two years, one might conclude that the most effective way for workers to obtain justice in these matters is to occupy their place of employment. That seems to be the only means of fast-tracking a fair resolution in these cases. People should not have to do that, just as they should not have to wait three years for a conclusion.
I am sure the Connolly Footwear workers are awaiting a verdict with bated breath. Given the duration of this particular case, I hope the Minister will keep an eye on proceedings. He must ensure for the future that there is proper enforcement and compliance in such cases. The measures he is proposing must deliver a system that works in an efficient and timely manner and delivers compliance when employers are found to have behaved wrongly towards their workers.
The National Employment Rights Authority has a role in terms of enforcement. As I said, I hope to bring legislation to the House before the summer. Already the changes we have made are showing a significant improvement, such as having a single point of entry, not having multiple hearings of the same source of dispute, having quick resolution as an alternative and scheduling hearings quickly. I acknowledge, however, that the legislative framework must also be improved.
Credit Guarantee Scheme Implementation
Thomas P. Broughan
Question:9. Deputy Thomas P. Broughan asked the Minister for Jobs, Enterprise and Innovation if he will report on the level of take-up of the credit guarantee scheme since its establishment; the way the scheme is actively being promoted by his Department to prospective applicants; and the targets he has set for overall take-up of the scheme in 2013; and if he will make a statement on the matter. [24339/13]
The credit guarantee scheme is an initiative that was called for by entrepreneurs, business people and their representative bodies for several years. Despite commitments to deliver such a scheme, previous Administrations failed to do so. Upon taking office I sought and received Government support to design from scratch a new scheme which was successfully launched on 24 October last year. As at 10 May, 36 live CGS facilities have been put in place, resulting in €3,661,100 being sanctioned through the scheme by participating lenders. It is expected that 190 new jobs will be created and 115 maintained under these facilities. This is lending and job creation that otherwise would not have happened
The scheme does not involve the taxpayer replacing the banks in providing lending directly to business. It is aimed, rather, at filling a gap in the market for bank lending to particular types of businesses with a shortage of collateral, or in innovative sectors that the banks may not be familiar with, by shifting a proportion of the risk to the State and thereby incentivising the banks to lend. In designing the scheme, a balance was struck between exposing the taxpayer to excessive risk on the one hand and, on the other, ensuring a proper incentive for lending to businesses. The scheme was designed in accordance with international best practice.
The Minister of State with responsibility for small business, Deputy John Perry, and I promote the scheme at every available opportunity, locally, regionally and nationally, as appropriate. In addition, a direct link to information on the scheme can be found on my Department's website homepage, http://www.enterprise.gov.ie/. Quarterly progress reports are also published on the website. The latest progress report, detailing the analysis and performance of the CGS for the quarterly period ending 31 March 2013, is now available.
The scheme is designed to facilitate up to €150 million of additional lending to eligible SMEs per annum. It is demand-led and the uptake may be lower than €150 million in any given year, depending on company needs. Take-up of the scheme is being closely monitored by its operator, Capita, and my Department. I committed to review it after 12 months of operation.
When he launched this very welcome initiative, the Minister referred to the creation of 1,300 jobs for each €150 million of additional funding under the scheme. He knows my own interest in this matter from my involvement in projects in Coolock and elsewhere on the northside over many years. Does he agree that the outturn thus far has been somewhat disappointing? The first Capita report was limited in the insight it offered because it only covered a few months of operation of the scheme. The second, however, is more comprehensive and it shows only 24 facilities in place and a total funding allocation of €3.1 million. The Minister said he has promoted the scheme very widely throughout the country. Is it possible that some small and medium-sized enterprises are still not aware of the scheme? The ESRI commentary, despite what the Minister says, certainly points to a problematic situation for firms seeking to obtain credit. Has he considered extending it to any other institutions?
I heard the Minister speaking about multinationals this morning on "Today with Pat Kenny". Is it an objective of the Department to begin planning for a situation where there is a greater reliance on SMEs and where our own indigenous industry is given priority?
Taking the last question first, the Government is absolutely committed to SMEs, responsibility for which belongs to the Minister of State, Deputy John Perry. Under the Horizon 2020 framework, for which the Minister of State, Deputy Sean Sherlock, is responsible, we are upping the target this year to 20%. We recognise that the future for Ireland is in developing an indigenous enterprise culture and a robust innovative capacity. Much of our work under the action plan for jobs initiatives has been about easing the pressures facing small indigenous business through the provision, for example, of access to finance, supports for companies and innovation, the move to trade online and other types of opportunities which allow businesses to thrive in a very challenging environment. It is important to emphasise that this is not an either-or situation. It is not a question of saying we do not want foreign investment. Such investment is essential, but we also want to build strong clusters which comprise both international firms and vibrant indigenous businesses. That is the objective and we are working to ensure it happens.
I would like to develop the credit guarantee scheme further. It is important to bear in mind that it operates at the point of sale, that is, it is administered through the banks. There is an issue of getting that message across so that more people who are refused funding will consider it and more bankers will consider it as an option for their clients. We are working with the banks to deliver that more effectively on the ground. We are also preparing a review of the scheme. Like the micro-finance fund and the development capital scheme, it is a new initiative which will require tweaking as we go along. We are committed to introducing innovative funding mechanisms. The bottom line is that the retreat of banking from risk-taking will not end today or tomorrow. It is happening throughout Europe, not just in programme countries like Ireland. In that context, there is a requirement to develop new instruments.
Written Answers follow Adjournment.