Vote 32 - Business, Enterprise and Innovation (Revised)
That a sum not exceeding €1,401,200,000 be granted to defray the charge which will come in course of payment during the year ending on the 31st day of December, 2020, for the salaries and expenses of the Office of the Minister for Business, Enterprise and Innovation, including certain services administered by that Office, for the payment of certain subsidies and grants and for the payment of certain grants under cash-limited schemes and that a sum not exceeding €42,150,000 be granted by way of the application for capital supply services of unspent appropriations, the surrender of which may be deferred under Section 91 of the Finance Act 2004.
It is a while since I have done this. Thanks very much, a Cheann Comhairle. You might bear with me.
Our country has been living through four months without precedent in the history of the State. Lives were lost, businesses were closed and it took a terrible toll on families, communities and the country. Yesterday, we began phase 3 of the reopening plan. Things are still very difficult for many people but confidence is slowly coming back to the economy and people are hopeful again. The new Government's job over the coming weeks and months is to give meaning to that hope by backing people and businesses and doing what we can to help.
During the darkest days of this pandemic we developed a vision for how the country would emerge from the crisis and how we would get workplaces and businesses open and the country back to work. As Tánaiste and Minister for Business, Enterprise and Innovation, it is my responsibility to realise that vision and to help the country to recover, repair the damage that has been done and restore confidence and prosperity. It can be done. To achieve this, the July jobs stimulus will have to be radical and far-reaching. It needs to be. It has to be of a scale to meet the enormous challenge we face. It will have to be done soon because we have no time to waste.
This is a critical moment and we must make the right decisions to set us on the right course for the next five years and beyond. Today, I seek the approval of the Dáil of the Department's Revised Estimate for 2020 in order that we can help enterprises to survive and emerge from this emergency. This will also enable us to operate the programmes that will help consumers, workers, businesses and society. The stakes are high because we need the authority from this House and the funds to continue the work being done beyond the next couple of weeks. The projected gross expenditure of the Department in the original Estimate was €970.9 million. This was broken down between €338.9 million in current expenditure and €632 million in capital expenditure. This represented an increase of approximately €21 million over the 2019 Revised Estimate allocation. The current expenditure provision of €338.9 million secured for the Department in the Revised Estimate last December represented an increase of €8.7 million on the 2019 current expenditure ceiling of €330.2 million. The additional funding was intended to provide for pay increases to staff of the Department and its agencies, arising from the public service stability agreement; additional pension requirements; Brexit-specific recruitment in the Department; regulatory bodies and agencies; targeted information campaigns; and the expansion of our global footprint as we continue to promote Ireland as a leading destination for foreign direct investment, FDI, trade and research. The Revised Estimate being presented to the House today does not involve any current expenditure or funding beyond what was provided for in December.
In terms of capital expenditure, the Department secured €332 million in the Revised Estimate last December. This represents an increase of €12 million or 2% on the 2019 allocation of €620 million. The additional capital funding secured for 2020 was intended to develop ambitious programmes, including the second phase of the disruptive technology innovation fund under Project Ireland 2040, the renewal of the Science Foundation Ireland, SFI, research centres programme and to respond to the challenges and opportunities presented by Brexit.
The Revised Estimate being presented to the House seeks additional capital funding to enable the Department to continue the various Government-approved Covid enterprise initiatives and supports, which have been developed in recent weeks and months. An additional €483 million in capital funding is being sought. The total capital ceiling now being sought is €1.115 billion, which represents an increase of 76% on the allocation from last year and 80% on 2018.
As part of this initial response, the Department has reprioritised and repurposed existing programmes to respond to Covid-19. These include the repurposing of the Enterprise Ireland online retail, lean continuity voucher and financial planning grant schemes; local enterprise offices' business continuity and trading online voucher schemes; InterTradeIreland's e-merge and emergency solution schemes; the credit guarantee scheme, the working loan capital scheme and the microfinance loan scheme.
The Department has also been to the forefront of developing actions to assist businesses in this challenging crisis. These were approved by the previous Government which gave rise to the need for €483 million in additional capital funding, to be sought in the Revised Estimate. The additional capital moneys break down as follows: a total of €180 million is allocated for the sustaining enterprise fund.
There will be €11.79 million for the further recapitalisation of the microenterprise loan fund; €41.21 million to fund a €450 million increase in the Strategic Banking Corporation of Ireland, SBCI, Covid lending through the €250 million expansion of the Covid working capital scheme; the €200 million expansion in the future growth loan scheme; and €250 million for the restart grant.
Specifically, the €180 million being sought for sustaining enterprise fund will enable Enterprise Ireland to increase overall funding under its financial grant planning scheme by €2.5 million. More than 540 businesses have received grant aid approval so far under the scheme. The sustaining enterprise fund will also enable Enterprise Ireland to increase the funding available under its retail online scheme by €6 million and provide an additional €12 million to its hubs and incubation centres. The fund will also enable Enterprise Ireland to fund its new sustaining enterprise scheme. The €124 million scheme is directed at SMEs in the manufacturing and international traded services sector and is available to enterprises with more than ten employees that applied for funding from a financial institution. This includes SMEs that have applied to the SBCI for the Covid-19 working capital loan scheme. Under this, eligible companies can apply for a minimum of €100,000 and a maximum of €800,000 per undertaking in several forms, including repayable advances, equity and loans. Funding must be approved by Enterprise Ireland by 31 December. While the volume of applications under the scheme has been relatively modest, we expect applications will increase significantly as more businesses resume trading.
It also means we can increase the funding available under the local enterprise office business continuity and trading online voucher scheme by €27 million and €6 million, respectively. In excess of 10,600 continuity vouchers and more than 3,200 trading online vouchers have been approved to date. The sustaining enterprise fund is also providing €2.5 million for InterTradeIreland e-merge and emergency services business solutions to help businesses deal with challenges in areas such as online sales, emergency cash flow and loan applications. Aside from the sustaining enterprise fund, the additional capital funding being sought in today's Revised Estimate will provide €250 million for the restart grant. This grant is targeted at micro and small businesses that have suffered a dramatic loss of turnover due to Covid-19 restrictions and need help reopening. The fund is a direct grant scheme for impacted businesses. Grants of between €2,000 and €10,000 are available to businesses that commit to reopening and re-employing their staff. The grant scheme, operated through local authorities, opened at the end of May. We believe that 100,000 small and microbusinesses will apply. Businesses can apply online and payments will be made directly to businesses by electronic funds transfer. It will be a straightforward and efficient application with an assessment to make things as easy as possible for businesses to reopen, restock and re-employ staff. More than 15,000 businesses applied for the new grant scheme in the first week.
The additional capital will provide the necessary funding for significant increases to finance measures, including an increase of €450 million in the lending available through the SBCI. This will be achieved through an expansion of the €250 million in the Covid working capital scheme and an expansion of €200 million in the future growth loan scheme. The working capital scheme was originally launched as part of our budget 2018 response to Brexit and was redesigned in light of the challenges posed by the pandemic. The revised Covid scheme, a joint scheme with the Department of Agriculture and Marine, is administered by SBCI and was an immediate first step in meeting the liquidity needs of SMEs. The additional funding of €250 million will help SMEs and small mid-caps negatively impacted by Covid-19, to access appropriate and competitively priced finance for their working capital needs. The scheme provides loans from €25,000 up to €1.5 million, with the first €500,000 unsecured, and a maximum interest rate of 4%. The costs of the scheme are split on a 60:40 basis between my Department and the Department of Agriculture and Marine.
Up to €27.6 million in funding is required to meet the cost of the Department’s contribution to the €200 million increase in lending under the future growth loan scheme. This scheme was originally launched in April 2019 to respond to an identified market failure in the availability of long-term lending for investment purposes to SMEs. However, as with the working capital scheme, the future growth loan scheme has been repurposed to assist enterprises in responding to Covid-19. It aims to support appropriately financed strategic investments by SMEs, including farmers and fishermen, as well as small mid-caps to recover from the impacts of Covid-19, adapt for the post-Brexit environment and transform their businesses to achieve growth, sustainability and resilience.
It seeks to provide longer-term financing by SMEs, including farmers and fishers, and small mid-caps in the event of alternative State help not being available. This will enable them to manage payments of current and accrued liabilities related to trading that have arisen as a consequence of Covid-19.
Loans under the expanded scheme will range from €25,000 to €3 million per eligible business, with loans of up to €500,000 available unsecured. Loan periods of seven to ten years will be made available for investment loans, and of five to ten years for financing debt management. Competitive interest rates will be applied.
The future growth loan scheme is also administered by the SBCI, backed by the European Investment Bank and the European Investment Fund. The cost of the scheme is being met by my Department and the Department of Agriculture, Food and Marine on a 60:40 basis. Loans to the value of €140 million have already been approved under the scheme.
The microenterprise loan scheme was originally established in 2012 to provide loans to microenterprises that cannot obtain funding through traditional sources. With the advent of the current crisis, a discrete Covid-19 loan was introduced to help them to access funding. Covid-19 loans from Microfinance Ireland, MFI, are available for eligible microenterprises that are facing a reduction in income or profit of 15% or more. Loans of up to €50,000 are available with terms that include a six-month interest and repayment moratorium, with the rest of the loan repaid over the remaining 30 months of the 34-month programme. The demand for MFI help continues to be very strong, with more than 580 loans with a value of nearly €15 million approved so far, and many more expected.
It is obvious that more needs to be done, so the Department is developing a further set of interventions ready for the July stimulus programme and then we will do further work in advance of the new economic plan for October. Some actions such as the discrete Covid-19 guarantee credit scheme, further expansions to the microfinance loan fund and the future growth loan scheme require primary legislation. This is currently being drafted.
Apart from the additional Covid-19 funding, the Revised Estimate of €1.4539 billion presented to the House today also includes the funding required to operate the normal programmes in jobs and enterprise development, innovation and regulation. As set out in the Revised Estimate, a total of €951.7 million is being provided to fund various activities under the Department's jobs and enterprise development programme. This is more than double the original provision intended for this year. The vast majority of this additional allocation is as a consequence of Covid-19. Funding of €951 million will ensure normal enterprise development and job creation activities can continue. Additional funding is also being provided to enable our enterprise agencies to respond to the UK's departure from the EU. With the innovation programme, a total of €414.2 million is being requested in the Revised Estimate. This funding will help various innovation and research activities and our membership of international research organisations, including the European Space Agency and the European Southern Observatory.
It is vital to our long-term recovery that we fund the second phase of the disruptive technology innovation fund and the renewal of the SFI research centres programme. The €87.9 million in funding that is sought for regulation will ensure we can continue to promote a business environment that facilitates investment and development, competition in the marketplace, and high standards of consumer protection and corporate governance. Our regulatory offices and agencies have been at the forefront of our Covid-19 business response, helping consumers and businesses as the country navigates through the return-to-work plan.
Today we are also seeking the approval of the Dáil to carry over €42.15 million in unspent capital from 2019 for use this year. The underspend arose as a result of a significant increase in own-resource income generated by the agencies. Of this money, €23.5 million will be allocated to Enterprise Ireland to help the Border region to prepare for Brexit; €6 million will be provided to the local enterprise development offices; €3 million will be given to MFI for recapitalisation to meet increased demands arising from Brexit; €6.425 million will be allocated to SFI; €425,000 will be provided to meet commitments under the programme for research in third level institutions; and the final €2.8 million will be for the disruptive technology innovation fund this year.
As we all know, Brexit is still a major challenge, and the Revised Estimate presented to the House today provides further Exchequer funding to continue the critical work in preparing our businesses for it.
Budget 2020 recognised the potentially disastrous effect of a no-deal Brexit. While we hope the ongoing discussions will be successful, the possibility of there being no agreement cannot be ruled out. Budget 2020 made provision for a contingency fund to be made available in the event of a no-deal Brexit to help those enterprises and sectors most affected. This contingency may be required and will have to be given further consideration in the months ahead.
I present these Estimates to the House to ensure we can continue to assist businesses impacted by Covid-19 and to operate our normal enterprise, innovation and regulation programmes. Failure to approve the Estimates would mean that the Department would no longer have a legal basis to provide this help or operate its programmes, which would have devastating consequences for businesses and, indeed, everyone in those businesses who is trying to return to work.
I welcome the opportunity to discuss the Revised Estimates with Deputies.