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Dáil Éireann debate -
Thursday, 26 Nov 2020

Vol. 1001 No. 5

Ceisteanna Eile - Other Questions

State Savings Schemes

Eoghan Murphy


65. Deputy Eoghan Murphy asked the Minister for Finance if there has been an increase in the purchase of State bonds or savings certificates administered issued by the National Treasury Management Agency, NTMA, or State prize bonds in the past 12 months; if so, the increase and current amounts invested in these bonds and products; and his views on the matter. [36722/20]

Eoghan Murphy


77. Deputy Eoghan Murphy asked the Minister for Finance if he is considering a new State-backed investment scheme via a bond, certificate or savings account. [36723/20]

I ask the Minister to update the House with regard to information on or an increase in the purchase of State bonds, savings certificates or prize bonds by citizens in recent months. My second and related question asks whether he is considering any new savings schemes. That is not a reference to a potential new special savings incentive account, SSIA, but, rather, to a new saving certificate or something in that vein.

I propose to take Questions Nos. 65 and 77 together.

The introduction of any new State-supported savings measures would normally be considered as part of the annual budgetary and finance Bill processes.

Given that precautionary saving is likely to have increased as a result of the pandemic, the need for the State to encourage further saving or introduce any State-backed investment scheme is not clearly established at this time. Regarding the existing State savings offering, the NTMA, through State savings projects, offers a wide range of tax-free savings products to the public, including prize bonds and fixed-rate savings bonds and certificates. Both short-term and long-term fixed-rate products are offered, with maturities from three to ten years.

The low level of return from normal savings vehicles is a product of the low interest rate environment generally. As such, interest rates on offer via State savings products are competitive and provide good value for their holders. The return rewards savers who hold products to maturity. Early redemption is possible, although at the loss of most, if not all, of the return. There has been an increase in the purchase of State savings products in the past 12 months. This growth in deposits is consistent across the financial services sector in Ireland. State savings balances at the end of October 2019 were €21.1 billion, while the end-October 2020 balances totalled €22.4 billion. In the intervening 12-month period, therefore, customer inflows were approximately €1.3 billion. This increase comprised changes in the deposit account of €400 million, prize bonds of €400 million and other products, including national solidarity bonds, savings certificates and savings bonds of €500 million.

These data confirm that there has been an increase in savings going into State-backed products. That is really welcome. The NTMA and I keep under review the suitability of products, which includes looking at how they are performing. The increase in savings we have seen via the products that are currently available shows their attractiveness. That attractiveness is enhanced in the context of very low interest rates across a whole variety of products.

I thank the Minister for his reply. The information he provided confirms what we are seeing throughout the country and in every lending institution. There is a dramatic increase in savings happening at this time. Earlier in the year, I read that €1 in every €3 earned was being saved, compared with a more usual savings rate of €1 in every €6 or €7. That dramatic increase is also happening in the case of State bonds.

The Minister made the apt point that if one is saving with a traditional lending institution, one is probably losing money because of the fees one is paying, the very low interest rates and inflation. The State offering is far more attractive. The reason I asked for this information is that there is a series of questions we need to ask ourselves as we look to next year and consider what will happen to these savings and all this pent-up demand. The first question is what it will mean for inflation when all this money is released into the economy. What happens if that pent-up demand in savings cannot be released into the local economy because of continuing restrictions? What might be the impact of those private savings being released into the economy at the same time as we see a massive increase in public spending? What will all of this mean for the economy in peaks and troughs and negative impacts such as inflation and everything else that comes with it?

The Deputy has raised an incredibly important point. The reason we have had a higher level of public spending in place is to coincide exactly with the huge reduction in private spending, consumption and investment which has, in turn, been mirrored by the increase in savings to which he referred. When we get into a situation where those savings begin to be released into our economy, we will then have decisions to make about what is the appropriate level of public spending that will be needed. The public spending we have had this year and our plans for public spending for next year are absolutely appropriate in the context of the collapse, and potential collapse, of private sector demand, income and employment. We probably were successful in staving off even worse outcomes in all of this by way of the level of public spending we have implemented. However, the Deputy is correct that the consequences of how those savings are used in our economy will be a huge factor in how we decide the right economic policies for our country for the years to come. I hope that decision is driven by what will be the great development of the availability of a vaccine and a corresponding improvement in public health. That would be a wonderful point to get to.

I thank the Minister for his response. There is time to plan ahead and make sure we find a balance between the increase we hope to see in private spending and the increase in public spending arising out of decisions that have been made. We want people to go out and spend money again but we need to make sure it is happening in the local economy and is supporting local businesses to get back on their feet. We do not want it to be counterproductive by leading to hyperinflation in the domestic economy, which would undo some of the gains that might have been made through public sector investments and the spending of private money.

The Tánaiste launched a very important initiative yesterday, the Look for Local campaign, which encourages consumers to be aware of the opportunities to spend with local business. The Deputy made the important point that in a open economy such as ours, it is possible that when people start spending again, the money may be spent to the benefit of businesses other than those involved in providing employment and creating income in our country. There is a flip side to that argument, which is that the same high level of savings is evident throughout the EU and in many other developed parts of the world at this time. As those savings are spent, we need to be in a place where our exports are competitively priced and accessible to avail of the demand that is likely to develop in the economies to which we export. As an exporter, we have a stake in the continued openness of economies and those economies being structured in a way that values the sale of goods and services into them. However, I take the Deputy's broad point that we need to ensure that our budgetary and credit policies are consistent with what may happen around the potential reduction in savings in the latter part of next year and beyond.

Covid-19 Pandemic Supports

Barry Cowen


66. Deputy Barry Cowen asked the Minister for Finance the number of businesses in counties Offaly and Laois that have qualified for support under the Covid restrictions support scheme; and if he will make a statement on the matter. [39197/20]

My question relates to the scheme to support businesses and self-employed people who trade from a premises impacted by level 3 plus restrictions. The scheme is very welcome and is another example of the expensive but necessary financial interventions that have been made by Government. I would appreciate if the Minister could relate the details of the uptake of the scheme, including applications made and awards afforded, in my constituency of Laois-Offaly.

I thank the Deputy for recognising the value of the CRSS. I will comment first on its national performance, after which I will provide the information requested by the Deputy in respect of his constituency.

The registration system for the CRSS was released by Revenue on 1 November. Up to 26 November 2020, 10,200 businesses had registered for the scheme in respect of 11,100 business premises. Revenue has informed me that a further 3,700 applications are being processed. To put those figures in context, at the very early stage of implementation of the employment wage subsidy scheme, EWSS, there were 22,000 employers registered. The eligibility criteria for the CRSS are a lot tighter than for the EWSS because the former requires a business either to be closed or to have a very low level of trading.

In regard to the Deputy's constituency, as of 23 November, there were approximately 100 businesses registered for the CRSS in County Offaly and a further approximately 100 businesses registered in County Laois.

I thank the Minister for his response on the state of play nationally, as well as in my constituency. I ask him to consider to consider a situation that has arisen in recent weeks. I received a representation from a hotel in my constituency. Unfortunately, many hotels, restaurants and pubs cannot meet the payment demands of suppliers. Yes, they are gladly availing of the schemes the Minister mentioned, such as the temporary wage subsidy scheme, rates breaks and the Covid restrictions support scheme, but they still have many issues in respect of bank and lending repayments because of liens against properties. It appears to restrict banks in approving or granting funds under the Government's guarantee scheme, which it had been hoped would be used to assist in the payment of suppliers. However, as a result of them not being able to access those funds, this is leaving them at a loss as well. It is an anomaly that sees some businesses, and definitely suppliers, exposed. I ask the Minister to consider a similar scheme to the one he alluded to earlier for suppliers to this sector.

I can give the Deputy further information about his constituency in the context of how the counties are drawing down the other supports he mentioned. Looking at Offaly and Laois collectively, there are now 379 employers participating in the employment wage subsidy scheme. There are 4,056 employees of those 379 employers participating in the scheme. I raise that because that is the other way in which we are trying to help, for example, the suppliers to whom Deputy Cowen refers. In terms of expanding the eligibility for the CRSS programme to include people who are indirectly affected by Covid-19 but not forced to close their premises, the CRSS is designed to support businesses that are broadly closed. I hope that the employment wage subsidy scheme is of help to the suppliers of whom the Deputy spoke. Of course, the greatest help we could give to them is to have their customers open and trading, whereby they are in a position to trade with them as normal.

Many of my constituents involved in businesses that have been severely impacted by the restrictions greatly appreciate and acknowledge the commitment the Government has made in its response to the pandemic by virtue of the massive amount of funding being pumped into business to give businesses an opportunity to be in a position to take advantage of the uplift if and when the restrictions are eased, and we hope that will be very soon. I have been in touch with the Department and officials specifically in respect of the issue that has arisen as a result of the banks' failure to acknowledge the commitment one would have expected to materialise by virtue of the guarantee scheme being in place. It is due to restrictions they believe impact their ability to make funds available because of liens that may exist on properties where this trading is taking place. That is creating the anomaly or gap I mentioned whereby businesses are not able to meet the demands of suppliers, which threatens both entities and was never the intention of everybody concerned.

I thank the Deputy for raising this matter. A similar matter was raised with me yesterday in the Dáil. The employment wage subsidy scheme, in particular, is supporting businesses that have every prospect of being viable again in the future. We all hope that opportunity for viability will come sooner rather than later. That is why implementing public health guidance is so important. I recently met all the CEOs of the banks, as I regularly do. It would be helpful if Deputy Cowen would give me the details of the business he referred to, if that business is comfortable with sharing the details with me, and I will follow up on the matter. I have every confidence the schemes we have in place are making a difference to supporting employers in a tough time. For example, the banks have informed me that they will treat mortgage applications on a case-by-case basis, and being on an employment wage subsidy scheme should not disbar somebody from getting a mortgage. It should not in general terms, but it has to be examined case by case. If Deputy Cowen gives me the information, I will follow up on the matter.

Tax Code

Denis Naughten


67. Deputy Denis Naughten asked the Minister for Finance if he will reform inheritance tax rules whereby a favoured niece or nephew is treated in the same manner as a child in circumstances in which the deceased has no family; and if he will make a statement on the matter. [38840/20]

Childless couples and individuals with no sons or daughters should be able to leave their home to a niece or nephew, without him or her being taxed to the hilt. I am calling for a change to Ireland's inheritance laws whereby they will no longer punish people for not having children by issuing those to whom they leave their homes with huge tax bills.

A fundamental principle of the capital acquisitions tax, CAT, regime is that inheritance or gift tax is levied on the beneficiary and that the level of taxation is determined according to his or her relationship with the disponer. The reason for this approach is that the capital being transferred has not been earned by the beneficiary and the effective taxation of windfall capital is an important tool for addressing income and wealth inequality.

There are a number of generous reliefs and exemptions to CAT available, one of which is the favourite niece or nephew relief. This relief allows a niece or nephew to be treated as a child of the disponer for CAT purposes in certain circumstances. A person may qualify for this relief if he or she receives a gift or inheritance of business assets, including farming assets. This means the person is entitled to the group A tax-free threshold, currently €335,000, when calculating the CAT liability for the gift or inheritance, rather than the group B threshold, which is currently €32,500. The use of this relief is not restricted to circumstances in which the disponer or beneficiary has no family. To qualify for this relief, the niece or nephew must have worked for the disponer for five years immediately before receiving the gift or inheritance and for a minimum number of hours per week. This is a targeted relief. The policy rationale underpinning the relief is to recognise a niece or nephew who has placed his or her labour and expertise at the disposal of the disponer for an ongoing period to the benefit of the business or farm.

If the Deputy's question refers to potentially extending this scheme, it would clearly represent a fundamental departure from the principles underpinning our CAT regime. It would also be a significant departure from the policy rationale of the relief. Such a move would undermine the basis of our CAT regime and could lead to a significant erosion of the revenue base. That is the reason I currently do not have plans to amend the favourite niece or nephew relief scheme.

If a person leaves a home with a market value of €300,000 in a will to a favourite niece or nephew, who might be the person's nearest relative, the recipient will be hit with a capital acquisitions tax bill of almost €88,275, while a son or daughter would get a tax-free inheritance threshold of €335,000. A nephew or niece is only entitled to a threshold of €32,500 before paying tax at a rate of 33%. By contrast, Britain has a tax-free inheritance allowance of £325,000, regardless of who the beneficiary is in the deceased person's will, before taxation comes into effect. The threshold is even higher for children of a deceased person. Will the Minister look again at these thresholds?

We are in the annual process of passing the Finance Bill and Report Stage will be taken in the House next week.

I have indicated that I do not have plans to change the thresholds to which Deputy Naughten refers in the Finance Bill. It is important that I am open about that to the House. I do not believe that such changes are currently merited given the huge pressure that we are under to pay for a level of public service that the country now needs in the context of our battle with Covid-19. The reliefs are always kept under review from budget to budget and when we approach next year's budget I will assess where the reliefs stand. The kind of structural change I believe the Deputy is looking for is not one that is justified, but I thank him for raising this matter.

I will put an alternative suggestion to the Minister. The favourite niece or nephew relief applies where someone has been working the land or working in a business with an uncle or aunt. Will the Minister extend the relief to a favourite niece or nephew residing in the home of the uncle or aunt who is providing care to the uncle or aunt? This happens regularly and these people can end up being hit with a significant financial burden after caring for an uncle or aunt. In the context of Covid-19, as referenced by the Minister, we must try to ensure we provide as many supports as possible for older people in the community. This could be a mechanism to do that and acknowledge, through the taxation system, the care that is being provided to older people in their own homes.

Deputy Naughten raises an important matter in regard to care. The care that people provide to other family members is indispensable to those families and also allows the State to look after those who are vulnerable, in particular those who are elderly and vulnerable.

I have concerns about making changes to a scheme that does provide such a significant amount of additional relief under the favourite niece and nephew scheme for the reasons I have already outlined. However, the Deputy raises an interesting point which I can consider when preparing for next year's finance Bill.

As Deputies Pa Daly and Devlin are not present, we will move to Question No. 70. Questions Nos. 68 and 69 may be answered later.

Insurance Industry

Duncan Smith


70. Deputy Duncan Smith asked the Minister for Finance if he is considering the calls from a group (details supplied) and other arts and cultural bodies for insurance reform; and if he is considering a refund of public and employer liability insurance for organisations that now have no insurable events going ahead. [27499/20]

I will take this question on behalf of Deputy Duncan Smith. As we all know, the high cost of insurance is a major issue for businesses right across the country. It is a particular issue for the arts and culture sector. We know the sector was the first to close in the initial lockdown and will be the last to open when the threat of the pandemic recedes. An Arts Council survey has shown very clearly that venues that are closed are losing revenue in terms of income from audiences and other sources, up to €3 million per month. I believe that is a conservative figure. Does the Minister support the view that those venues that are closed should receive refunds from insurance companies for public liability and employer liability insurance?

I acknowledge all the work Deputy Nash has done in raising the interests of the arts sector. It is an area that he and I both feel very strongly about. We look forward to the point at which we will be able to enjoy live music gigs again. We truly appreciate the value of live performance when we are not able to enjoy it in the way we were in the past. I recognise the work done by the Minister for Tourism, Culture, Arts, Sport, Gaeltacht and Media, Deputy Catherine Martin, in this area. She has been extremely innovative in trying to put in place new funds and programmes to support the arts sector. It is great to see a number of web streaming live performances will take place to provide much-needed income to the artists involved. It will be an opportunity for music lovers and families to enjoy that, albeit in a different way.

To deal with the particular matter Deputy Nash has raised on behalf of Deputy Duncan Smith, I believe the insurance sector must play a role in assisting its customers in what has been an extraordinary and very demanding period. In light of that, my officials and I engaged with the insurance industry through its representative body, Insurance Ireland, although with particular regard to the provision of motor insurance reliefs earlier in the year.

Deputy Nash will be aware that further commitments were made earlier in the year by most of the key insurers in the Irish market that they would ensure that a number of common forbearance measures would be made available to their customers. I welcome the statement issued by Insurance Ireland on behalf of some of its members last month that these measures would continue to be implemented.

The Minister of State, Deputy Fleming, raised this specific matter and I will take the opportunity to raise it also. Given its importance, perhaps Deputy Nash could give us a perspective on how he believes those forbearance measures are being implemented.

I thank the Minister for his comprehensive reply. He is correct that significant action has been taken by the Government to support venues and individual artists. He is also correct that the arts and culture sector is intrinsic to our identity and sense of ourselves. The Minister and I share a deep interest in the practice of arts and culture in this country. One of the largest outgoings venues have is their annual insurance bill. There is currently no blanket refund scheme in place, such as those we have seen in the motor insurance and private health insurance sectors earlier this year to reflect the facts that people did not have access to certain hospital treatments during the first lockdown and the roads were less busy during that lockdown period. That was reflected in motor insurance and health insurance refunds. I ask the Minister to look deeply at this. I am aware of organisations throughout the country and in my constituency that had to battle very hard with their insurance companies to access individual refunds. I ask the Government to take a closer look at the matter.

The Deputy is over time. I am sorry but I am just trying to ensure we stick to the time. Deputies are waiting.

Yes, I will raise this matter. I am aware that forbearance measures are being made available to the arts sector, but I did think that they were being made available in a manner that was typical of what happened with motor insurance earlier in the year. My understanding is that this was not being done through a common forbearance decision, but that it was being dealt with on a business-by-business basis. I understood more progress was being made than Deputy Nash has indicated. On the back of the Deputy raising this matter with me, the Minister of State, Deputy Fleming, and I will raise this matter again with Insurance Ireland. It would be great to see our music venues and theatres being in a position to reopen in the way they operated in the past.

I thank the Minister.

We have a while to go on that yet but I hope they will be able to do that with as low a level of debt as possible. I will get back to Deputy Nash on the matter.

There is not a blanket understanding across the sector and there have been some difficulties with individual venues, which were battling with their insurance companies to obtain some refunds to reflect the fact that they have not been open to the public and there is obviously less risk associated with that. Given that both the Minister and I are extremely interested in the arts and culture sector, I urge him to consider very deeply the calls by individual and national arts organisations to allow them to reopen safely, with some limitations, during the Christmas period so people can enjoy live music and live culture experiences in individual galleries, museums and arts centres across the country. I ask him to consider that, as I know he has an important meeting later today with his Government colleagues to consider how we lift the level 5 restrictions and move safely into December and early January.

I assure Deputy Nash that we are trying to get the balance right between the absolute imperative of keeping citizens safe and healthy and recognising the deep and intrinsic value of culture.

Such culture includes live performances and museums. I look forward to the day, for example, when schoolchildren can go into our museums again and we can have Irish and international artists performing in venues, particularly in smaller venues, presenting the art that is so special to us all. We have important decisions to make and a journey to go yet in allowing these venues to be opened safely. Much work needs to be done.

On the specific point raised by Deputy Nash, I will bring up the insurance treatment of artistic venues to see what further progress can be made.

I will go back to Deputy Cormac Devlin's question now.

Brexit Supports

Cormac Devlin


69. Deputy Cormac Devlin asked the Minister for Finance the status of his Department’s preparations for Brexit; and if he will make a statement on the matter. [39213/20]

I thank the Minister for taking these questions. With just 35 days to go before the UK leaves the EU, what preparations have the Minister's Department done in advance of this?

I thank the Deputy for raising this very important matter. My Department has been participating in whole-of-government preparations for Brexit since before the UK referendum in 2016 and, in line with the Government's overall approach, it has intensified work ahead of the end of the transition period on 31 December.

Without prejudging the outcome of ongoing negotiations between the EU and the UK, the central scenario underlying budget 2021 assumes the transition period ends without agreement. Budget 2021 provides €340 million for measures to prepare for Brexit through the continuation of existing measures and new supports for sectors and enterprises likely to be most affected. This comes on top of more than €700 million in budgets since 2017, and budget 2021 also provides for a recovery fund, in part to respond to the fallout from the ending of the transition period. I assure the Deputy that every effort has been put into getting ready for the approaching deadline. Since the morning of the referendum result in 2016, it has justifiably absorbed a significant amount of my time and that of the Department.

To give a little more detail, the Revenue Commissioners have now written to 90,000 businesses that traded in goods in the UK last year and phoned 14,000 of those businesses that were identified as having more than €50,000 in activity with the UK. In October, they hosted seminars with 2,000 businesses in that month alone, and very soon the Revenue Commissioners will launch a campaign focusing on the changes that are due on day one, 1 January 2021.

I have no doubt this has been extremely time-consuming for the Minister and officials not just in his Department but across the Government for the past number of years. That said, it is prudent for us to have the reserve that budget 2021 has given us because of the potential of a no-deal Brexit. It is the right course of action.

I know the Department is making every effort to deal with the challenges of Brexit but the next few months will be extremely difficult for Ireland and businesses, not just because of Brexit but because of Covid-19 as well. Is the Minister aware of this morning's report in The Irish Times, which claims that Ireland could lose out to France in laying claim to a significant portion of the €5 billion Brexit compensation fund? Even if we got all the fund, it would not compensate the hit to our economy. As the Department of Finance and ESRI analysis indicates, the long run impact to gross domestic product is between 2.6% and 5% in a no-deal Brexit, meaning losses of between €9 and €17 billion in 2017 prices. Will the Minister comment on that?

I will do so and I thank the Deputy again for raising a very important matter. I assure him that the Department of the Taoiseach and all of us in the Government are working in an integrated and very careful way to ensure we can access our fair share - a good share - of the Brexit adjustment reserve fund that the Deputy refers to. I am now familiar with these kinds of negotiations and the claims and counter-claims that can arise in them. I further assure him that the effort and diplomacy we have demonstrated over the past number of years in pursuing our issues with Brexit will continue as we approach the negotiations over the Brexit adjustment reserve fund. The nature of that fund and its use will become clearer when we are clearer on the shape of Brexit.

I thank the Minister and I welcome his remarks on the diplomatic approach. It is important that Ireland avails of this fund as much as possible, considering the grave impact Brexit could have on our economy. We must avail of that compensation fund as much as possible.

The Minister made remarks on the work of the Revenue Commissioners and their engagement with businesses, which I very much welcome. We can see from experience with Covid-19 support schemes that many businesses are, unfortunately, not availing of existing supports. It is important we ensure these businesses are prepared for Brexit and that they also avail of supports that are available to them.

Britain has provided six months for the implementation period in their economy, with a deferral of Brexit customs declarations until 30 June 2021. Would a similar adaptation period be considered by the Minister and his departmental officials here?

Matters relating to customs policy and procedures are dealt with at a central level by the European Union and we have requirements we need to uphold as the UK formally becomes a third country. I know the EU will try to ensure the rolling out and introduction of new customs procedures will be done in a way that is proportionate and will reduce the adverse effect on businesses that are trading from the Union. On the other hand, the EU and Ireland must also ensure the integrity of the Single Market is protected. It is an Irish interest in that it is in the long-term interest of Irish businesses and consumers that this happens. The Revenue Commissioners and the Government will do all they can to raise awareness of the schemes, ask businesses to participate and roll out the new customs procedures and policies that will be needed in a manner that is as effective as possible. What comes will be better if there is an agreement rather than no agreement; any agreement would still be very different from the position if the United Kingdom had remained in the European Union.

Covid-19 Pandemic Supports

Pa Daly


68. Deputy Pa Daly asked the Minister for Finance further to Parliamentary Question No. 319 of 10 November 2020, if he will reconsider the position on mortgage lenders relating to customers that are on the employment wage subsidy scheme and who are being denied mortgages even though they are in long-term employment and their jobs are not considered to be in jeopardy; and if he will make a statement on the matter. [36678/20]

Pádraig O'Sullivan


71. Deputy Pádraig O'Sullivan asked the Minister for Finance his plans to assist home buyers who are being refused the drawing down of approved loans due to one or both borrowers being on the temporary wage subsidy scheme; and if he will make a statement on the matter. [38632/20]

I have been contacted by many aspiring homeowners over the past few months about their mortgage applications. Unfortunately, they are facing much uncertainty about their applications to financial institutions and the drawing down of funding because their employers are availing of the temporary Covid-19 wage subsidy scheme. I know the Minister has engaged with banks about this. During his discussions with the banks, has he received any indication as to how many people are being affected? I have seen in my constituency office, as I am sure the Minister has in his, a volume of queries coming in and I know it is a significant matter.

Deputy Pa Daly is not in the Chamber but this is grouped with his Question No. 68.

I was about to ask which question this refers to.

They are grouped but they are separate questions.

The numbers do not make a difference in me getting to the material. I can deal with the Deputies' questions and I thank them for raising the matter.

I propose to take Questions Nos. 68 and 71 together.

I have raised the matter with the chief executive officers of all the banks and my officials continue to raise it. I have passed this view strongly to the banks and some have now indicated publicly the same view.

Participation in a wage subsidy scheme should not, in general, preclude somebody from being able to get a loan or a mortgage. This must be evaluated on a case-by-case basis by the banks but they are trying to strike a balance, which I understand. I also understand that it is a difficult case to make to those who are worried about whether they will be able to get a loan or a mortgage but the banks need to take care with granting a loan to people who, in a few months or next year, may not be able to repay it because their employer has ended up in difficulty due to the effects of Covid-19 or the effect of changes in the wage subsidy scheme. This goes back to the principle of ensuring that lending is done with care and in a way that is in the long-term interest of the borrower.

Again, being on one of our subsidy schemes should not, in general, preclude somebody from getting a loan but the viability of the employer and the nature of the support the employer is getting are matters that must be taken into account. It is my expectation that many of the employers that are on our wage subsidy schemes will continue to be viable and successful in the future. These subsidy schemes should be seen for what they are, namely, an exceptional bridge to get Irish employers through an exceptionally demanding time.

I thank the Minister for his response. I appreciate that the regulatory framework for the decision to grant or refuse an individual application for a mortgage is a matter for the financial institutions. However, many of the constituents to whom I have spoken have not been impacted financially. The issue is that they cannot draw down a previously approved mortgage. Often their employers provide letters to state that their employment will not be affected and there is no long-term financial difficulty, yet they are not able to draw down the mortgage. I urge the Minister to engage further with the banks on this issue.

I will continue to follow up on this matter. It is very important, not only for those directly affected who are looking to draw down a mortgage but also because the programmes that we have in place now will be in place throughout much of 2021. It is important in the context of our mortgage market continuing to operate and mortgages continuing to be issued, that broad schemes which will continue in some format into and for most of 2021, are not an impediment to people accessing a loan. It has to be done on a case-by-case basis but I hope and expect that if an employer is willing to vouch for and provide evidence of the continued viability of the company, this would be an important element in the evaluation of a loan application. I assure the Deputy that I will continue to raise this matter

I thank the Minister for his response and appreciate where he is coming from regarding the importance of protecting people who may not have long-term financial security. Nobody is advocating that banks approve loans to people whose jobs are not viable or that they lend recklessly. I am not suggesting that for one minute. I emphasise that I am referring to applicants who were pre-approved for mortgages. They are having difficulty with the drawdown of same because they are on one of these schemes. I am grateful for the opportunity to raise this issue again because it is imperative that we continue to allow people who can purchase a home to do so in order to ensure that we have a functioning housing market. On that note, I welcome the recent announcement by the Minister for Housing, Local Government and Heritage on the launch of an affordable housing scheme. I eagerly await the details on this.

I would be grateful if the Minister and his officials would continue to keep the mortgage issue under review.

We will do so. Many of the decisions on the granting of a mortgage were made at a time when the country and the world were very different; things have changed now. I know Deputy O'Sullivan is not advocating an irresponsible approach to these matters. The case he is making is that if there is every prospect of an employer continuing to be viable in the future, that should be taken into account when a person is looking to draw down a loan for which he or she qualified in the recent past. I understand that point and will continue to raise this matter with the banking sector. I recognise the sensitivity of the matter to which the Deputy refers for those who are raising it with him.

Question No. 71 answered with Question No. 68.
Question No. 72 replied to with Written Answers.

Credit Availability

Thomas Gould


73. Deputy Thomas Gould asked the Minister for Finance if consideration will be given to incentives to encourage credit unions and post offices to lend to persons whose income has been temporarily affected by Covid-19 to ensure they are not forced to obtain loans from private moneylenders with extortionate interest rates. [39153/20]

Has the Minister given consideration to providing incentives to encourage credit unions and post offices to lend to people whose income has been temporarily reduced during the Covid-19 crisis so that they are not forced to obtain loans from private moneylenders who are charging exorbitant rates?

I thank Deputy Gould for raising this matter. I engage with the credit union movement regularly and since this terrible disease arrived on our shores, I have made a point of meeting the leaders of the main credit union organisations. I assure the Deputy that I will ask them to continue to be aware of the vulnerability of some of their customers and members at this difficult time and of the importance of treating them appropriately so that they can avoid having to resort to illegal moneylenders. I am also considering legislation to provide for the capping of interest rates for short-term loans. Having engaged with the credit unions and their leaders, I know that they are very much aware of the issue to which the Deputy refers. They are also aware of their duties to their vulnerable members. If the Deputy has any examples of specific changes he believes could be made, I would be very happy to hear about them and to respond.

I thank the Minister. Sinn Féin recently carried out a household survey and 94% of those who responded were concerned about their household income this year. A survey from last year showed that one in eight Irish parents goes into debt for Christmas, something that will be much worse this year because of the Covid-19 crisis. A financial broker quoted in the Irish Independent said that banks are not lending to those on the EWSS or PUP and are reluctant to lend to people who work for companies that have availed of the EWSS. The banks are not lending which means that people who are struggling to get finance are being driven into the hands of moneylenders. I ask the Minister to provide more details on what he intends to do about this in conjunction with the credit unions and post offices.

The very reason we introduced the EWSS and the PUP was to protect the incomes of all, but particularly the most vulnerable, as we deal with the ravages of this terrible disease. The biggest action the Government can take is to put in place direct measures to support the income of families at this most difficult time and we have done that. The PUP has made a decisive difference to those who need help the most. In terms of how we will deal with the issues raised by the Deputy regarding the post offices and credit unions, he knows that I cannot give a direction to our credit unions about how to lend. That is a matter for them but I will meet them again soon and will listen to any requests they have regarding how the needs of the most vulnerable can be looked after. We have a common, shared interest in this.

Moneylenders are currently distributing leaflets promoting loans. My father recently received one in the post. If one borrows €1,000 from one of these moneylenders, one will pay back €32 a week for a year, which means paying back €1,560. That is a scam and a disgrace. How can we allow this? The problem is that, if people cannot find another avenue to borrow money, they are driven to these moneylenders. Christmas is a special time and it will be even more special this year. All families want to do their best. Parents in particular want to do the best for their children and they are being driven into the hands of moneylenders. We in Sinn Féin are bringing forward legislation which aims to cap interest rates and to stop this type of moneylending because it is a scandal.

The Government will be bringing forward proposals in this regard. These will be effective and will deal with issues relating to the legality of moneylending and the interest rates charged. I represent and engage with constituents who are dealing with the matters to which the Deputy has referred. The Government is implementing a significant number of policies to protect those families as we come towards a Christmas that will be particularly special. What we have done with the pandemic unemployment payment, the nature of the employment wage subsidy scheme and even the decisions regarding the Christmas bonus have all been motivated by this Government's desire to do all it can to support people at a time when so many are vulnerable. As I have said, we will be bringing forward our own proposals on interest rates for short-term loans. We were conducting a survey and review in respect of this matter during 2020 but it was disrupted as a result of the Covid pandemic. I informed Cabinet on Tuesday morning that I would be bringing forward proposals in this regard, to which I hope to get agreement, in the near future.

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