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Dáil Éireann debate -
Thursday, 16 Dec 2021

Vol. 1016 No. 3

Ceisteanna Eile - Other Questions

Credit Unions

Dara Calleary


93. Deputy Dara Calleary asked the Minister for Finance his views on the credit union’s common bond. [62244/21]

I would like the Minister of State’s views are on the common bond for credit unions. Has the Government any plans in this space? We also might have an opportunity to discuss the work that the Minister of State doing on credit unions. He is putting significant work into this. In yesterday's update from the Central Bank of Ireland, the ambition and the hunger of the credit union sector was not reflected or acknowledged in the language it used.

I thank the Deputy for raising the issue of credit unions and the great role they have in society.

Recent opinion polls have shown them to be the most trusted brand consistently over recent years. The Central Bank issued a report yesterday about the challenges facing credit unions so I will briefly bring people up to date on that. Credit unions' financial situation improved in the past year. Of the 210 credit unions in the country, all but nine were in surplus in the past 12 months, which is positive and is much improved from the previous year. The report pointed out that relative to the amount credit unions are saving, their loans are only 27%. That is the issue with growing their loans. There are many schemes for businesses and so on but they are still concentrating on personal loans, which have been their bread and butter over the years. They have reduced some of their deposits with caps introduced by individual credit unions, and that has also prevented the situation deteriorating.

On the matter of common bonds, section 6 of the Credit Union Act 1997 sets out the requirements in relation to the common bond. The credit union advisory committee, CUAC, in its review of the implementation of the recommendations in the Commission on Credit Unions report in 2016, recommended that the common bond be subject to detailed consideration in consultation with stakeholders. The credit union advisory committee is a group established by the Minister to advise him or her on credit union issues. That matter is currently being examined, and when I get the opportunity in a few moments, I will tell the Deputy about the review progress. I expect the Government to approve significant proposals regarding credit unions early in the new year.

I thank the Minister of State. I would like some detail on that review process and its timeline. Will that happen in the first quarter of next year? Will the recommendations the Minister of State is hoping to bring require legislative change? If so, do we have any sense of a timeline on that?

A number of us met with credit union representatives a few weeks ago and the Minister of State was on that call. There was a sense of ambition from them, a sense of wanting to respond to the various challenges facing communities. With banks withdrawing from them, the credit union is the perfect organisation to step into that sphere right across the country. There was also a sense that they wish to do different things to respond to different demands. It is quite interesting that yesterday's report from the Central Bank highlighted climate change as a challenge for credit unions, whereas the credit unions see climate change as an opportunity to partner with communities, homeowners and families to respond to it. I ask the Minister of State to comment on the review, the timeline and any potential legislative changes.

I thank the Deputy. On climate change, credit unions are exceptionally well placed to provide loans for retrofitting schemes for individual houses throughout the country. As regards the common bond, in 2017 CUAC made five recommendations to open up the common bond to assist credit unions in developing their business model and growth potential. Those recommendations included the removal of the anomaly whereby credit unions are prohibited from introducing businesses to each other but can introduce businesses to other financial institutions. Any changes to the common bond should happen promptly and the rules regarding common bonds should be made clearer and be better communicated. In most cases the arrangements for common bonds have been in place for a significant period of time and not many people know the particular boundaries in that regard. CUAC made those recommendations but they were not progressed at the time because there was resistance in the area. I will have recommendations in the early part of next year, certainly early in the first quarter.

Those recommendations make complete sense. The Minister used the word "promptly". Those recommendations were made in 2017 and we are now in 2021. Will the new proposals mirror some of those recommendations? Where did that resistance come from?

The resistance came from the main representative bodies in the credit unions at the time, which did not want to touch the common bond because they felt it was established in the first place for very good reasons and they did not want to move on that. I have met all the representative bodies in the credit unions a few times in the past year and we now have movement from all the main credit union organisations on some refinement of the common bond boundaries and improvements to share and syndicate loans between different credit unions. We are not going to unravel the entire structure of the common bond. There will be improvements to the common bond structure, and what I will be proposing is substantially agreed by all the bodies at this time. I will send them a formal document early in the new year. That may require legislation and that will be progressed as soon as we get approval. I will ask the sector to respond promptly when we issue the proposals because we have covered this ground entirely. I gave those organisations a commitment that I will come back to them with one final draft before we publish it. I will seek their input early in the new year.

Tá an chéad cheist eile in ainmneacha na dTeachtaí O’Dea, Lawless agus Cowen.

Scríobh an Teachta O’Dea ríomhphost chuig oifig an Chinn Comhairle ag athrú na ceiste chugamsa.

Covid-19 Pandemic Supports

Willie O'Dea


94. Deputy Willie O'Dea asked the Minister for Finance the number of persons in counties Limerick and Clare, respectively, currently being supported by the employment wage subsidy scheme; the number of businesses in each county currently availing of the business resumption support scheme, BRSS; the number of businesses in each county currently availing of the Covid restrictions support scheme; and if he will make a statement on the matter. [62240/21]

James Lawless


98. Deputy James Lawless asked the Minister for Finance the number of persons in counties Kildare and Wicklow currently being supported by the employment wage subsidy scheme; the number of businesses in each county currently availing of the business resumption support scheme; and the number of businesses in each county currently availing of the Covid restrictions support scheme; and if he will make a statement on the matter. [62104/21]

Barry Cowen


106. Deputy Barry Cowen asked the Minister for Finance the number of persons in counties Offaly and Laois, respectively, currently being supported by the employment wage subsidy scheme; the number of businesses in each county currently availing of the business resumption support scheme; the number of businesses in each county currently availing of the Covid restrictions support scheme; and if he will make a statement on the matter. [62239/21]

How many people in Clare, Limerick and the mid-west are currently availing of the EWSS, and how many businesses in that same region are availing of the CRSS?

I propose to take Questions Nos. 94, 98 and 106 together.

I am advised by Revenue that 22,100 businesses have claimed the CRSS and that a total of €704 million has been paid out. For the EWSS, that figure is now at more than €6.6 billion in respect of 696,900 employees and 51,700 employers.

In County Clare, the EWSS is in use for 630 employers and 6,725 employees, while 795 businesses are availing of the CRSS and 60 businesses are using the BRSS. In Limerick there are 970 employers and 10,930 employees on the EWSS, with the CRSS supporting 945 businesses and the BRSS supporting 75. I was also asked by Deputy Lawless about Kildare, where there are 950 employers and 12,055 employees on the EWSS, with 705 businesses on the CRSS and 55 on the BRSS.

This has been one of the real successes of the Covid pandemic. It has been 18 months of misery on the health front, for those in employment and those who are trying to shore up a business and keep it surviving at this time. This has been one of the successes in stabilising the economy and it is very much appreciated by those in business. I am glad 6,000 people in Clare are benefiting from it and that the Minister recently announced an extension of the EWSS for a further two months. I am also glad the Covid stability fund is there for businesses such as nightclubs that will have to remain closed until 9 January.

However, there are anomalies in these supports. Some 11,000 employees in the hotel sector are facing a degree of uncertainty at the moment because new criteria for the EWSS were introduced in budget 2022. The anomaly arises in the case of seasonal hotels like those in the west. A seaside hotel could be closed at this time but may have every intention of opening in the early spring. The other anomaly relates to largish hotels that might be doing pretty good trade in the lead-up to Christmas. They will have pulled out of the EWSS because of that trade but may not expect to be at those trading levels in January 2022. Due to that break in trading, they will be precluded from the EWSS for the first four months of 2022. That leads to a lot of uncertainty for them. I already mentioned the 11,000 jobs. Most of these are family-owned hotels or rural hotels in the west, but that model is also replicated in other parts of the country. They need an added degree of certainty. There has been a 60% collapse in bookings leading into Christmas. They are going to need a little more certainty as we face into the new year.

I thank the Deputy for recognising the role this role this scheme has played. It has been invaluable in supporting our domestic economy and it will lay the foundation for the continued economic recovery of Ireland from this pandemic. It is valued by many businesses that are on it at the moment.

Regarding the particular matter the Deputy has raised, I respectfully say that there is not an anomaly with regard to it. In fact, there is clarity regarding how people do or do not get into the scheme. I have been clear for some time that the business threshold is that there has to be a decline in turnover of 30% or more versus the reference period in 2019. I accept that in setting any business performance level there will be at times employers who are just outside of that, but that can happen in any threshold decision I make. If a company is not in the scheme at the moment, the most likely reason is that its business performance is higher and better than a 30% decline. I accept this is something that will pose a challenge for a number of employers at the moment, but it is a matter I have been clear about for some time in order to try to create the certainty that I know the Deputy values.

I thank the Minister for his response. Some hotels will be left out of the scheme. Elaina Fitzgerald has been on the airwaves quite a lot lately. She is head of the Irish Hotels Federation. Her hotel in Adare, County Limerick, is one such hotel that will probably do pretty well coming into Christmas, but will not benefit from the scheme. That is her analysis, something that is replicated throughout counties in the mid-west. The cost of supporting 11,000 jobs in the hotel sector for the month of January is approximately €4.2 billion. Stability and certainty needs to be in place because if jobs are not supported many people could end up on the PUP.

In my limited speaking time, I wish to refer to the revaluation of guest houses. I understood it was going to stop, but it is still happening. I was told many months ago that it does not make sense for a hotel on the Muckross Road in Killarney to have to pay commercial rates while a 40-bed bed and breakfast does not. That might be fair and true, but valuation people are calling to the doors of bed and breakfasts in Clare to measure their square footage. On top of dismal trading this year and last, they are now being asked to pay commercial rates. Their families live at one end of their houses and they have one or two beds at the other in order to make an income. They should not pay commercial rates. I ask that the Government step in and call a halt to this.

I was aware of the rates issue and I thank the Deputy for bringing it up. I will have my officials look into it because I appreciate that at this point in the year, given everything that has happened with this disease, the strain and anxiety that smaller hospitality businesses are facing is very intense. I will look into that for the Deputy.

On the EWSS, I need to indicate to the Dáil that I believe our health service will allow us to reach a point in the new year where we will need to phase out the EWSS. It is a scheme that has played an invaluable role in our economy, but it was primarily designed to deal with the threat of mass unemployment in our country. It has prevented the threat of mass unemployment, but we cannot find ourselves in a position as we move through 2022 that we have a labour market shortage and a high demand for workers while running the unemployment wage subsidy scheme at the same time. We are not at that point yet and that is why we have extended the scheme.

I wish the Minister a happy Christmas.

I wanted to ask a follow-up question on the EWSS which has been important in keeping businesses going. The Minister gave a county breakdown to Deputy Crowe. Does he have a similar breakdown of the sectors that are receiving EWSS?

The scheme involves a huge amount of money. A larger budget than many Departments have has been, and continues to be, spent on it. Are sectors still receiving the EWSS despite not being impeded by restrictions? Well over a year ago I asked the Minister to extend the EWSS to the hospitality sector when it reopened to help businesses claw back the many costs they incurred and to try to help them keep afloat as things reopened slowly. If sectors are in receipt of the EWSS but have not been under restriction for some time, I would be glad if the Minister could update the house on that.

I thank the Deputy for her question. I will share the full breakdown with her by sector which I have available to me. Very broadly, around 26% of the scheme was made available to the hospitality sector. After that, sectors such as retail are very high recipients of funding from the EWSS. It is available for sectors. I do not have the figures available now, but I will get the information sent onto the Deputy's office across the day.

On the Deputy's point on sectors that may not need support, it is important to state that the entry into the scheme is not done by sector but rather by business. In order to be on the scheme, a business performance has to indicate a decline of 30% or more. We could definitely make the case that some sectors are doing better than others, but even within sectors that are doing better, there will, as the Deputy will know, be firms that are experiencing challenging conditions because of public health guidance and, therefore, that is why they are on the scheme.

Insurance Industry

Martin Browne


95. Deputy Martin Browne asked the Minister for Finance the status of progress made under the action plan for insurance reform; and if he will make a statement on the matter. [62370/21]

Ruairí Ó Murchú


164. Deputy Ruairí Ó Murchú asked the Minister for Finance the status of progress made under the action plan for insurance reform; and if he will make a statement on the matter. [62362/21]

I also want to wish the Minister best wishes for Christmas before we all fall out.

I ask for an update on progress that has been made under the action plan for insurance reform. We hear a lot about reductions in personal injury awards. What effect is that having on insurance policies?

I propose to take Questions Nos. 95 and 164 together. The action plan for insurance reform contains 66 cross-departmental actions that aim to improve the cost and availability of insurance. This reform agenda is progressing well. The first implementation report published by the Tánaiste’s Department last July showed that 34 of the 66 actions had been completed.

Key reforms include the establishment of the insurance fraud co-ordination office within An Garda Síochána in September and the publication of the final report of the Central Bank’s review of differential pricing in the motor and home insurance markets. I will shortly go before the Committee on Finance, Public Expenditure and Reform, and Taoiseach to deal with pre-legislative scrutiny of the elimination of loyalty penalties in the course of 2022. I appeal for everybody on that committee to complete pre-legislative scrutiny today so that we can move onto the legislation as quickly as possible and pass a Bill in the Dáil and Seanad early in the new year.

Other reforms include the expansion of the national claims information database to gather data on public liability and the publication of the first report on this subject. We now have information we never had before, which is helpful. The Central Bank’s third report on the claims information database on private insurance has been published in recent weeks. We also have the Criminal Justice (Perjury and Related Offences) Act 2021, and perjury is now a criminal offence. Personal injuries guidelines were completed at the end of April and have been implemented. We will produce a review early in the new year on how they are progressing in practice. We said we would do that after a six-month period and work is commencing on that. We will publish an interim report on that within a short period, which will be available in the new year. We established an office to promote competition in the insurance market, which is essential because of the small size of the Irish economy and the impact of Brexit which affects competition. We are introducing new regulations on solicitors' advertising.

All in all, quite a lot has happened. Motor insurance premiums decreased by 8% last year and 7% so far this year, based on the most recent figures from the CSO.

Given the 40% reduction in personal injury awards since the new personal injuries guidelines came into effect, reductions should have been passed on to members of the public and organisations and businesses that need them. Instead of reductions, the businesses in the entertainment sector are under huge pressure right now and have seen hikes in their premiums. Public liability insurance costs have also increased by 15%, according to the Alliance for Insurance Reform. There have been reductions in some sectors, but increases in others. The insurance industry needs to be taken on.

It is essential that insurance companies immediately reduce insurance premiums to reflect, euro for euro, the 40% reduction in personal injury awards since the new personal injury guidelines came into effect. I must call on the Minister to remove the delay the Government has placed on the Sinn Féin Judicial Council (Amendment) Bill which would hold insurance companies to account and ensure they reduce premiums in line with the reduced cost of claims. What is going on with this?

This is obviously a case where a significant amount of work has been done. Some in the industry and some who have been lobbying for a long time would have stated that we should have made some of these moves previously but, as the old saying goes, we are where we are. I would separate out public liability insurance. That is a specific piece of work that needs to be done. It is absolutely necessary we follow through as quickly as possible in dealing with differential pricing and what you can only term morally as "criminal" as regards the loyalty penalties. We need to see that the personal injury guidelines work from the point of view of those who are paying insurance premiums. It has not happened to date. I want to know the Minister of State's engagements with the insurance sector and then we need to make moves on duty of care and other matters. I am also in on another question and we will get more time later.

As the Deputy rightly says, the categories of car insurance and home insurance are separate from the issue of business insurance. There have been reductions in car insurance, which affects every household in the country, this year and since the guidelines came in.

Three major insurance companies were at the Joint Committee on Finance, Public Expenditure and Reform, and Taoiseach this week. Two of them said they have reduced prices by 10% this year so far and another said it reduced them by over 5%. That is confirmation of what the CSO is saying.

In relation to business insurance, an important Central Bank report issued recently showed that for the vast majority of businesses the average cost of insurance is under €2,500.

There are high-risk sectors in the Irish economy that have difficulty getting insurance and those sectors need to be helped. That is why I met specifically with the Alliance for Insurance Reform on a couple of occasions recently, and I will be doing so immediately in the new year again, on the euro-for-euro reductions we are seeking. Those reductions that are happening have been confirmed by the Personal Injuries Assessment Board, PIAB. Obviously, some people are not happy and want to appeal them to the courts as well, and that is taking some further time.

I accept the Minister of State has met the insurance companies but he will forgive me if it seems like a kid-glove approach to the sector that has prevented community events from taking place during the summer and for the past 12 months. It has made driving, which is a necessity, costly. It is not a luxury anymore.

The public thinks the Minister of State is being too soft on the insurance companies. They are the ones that are profiting from the reductions in claims because the Minister of State will not implement the legislation Sinn Féin has brought forward.

Only this week, the Alliance for Insurance Reform called on the Minister of State to deliver on his promise to deliver a properly balanced duty of care, if applicable, to every premises and event in the country. I call on the Minister of State to stop letting the insurance industry off the hook and to put the public first for a change.

Pressure needs to be maintained on the insurance companies. That goes without saying. There is an absolute requirement that those engagements are robust.

I will deal specifically with public liability insurance. Let us accept we need insurance. We particularly need insurance in what is high risk. We have seen the tragic circumstances in Tasmania.

I have dealt with the Minister of State in relation to the entertainment industry, the leisure industry, and especially in relation to what we term bouncy castles. Following on from some conversations with Deputy Fleming and the Minister of State at the Department of Enterprise, Trade and Employment, Deputy English, I am dealing with Insurance Ireland specifically. We will also be dealing with the Minister of State at the Department of Housing, Local Government and Heritage, Deputy Peter Burke, specifically on guidelines and regulations that are probably needed within that industry. It is from the two ends. We need licensing, regulation and protections and then we need duty of care so that there is also a protection of these businesses. There are community centres, businesses and community organisations that face hitting the wall and we need action now. It is beyond time.

The principle of risk equalisation works well and it makes sense in the health realm. It makes no sense whatsoever insofar as flood cover insurance is concerned. In my county of Clare, a county of 118,000 people, one person in 12 is unable to get flood cover on his or her insurance largely due to flood events that happened ten, 12 or 15 years ago. What we have since is a national database of flood maps. We have had umpteen work programmes that have remediated flood areas but still the insurance sector, time and again, is levying on other people. Because one house in a community of 2,000 or 3,000 homes took in a drop of water in 2009, the whole community has to pay a penalty. It is becoming a major barrier to people trying to sell their houses. If you go to a bank or if you go to your solicitor and conduct conveyancing, you will be advised not to take out a mortgage on that property because it cannot get flood cover. This also needs to be in the realm of insurance reform.

I agree with the Deputies opposite when they talk about balancing the duty of care. Before we came in here, we had it already arranged that I will meet with the Minister for Finance, Deputy Donohoe, and the Minister for Justice, Deputy McEntee, at the very beginning of the new year to progress that legislation. Work has already been done on it in consultation with the Attorney General. It is an absolute priority for the Government to get that legislation published as soon as possible. It is only fair to businesses. If somebody has a fall in a person's property, it is not always the fault of the proprietor. That is something we have to rebalance in legislation. I think everybody in the House will agree with introducing common sense in that area. We will be moving on that immediately in the new year. Also, a reform of the PIAB process is being finalised.

On the event in Tasmania, obviously, the sympathy of every Member of this House goes out to those affected by that shocking tragic event. All we can do is extend our condolences to the families of the people involved.

Flooding is a major issue. I have met with the Office of Public Works, OPW, the Minister of State and those involved, and through the Department of Public Expenditure and Reform, they are working on the flood map. The issue is to reduce the flood risk in those areas. That is the only way to make insurance more available in the flood risk areas.

Energy Prices

Alan Dillon


96. Deputy Alan Dillon asked the Minister for Finance the proposals being considered by his Department to put in place reliefs to reduce energy bills considering the significant cost increases over recent months; and if he will make a statement on the matter. [62356/21]

The impact of recent increases in energy prices and the rising cost of utility bills are having an enormous impact on households and businesses. You only have to ask those who filled their car at the pumps or got a fill of oil for their home in recent weeks. What engagement is the Department of Finance having with utility companies and what can we do to address this for consumers?

I thank the Deputy for raising what is a very important and timely issue at present affecting every household in the country.

The final retail price of fuel is determined by a number of factors that include the costs of production, distribution, global market factors, international exchange rates, taxation, wholesale market contracts as well as individual retail pricing policies. The current spike in energy prices arises principally from the global recovery from the Covid-19 pandemic in conjunction with supply constraints and is being witnessed across the European Union and other countries.

Wholesale electricity prices both in Ireland and across Europe have risen substantially in 2021, with high international gas prices, low levels of wind, increasing carbon prices and a lingering 2020 winter.

As the Deputy will be aware, the Government approved the establishment of the electricity costs emergency benefit scheme under which a payment of €100 will be made to every domestic electricity customer as a once-off measure to mitigate the effects of the unprecedented rise in electricity prices on domestic electricity customers.

The Deputy will be aware work will commence on that early in the new year. It will require legislation. We look forward to the co-operation of the House on that issue so that people can get the value of this in the spring of next year.

It will run in conjunction with the fuel allowance, which runs from October right into April. There is cold weather in January, February, March and into April and it is important that extra €100 would be available, not only to the people who are on the fuel allowance but to everybody else in society who is experiencing the high cost of fuel. That will be a benefit. It is a once-off situation. I know of no other country in the world that is doing that. It is an excellent initiative. There is substantial funding available for that.

The discussions we are having with the sector are through the regulator. The ESB will provide the cheques directly to the individual suppliers which will credit every consumer's account. The people will get the benefit of that as early as possible in the new year.

I welcome the measures that have been introduced. Anything that helps should be prioritised. I welcome the tax and social welfare adjustments and the announcement this week in respect of the €100 credit for account holders. These are important to counter rising costs of living.

I still feel we need to do much more in the longer term. We have seen commentary in recent weeks that energy prices are the main driver of inflation at present. We have seen the road hauliers crying out for relief on fuel costs. Typical home energy costs and motoring costs have increased significantly. Since this time last year, the price of electricity, gas and other fuels has increased by 29%.

Home heating oil has skyrocketed by 71% in just 12 months. Petrol has gone up by 20% and diesel by 29%. All of these increases are having a major impact on households. I ask that we would develop a long-term approach for Ireland to insulate consumers from the volatility on international wholesale energy markets.

It is important to put on the record that all the measures I have just mentioned, especially regarding the fuel allowance for many hundreds of thousands of households around the country who benefit to the tune of €914 from October to next April, are funded through the carbon tax. Those who oppose the carbon tax are trying to reduce the Government's ability to assist those households. We must be consistent. If we want funding to help people with the rising costs of energy, we must raise it through a carbon tax. It is important that we have support in the House when it comes to raising the expenditure in order that we have the funds available to spend on those measures. People in receipt of the fuel allowance will get the €100 I have just mentioned as well.

The ESRI has shown in a recent report that if people shop around and change their electricity supplier, the average household can save more than €300 on its electricity bill per annum. I encourage people to shop around as an immediate way of getting a better price for electricity.

If we consider the number of people who on Government advice are now working from home, it is obvious that they are using more household energy, resulting in higher bills. Consumers are facing massive price hikes by utility companies. We have taken some first steps this week, but more needs to be done. With Christmas just around the corner, people are concerned about more money coming out of their pockets. Can we give any further subsidies? The situation is impacting those in particular who are on tight budgets and it is causing them massive hardship.

The initiatives we announced this week specifically refer to the increased costs of working from home. The Finance Bill included some new measures of support for people working from home. The previous scheme was very narrow, but we included a new scheme of statutory benefits in the Finance Bill that was passed in the House last night. There are benefits for people working from home in recognition of the extra costs involved.

In terms of people being able to afford the extra costs, an increase in the minimum wage is due shortly. Most people in the public sector and the vast majority of those working in private businesses will be given a pay increase in the coming year. That is in addition to the increase in the tax bands for people who are working, not to mention the increases to which I already referred on the social welfare side. People will have additional money in their hand to meet some of the additional costs that are arising this winter.

The point made by Deputy Dillon is valid. We are going to see increasing volatility in fossil fuel prices as we move to net zero. Would the Government consider some form of policy that would have a buffer in the tax take so that in times of sharp changes, either up or down, the State would maintain a steady upward drift in the price of fuel but would to some degree insulate people from the short-term volatility?

In fairness, I find myself agreeing with a lot of what has been said. We accept that we have difficulties at present with the energy crisis. We are going to have continuing difficulties and we must look at easing the pain as much as possible as we move towards a just transition.

I put on record my disappointment at the fact that the €100 mitigation offered to people has been put on the back burner – no pun intended. We need to move as quickly as possible. Even at this late stage, if at all possible, I request that we could get movement. I think we could all get agreement on that. This is not one of these offers that is made consistently at this time of year that we can meet next week. We are not talking about something that is beyond agreement and getting sorted. We need the type of long-term protections Deputy Bruton spoke about.

I understand the issue concerning having a buffer in place to address the volatility in prices, many of the causes of which are outside our control. The ESRI stated again this morning that it expects the inflation rate to peak by the end of the first quarter. I know that means we will continue to have rising prices, but as the year progresses, some of the issues that have emerged in terms of world supply and Covid will ease. I hope that will be some help.

In terms of a buffer, that is why we have carbon tax increases planned for the years ahead, in order that we have funding in place to help people, especially those on social welfare, who are the direct beneficiaries of the carbon tax measures we have in place.

We would love to be able to provide people with the €100 this side of Christmas. Many people pay by coin in meters and others are in apartment blocks and the bills might not be in their name. That takes a couple of weeks to sort out. We could not proceed with a scheme and leave those people out of it this side of Christmas and give it to the rest of us. A couple of weeks' work will be required in the new year and I know everybody will help to move the legislation swiftly through the Houses as soon as we come back.

Insurance Industry

Cathal Crowe


97. Deputy Cathal Crowe asked the Minister for Finance his views on the impact that Brexit has had on the employer and public liability insurance market in Ireland. [62320/21]

Ruairí Ó Murchú


100. Deputy Ruairí Ó Murchú asked the Minister for Finance the status of his plans to address the rising costs and limited access to public liability insurance; and if he will make a statement on the matter. [62361/21]

I want to speak specifically about public liability insurance. We know the difficulties businesses, community organisations and community centres encounter in this regard. I dealt with the Minister of State previously about a case where a premium of €11,000 was put on a local community centre in Blackrock in my constituency. None of that is sustainable. Could he outline timelines on the movement on duty of care, in particular, but also his engagement with the sector? We know that there are not enough players in the market at this point and we need to sort that out.

I propose to take Questions Nos. 97 and 100 together.

At the outset, I am sure the Deputies will appreciate that neither I nor the Central Bank can interfere in the provision or pricing of insurance products, nor do we have the power to direct insurance companies to provide cover to specific individuals at specific prices. Everybody knows it would be deemed gross interference in the market.

With regard to the impact that the withdrawal of the UK from the EU may have had on the general liability market in Ireland, I am informed by the Central Bank that when looking at all jurisdictions during the Brexit preparation period from 2018 to 2020, the number of firms writing general liability insurance in Ireland via a freedom of service or freedom of establishment basis had not decreased, and the overall premium levels written by them have remained static.

It is also my understanding from the Central Bank that while some UK and Gibraltar insurers decided to withdraw from the Irish market post Brexit, the vast majority – more than 95% - have implemented contingency measures. Some of that will come up in the course of the pre-legislative scrutiny process this afternoon, as there are some technical difficulties with some of the UK and Gibraltar companies as a result of their intention to continue to provide cover in the State.

While Brexit may have exacerbated insurance issues for certain sectors, I understand that a more prominent reason for the withdrawal of some international insurers from Ireland in recent years has been the instability in the personal injury claims environment. In this regard, I believe that the personal injuries guidelines are a key achievement of the action plan and should help to reduce this uncertainty. That will also have a knock-on effect on legal costs, as many of the claims will now be dealt with in the District Court rather than the Circuit Court, and claims previously dealt with in the High Court will now be dealt with in the Circuit Court because of the reduced level of awards. As a result, there will be a major knock-on effect on the cost of insurance. There is a commitment from all involved to provide a euro-for-euro reduction regarding the savings.

The general damages that were examined by the personal injuries guidelines deal specifically with the most common injuries - the slips, trips, sore backs and sore necks. They are the most common injuries that make up most of the claims. They did not cover serious or catastrophic injuries following a car accident or a very serious fall resulting in lifelong medical requirements. We only covered the most common injuries. The cost of care in the future for specific damages was not covered. We did not want to interfere with somebody who may end up in a wheelchair for the next ten or 20 years. Such cases were excluded from the personal injuries guidelines. Some of the claims that are being made will come under the new guidelines and others will not. We did not want any reduction in damages for more serious injuries and, in fact, some of them have increased marginally in recent times, which we all support.

The key issue we are going to have is to get people to use the PIAB process more closely. It was great when it started but people have tried to bypass it extensively in recent times. The only issue of concern that I have, and I want to put it on the record, is that while the awards through PIAB have come down, the chief executives of all of the insurance companies have, one by one, confirmed to me directly that they are using the guidelines to the letter of the law, and none of them are offering an extra grand over the figure to settle the case quickly. That is important.

The Government, the Alliance for Insurance Reform and the individual companies are determined that we will follow it through to the letter of the law. The only issue is that some people are rejecting the new awards because they are lower than they used to be, and some of them are going to work through the courts to test out the new guidelines. I hope the courts will stand over the guidelines that the Judiciary actually wrote and designed. When we get that certainty, it will be a major improvement.

I accept there are certain things the Government cannot do but we will deal with those powers that the Government has. I welcome the fact we are looking at the anomalies that have been caused by Brexit, the gift that never stops giving, but we have to move on in that regard. It was a vital piece of work in regard to the personal injury guidelines. We know that in an awful lot of cases, the insurance companies did not fight cases and they just paid out, no matter how good the case would have been from a legal point of view, and we are talking here about soft tissue injuries. I want to know about the Minister of State's engagement with industry because, for public liability insurance, we do not have the players in that sector. I hope the Minister of State will be supportive of that piece of work, on which I have engaged with him previously. As he said, there are certain high-risk sectors where we need to look at regulation and at facilitating the groups into block-buys and whatever else, and I am specifically referring to the leisure, entertainment and community sectors. That is necessary. I would like to get specifics on the Minister of State's engagement and get a view on whether we can get more players in. Is there a timeline with regard to when the Minister of State thinks the duty of care legislation will be in place?

On the duty of care, it is an immediate priority. It is one of the biggest single outstanding actions in the action plan that we announced 12 months ago. I would hope that by the end of January we will have a firm date. There is a meeting of the Cabinet subgroup dealing with this issue towards the end of January, by which time we will have a full review of 2021. I expect that at that date we will have a clear timeline. I do not have a date today because it is subject to legal discussion between Department officials and the Office of the Attorney General. My hope is that by the end of January, around the time we come back, we will have a date for that.

With regard to my engagement with the industry, it is well known and is public knowledge that I recently met individually each of the chief executives on the matter, having done that earlier in the year. I met Insurance Ireland to make sure it, as a representative body, is making sure there is good feedback in the area. I met the Alliance for Insurance Reform specifically in regard to the pinch points where people cannot get insurance. I have committed to meeting them again in January to progress that particular work.

I welcome the promises the Minister of State has made and we will follow up in that regard.

I wish the Minister of State a happy Christmas. I have an issue that was brought up with me by some of my younger constituents. Obviously, we have had supply chain issues that have also been caused by Brexit. There are worries in regard to a certain Santa Claus. We hope the Minister of State and his colleagues in government will be engaging from the point of view of ensuring there will be no difficulties as regards the problems we have with the Irish protocol and no visa difficulties. We assume that public liability insurance issues that may arise in regard to Santa Claus and his workers have been looked at and dealt with, and that the Government can assure my younger constituents that the difficulties we are facing in the wider world will not be impacting in regard to the supply chain and Santa Claus.

I think he will be okay once he does not damage my roof.

I thank Deputy Ó Murchú for raising that timely issue. Before I came in here, we made a phone call to Lapland. The Government in Lapland has told us there is no insurance required whatever for anybody in Lapland who ever has an accident, which has never happened because Santa Claus and Mrs. Claus make sure that all the helpers are fully protected, so there has never been an insurance claim. That policy will be carried out, no matter where they go in the world. I think the United Nations made that clear decades ago. I think all children will be quite satisfied that the domestic border between Ireland, or between Russia, Mongolia, China or any other country, does not exist with the sat navs that are used from Lapland. All the children can be fully assured they will get their presents when they wake up on Christmas morning. I thank the Deputy for raising that issue and I want to put that to bed once and for all.

I thank the Deputies for their co-operation. If I do not see any of them between now and the new year, I offer my best wishes for the festive season. It will be a little less expansive than we had hoped but let us hope we all have a good Christmas nevertheless.

Question No. 98 answered with Question No. 94.

Mortgage Interest Rates

Neale Richmond


99. Deputy Neale Richmond asked the Minister for Finance his views on whether there is scope for increased competition for loans and mortgages within the European Union; and if he will make a statement on the matter. [62134/21]

After such an explosion of festive goodwill, I am loath to ask about mortgages, but I am afraid I am going to have to. As the Minister of State knows, Ireland has one of the highest mortgage rates in the eurozone. I ask him what efforts are being made by the Government to look at competition across the EU for mortgage rates and for loans.

While competition issues generally are primarily a matter for the Competition and Consumer Protection Commission, competitive pressures in the banking sector can clearly have an effect on the functioning of the financial system and on the quality and price of credit and other banking services provided to customers. It is accepted that the Irish retail banking system is relatively concentrated by international standards and the recent decisions by some banks to leave the Irish market will further impact on this. However, against this, it should also be noted that some new lenders have entered the market and are playing a greater role in the provision of new mortgage lending. More generally, it is likely that increased competition in the provision of financial services globally will take place and that this will have an influence in Ireland with potential new entrants to both bank and non-bank lending, deposit-taking and payments markets for households and businesses.

The European Union’s initiatives in the context of the capital markets union, which aims to improve the provision of financial services across borders within the Union, also have the potential to further improve levels of choice regarding savings and investments for consumers, and to improve access to finance for businesses in the Irish economy. Further, the scope for provision of services within the Union will be enhanced by the adoption of digital financial technologies already under way.

Even in a concentrated banking system such as that in place in our economy in recent years, price competition is possible, particularly in a growing economy. Trends show that interest rates in Ireland have been falling in recent years, providing benefit to consumers. Interest rates on new mortgages, excluding renegotiated mortgages, have fallen from 4.05% in December 2014 to 2.73% in October 2021. SME and consumer loans interest rates have also declined over the same period. I fully appreciate that enhanced sustainable competition in the market will be of benefit to consumers. Accordingly, the review of the retail banking market which is now under way in the Department of Finance will assess various aspects of the banking market and will consider options to encourage greater competition in the credit and banking market, including possible options to develop the mortgage market.

I want to pick up on one of the last points. The Minister of State mentioned the very welcome decline in interest rates to an average of 2.73% in this State in October but we have to remember that compares to a eurozone average of 1.28%, so it is more than double the average for comparative European markets. To put that into actual figures, the average Irish mortgage holder will pay almost €180 a month more for every month of their mortgage compared to the European average, so that can total €2,200 a year. The Minister of State rightly points to what is a concern that those of us who sit on the finance committee have been going through for the past year, namely, the announced departure of two very significant lenders from this market in the last calendar year. This is very worrying. Their replacement by new lending options has been welcome but, we have to be frank, it is not a great deal. We cannot replace the likes of Ulster Bank with what we are seeing coming into the market. It was absolutely a pillar of Irish lending for over a century.

The Minister of State referred to the opportunities within the capital markets union. The Minister, Deputy Donohoe, is in Brussels today to discuss that at the eurozone meeting as President of the Eurogroup. I ask the Minister of State where is the enthusiasm and the rush to actually get this done.

As I said, there has been a reduction, although I understand the Deputy’s point that despite the 2.73% rate available since October this year, it is higher than European norms. In truth, the reason for that is multifaceted.

While the credit risks and capital requirements in Ireland are elevated due to the historic loan experience and loss experience, the level of non-performing loans is higher in Ireland relative to other European countries, which affects the cost of mortgages. I do not know why that is the case but it is a simple and straightforward statement of fact. The higher cost-to-income ratio has also been characterised by the Irish banking sector in recent years and low levels of competition in the Irish banking market compared with other jurisdictions can also have an impact on rates here.

It is important to note that new mortgage lending is running at a strong level. In monetary terms, mortgage lending in the first nine months of 2021 has amounted to €7.2 billion. This is 32% higher than in the same period last year and is now at the highest level of any year since 2008. In the last 13 years we had a much more muted mortgage market and the figures we have this year are higher than any period since 2008, which is good news for many people.

The Minister of State rightly says that this is a small market with unique challenges, particularly in the requirement for retained capital, but we are part of the world’s largest economic block and the Single Market. We see in so many different areas the opportunity and competition that present not just to Irish consumers but also to Irish exporters in terms of goods and services. One area where it is not being felt is in financial services, particularly lending and mortgages. While the declining interest rate is welcome, there is no equity in comparison with the average European mortgage holder. How are we going to utilise our membership of the Common Market over the next decade to give Irish mortgage holders greater choice and competition and cheaper mortgages?

On that issue generally, the European Central Bank, ECB, has a much greater role in overseeing and regulating the Irish banks. As time progresses the ECB will try to equalise all the issues with reserves across the various member states. We have had a historic higher level of defaulting, we had a higher level of people not paying mortgages and we still have a higher level of arrears, relative to other EU countries. As long as that is the case, it will have a knock-on effect on those people who are paying the interest rates. It is a little bit like insurance - if the costs are higher, it will be reflected in the costs to the people who are paying. The banking review that the Minister, Deputy Donohoe, established recently will examine the range of bank and non-bank providers involved in the provision of mortgages in Ireland. It will also assess the impact of competition, consumer choice and protection, and market and regional coverage of any financial area in the country.

Question No. 100 answered with Question No. 97.

Real Estate Investment Trusts

Thomas Gould


101. Deputy Thomas Gould asked the Minister for Finance the number of existing residential housing units that have been acquired by real estate investment trusts, REITS, and Irish real estate funds in each of the years 2018 to 2020, by county; his views on whether the tax advantages provided by both tax structures are justified with respect to the acquisition of existing dwellings; and if he will make a statement on the matter. [62339/21]

Martin Browne


123. Deputy Martin Browne asked the Minister for Finance the number of existing residential housing units that have been acquired by real estate investment trusts and Irish real estate funds in each of the years 2018 to 2020; his views on whether the tax advantages provided by both tax structures are justified with the respect to the acquisition of existing dwellings; and if he will make a statement on the matter. [62371/21]

Pearse Doherty


130. Deputy Pearse Doherty asked the Minister for Finance the number of existing residential housing units that have been acquired by real estate investment trusts and Irish real estate funds in each of the years 2018 to 2020; his views on whether the tax advantages provided by both tax structures are justified with the respect to the acquisition of existing dwellings; and if he will make a statement on the matter. [62365/21]

Violet-Anne Wynne


141. Deputy Violet-Anne Wynne asked the Minister for Finance the number of existing residential housing units that have been acquired by real estate investment trusts and Irish real estate funds in 2018, 2019 and 2020; his views on whether the tax advantages provided by both tax structures are justified with respect to the acquisition of existing dwellings; and if he will make a statement on the matter. [62330/21]

Can the Minister of State tell this House the number of existing residential housing units that have been acquired by REITs and real estate funds in each of the years from 2018 to 2020? I would also like the Minister of State’s views on whether the tax advantages provided by the tax structures for both are justified with respect to the acquisition of existing dwellings, given the extreme housing crisis we have.

I propose to take Questions Nos. 101, 123, 130 and 141 together.

Institutional investment in the commercial and residential property market continues to be critically important to ensure the ongoing supply of new housing. This is particularly the case in areas where there are viability challenges, in the area of high-density urban apartments for example. As with investment funds generally, tax occurs primarily at the level of the investor rather than within the fund and it is important to make that point. That is what most people would want. The end beneficiary should pay the tax, not the intermediary which is just the investment fund. It pays tax as well but the beneficiaries should be caught for most of the tax, as is currently the case.

Additionally, in the case of both Irish real estate funds, IREFs, and REITs, withholding taxes apply on distributions to investors to ensure collection of tax revenues. In 2019, I made a number of significant amendments to both regimes to ensure appropriate levels of tax are paid by investors in Irish property. Due to the small number of market participants within the REITs regime, and to protect taxpayer confidentiality, I am advised by Revenue that it is not possible to provide data with respect to the residential holdings of REITs. On IREFs, I am advised by Revenue that is not possible to provide data on the number of residential units acquired by IREFs in a year, or whether these units were existing dwellings, forward purchases or forward funding. However, I am advised that IREFs invested approximately €2 billion in residential assets in 2018; €3.5 billion in 2019; and €4.1 billion in 2020. A county breakdown of this investment is not available, with the exception of Dublin. IREFs invested approximately €1.9 billion in residential assets in Dublin in 2018; €3.1 billion in 2019; and €3.5 billion in 2020.

Notwithstanding this increased activity, it must also be recognised that institutional investors still account for a relatively small share of the residential housing market. According to the latest available CSO data, the real estate sector, a close proxy for institutional investors, accounted for just 3% of the purchases of all dwellings in 2020 and 6% of the purchases of new dwellings. According to CBRE Group, investors owned approximately 19,500 properties in 2020, accounting for less than 1% of the total housing stock.

In response to a previous question I mentioned that mortgages for private individuals this year alone were at their highest levels since 2008. So far this year the mortgages raised by people in this country have been worth €7.2 billion. When we add on the ambitious Housing for All programme with local authorities and approved housing bodies, people will see that the overwhelming majority of houses being built in the State are either provided through social housing by local authorities or approved housing bodies or through people getting their own mortgages, using the various schemes out there such as the help to buy scheme. The vast majority of houses are being purchased exclusively with beneficial ownership, be it the house owner, the local authority or the approved housing body.

The Minister of State will be aware that the CSO residential property price index report for October was published today. It shows that house prices across the State have risen by 13.5% annually. Families cannot afford to buy homes. As I have already told the House this week, there are families in Tipperary whose landlords have given them notice. They are looking to a rental market that is either non-existent or overpriced. The Minister of State will be well aware of the price of this starvation of the overall residential property of the market that has resulted from the advantages that continue to be given to these trusts and funds. In many areas of the country, these are contributing to the shortage of housing available because many are being sat upon with a view to increasing profits in the future, putting them further out of the reach of families. This is what we know about; what about the areas we do not know about? Can the Minister of State honestly say that the tax advantages continuing to be enjoyed by these funds are helping Irish families to get a roof over their heads? The Minister of State’s office, as well as mine, is getting those requests every week.

The Minister of State just said that the funds pay tax as well but they do not. They pay no corporation tax or capital gains tax. I have a quote from the Minister of State from an RTÉ Radio 1 interview he did earlier this year. He said that on any profits being made there is a tax of 20% or 25% depending on the structure and that any profits they make are taxed at a higher rate: "double the rate of corporation tax" as the Minister of State put it. We have looked at the figures and the Minister of State’s statement simply was not true. The figure of 17.9% the Minister of State was citing was relative to the taxable event, meaning distributions to shareholders; it was not relative to rental profits. In 2019 tax paid by IREFs relative to pre-tax profit was 9.1%, which was less than the 25% paid by any other landlord and less than the 12.5% paid by any other company. Furthermore we know these funds pay no capital gains tax or corporation tax whatsoever. The Government’s defence of these funds snapping up homes at the expense of renters and struggling home buyers is that they stimulate supply. However, the financial stability review published by the Central Bank last month found that the majority of residential units purchased by investment funds were existing and not new stock. That point was made on page 70 of that review.

I thank the Deputies for continuing to raise this issue. The essence of my point all along has been that the beneficial owners are the people who pay the tax by and large. The VAT and other small taxes are paid directly by the fund. There is a strong withholding tax regime in place for the transfer of funds.

For example, in the Irish REITs market, including Hibernia, IRES and Newgrove, the amount of gross dividend withholding tax paid was €15.3 million in 2021; €13.4 million in 2020; and €12.2 million in 2019. These are very substantial figures that are worthy of mention. Individuals are also liable to tax at their marginal tax rates over and above the withholding tax rate. Corporates are liable to tax at 25%, with credit for dividend withholding tax. Institutional portfolio investors are liable to tax on their REIT dividends at 12.5%, which is the rate generally applicable to trading income.

As I mentioned, the overall issue is housing supply. The €7.2 billion in mortgages issued to private individuals this year is a record and the highest it has been since 2008. The amount of funding going into local authority housing, social housing and approved housing bodies is hugely significant. In the vast majority of cases, the beneficial owners of the new housing being built will be private individuals, local authorities or approved housing bodies and only in a minority of cases will the beneficial owners be these funds.

Written Answers are published on the Oireachtas website.