Brexit and Readiness of Businesses, Employees and Communities: Discussion

We will move on to the next item on the agenda, which is a briefing on Brexit and the readiness of businesses, employees and communities with the coming into effect of the UK's decision to depart from the EU. To assist the committee in its consideration of this matter, I am pleased that we have been joined remotely today by representatives of IBEC, the Irish Congress of Trade Unions, ICTU, and Border Communities Against Brexit. I welcome from IBEC, Mr. Fergal O'Brien, director of policy and public affairs, and Mr. Neil Willoughby, senior executive, European affairs; from ICTU, Ms Patricia King, general secretary; and from Border Communities Against Brexit, Mr. Tom Murray and Mr. J.J. O'Hara. All witnesses are joining us online.

Before we start, I wish to explain some limitations to parliamentary privilege and the practice of the House as regards references witnesses may make to other persons in their evidence. The evidence of witnesses physically present, or who give evidence from within the parliamentary precincts, is protected pursuant to both the Constitution and statute by absolute privilege. However, today's witnesses are giving their evidence remotely from a place outside of the parliamentary precincts and, as such, may not benefit from the same level of immunity from legal proceedings as a witness physically present does. Witnesses are again reminded of the long-standing parliamentary practice that one should not criticise or make charges against a person or entity by name or in such a way as to make him or her identifiable, or otherwise engage in a speech that may be regarded as damaging to the good name of the person or entity. Therefore, if a witness's statement is potentially defamatory with regard to an identified person or entity, he or she will be directed to discontinue his or her remarks. It is imperative that witnesses comply with any such direction we give them.

We now move on to the opening statements, which have been circulated to all the members. To commence our consideration of this matter, I invite Mr. O'Brien from IBEC to make the opening statement. Unfortunately, due to Covid-19 restrictions, I stress the need for all witnesses to limit their opening briefing to five minutes or less.

Mr. Fergal O'Brien

I thank the Chairman and members of the committee very much for the invitation to join them this morning. IBEC, as Ireland’s largest business organisation, has since the UK referendum on 23 June 2016 been working intensively to support our member companies as they manage the ongoing uncertainty and plan for both the known and the potential disruption when the current transition period ends.

The central priority of the IBEC Brexit campaign has and will continue to be to provide our members with clear and actionable guidance in preparation for 1 January. We have delivered this through a comprehensive suite of planning documents, a broad range of technical and political seminars and events as well as a whole range of insights and expertise from our specialist staff.

We have a large number of staff, both at IBEC level and through all our trade associations, working almost continuously and directly on Brexit. In line with the expected impact of Brexit, this campaign has focused on four central themes: trade in goods; trade in services; the all-island economy and the implementation of the protocol, which is a key issue for business; and the labour market.

IBEC has held an extensive series of virtual events and briefings to provide practical guidance and advice to members on the range of critical issues we believe they will face. As part of our programme, since September we have hosted dedicated sessions on customs, trade and VAT preparations, international data transfers, a range of broader business readiness issues, the UK land bridge and direct routes to the Continent from a shipping perspective, and the all-island economy. The campaign has collaborated closely with a range of key stakeholders and decision makers in Dublin, London and Brussels. These include the Revenue Commissioners, the Department of Transport, the Department of Enterprise, Trade and Employment, the Data Protection Commission, the Department of Foreign Affairs and, outside Ireland, the UK Government and the European Commission. In total, since September last, over 2,000 IBEC business members have engaged with these sessions. It has been very broad and extensive.

We must remind ourselves that earlier this year, on 31 January, only the political Brexit took place. The economic Brexit will take place on 1 January. The transition period is ending in less than four weeks. The UK will depart the EU Single Market and customs union. As of today, and given how little time there is left, many business still do not have clear information on the trading conditions that will apply for goods and services between Ireland and Britain from 1 January 2021. We welcome the fact that the EU and the UK continue to engage positively in difficult negotiations on their future relationship, including on the necessity of a basic trade agreement. Our concern is that now there is insufficient time for businesses to adjust to the outcomes of a prospective agreement, if indeed it is reached. This transition period was presented to business as a period for accustoming to the known changes of Brexit. I remind the committee it was intended to commence on 29 March 2019, then 31 October 2019, before eventually beginning on 31 January 2020. While business prepares for the known effects of the UK departing the EU customs union, the transition period has instead continued to be a negotiation period. It has left businesses with no lead time to implement significant changes and continued uncertainty rather than the promised clarity.

Irish businesses, from multinational companies to small and medium enterprises, SMEs, have been working diligently and are committed to ensuring they are as prepared as possible for the end of the Brexit transition period, in terms of engaging both with the EU and the UK. However, it must be acknowledged and understood that business has been preparing for the unknown in uniquely challenging circumstances, with the dual threat of the continued, extraordinary uncertainty posed by Brexit combined with the evolving consequences of Covid-19. In addition, there remain significant gaps in clarity on the rules which will apply to businesses trading goods with Britain from 1 January next.

Despite its limitations, the bare bones future relationship agreement under negotiation would be vital for Irish business. First and foremost, it would crucially avoid the EU and UK for the first time trading on WTO terms and the subsequent introduction of tariffs and quotas. If such a deal is not agreed, it would be a further blow to fragile confidence, reduce economic growth in the short term materially and impair potential recovery in future years. Until there is clarity on whether tariffs will be introduced, businesses cannot fully prepare for the future. With the UK Government’s introduction of the Internal Market Bill, we have seen that the full implementation of the withdrawal agreement and protocol on Ireland and Northern Ireland cannot be taken for granted. Members of the committee will be aware of its vital importance for avoiding a hard border on the island of Ireland and protecting the Good Friday Agreement, while also safeguarding the integrity of the EU Single Market. The protocol is critical for business by ensuring the continuation of the common travel area and protecting North-South co-operation towards the advancement of initiatives of mutual interest on our shared island. As of today, people, communities and businesses both North and South do not have the assurances they need that the protocol will be fully implemented and, crucially, operational by 1 January.

Over recent months IBEC’s work to support contingency planning has intensified. We have produced comprehensive guidance for business and have hosted numerous events, as I mentioned, providing a range of detailed expert insight into the complex issues that will need to be managed from 1 January. While our members are very aware of the risks and are planning accordingly, it would be wrong to suggest that business, or the wider economy for that matter, could ever be fully ready for the profound, overnight changes that the end of the transition period will bring. Despite the best efforts of business, successfully adjusting in a short timeframe, when so many specifics are still not known, to a radically new trading and economic relationship with one of our closest trading partners is neither possible nor realistic, particularly for companies in the most exposed sectors. What we know is that the imposition of very high WTO tariffs on certain products, combined with additional customs and regulatory barriers, would cause major trade and economic disruption.

The political brinksmanship involved in setting non-credible deadlines, both in the past and in the future relationship negotiations, has already cost the business community. Additional collateral damage must be avoided. While most larger companies have comprehensive plans in place, and IBEC's member companies are as prepared as we can expect them to be for 1 January, we are concerned that a number of SMEs are still working to be prepared. Despite major information campaigns, some companies have yet to register for the economic operators registration and identification, EORI, number and take the further steps that will be necessary to continue to trade post Brexit.

While IBEC’s work to support contingency planning will continue, it must be stressed that significant Government and EU intervention will be required to protect jobs and businesses should an agreement not be reached. The Government must bear the ensuing uncertainty in mind and ensure that adequate and agile supports are available to businesses in early January and beyond as the practical consequences of Brexit become apparent. These supports must prioritise and be quickly available to the worst affected sectors to offset the economic consequences of Brexit.

Can you finish your contribution, Mr. O'Brien? You are over time.

Mr. Fergal O'Brien

That is the conclusion of my remarks. Thank you, Chairman. I and my colleague, Mr. Willoughby, will be happy to answer members' questions.

We will return to that. I apologise, but we are constrained due to Covid-19. We must be strict about the time. Thank you for your contribution. I invite Ms King to make her opening statement on behalf of the Irish Congress of Trade Unions, ICTU.

Ms Patricia King

We welcome the opportunity to appear before the committee. The Irish Congress of Trade Unions is a civil society organisation representing approximately 700,000 workers across the island of Ireland. While we are discussing the issue of readiness for Brexit, I wish to emphasise at the outset the importance of ensuring full adherence to the Good Friday Agreement and the European Convention on Human Rights in a future EU-UK agreement, if there is one. With regard to the matter at hand, I acknowledge the work to date that has been done by the Department of Foreign Affairs, civil servants and stakeholders, including many businesses, to prepare, but I also wish to express concern, as the Taoiseach did last week, about the complacency of some businesses that have not prepared. Last Friday’s Enterprise Ireland survey revealed that only 42% of businesses believe they are ready.

It is clear that while the pandemic is having the greatest impact on employment, Brexit has major consequences for many workers. The Department of Finance estimates that a no-deal outcome would increase unemployment by 0.25% next year - that is up to 10,000 workers losing their jobs as a direct consequence of Brexit. We believe, and all the indicators show, that the impact would be concentrated in agrifood, traditional manufacturing and financial services. Those sectors have been relatively less affected by Covid-19, but they are also sectors with strong regional footprints, with agrifood and traditional manufacturing in rural areas and financial services in urban areas.

Congress has therefore put forward a number of measures to prepare workers. First, we believe there should be a genuine short-time working scheme to support the jobs and incomes of workers whose firms are vulnerable but viable. This should be modelled on the most effective schemes in other European countries, schemes that support a high level of net pay and, hence, aggregate demand and upskilling.

Recently, we proposed a retraining programme for workers at risk. Last spring, the OECD highlighted that Irish businesses provide less training to employees than other OECD countries where only one in ten manufacturing workers in Ireland took part in training in 2019, compared to one in four in Sweden and Finland.

Third, there should be a job transition programme to help workers made redundant find re-employment. This should be modelled on the European Globalisation Adjustment Fund, EGAF, which has helped more than 10,000 workers in Ireland since 2007. We believe these complementary measures could ensure workers are better prepared.

What would enhance their chances of success is a deeper, indeed a proper, social dialogue between employers and unions on these matters. It is widely acknowledged that Germany’s short-time work scheme is the model to emulate; the IMF calls it the gold standard. What is less often acknowledged is that what makes this scheme truly effective are the sectoral level collective agreements that accompany it. Germany’s official scheme supports 60% of net pay, but this can be, and is, accompanied by sectoral agreements that support 75% to 100% of net pay and facilitate restructuring. Consequently, firms and workers emerge better placed for recovery. The OECD also points out that workers covered by collective agreements are one third more likely to take part in training than those who are not, and that the most effective job transition programmes are those based on social dialogue.

Social dialogue, in short, can ensure that businesses, employees and communities are ready for Brexit, and indeed for other major employment challenges we must address over the coming years, including climate change, automation, and digitalisation, which should all form the basis of a much better social dialogue model. The European Commission President, Ursula von der Leyen, said she is "a firm believer in the value of social dialogue between employers and unions, the people who know their sector … the best."

Mr. Tom Murray

Gabhaim buíochas leis an gcoiste as an deis seo le labhairt fá choinne tionchar an Bhreatimeachta ar an bpobal agus lucht gnó thart ar an Teorainn. Is mise Tom Ó Muireadhaigh, poitigéir as Dún na nGall agus liom inniu tá J.J. O'Hara, fearr gnó san earnáil turasóireachta agus teicneolaíochta as Contae Liatroma.

Border Communities Against Brexit was formed approximately four years ago as we recognised the threat of Brexit to the economic and social well-being of the communities on both sides of the Border. As representatives of civic society, we have lobbied and highlighted the many issues which concern us about Brexit in the EU, in Dublin, London and the USA. We have had several meetings with our own Government, with Michel Barnier, Guy Verhofstadt, Nancy Pelosi among many others.

A common thread runs through the things we will discuss today. There is a lack of clarity and inconsistency in information on Brexit. Brexit has already happened. Britain left the EU, the transition period now ends on 31 December and there is no tangible difference so far and less understanding of what will happen in January. Many important deadlines have passed and thus far there has been no real change at employee or business level. This has led to a certain complacency, disinterest and disconnect between employees, businesses and Brexit. There is a strongly held belief that there will be some form of deal and that all issues relating to Brexit will be resolved at a business macro level or government level, but there is little engagement at a micro level and little understanding at SME or employee level.

Information or detail about the implications of Brexit for supply routes, importation, exportation and associated paperwork and bureaucracy is seriously deficient. This obviously comes from the lack of clarity at EU and British Government levels as to what form of deal may take place, if one does, and what effect that will have on the day-to-day running of business. There is an expectation of extra paperwork and possible shortages in supplies but little is clear. Furthermore, there is a serious evidence of a lack of common understanding of the North of Ireland protocol as already agreed. British Government action in respect of a breech of the international agreement has led to a level of further disengagement and caused further difficulties. It has also worsened the lack of clarity among employees and business around administrative details post Brexit. This requires urgent attention in the form of training and financial supports for businesses and employees, to help understand the impact of Brexit on day-to-day business.

We heard about the economic consequences of Brexit. This year it was overtaken by the economic consequences of the pandemic. We need people to re-engage at a business and employee levels about Brexit’s consequences. It will have an economic impact and it has a potential impact on job security. It is incumbent on business and Government to inform employees about their own financial planning, because of the potential impact that Brexit could have on their job security in SMEs and larger businesses.

On community preparedness, the level of integration across the Border of families, communities, sports teams, schools and community groups has been largely misunderstood and underestimated until Brexit. There is a widespread expectation among those groups that the free movement of people will continue and as such much of that integration will continue seamlessly. However, there is a fear in Border communities where Mr. O'Hara and I operate that the British Government might renege on agreements around free movement as enshrined in the Good Friday Agreement. Their recent actions on the North of Ireland protocol have seriously undermined trust.

There is also a fear due to lack of knowledge about cross-Border funding and PEACE funding for Border area community initiatives. The lack of clarity and constant moving of goal posts has worsened that. We need clarity and information. There is a very short time for community groups and those living on either side of the Border to implement changes.

On business, various outcomes are possible and each requires different planning. All business on the island of Ireland is under great pressure from uncertainty surrounding Brexit and the current pandemic. We expected to see funding supports rolled out across the country. We understand the Strategic Banking Corporation of Ireland, SBCI, has dried up. The partner financial institutions tell businesses there is very little funding left for business.

There is evidence of great deprivation in recent years because of the Border’s presence. There was some economic resurgence since the peace process but there is urgent need for investment in infrastructure and financial supports in this area. Under the Border Enterprise Development Fund, BEDF, we expected around €400 million of investment in the region, but only around €15 million has been delivered to date. The Border regions have suffered massive financial hardships and lack of growth due to the presence of the Border. Efforts to revitalise sustainable communities in the area have been damaged by the pandemic.

Anecdotal evidence from newspaper reports tell of youth unemployment among those under 25 years at more than 40% in Border areas. This is unsustainable for any community. It is impossible for us to sustain and grow communities in this area where there are such high levels of youth unemployment. We implore the Government to seek strategic investment to rebrand tourism in the area, particularly in counties Donegal, Sligo and Leitrim to revitalise the industry in these areas and to maintain jobs for our young people so that we can maintain our communities into the future.

The elephant in the room is the threat of Internal Market Bill in that goods produced in Britain must be available on the market in North of Ireland. Depending on the nature of the international deals agreed by the British Government, this could include chlorinated chicken, GM foods and other goods which are not acceptable to the European Single Market. There is a risk of these goods leaking into the EU market area through the Border. We need clarity on whether that will be protected. Will some sort of customs border be established on the island of Ireland, which would be against the spirit of the Good Friday Agreement? What protections will be put in place if we cannot guarantee the safety of the market of the North of Ireland in the South, we could see Ireland as a whole become some sort of annex to the EU Single Market? That must be addressed.

I must stop Mr. Murray as he is over time and we must be strict about meeting times due to Covid restrictions.

I apologise before I start. I must go to the convention centre where the Dáil is sitting today, so I cannot stay for the full meeting, but I will catch up on its proceedings later.

Reference was made to the need for adequate and agile supports. That was made in the context of business, but adequate and agile supports could be made in the context of communities and workers as well as business. What might those adequate and agile supports be? What level of dialogue has taken place to date? Ms King from ICTU has described very well the value and importance of dialogue, but there is no use in saying it is a good idea if it is not actually happening.

Ms Patricia King

I will answer the Deputy's questions. Throughout 2019, congress, in its own right, took several initiatives to speak to various Departments about developing a comprehensive short-time working scheme that would not be just a reflection of the current scheme, but would be one focused on a Brexit scenario involving companies that were going to be in difficulty for some time but had all the prospects of being viable. As I said in my submission, this would mirror the scheme in Germany. How could we develop that in Ireland?

I visited a number of Departments, on one occasion in concert with IBEC. Unfortunately, the response from those Departments was quite slow. There was a lack of speed in taking ownership of the issue. I had to visit a number of Departments before I got anybody to take ownership of having a discussion about it. Eventually, I did. When we got to that stage, there was little enthusiasm for developing it until the very end. Covid took over then and we had no substantive conversations. In principle, I understand that the Departments of Social Protection and Enterprise, Trade and Employment are now more inclined to explore the possibility of a German-type model being introduced in Ireland. This is about keeping contact with the workplace, developing and upskilling people and having workers ready in the same employment when the company becomes viable again. The discussions have been slow. I was disappointed by the effort we had to put in to get people to take it on board and talk to us. I am also disappointed that we have not reached any agreement by now. We should have done so given what will happen by the end of the year.

With four weeks to go, is Ms King hopeful that such an agreement will be reached?

Ms Patricia King

All I can say is that there is no arrangement to meet anyone in respect of it.

That tells me all I need to know.

Mr. Fergal O'Brien

We have some concerns about the supports. We do not really have the details of how the Brexit contingency fund, as set out in the budget, will operate in practice. We also have concerns about the EU Brexit fund. Obviously, it is crucial for us to get our proportionate share given that Ireland will have some of the most affected business sectors of any economy in Europe.

I fully endorse Ms King's comments on the need for social dialogue, particularly in the context of the short-term working measures we regard as crucial. We have been calling for that since long before the Covid pandemic. I know we have again got caught up on a roof in the middle of a storm trying to fix this. We have not used the past six or eight months well even after we introduced the Covid emergency wage-subsidy supports.

We have been calling for an export credit insurance scheme for a number of years. With Brexit we know that companies will need to diversify out of the UK. Covid is also making that more difficult. People in SMEs in particular cannot travel to meet customers or potential customers in Europe in the same way that their competitors in other countries can. Their aviation is operating better than ours. They can get into a car or take a train. Our companies are feeling particularly remote and disadvantaged at the moment. Having an export credit scheme is crucial. We have been engaging with Government for a number of years on that, but it has not been brought into operation.

I am going to have to cut Mr. O'Brien short there because our time is tight.

Mr. Fergal O'Brien

More specifically, we need the Brexit preparedness on the ESSFs fixed in advance of 1 January in terms of the legislative measures.

I was very struck by the submission from Border Communities against Brexit on the high levels of unemployment, particularly along the Border. Do the witnesses from Border Communities against Brexit feel that enough has been done? Has there been a level of engagement that would indicate a realisation at the level of Government of the high levels of unemployment particularly youth unemployment?

What is the situation for people who cross the Border every day for work? What is the employment status of a worker who is not Irish-born, who is an EU citizen, who lives in Derry but who works in Donegal or who lives in Donegal and works in Derry? What protections do these people have?

Mr. Tom Murray

I will take the second part and let Mr. O'Hara take the first.

Mr. John James O'Hara

Investment needs to be made right along the Border. We have been developing tourism and technology under industry 4.0. It is a development to look at new projects under youth unemployment. It is focused on young people and where new technologies within Europe are being developed. One fund was funded by the BEDF. The total funding for that was €15 million and this should be increased. Originally, €400 million from the Brexit fund was to go towards industry. This has not happened and only €15 million has come out in the past 12 months. To make a real investment in our young people, we need to develop the brand tourism and technology. We need people for the future, young people who can go into a new market. Ireland is lagging behind by five years in technology. Industry for technology, robotics, cobotics, artificial intelligence, augmented reality, virtual reality, 3D printing and 4D printing are all areas students in the Border region can capitalise on. We have six colleges on both sides of the Border that can educate the staff and encourage new companies to come to these areas.

Mr. Tom Murray

I will take the second part of Deputy O'Reilly's question. Non-Irish-born EU citizens are not covered under the free movement of people directive and it is not addressed in the current withdrawal agreement or the Northern Ireland protocol. There is no guarantee of free movement of people. For example, if a building contractor is working on both sides of the Border and has a Polish employee, nothing allows for the free movement of that employee across the Border, North and South. There is an expectation of some bureaucratic arrangement being put in place, but that has not been established yet.

People working on either side of the Border are finding it extremely difficult to get mortgages through the banking and financial institutions because they are not applying same multiple of salary to people who work and live on either side of the Border. For example, a couple living in Donegal where one works in Derry and one works in Donegal do not get the same multiple applied to their mortgage application and they are having serious difficulty in obtaining funding for mortgages.

I thank the three people who presented this morning. I am struck by the unanimity between IBEC and ICTU on the importance of the short-time work scheme. I apologise that I need to go straight to a Council of Europe meeting after this. Are any further engagements planned with the Departments regarding that short-time work scheme in the coming week?

Ms Patricia King

No.

Mr. Fergal O'Brien

IBEC is in ongoing engagement. We are also conscious that other legislation will be needed, particularly on the wage subsidy supports to support the Brexit-ready firms. There is probably a parallel approach on this for now.

I want to express my extreme concern, given the importance placed on this short-time working scheme by both IBEC and ICTU, that we do not seem to have sufficient engagement from the Government on it at this time.

I wish to ask about the threat that Brexit potentially poses to existing terms and conditions of employment. ICTU has highlighted previously the danger of a race to the bottom and I note Mr. Michel Barnier's comments that competing on social and environmental standards, rather than on skills, innovation and quality, leads only to "a race to the bottom that puts workers, consumers, and the planet on the losing side". How do we avoid a race to the bottom after Brexit?

Ms Patricia King

I would argue that this is going to be one of the most difficult consequences of Brexit, particularly if there is no deal on what has been described as the level playing pitch. Workers' rights are one of the key issues under that heading and if the UK Government wishes to legislate for and introduce its own suite of measures relating to workers' rights- a desire it has expressed previously - that will put enormous pressure on companies trading with the UK, post Brexit and will, in turn, mean pressure on workers. If the UK has lesser terms and conditions, pressure will fall on those companies in Ireland with a trading relationship with the UK to emulate those terms and conditions on a labour costs basis. In my judgment, that has huge potential to cause great fractiousness between workers and employers. It will also probably heighten industrial dispute issues. It will be a new dawn in one sense because while the UK was in Europe, the Single Market meant we never had to deal with such issues because the playing pitch was level. If it becomes uneven, that will be very fractious from our point of view. Again, I must say I am disappointed that nobody at central level is having any discussion with us about this. We do not know whether an agreement will be reached this week which will avoid the consequences outlined by Senator Gavan, but if there is no agreement there is huge potential for fractiousness in the Irish labour market.

Mr. Neil Willoughby

We are in full agreement with what Ms King has just said. This is the most difficult negotiating point between the EU and the UK. The level playing field is not only about state aid and business subsidies but also about social and environmental standards and standards for workers. The EU has made it clear, with the unanimous support of member states, that there will not be an overall agreement without agreement on this level playing field and all of the related issues. This is something that we strongly support and we hope that there will be agreement. Obviously, in the event of no deal, there is quite a lot of concern about the consequences. The EU has made clear that a future trading relationship is dependent on a level playing field with regard to social and environmental standards.

I thank the witnesses. I only have 20 seconds left so I will ask the representative from Border Communities Against Brexit a simple question. He said that there is a serious information deficit with regard to the implications of Brexit for supply routes, importation, exportation and the associated paperwork and bureaucracy. Are we facing chaos on 1 January 2021?

Mr. Tom Murray

Potentially, yes. Until we get clarity on exactly what is required and the day-to-day changes that Brexit will imply at a business level, we are potentially facing chaos. We do not know if imports will come in freely or whether we will be able to export freely. We do not know what level of paperwork will be required or what VAT or other levies may be applied. We are potentially facing chaos because of the lack of instruction and clarity less than 30 days out from Brexit.

I just would like to finish by saying that I am extremely concerned by what we have heard this morning. This is serious testimony from people who really know what they are talking about because they are at the coalface. Let us hope the Government responds this week.

I welcome our guests to this meeting. As Senator Gavan has just said, the word chaos has been used. Tá sé uafásach, gan dabht. I have been alarmed over this for a long time. It has been obscured by the fog of Covid-19 but this is just horrific. There is no other way to describe it. A deal would be terrible but a no-deal outcome would be absolutely unbearable.

I am struck by a lot of what has been said here, including the fact that 42% of companies feel they are not prepared. How can any company be prepared when it does not know what to prepare for? The fact that more than 40% of companies are not engaged is quite concerning. I agree that social dialogue is hugely important, as argued by all of the contributors this morning. I was struck by what the representatives from Border Communities Against Brexit said about the level of integration across the Border of families, communities, sports teams, schools and community groups being largely misunderstood and underestimated. That is an extremely powerful statement and Brexit has the potential to impact in a very negative way.

I know that Ministers and officials across all Departments have been working extremely hard on this for quite a while. They are as frustrated as anyone else at the lack of clarity at this stage, with only a small number of days remaining until 1 January. The transport of goods across the land bridge is one issue of major concern. Some efforts have been made to develop direct links to the Continent. A lot of our exports go to the UK but the importance of the back haul from Europe should not be underestimated. Many companies use the land bridge and bring goods back into the UK from Europe as a way of financing their operations. How might that be affected? We do not know because if there is a deal, we do not know what will it be like. I am not sure what the Government here can do but I do agree that workers and companies need support.

The one word that came through in all of the presentations was uncertainty. The lack of clarity at this very late stage is difficult and it is very hard to know what questions to ask of our witnesses. We are operating in a kind of vacuum and do not know what kind of outcome will present itself. I hope that some agreement is reached but if not, what will the WTO rules mean?

This committee has been asking that particular question since 2016. I invite the witnesses to respond.

Mr. Fergal O'Brien

I thank Deputy Stanton for the questions. I do not think we are going to have chaos on 1 January but I do think we have a lot of challenges facing us next year. The issues that have been mentioned around logistics, direct shipping and the land bridge are all of concern to business and we continue to work on them. Many of our companies have de-risked the land bridge option completely by putting direct shipping options in place.

On the specific question of what no-deal means for businesses, there are two issues. First, all of the other issues that still need to be worked out between the EU and UK become a lot more difficult without the platform of a bare-bones trade agreement. We know that there are lots of details still to be worked out but if we get that bare-bones trade deal in the coming weeks, it allows us to continue very positive engagement in the weeks and months ahead. Second, if we are facing tariffs for our food and drink industry, for example, we are looking at something in the region of €1.5 billion in additional costs on Irish business. In some sectors and sub-sectors, that will be an unbearable cost. Right now, less than four weeks out, how are companies to price their products commercially for the UK market when they do not know whether tariffs will apply?

Those are the big issues with which businesses are dealing right now.

Ms Patricia King

I agree with the Deputy that it is extraordinarily difficult to make any prediction in the absence of knowing whether there will be a thin, bare bones agreement. That will be instructive in terms of how all these matters are dealt with. I do not disagree with the projection made by Mr. O'Brien in terms of how catastrophic this could be for certain industries, areas and regions. For instance, 83% of those who work in the food processing and manufacturing sector work outside city centres. There are significant challenges in getting to a place whereby those jobs can quickly or easily be replaced in their current locations such that workers are re-employed. In the event of a no-deal Brexit, the risk is heightened in terms of tariffs, costs outlay and all of that. It would lessen the chances of those companies remaining viable and the workers continuing to be employed. All of those benchmarks become very problematic in the case of a no-deal Brexit yet, three and a half weeks away from the date of Brexit, we do not know whether we will have some sort of an agreement. That really emphasises the difficulty in this area. I think the Deputy is right to say that the significant uncertainty around this issue is one of the key problems we have.

I thank our guests. I am on quorum duty in the convention centre, so I may have to dash if a bell rings. From the Government perspective, €5.4 billion has been set aside in the budget as a contingency and conscious of the fact that there are many uncertainties and that the Government has to be prepared for various eventualities to which we would have to respond. One of the important things is to try to identify the areas in which we may use that funding.

Mr. Murray commented that credit has been exhausted. Is that a problem just around the Border region or is it prevalent throughout the country? I read comments to the contrary which stated that businesses did not wish to take up the credit. If that is an issue, I am sure it can be addressed.

I absolutely agree with Ms King about the need for a significant shift in education and training. To what extent are the institutions responding to that need in terms of employers investing more in training, but also in terms of education institutions devoting more of their time in a flexible way to people who are already in the workforce? Is that happening?

There is a fear that there will be disruption in Dover and other crossing points. To what extent have employers tested the contingency arrangements that are in place to find other routes? Has that been stress-tested to any significant degree?

Mr. Tom Murray

On the point about the SBCI, the evidence I have obviously relates to Border areas because Border Communities Against Brexit exists on both sides of the Border. The evidence we have is certainly regional-based. I cannot comment on the national picture. I have personal experience of applying for the SBCI and being told the funds were exhausted. My experience in Donegal is that it was exhausted, but I was led to believe that the financial institutions involved were talking about their national pictures. They did not tell me there was a regional fund for each section, area or province; it was that the SBCI funds had been exhausted.

Mr. John James O'Hara

I will come in on that issue. We checked with SBCI and the SBCI loan fund of one of the major banks had been exhausted. The SBCI loan scheme was meant to be a support for companies in need of assistance. It was 80% guaranteed by the Government. The major bank in Ireland did not have funds in its facility to issue loans to businesses. That is a major problem, especially in the context of Brexit. We see three possible scenarios in terms of Brexit. I find it difficult to believe that any company can be ready for any of those three scenarios. Support is needed. If the banks that are meant to be supporting the SBCI scheme cannot fund it at this stage, three weeks from a deadline, that is very worrying for us.

Mr. Fergal O'Brien

The availability of credit and finance issues is something IBEC has been tracking very closely recently, working with the Department. It publishes its data on a regular basis now, which is very useful. What we have observed is probably a varying take-up across the various schemes. Obviously, there are currently a range of schemes available, including Brexit-targeted schemes and Covid schemes. What we have found from our members in recent weeks is that there is very strong demand for longer-term loan funds, particularly the seven to ten year loan funds with lower interest rates and some flexibility around repayment terms. We are aware of the official numbers that have been published but we also understand that the pipeline is very active. On some of the credit schemes that are available, there is probably a need for a reallocation of resources and an increased allocation into credit financing generally in terms of Brexit supports. The take-up of some schemes has been low. It is important that we recognise there is varying take-up across the various schemes.

Ms Patricia King

I will deal with the question relating to education. One of the key components of attempting to put in place a short-time work agreement, for instance, is training. The take-up of training will be low if people believe that it will mean lower income for them. The whole idea of having a comprehensive short-time working agreement is that people can train and their income will be covered under the agreement. Indeed, in spring the OECD recommended that Ireland should introduce a statutory training leave for workers. If a model is to be developed whereby workers will be reskilled either because of a diversification route a company is going to pursue and take up or in order to retrain and reskill for alternative employment while still connected with the workplace, we will have to ensure it is opportune for people to take it up and that they feel they can do so in the context of their income. At the moment, we are not in discussions on that issue. We should be in those discussions and much further along in the development of that model. The new Department of Further and Higher Education, Research, Innovation and Science has an opportunity to focus on all of this. It is currently having a very good look at the issue through a review process, for instance, on the whole area of apprenticeship training and so on. As members are aware, apprenticeships have expanded far beyond the traditional craft worker and construction routes. There are all sorts of other apprenticeships available, but they have not been developed to the level they ought to be developed. Some of the structures are in place to allow us to develop a proper upskilling and retraining programme but those discussions should be much more advanced than they actually are. One of the key things I hope the committee will recommend is that those discussions should happen and should be concluded fairly soon.

Deputy Bruton has a small amount of time remaining.

I have to leave to go to the Dáil Chamber. I will just listen in to the proceedings from now on.

I thank Ms King of ICTU, Mr. O'Brien and Mr. Willoughby of IBEC and Mr. Murray and Mr. O'Hara of Border Communities Against Brexit for attending this meeting of the committee. I echo the comments of Senator Gavan. I am alarmed that we have a situation whereby IBEC is proposing an enterprise stabilisation fund or scheme, particularly for the food and drink sector, and ICTU is proposing a not dissimilar scheme in terms of a short-time work scheme, but there has been no progress from the Government.

We urgently need the Government to make progress.

I ask all three groups to articulate the chilling effect created by the pandemic and uncertainty surrounding Brexit, which was articulated this morning, on expansion, investment and pay plans into 2021. Please outline the experience of member workers or member companies.

Mr. John James O'Hara

Investment needs to be made at a younger level, in innovation, research and development and education. What worries us in the Border communities is the fact that 45% of people under-25 are unemployed. We have three groups here with a great knowledge of real people on the ground so I ask that we are allowed to make a joint submission to the committee that outlines a solution and delivery model to make real projects and outline the implications of Brexit on Border communities. Unless we deal with the problem ourselves, stand up and go forward, a solution is not going to happen. We have to consider deliverable solutions. We have talked for the past four years. It is shocking to have 45% of people under-25 unemployed but we believe this time next 27% of people aged between 25 and 55 years will be unemployed and the only way forward is to come up with deliverable plans.

Obviously IBEC will have done its own internal research so I ask Mr. O'Brien to please outline IBEC's pay and investment plans for 2021.

Mr. Fergal O'Brien

The Irish economy is a phenomenon at the moment. We view all of these issues through the K shape and see many sectors of the economy continuing to perform incredibly strongly. The life sciences, technology and services sectors are all rapidly expanding, hiring and investing. On the downside of the K, it is very hard to disentangle Covid from Brexit right now and so many companies are dealing with similar challenges. I have seen previous research that indicated that the Brexit impact on individuals will be quite different from the Covid impact on individuals. In many cases, those people will be in the same regions and homes. I mean we could have someone working in tourism and someone working in food processing, for example. I am quite concerned about the regional impacts. Overall, the economy will perform quite strongly next year. There is going to be an unleashing of activity. We know that households have saved €1 billion extra every single month since the start of this crisis but that does not mean individuals, many companies and many regions are not going to be left behind because I think they will. The phenomenon of this year, despite what we have seen around Europe, is that the GDP of the Irish economy may not fall that much because some sectors are doing really well while others are not. It is a parallel economy that we have never seen before.

Ms Patricia King

This is where the pandemic and the Brexit chilling effect can overlap. First, there will be some turnover in the economy in areas like retail, and in some parts of accommodation and food. All one has to do is look across at the UK to see what is happening to the retail sector and some of that is going to happen in Ireland. Let us take a regional town where employment depends on a good manufacturing industry located on the outskirts, has solid retail outlets in the town and has some accommodation and food outlets in the town. Those are some of the basic components of the economic activity in a small or medium-sized regional town. If one presumes Brexit may cause turbulence in the manufacturing outlet located on the outskirts of the town, and the pandemic has affected retail and accommodation, then one is talking about a very bleak outlook for at least a number of years. Therefore, one of the key pieces is to build on retraining and reskilling in order to have people prepared to enter the labour market albeit doing different jobs. Unfortunately, Ireland is very low in terms of how we respond on that.

With regard to the concerns articulated about the common travel area and workers' rights, particularly EU workers, is there any more that the Irish Government can do to protect workers on the Border in the circumstances that were outlined earlier?

At the start of this year it was announced that there would be a fund of €25 million provided for Border communities and people have articulated that the amount is not enough. What sectors are not accessing some of the funding at the moment?

The Strategic Banking Corporation of Ireland, SBCI, funding and other funding schemes have been made available. Mr. O'Brien has articulated that there has been strong demand for long-term funding. What about bridging funding and working capital for micro enterprises, and small and medium-sized enterprises? What do we know about the demand for such funding? Is there a gap in terms of putting in place funding supports for those firms?

Mr. Tom Murray

We addressed the issue of rights for EU citizens not born in Ireland and their free movement at a Zoom meeting with the Taoiseach two weeks ago. He said that he was aware of the issue and that he would try to progress same. It is not part of the macro agreement negotiations that are taking place because it is considered to be a relatively small issue when compared with the large issues of a level playing field, standards and investments. In terms of businesses operating in the Republic of Ireland and in the North of Ireland, it is quite a serious issue but I am not sure that there is any mechanism to address it at the moment.

Can I get a response from Mr. O'Brien?

We will have a second round of questions in two seconds.

I thank our guests for joining us this morning. Deputy Stanton highlighted the issues as being clarity, uncertainty about the supply chain, market access and pricing impacts. It is very hard to ask businesses anything when we say that they are not prepared for Brexit. We have to acknowledge that we do not know what Brexit will mean for many businesses. It is very hard to take a punt on investment when faced with complete uncertainty so I can understand the reticence of many businesses because Brexit is largely outside of their control. Ireland is largely an export-led economy so we worry about the future that Brexit will deliver.

Can the IBEC delegation explain why we are having difficulty with implementing additional export credit insurance and making it more widely available, particularly to smaller businesses? If not available, the businesses that did business with the UK will be forced to consider doing business outside of Ireland. Language is also a big issue.

Deputy Bruton said something about investment in other options and businesses trying to scope other options. I must point out that in the past number of years there has been continuous talk about the potential development of Rosslare Europort, which has not happened and there has not been significant investment. The latest talk is of a ferry service being provided by commercial concerns but not by Government. I cannot understand why we are still in that position but we are. We must consider the intent of the UK. There is a very large political intent that I am sure none of us here understands, and the EU is struggling with that.

I read an interesting statistic last night that the UK metal window and door industry is twice the size of the UK fishing industry and yet fishing has been held up as a hostage in the Brexit negotiations, which might tell us something.

Regarding the level playing field, I would have a concern about tax harmony in the EU in the future. We have seen moves again to discuss Ireland's corporate tax rate. That will be extremely important, particularly in light of a harder Brexit. Also, what the Border gentlemen referenced with respect to the telling statistic of under 25s unemployment and the possibility of some UK customs would be disastrous for the island of Ireland. As they rightly pointed out, it could cause an annexing of the whole Irish market and economy. We have major problems. None of us here has had a real input into Brexit. We will have to wait and see what is the shape of a deal or no-deal. Apart from Ms King's focus on short-time working, where are the opportunities in terms of a hard Brexit? Is there anything we should be proactively doing now to consider the worst case scenario and what can we do to protect the Irish economy as we go forward?

Mr. Fergal O'Brien

I thank the Deputy for raising those questions and I am happy to comment on some of them. At an overall level, what I see as the big challenge for the Irish economy from Brexit is risk to our competitiveness. The benefits of the UK and all of us being in the Single Market and a customs union for a period of decades have been very substantial for business and consumers. The untangling of that, which will happen almost overnight, will bring many extra costs to doing business and, unfortunately, for the consumers and across the economy we will see that in all the logistics issues that were mentioned. As I said, we are seeing a number of our companies derisking in opting for a direct shipping route but it all depends on the nature of the product. Time to market times become longer in most cases when opting for a direct shipping route. For some of the more perishable goods and depending on value and complexity of supply chains across the UK into EU, that will not always be possible. Where companies can do it they are seeking to do it and may have already done it. All these measures are bringing additional costs and that will be one of the underlying concerns for business.

On the competitiveness point, we are concerned we have not been able to progress an export credit insurance scheme, which we currently see in pretty much most other European countries. We are not sure what the blockage is but it is a missing part of our artillery to help companies that need to diversify into new markets. We would urgently ask the support of this committee to bring about that change of policy in government and get an export credit insurance scheme delivered.

Ms King referenced the short-time working agreement and highlighted the encouraging of training and upskilling. Most business is opportunity led and, first and foremost, they must significantly identify where their market opportunities are. We have the same problem in regional Waterford, as has been discussed on the Border. I refer to the idea of trying to identify opportunity and then having the workforce. It is not always possible, particularly with the market changes in AI digitisation and globalisation, to upskill people to that extent. Are there any other areas Ms King can highlight? It is great to say upskilling but what sectors was she targeting when she referred to upskilling workers from the current employment to new employment?

Ms Patricia King

Every company will be faced, first, with the challenge of what is their in light of Brexit, who do they trade with and if a major component part of their trade is with the UK, can they continue that in a no Brexit scenario? They have decisions to make. In light of the possibility of a no Brexit, are they exploring diversification to new markets and, if they are, what does that require them to do? There is the matter of the agility of their workforce to face up and quickly respond to new products they might have to produce for new markets. I would not like to give the impression that State agencies have been silent throughout this. State agencies such as Enterprise Ireland and Bord Bia have been working extraordinarily hard with these companies and many of them have responded well to that work by getting themselves Brexit ready and having the agility within their workforce to respond to the possibility of diversification into new markets and so.

Mr. Feargal O'Brien referred to the issue of the risk to competitiveness. If those companies decide they are best placed to continue to trade with the UK, competitive issues come in if there is a no-deal Brexit. That is where the race to the bottom starts. Those companies will be forced to say they need to be more competitiveness, that their labour costs, for instance, are too high compared to what is being done in the UK and the way companies can produce the same product for much less. That pressure will come on the workforces and the companies in Ireland and that will have a ricochet effect on what companies will expect in terms of pay, labour costs and so on. That is where the pinch point will be. It would be wrong to give the impression that companies have not been involved in very key discussions with State agencies and that the Government has not been attempting over a number of years to help people to place themselves better to cope with Brexit but, from our perspective, the pinch point that will come will be as I have described.

The point I have made throughout the discussion is that most companies will advise that reskilling, upskilling and training workers is a positive thing to do but they will also point out that it costs money and investment. In some cases they are afraid to make that investment because they might need that money in a post-Brexit scenario. There are many component parts to this. The uncertainty leads to the fact that we cannot answer all the questions but, from our point of view, education, upskilling, and retraining are never wasted and most companies would agree with that. All the big pharma, chemical, medical devices companies are doing very good training. Training is a complete part of their ongoing daily and weekly work. The smaller medium sized businesses are not placed in the same order as those bigger companies. Therefore, the State aid has to go into those to ensure they get everything they need to meet the agility that will be required in a post Brexit scenario.

I thank Ms King for her reply. I advise Deputy Shanahan we have run out time and I must move on. I call Senator Ahearn.

I thank our invited guests for their presentations. A common feature in this process in recent years has been the need for clarity. As previous speakers said, trying to ask the right questions is quite difficult. In many ways we are still as confused now 30 days out as we were when we were three years out and the same questions apply today as they did then. The amount of investment being put into being Brexit ready is positive, whether it be from the July stimulus package or the budget introduced in October, but that still does not resolve the issue of clarity for businesses, and having clarity is the key.

I have two questions, one for Mr. Feargal O'Brien of IBEC and one for Ms Patricia King. Mr. O'Brien may be aware that a letter was issued by Revenue last week to businesses across the country on the arrangements for imports and exports that need to happen on 1 January next. When we talk about having clarity and a lack of confusion, it works both ways. Businesses can be as prepared as they want but there are issues involved for them when they receive a letter such as this one from Revenue. There will be a requirement for them to submit trade notifications for outbound exports to ports. The letter also states they would have to go back to the Revenue system again to declare when the export load had arrived at ports. There are a number of requirements Revenue expects businesses to have to do on 1 January. In fairness, it seems to have rolled back on one or two of them in terms of a second trader notification.

I am thinking of businesses in my constituency like Bulmers in Clonmel, which is part of the C&C Group and exports in high volumes. A letter such as that would have significant ramifications in terms of being prepared in January. Has IBEC received concerns over the letter being sent out to businesses that export to the UK? Have businesses been in contact with the witnesses in terms of what is expected of them from Revenue's perspective? We talk constantly about businesses having a Brexit team and weekly meetings. Changes are happening all the time, depending on what happens in the UK in terms of the negotiations in Europe, but how can businesses possibly be prepared when something like this is thrown at them out of the blue by ourselves six weeks out from Brexit? That question is for IBEC.

I have a question for Ms King as well. Could she expand on the German short-time working scheme? Have we done any research on how many people we expect would need it or would come under it next year? Is there an estimated cost element to how much it would cost the State? We talk about businesses not being as prepared as they should be for Brexit. It has almost been forgotten about, and understandably so, for many reasons in recent months. Are certain business sectors not as prepared as others for Brexit? I think of the farming community and agribusinesses. How can we support them to prepare for Brexit next month?

Mr. Fergal O'Brien

On Revenue engagement, IBEC has been in ongoing contact with Revenue through all of this and we have done a series of events with our members. We are also a member of a customs consultative committee run by Revenue. I might ask my colleague, Mr. Willoughby, to join us on this as he has been leading a lot of the detail on it for IBEC.

Mr. Neil Willoughby

I echo what Mr. O'Brien said. The engagement between Revenue, IBEC and the wider business community has been excellent. I have not seen the communication from last week to which the Senator referred, but what has been outlined would not come as too much of a surprise for business. We have known that the UK has been divided on the customs union and the full information has been brought out in recent months from Revenue. We would not have too many concerns from that perspective.

There is a lot of burden on smaller enterprises. As Mr. O'Brien indicated in his opening statement, we still have concerns about their preparations and getting through them, as they are coming to it now. In general, it has been quite good. Where we would have more concerns is due to the requirements on the UK side. A lot of the information on the UK border operating model has only come out in recent months. Only last week did we get full information on the health export certificates for agri-food, for example. A lot of that information is coming in fresh now and so many businesses have to adapt to it within a very short timeframe before the end of the transition period.

Ms Patricia King

I will answer the Senator's question on the short-time working scheme. The scheme that operates in Germany is built on a tripartite model, that is, there is a contribution from all three elements - the state, the employer and the worker. Let us take a company that might have 200 workers. It is producing well at the moment in the non-Brexit scenario, but it knows that the product it is making is not going to be necessarily viable in the post-Brexit scenario. What would happen in Germany is that there is a dialogue between the state, the employer and the workforce. The contribution from the workforce would be the decrease in net income. In the case of Germany, on average, there is a 75% assurance of net income, so that is the contribution from the worker. The state and the employer would agree to put in a percentage to ensure that the 75% of net income was maintained. The workers would be retained in contact with the employer. The employer would have to demonstrate that it would have a prospect of viability in terms of diversification of market. For instance, if the product were to be sold in X, Y and Z countries outside of the UK it could take approximately two years to achieve that and it would need the workforce to be agile and trained up to do the work and therefore the training and upskilling would take time. Everybody agrees to take part in the project to get them to the place where they are at full production in two years when they have new markets opened, they are selling into them and they have the prospect of increasing their employment. That is the very positive piece that can happen. All three elements are investing in the company being ready for the diversified market within a certain period.

That is how the German scheme operates. It is forcing companies to look at finding alternatives to their current model and developing markets outside of the UK, which is what they are comfortable with at the moment. It is giving a sustained certainty to the income of the workers who stay with the company for the long haul and come out the other end with a full productivity in the new markets. That is the basis of the scheme.

We have had quite a successful scenario with the Department of Foreign Affairs, led by the Minister for Foreign Affairs, in recent years in terms of a Brexit stakeholder forum. We should convert that now into a Brexit social dialogue on all of these issues we are discussing this morning. We should be in there as we speak, looking at options. The point Senator Ahearn raised about Revenue indicates there is a lack of joined-up thinking there or that we are operating in silos. We should not allow those things to happen. That does not mean we ignore the fact that Revenue issues have to be dealt with, but we should have a dialogue where the issues relating to the short-time scheme, the export credit insurance scheme and other such issues could be discussed around the table and we could look for solutions and see what we are going to do to resolve them in a joined-up way. That is the value of having that dialogue. I suggest that the Brexit stakeholder forum needs to morph into a dialogue forum on these issues. That would be my offering in terms of attempting to find a solution.

First, we should probably get a note from the Department on the export credit insurance scheme and what its thinking is on that, given that the issue has been raised more than once.

I note that the Office for Budget Responsibility in the UK has predicted that a no-deal Brexit will lead to a negative impact over the next 15 years or so of about 6% of GDP. A no-deal Brexit would have serious impacts here, but it will also have a serious impact on the UK, which could have a knock-on effect on UK companies operating from here. We have already seen that happening in the retail trade, including in reports in recent days. Could I ask the witnesses from IBEC and ICTU what connections they have with their sister organisations in the UK? What are they saying about their perception of the impact of any kind of Brexit on business, employment and workers in the UK? Am I correct in saying that would also have a knock-on effect here? A negative impact on business in the UK could have a knock-on impact here as well.

My final question is for Mr. O'Brien. What are companies doing to pivot away from the UK market for exports and imports to markets elsewhere in Europe, for instance to substitute goods, materials and services, as they would not face tariffs or restrictions, as could happen with trade with the UK, no matter what kind of deal we have?

Ms Patricia King

I might just answer the question about our contacts in the UK. We have ongoing contact with the TUC and no later than last week we had a conference call with the general secretary of the TUC about all of this.

To be fair, the Irish Government and the Department of Foreign Affairs facilitated them coming to Ireland and having direct discussions, but they are very concerned about a race to the bottom in a no-deal scenario. They are very well acquainted with the possibilities and the consequences of that, and indeed the possibilities of it happening. Without straying into party politics, from their point of view, the current UK Government is more likely to engage in that sort of behaviour in the UK than not, so they have huge concerns about it. We are an all-island body, so the Northern Ireland aspect to this is a matter of grave concern to us, and we have worked hard with the Northern Ireland Executive and the TUC on all of the issues linked to the Northern Ireland aspect that affect workers. We are onto that and they have grave concerns, as we do, about the future.

Mr. Fergal O'Brien

I will start with engagement and the all-island issue, which is incredibly important, particularly the implementation of the protocol and the shared island initiative, which we know is such a priority for Government. IBEC has had a joint business council with its counterpart in Northern Ireland, the CBI, officially since the 1990s, and indeed has engaged with it for much longer. That engagement will never be as important as it will be in the next chapter. Businesses in the North are meeting with businesses with IBEC membership on an ongoing basis, and we are thrashing out some of the challenges to the all-island economy with Government. We are also engaging with our counterpart in London, the CBI, with manufacturers in the UK and a range of trade associations. What we find is that they are pointing out the realities and practicalities of what Brexit is going to mean for their businesses, and the challenges it will present, including for the cost of doing business. However, they are also looking to the future, because that is what they need to do as businesses. It looks to us like the UK's strategy will be to work hard to become more competitive, and it will spend a lot on innovation. I note the risks of triggering a race to the bottom, but I feel that the real challenge for the Irish business model will be remaining competitive on the higher value aspects of the economy, because that is what the UK will go after. It will seek to spend aggressively on innovation, research and development, education and skills. The entire innovation ecosystem, including the ranking of our universities, is going to be incredibly important. I would not rule out the UK making aggressive moves in respect of taxation, and that is the real threat to the Irish economic model, rather than a potential race to the bottom at the other end of the economy.

Mr. John James O'Hara

We have not mentioned the agricultural and tourism industries much today, and they are the two biggest industries on this island. The tourism industry is already on its knees. Tourism Ireland markets the whole of Ireland, and tourists visit this country and do a 360-degree tour of the island. A no-deal Brexit would have massive implications for every rural community, and would kill the hospitality businesses that are currently struggling, so it is an issue that must be looked at. It is the same with the agricultural sector. In the Border region, there are farms that straddle the Border and the communities there do not see a Border. In Leitrim, where I am from, for example, there is a farmer who is concerned about feeding his cattle around a bale which straddles North and South. The simple issues are causing concern, and we must look at the real people on the ground. We must look at the farming and tourism industries and communities, because they could be decimated. Tourism is a major player that brings income into rural economies every day, so we need to look at this properly.

The other question I had, which was for Mr. O'Brien, in particular, concerned pivoting to Europe and beyond.

Mr. Fergal O'Brien

There are two elements to this. We have been working with many of our members over the past three to four years on the supply chains, components and input aspects, to help them to understand the complexity of their supply chains - and not just the first layer of them, but also who are their suppliers getting their supplies from. We have seen many companies de-risk as a result of this. On the issue of diversification on the export side, it is interesting to note that our reliance on the UK has been reducing over the past ten or 20 years. Over the past ten years we have seen particular diversification across some sub-sectors of the food industry. The one area that we have not seen that diversification happen is in the beef industry. It links back to Mr. O'Hara's comments on the challenges for agriculture, and it is the sub-sector of the entire economy that I am most concerned about, because we have seen very little practical diversification out of the UK in respect of the reliance for our beef industry. It has happened in other parts of the economy and other parts of the food industry, but it has not happened in the beef industry, and that is worrying.

On the issue of the Brexit Stakeholders Forum, dialogue and joined-up thinking were mentioned. Such an approach is fundamental and I hope that all those involved, including Government representatives, deliver on that. There must be a renewed focus on this, and the forum must morph into a true stakeholder forum, as has been asserted here today. As we have seen with NPHET, this forum or any future forums concerning this issue must engage with senior industry leaders. They are not currently being included and yet they possess the most singular expertise in developing new business and markets, and understanding the strategic plans that need to be put in place to mitigate what Brexit brings with it. There also needs to be a real focus on community enterprise development. Mr. O'Hara spoke about issues in the Border region and they are issues that affect those in my constituency also. We have good community enterprise centres around the country that are largely being funded privately, and there is much good thinking and many capable people in those centres. We must try to build funding inside out, which is unfortunate. We need to get people together, and in order to do that, we must support them.

On the Border issue, the agrifood sector is a pivotal business area in the south east, and it is very exposed to Brexit. Like others, I am very concerned about this, but I think the future is going to be about green and sustainable agribusiness, agritourism and tourism potential. Therefore, I hope that any Brexit Stakeholders Forum will look beyond Brexit, because we all must look beyond it. Brexit is a fact and it has already happened, other than the mechanics of how the UK will exit the EU. We need to look forward. I ask the witnesses to keep my points in mind.

Ms Patricia King

I agree with the Deputy completely. All of those people with expertise, knowledge, and who will be driving the post-Brexit economy, should be involved. The forum should be known as the Post-Brexit Stakeholders Forum.

Mr. John James O'Hara

I would like to make one further comment. There is another big issue to be considered, namely, fracking. Despite a ban on fracking in the South, in a no-deal Brexit situation, fracking could still happen in the North of this island. Currently, research is being carried out in the North, through the Northern Ireland Executive, and it is something we must look at, because it could have big implications for our rural communities. Fracking should not happen on this island, because it will have major implications for areas such as tourism, health, and agriculture, so I ask this committee and other Oireachtas committees to look into the issue.

I would like to raise an issue that has come up repeatedly, namely, the risk that regional areas will suffer disproportionately in a no-deal Brexit scenario. I know a rural plan is currently being developed, there are regional enterprise strategies and regional skills forums, the national broadband plan is being rolled out and there is substantial money set aside in the national development plan for rural and town development. However, it seems people feel that those measures, which, in combination, are designed to address this issue, are not sufficient to do so. I am interested to hear about new policy tools for addressing this issue.

Mr. O'Hara mentioned some cutting-edge technologies coming our way. How do we, in practical terms, develop those in regions that do not have those sectors in place? Are there new things that Government should think about that are not on the agendas of those initiatives now in place?

Mr. John James O'Hara

The quarrying and construction industry has developed industry clusters, so developments should be specific to those industry clusters. We have a new project called W8 Innovation in Leitrim, which concentrates on the quarrying and construction industry under five different points and developing specifically for those industries. Others include science and technology, and agriculture and food, and we have space under Industry 4.0. These are real projects that are being developed in the Border region for industry clusters. Under the first one, we put 40 companies with more than 10,000 staff together and we made a real project with the help of Enterprise Ireland. Enterprise Ireland has been amazingly helpful. We got funding of €3.7 million for that project, which will bring 40 jobs in a three-year period, with 200 indirect jobs in the industry. This is the way we think this should be developed around Ireland and in innovation hubs.

Mr. Fergal O'Brien

I will offer a comment from IBEC. I thank Deputy Bruton for the input. I agree about the dislocation for our regions. When we overlap the Covid legacy and Brexit impact, the regional disparity will become a much more severe public policy issue. To build on what Mr. O'Hara is saying, the key to intervention is bringing agility into public policy. When I look at dislocation that we have seen in industry and in the economy and the past decade, some interventions that have worked well include resourcing institutes of technology, now the technological universities. Those are crucial to our regional development agenda. We have seen many examples of them being able to bring agility to work with companies that are either facing challenge or opportunity, to help them pivot, to get supports for innovation, to have upskilling, and to get the labour force resources through to those local and regional areas. That is a game changer.

We have many programmes that we know work well, whether it is Skillnet or Springboard, and there is a need to be deep and ambitious with innovation. The most significant challenge of Brexit is competitiveness, and the solution to that will be innovation and productivity, working through these advanced technological universities, resourcing them better, and blending innovation, upskilling and training supports for businesses and organisations working at a regional level with businesses. That will help the regions. I am concerned about the regional disparity that we will see in the coming years.

Ms Patricia King

When IDA Ireland or Enterprise Ireland are trying to achieve investment for particular areas, a key element in an area's attractiveness is the skills base that it offers. To me, there is an opportunity for the new Department of Further and Higher Education, Research, Innovation and Science to have joined-up thinking about this. We could even specify areas for innovation and home in on that. If we had an offering from institutes and universities to develop particular skills for an area, that area would then become attractive for investment for companies going into that area because they would want to utilise that skills base. Those conversations are happening but they are probably not happening in a joined-up way. We need to be much more flexible about how we are having those conversations so as to develop areas based on their attractiveness with regard to skill.

We are now entering a reform of our economy. In ten years, we will have much-reformed economy compared with the one that we have now. Reasons for that include Brexit, Covid and the normal reform process that takes over. As the Deputy knows from his own experience, our education base is much risen compared with what it was even two decades ago, but we now have to be much more targeted in producing the skills base to attract industry to a particular area. People will see reason behind that and take part in that, and the institutes, universities and so on will respond to that. We can have those conversations in a social dialogue and get a quick product from that, but if nobody talks about it in a joined-up way, then everybody will have good ideas but there will be no action at the end.

Mr. Tom Murray

I agree with Mr. O'Brien about regional disparity and there will be further regional disparity. Evidence has shown that the Border regions have lagged behind other areas of the country already and we think that the Border regions will suffer the most in the event of Brexit, whether there is a deal or not. Our hinterland for business is cross-Border and we already live in areas of poor social and economic infrastructure. I ask that the Border enterprise development fund be used to reinvest in technological advances in the Border regions to promote them and to try to prevent some of that regional disparity. We have institutes of technology in Monaghan, Dundalk and Letterkenny, which are all ready and able for upskilling and to work with industry, but we need to see some strategic investment in the Border areas to help to promote that.

Four years ago, we were in this same chamber, talking about the same issues with some of the same witnesses who are here. We were one of the first committees to produce a report on Brexit and it is hard to believe that we are here with some of the same concerns and worries four years later about what is facing us in the new year. What do the witnesses think is one issue that the Government could do better or that it is not doing and that they would like it to do better? What one thing could be done to alleviate some of the concerns or worries that we have for next year?

Ms Patricia King

We need to beef up our engagement with all the stakeholders so that we can have a more joined-up approach. That will produce results.

Mr. John James O'Hara

Joined-up thinking is the main thing for the projects that we are developing under Industry 4.0. It brings real employment to the area. We were talking with the Taoiseach about this. It is a matter of looking outside the box and bringing industry and colleges together, and giving them a real direction. In every programme that we write, we write a youth programme with it. We write that from seven to 17. Kids need to learn about innovation and technology. It is not just for the older age group. We have done different tests here, including bringing a kid and a parent together to build a robot. We have to teach kids at a younger age what innovation, research and development are, and that is where our advances will be.

Mr. Fergal O'Brien

From IBEC's perspective, the priority is to take the contingency fund that was put in place in the budget and translate it into some specific support measures that we think will be needed, especially in the case of no deal. Irrespective, we need to face the new trading relationship from 1 January and to try to advance this issue of the export credit insurance, which is crucial to help companies to diversify out of the UK.

I echo the sentiments of the witnesses regarding the potential of third level education to accelerate our situation. On joined-up thinking, I refer to my exasperation with a specific issue which might highlight where we are. When I was elected to Leinster House in February, one of the first things that I brought to the attention of Government was the South Eastern Applied Materials Research Centre, which is the highest-functioning technology gateway in the country, dealing with medical device manufacturers from Waterford to Letterkenny.

We have been awaiting funding of €2.8 million for a CT X-ray scanner and despite the fact that the Government has now put out almost €30 million in Covid-19 innovation funding, the money for that scanner has still not been dropped. That is a singular piece of technology that could accelerate integration across to the UK. I remind everybody the kind of game we are in. As Ms King highlighted, it is vital that everybody is talking. These things should be discussed, particularly in industry and education. We could drive on from here but we can only do that if we get together.

We also must get the ears of Government and senior civil servants. Despite all of the positive things that can be said, I will say that it is difficult, as a Deputy, to try to get these messages across. We have to keep on putting them across to try to get any action on something that should be a no-brainer.

I thank the Deputy and all our witnesses. That concludes our consideration of the matter. I particularly thank the representatives of IBEC, ICTU and Border Communities against Brexit who assisted the committee today. The committee has sought written comments on the matter from the ISME and we may need to consider the issue further.

I apologise for interrupting people but we were under time pressure. We cannot be in this room for more than two hours so that was why I was strict with everybody. I hope I was not rude. I thank everybody for their contributions and for coming.

The joint committee adjourned at 10.51 a.m. until 12 noon on Tuesday, 8 December 2020.