Seanad Éireann debate -
Wednesday, 3 Apr 1996

Vol. 146 No. 21

County Enterprise Boards: Statements.

Minister for Enterprise and Employment (Mr. R. Bruton)

It is a pleasure to be here to address this issue. As Members know, the county enterprise boards are a strategy to foster "bottom up" development in counties. For too long we developed on the basis of centralised decisions on grant aid and passed over the potential of many local communities to create enterprise and devise strategies for their area. The county enterprise boards are filling that gap; they are drawn from trade unions, employers, the community and the agencies and give people an opportunity to look at their strengths and weaknesses and devise approaches which would be most attuned to their needs. At the heart of this approach is the development of a plan for the county.

By way of background I will set out the development of the county enterprise boards and outline some of the work they are engaged in. This will give Senators an impression of what we are trying to achieve. I will be interested to hear the contributions, because this is an evolving area of policy about which we can learn and improve as we go along.

The county enterprise boards are now well established and have, I believe, been actively addressing the mandate they were given to provide a new source of support for local enterprise initiatives. The original purpose of the boards was to fill a gap which had been identified in the range and scope of enterprise support services available to small and, especially, start-up businesses. They were developed as a countrywide scheme which would enable small enterprises to obtain funding from a variety of sources in order to assist local economic development. It was envisaged that they would tap into local knowledge, energy and commitment and help maximise the efforts of the existing State agencies.

Public intervention in the promotion of local development activity is a relatively recent phenomenon in this country. The main initiatives in this area heretofore were initially, the western development scheme which operated through county development teams in 11 counties and, subsequently, EU supported programmes such as Leader, INTERREG and the small and community enterprise scheme, a sub-programme of the operational programme for rural development. These approaches to local economic development in a sense constituted a response to an industrial policy strategy which some believed over-emphasised the attraction of internationally mobile capital. The perceived failings and limitations of this essentially "top down" model led to a growing recognition that action is also required at a local level to support small firm growth, given that the benefits of national economic prosperity do not automatically trickle down to local areas and communities.

In the interests of drawing on past experience and ensuring that the wheel would not be reinvented, the western development scheme was used as an initial operational model following the establishment of county enterprise boards in 1993. Primary responsibility for the duties of the county development teams has now been assumed by the county enterprise boards, and the activities which were previously assisted by the western development fund and SCES are now embraced by the broad remit given to the new boards.

County enterprise boards represent a first effort to put in place a comprehensive but flexible local enterprise support mechanism on a countrywide basis. They take as their starting point the need to promote the know how of local development by switching the emphasis from support for centrally selected and funded projects towards investment in developing the knowledge, skills and entrepreneurial abilities of the local population and in changing attitudes. This is by no means an easy task and it depends crucially for its success on the capacity of those involved to develop a thorough understanding of the strengths and weaknesses of the local economy and to proceed on the basis of a strategic plan to implement sharply prioritised activities.

To appreciate the significance of the shift represented by the establishment of county enterprise boards as part of a new model of local development, it is useful to compare the level of resource allocation to the new boards with the provision for their predecessors. Throughout its history, the western development fund — operating through the county development teams in 11 counties, namely, Donegal, Sligo, Leitrim, Cavan, Monaghan, Mayo, Galway. Roscommon, Longford, Kerry, and west Cork, was modestly funded and addressed a relatively limited range of enterprise support activity. In more recent years, from 1987 to 1993, the underlying per annum funding within the western development fund was £750,000, higher amounts shown in individual years being a result of special circumstances applying in those years. As a result, most counties in the system could be guaranteed enterprise support capacity to a maximum of only £48,000 per annum for small grants, with the possibility of securing a limited amount of additional approvals in the form of main grants reserved to the central development committee.

The position was improved when the county development teams assumed responsibility for the implementation of the small and community enterprise scheme in the western counties. However, overall amounts were still modest — between August 1992 and December 1994 only £2.9 million was drawn down between all western county development teams and Shannon Development.

By way of contrast, the direct cash supports for capital projects, feasibility studies, etc., provided in the period ending 31 December 1995 by the county enterprise boards established in the same 11 western counties amounted to £6.44 million, or approximately 35 per cent of the total expenditure on direct grant support by boards throughout the country. It is clear that the levels of funding available to the county enterprise boards for enterprise support purposes in the former western development counties is on a considerably larger scale than that formerly available to the western county development teams at any time.

On the wider national front, I am satisfied that the funding currently being provided to all 35 county enterprise boards will enable them to achieve the board targets set for the initiative in the Operational Programme for Local Urban and Rural Development, 1994-99, under which the boards are supported by EU funding. The planned investment by both the State and the EU under the OP for this initiative is IR£81.77 million for the period 1995 to 1999.

The level of public expenditure on direct financial assistance to small firms by the county enterprise boards has already exceeded the projections in the operational programme. In total, over £18.5 million has been provided to date in grants by the 35 boards, resulting in the creation of over 4,663 full-time and 1,078 part-time jobs. An additional sum of £1.421 million was provided to the boards in 1995 to facilitate their indirect or "soft" support activities. The 1996 Estimates for my Department provide £19.736 million to cover the running costs of the county enterprise boards; of this amount, some £10.250 million is available for project payments and £4.75 million for indirect enterprise or "soft" supports.

Since the boards first commenced operation in 1993 their access to funding support for projects has been on the basis of uniform allocations. In 1993 all boards were given a grant commitment quota of £250,000. None of the commitments from this quota actually matured for payment in 1993 and so the projects fell due for payment in the following year. I understand that in 1994 all boards were initially permitted to make new commitments up to a limit of £500,000. This ceiling was soon reached and the Government subsequently raised the limits with the result that by December 1994 commitments of £24 million had been incurred by county enterprise boards, of which only £5 million had been drawn down by project promoters. In this period the rate of draw down of funds was unfortunately out of kilter with the level of project approvals.

In 1995 all boards were allocated a total approval capacity of £500,000, which comprised two separate elements: first, a maximum approval capacity of £365,000 in direct financial assistance and, second, an allocation of £135,000 to cover the new range of "soft support" measures introduced under the operational programme which came into effect for county enterprise boards in 1995.

This total allocation of £500,000 in 1995 was intended to enable boards to fund a wide range of activity, including financial assistance in the form of capital grants in respect of the four specific measures under the local enterprise sub-programme of the operational programme for local urban and rural development. These include promoting an enterprise culture, business information, advice, counselling and mentoring financial assistance and management development.

As the boards had always been envisaged as an administratively slim structure working in partnership with other public sector bodies, a separate administrative budget of £120,000 was also allocated to each board last year. The same provision applies in the current year.

The introduction in 1995 of a fixed approval allocation reflected a concern on the part of the Government and the European Commission to ensure that boards took action to prioritise the areas of enterprise they wished to support, in accordance with their completed enterprise plans, so as to bring a focused and more positive outcome to their deliberations. Concern had been expressed that some boards seemed not only to assume that there were no limits to their capacity to access public funds but also appeared to have devoted inadequate analysis to projects at approval stage in the interests of maximising their approvals. An unfounded assumption that there would be unconstrained access to public funding support would leave boards with no incentive to seek additional private sector funding for projects, an important feature of mobilising local support for sustainable local development.

After the experience in 1994 of escalating levels of approval capacity being made available through the course of the year, the introduction of new financial arrangements for county enterprise boards in 1995 brought greater consistency and stability to their operations. It ensured that the commitment, payment and financial control procedures essential for the management of this kind of programme became more firmly established and that the rate of drawdown of funding increased significantly. Having regard to the need for a balanced programme of grant approval activity to be undertaken by boards throughout the course of the year, I initially confirmed the application of a maximum grant approval capacity of £180,000 per board for the first six months of this year.

Approval of grants is now a matter of day-to-day responsibility for each board. Boards have been advised to consider the phasing of their supports over the course of the calendar year. In this context, boards were advised, as in previous years, to prioritise projects in accordance with their enterprise plans. A balance must be struck between addressing the pressing claims of projects already on hands and retaining some flexibility to cope with anticipated demand at later stages in the year.

I am at present examining proposals for the differentiated allocation of this funding between each county enterprise board. A final decision on the allocation for each county enterprise board in 1996 will be communicated to each board as soon as possible. Differentiation will not have an adverse effect on rural areas. On the contrary the approach to determining budgets will take account of the diversity of needs and the particular opportunities for developing rural enterprises. Moreover, all county enterprise boards will be assessed for the quality of their plans and on the basis of their performance to date.

The county enterprise boards will continue to play a key role in promoting small business growth at local level and will continue to expand their role as they deepen their co-operation with other local actors and with State agencies in the delivery of a comprehensive range of support services in every area throughout the country. The Government remains committed to the success of the initiative, the key to the success of which remains jobs and, in particular, the sustainability of the jobs created. These factors will determine the success or failure of the county enterprise initiative and will be carefully assessed and monitored.

Mr. Farrell

I welcome some of what the Minister stated in his contribution.

At present, people have access to the Leader programme, area partnership boards, county enterprise boards, peace and reconciliation funding administered by the Combat Poverty Agency, FAS, Forbairt and the IDA, but how much money is spent on administration and how many layers of bureaucracy are in place within these bodies? Is it not time that they were placed under one or two headings? This is the crux of the problem. The Taoiseach recently established a task force to investigate what could be done. Task forces seem to be the greatest thing since sliced bread. They are the answer to every problem, but we never hear their findings or the cost involved in their establishment. One thing we know is that jobs are not created for men who earn their living by rolling up their sleeves and engaging in productive work.

Until we face these problems and remove bureaucracy and red tape, we will never succeed. Responsibility for this matter is held by the Taoiseach and the Ministers for Agriculture, Food and Forestry and Enterprise and Employment——

Mr. Belton

Three just men.

Mr. Farrell

I have no doubt about that, but why are the three needed to deal with this matter? Why does the responsibility not lie solely with the Minister for Enterprise and Employment? Why are there so many headings? With the best will in the world I must state that Ministers are bedevilled by civil servants, none of whom will cross a threshold without reading the small print and returning to the Minister for further decision.

The county enterprise boards succeeded the county development teams. I have always sung the praises of those bodies. County development teams were administered locally and had the power to allocate grants up to a maximum of £2,000. At present, if a feasibility study costs more than £1,500, it must be sent to the Department for sanction. Invariably it is returned for further examination and another questionnaire is despatched. I believe many civil servants have a great time passing the buck. When young entrepreneurs become sick to the teeth with the process, they are eventually informed that their application has been granted. Why must this time be wasted?

The county enterprise boards were established with a bottom-up administrative structure, bureaucracy would be cut out and all matters would be dealt with at local authority level. The boards would receive their allocations, decide how the money would be spent and the results could be seen at the end of the year. However, there is still no power at local level. The county enterprise boards were supposed to be the lifeline that saved the west and north-west, in particular. As I stated earlier, it was believed that they would be the greatest thing since sliced bread. However, they have been bedevilled by bureaucracy since their establishment.

Will the Minister inform the House how much was spent on the administration of the bodies? Why must civil servants and inspectors compete with each other and inform people that their applications are proper to the Leader programme, the county enterprise board or the IDA? People who want to establish their own businesses are being stifled at every turn but when, eventually, they are ready to start operations, the Revenue Commissioners inquire from where their finance originated. Drug barons are seldom asked where their money comes from and they can spend it as they please with no questions asked. However, people establishing legitimate businesses must dot their i's and cross their t's.

This year £90,000 is being allocated per quarter. My own county is living within its budget but it is not expanding as fast as we could. There are many projects in the pipeline which cannot be taken on. I have just returned from Donegal where this was a big by-election issue. They want another £1 million to fund all the projects they have in the pipeline. A lot of money is wasted in this country. If we stopped giving this money out in grants, put it into a fund and loaned it to people who wanted to go into business at 1 per cent or 2 per cent interest, the Government would get most of it back. It would be revolving fund. More people would set up their own businesses and we could cut out all this bureaucracy.

The funding guidelines for specialised equipment are too narrow. The most anyone will get to help pay for expensive specialised equipment is £1,000 or £1,500, which would not pay a deposit on some of this equipment. Business people with a good track record who are doing well and creating jobs should be given more leeway when buying specialised equipment.

Where are the demarcation lines between agencies? If somebody asked the Minister for advice about starting a project making folding chairs, where would the Minister send them? Where would he advise them to go for advice? I have been working for 30 years. I will be 30 years a member of Sligo County Council this year, but I no longer know where to send anyone for advice or funding. Everyone here is the same, because we do not know where the lines of demarcation are. We should publish a simple booklet telling us what we get under Leader, under the county enterprise boards and all the other initiatives. We are getting confused.

I appeal to the Minister, as I have appealed to other Ministers before him, to get rid of all this bureaucracy. There should be only two organisations to deal with: the IDA for projects from £100,000 up and another agency to deal with projects of less than £100,000. Then we would know where to go in a given case; we could get rid of the bureaucracy. That could best be done by reinstating the county development teams. When we had the county development teams and the IDA we knew exactly which body would recognise and fund a project. The system was easy and administration costs were minimal.

Are we giving any money to the bishops' initiative? That was a big project for a long time. We spent a lot of money conducting a survey of what we were going to do. I have not heard of it for a long time. Are we getting any money for it? We gave people hope when we told them about the bishops' initiative. I said at the time — I say it again — that I thought a smart university man who realised there was a certain sum of money available for a survey in the west of Ireland was behind that initiative. He set in about the survey and did it, but what has been done with it? A lot of money has been spent on surveys.

The new buzz word is "monitor". Everything is monitored now, and we have more bureaucracy than ever before. I welcome the work the Minister is doing — he is doing his best — but he is hamstrung. There are too many Ministers dealing with the problems in the west and in other rural areas. The Minister for Enterprise and Employment is here. I suggest that all schemes be put under his control. In that way we would only have to write to one Minister. We should give him the money and let him spend it. If after four or five years he is not doing the job well, we can re-examine that system; but between the Department of the Taoiseach, the Department of Agriculture and the Department of Enterprise and Employment, the whole system is unwieldy.

The Minister is doing his best, but I appeal to him to examine the possibility of cutting down on the numbers of agencies, to give us action and jobs and let the people who want to work do so and not to stop them with red tape.

Mr. Doyle

I welcome the Minister to the House, especially when he is here to speak on the subject of the county and city enterprise boards. I am pleased to have an opportunity to speak on this subject today because I have been a member of the Dublin city enterprise board. People forget that there are cities in Ireland, they refer to this initiative as the county enterprise boards. I am a member of the city enterprise board since its establishment in 1993. The Dublin city enterprise board, as the Minister is aware, is one of the 35 boards throughout the country established for the purpose of promoting and facilitating economic development within its operational area. In Dublin city this area coincides with the administrative area of Dublin Corporation, which the Minister will be very familiar with. In the two full years since it was established, over 200 jobs have been established at a very low cost to the taxpayer.

When I was asked to become a member of the enterprise board I was cynical. I asked myself what this board would do. I have been on a number of different committees in my lifetime in local authorities to create employment, but no employment was ever created. I now have the satisfaction of being on the enterprise board and of seeing real jobs created. I have met people seeking employment and I have been deeply impressed by their enthusiasm and ability. The enterprise boards serve a very useful purpose in helping people in that area. In 1995 a total of 50 projects were eventually approved to the value of £365,000, the full amount. Some 93 full-time jobs were in existence from these projects at the end of 1995 with the short and medium term potential to create another 51 full time jobs. Of the total grants approved, 39 per cent had been drawn down at the end of that year and I am pleased to report to the Minister that Dublin city, for the second year in a row, has one of the highest draw down rates in the country.

The board achieves its general aim of promoting economic development in a number of ways. These include, first, the making of an enterprise plan for its area setting out aims, objectives, strategies, targets, costings, timescales, etc., which is kept under review. Second, the general promotion of an enterprise culture. Third, the enterprise board makes use of the Dublin public library system in helping to provide a series of lectures, seminars and workshops focusing on all aspects of enterprise promotion. Fourth, the enterprise board avails of the services of the Dublin Business Innovation Centre in providing information evenings on entrepreneurial opportunities, training and business development to people considering starting a business and wanting to know how to go about it. Fifth, it has been involved in competitions — the object here is to stimulate the creation of new and innovative projects by providing support for enterprise competitions. During 1995, the board was pleased to sponsor a prize money for the Project Development Centres' enterprise competition to the sum of £2,000.

Sixth, the board was also pleased to participate in an annual young entrepreneur programme run by the Young Entrepreneur's Association. The object here is to prepare young people for a changing and increasingly difficult employment situation by helping them to develop entrepreneurial skills to obtain the experience to set up and run a real business. Seventh, the enterprise board has also been in contact with educational establishments in order to promote an enterprise culture. The object here is to harness the full resources of many of the excellent third level establishments in the city with a view to fostering development and furthering an enterprise culture in general. Initial contact was made in July 1995 with certain colleges with a view to placing graduates in need of work experience. These graduates could be used to follow up surveys, assess the performance of grant aided companies and identify training needs. The graduates could also be used to work out local linkages and import substitution opportunities. Eighth, the board also resolved to forge stronger links with the area based partnerships. This is important. The objective here is to focus more clearly on the problems and needs of the long-term unemployed. The national policy objective of converting the current favourable economic climate into sustainable jobs has been supported by the board, particularly in the context of measures announced in the January 1996 budget. The board is also involved in availing of the services of the Forbairt mentor programme. This is an important issue because it is a most helpful resource. The objective here is to put in place a system of mentors who will provide specialist help, guidance and ongoing support to small enterprises within the city. The board decided, as a matter of policy in the first instance, to concentrate on those businesses which already had been grant aided in offering this service. By doing this, they hope to see an increase in the survival rate of new start-up businesses and better performance by existing businesses. By the end of 1995, approximately 20 businesses had been assigned mentors. To date the provision of mentors to start-up businesses has been a real success.

The Dublin enterprise board operates in an area which has the highest unemployment rate in the country. In some housing estates unemployment can be as high as 70 or 80 per cent. When the enterprise boards were established initially, each enterprise board, irrespective of population or need, received the same amount of funding. I am pleased that the Minister for Enterprise and Employment has requested an independent consultant to draw up a model for the funding of enterprise boards to be built around three factors: first, the population and relevant needs of each area; second, the capacity of each area to successfully utilise enterprise funding and create employment; and, third, the quality of plans prepared by each enterprise board. I note that he spoke today about the differential which will be built into the new funding system for enterprise boards and I welcome this.

Certainly, the Dublin City Enterprise Board looks forward to this new model of funding as it would help to meet the needs of Dublin city in its efforts to help create employment and combat unemployment. I see the enterprise boards system as one spoke in the wheel to create employment. It is an important spoke and one which must be encouraged and fostered. I thank the Minister for the initiative and the support he has given to it.

Mr. Quinn

I welcome the Minister to the Chamber and welcome the opportunity to speak about the county enterprise boards. We should not be surprised that the 30 county enterprise boards vary greatly in terms of the success they have achieved in creating jobs. What we should concentrate on is making sure that the experience of the most successful boards is used to the full by the others. In business we tend to call this the ability to "copycat"; more often we call it the ability to "leapfrog", which is not just the ability to copy what somebody else is doing but of doing better than they have done.

In my opinion, the best way to do this is not by fiat from above. It would be a grave mistake to impose greater standardisation on the activities of county enterprise boards from the centre. One of the great advantages of the county enterprise boards is that they are local rather than centralised and are driven from the ground up. If they end up as nothing more than local offices of a central Government Department, then the potential power of a locally-driven initiative will be wasted.

Therefore, the way forward is to encourage more. Communication between the country enterprise boards themselves. Peter Drucker, the American management guru, talks about the fact that we often spend our time starving the opportunities and feeding the failures. In other words, we look at where we have made mistakes and concentrate so heavily to try to overcome them that we fail to concentrate on the opportunities. They should be encouraged to learn from each other's successes and mistakes. They should be encouraged to invent wheels only when they do not already exist, and to copy blatantly from their colleagues when there is something to gain from that.

The resources available for the boards should be distributed so that more time can be spent on this learning process. This is the essence of the point I want to make. In this way we can preserve the local integrity and enthusiasm of each board, while ensuring that all parts of the country benefit to the greatest possible extent.

I have discovered through my own business experience that one of the most difficult tasks is striking a balance between autonomy at local level and high standards throughout the organisation; but if we work at it with great intent and commitment, the balance can be struck.

The county enterprise boards fill an important niche in our support for industry. They concentrate on fostering micro businesses employing less than ten people, a sector with which State agencies have always found it difficult to deal. They will continually find it so in future because such businesses are so small that they tend not to be able to be helped by a central agency to anything like the same extent as a self-help organisation or on a local basis. Unique among development agencies, county enterprise boards have given as much attention from the start to service businesses as to manufacturing. When I say that is unique, this is an important element. I know the Minister is fully supportive of them but it takes more than support; it takes action too. Future jobs will come from the service sector, that is, people business — supplying services rather than manufactured products to people.

I spoke on this same topic of the service industry some time ago. I was impressed at the number of new jobs created in the service sector since we joined the EU. While we lost 110,000 agricultural jobs in those 24 years, we created 255,000 new jobs in the services sector. The service sector is much more likely to grow from the blossoming of small micro-businesses employing fewer than ten people. This sector will be most helped by the county enterprise boards.

We should work to ensure these boards, local entities which build on local drive, enthusiasm and dedication are not watered down by our understandable wish to get uniform results. While it is understandable that we want uniformity, the real advance is in having a small number of success stories others will copy. My enthusiasm for the county enterprise boards will rest on our ability to ensure that. The Minister is aware of this and may be fully committed. These boards should be given authority and the freedom to succeed and make mistakes. In making an effort, there will be failures and we should learn from them rather than give up. I support the concept of county enterprise boards as long as we do not make the error of centralising authority.

Mr. Calnan

I wish to share my time with Senator Kelly.

An Leas-Chathaoirleach

Is that agreed? Agreed.

Mr. Calnan

I compliment the people in the county enterprise boards. The county development officers and their staff are doing a tremendous job. That State agencies, the private sector and the social partners were involved in the formation of the board gives it a tremendous amount of expertise. The addition of county managers and local authority members will give it balance. These groups will be a terrific help to the county development officers in doing their work.

I compliment the local development associations, voluntary organisations set up by people in towns and villages. They do a huge amount of voluntary work in developing their areas, promoting industry etc. I also thank county development teams for their tremendous work in counties on the western seaboard, including that part of west Cork from which I come. Because of differing economic categories, the county was split and consequently there was a separate development team for west Cork.

The main purposes of the county enterprise boards is to create jobs and develop local enterprise. If one can assist a local small businessman to create five jobs, they will be permanent jobs whereas many foreign companies stay for a small time and leave when the grants finish.

The Minister should be careful about differentiation. Population size should not be taken as an indicator. I come from a rural area which has lost, and will continue to lose, much of its population unless industries can be developed. We would go down the wrong road if we took population as the main indicator. The Minister mentioned that the quality of the plans and performance to date would be of significance and importance. However, I do not want population levels to be taken as an indicator because the rural peripheral areas would then lose out.

All projects giving jobs should be favourably examined and should not be disqualified by bureaucratic systems. Jobs provided in the service, manufacturing, agriculture, fishing or tourism industries in rural areas, can add up to a considerable number. IDA Ireland or Forbairt would have to do a great deal of work to get a factory to match the many jobs provided in this way.

Sometimes enterprise boards are precluded from considering projects involving in excess of ten jobs. A small enterprise with the ability to employ 20 people may not be able to slot into projects from other State agencies and could lose out. I would like to see greater flexibility in that area. If jobs are being created, grants should be given to people prepared to start an industry in a rural area.

The population of west Cork declined for several years but incentives such as those offered by the county enterprise board helped to provide jobs to maintain people in the area for population stability. The same population trends affect the regions from Castletownbere to the Mizen Peninsula and the west Cork area where the land is not of good quality. There should be a definite bias towards peripheral areas with declining populations. The logistics and costs of establishing business in a peripheral area greatly exceed those involved in areas with larger populations, services and markets.

Since its establishment the West Cork Enterprise Board has approved the allocation of substantial moneys. These approvals have now been converted into jobs and the grants drawn down. The same amount of money should be given on a continuous basis.

The board's action plan was one of the first launched and it achieved wide acceptance as a document which outlined west Cork's problems and how to solve them over the next few years. The plan was launched in advance of the Operational Programme for Local Urban and Rural Development and will obviously need to be refined to take account of the provisions of the programme. Nevertheless, it contains a quality strategy and has widespread acceptance in west Cork. These boards badly need to get the same amount of money or percentage increases in it.

Boards in rural regions, which have huge areas to cover, have many problems. The cost of providing services such as water and electricity is generally borne by the promoter, as they are not normally available on site or at the roadside as in urban environments. Any enterprise established in an urban area has access to markets on its doorstep. Rural enterprise must generally bear the cost of transport of raw materials to its base and the subsequent cost of transporting its finished product to the marketplace. This is very much the case in areas like west Cork.

Generally speaking, in populated areas private enterprise or community organisations, with the assistance of State funding, will provide work space for the businessman willing to set up his own business. Many of these complexes also provide centralised administration for businesses operating there, but that is not the case in rural areas where buildings and sites are difficult to acquire. Even then, the cost of servicing, renovating and building must be borne by the business. These higher set up costs inevitably mean there are higher operational costs to service this outlay and the outgoing costs of transport.

The same level of money should be available to the West Cork Enterprise Board as in the past, and no loss should be suffered on account of it being in a rural area with a small population.

Ms Kelly

I welcome the Minister to the House and I thank Senator Calnan for sharing his time. I have been a member of the County Limerick Enterprise Board since 1993. County enterprise boards constitute the first major system of support for small businesses and, as such, provide a much needed service. some £61.3 million will be available for county enterprise boards during the lifetime of the operational programme for local urban and rural development. The programme shows that the Government is serious about its commitment to local development at micro level.

For many county councillors, membership of county enterprise boards presented the first opportunity of handling real money. There was an initial enthusiasm to give financial support to people in their respective counties and this produced a feeling of euphoria. On most boards that role took precedence over the more important role of acting as a broker or networking organisation to examine enterprise in a given county.

Fulfilling the latter role involves assessing the strengths and weaknesses of industrial development in counties in addition to examining what alternative funding sources are available. With guidance from county enterprise boards, people would know if they were better off applying under the Leader programme or ADM.

The idea of enterprise should be fostered not only among young people but also among the unemployed. In 1971 some 12,304 people were employed in agriculture in County Limerick — or 23 per cent of the population — but that figure fell to 7,889 in 1986. According to the most recent labour force survey that figure has fallen to 13 per cent of the population. Farming families have drifted out of agriculture to towns and villages where they now make up the bulk of our long-term unemployed. We need to encourage such people to use their talents, but if their talents are outdated they should be brought back into the mainstream workforce through training programmes. Enterprise should not be seen solely as the prerogative of the young. Older people must also have an opportunity to use their skills or to update them.

While county enterprise boards are grant based, grants are not necessarily all that a small business needs. I started up a small business but I did not get a grant because it was in the retail sector which is not funded by county enterprise boards, and I can see the logic of that. Sometimes businesses require more than grants. They need a supply of money that does not cost them an arm and a leg, such as soft supports like revolving loans. From that point of view, county enterprise boards should work hand in hand with credit unions, banking institutions and building societies to encourage the provision of easier finance terms for entrepreneurs. Some banks already have this in place but their terms are rather strict.

The Department's insistence that each county should produce a county enterprise development plan was a good idea. However, Limerick County Enterprise Board did not receive one letter of support or criticism when it published its plan, even though it had plenty to say about the county's potential and weaknesses. The county enterprise officer was featured on local radio and in the local newspapers but we still need to get through to ordinary people the importance of the county enterprise plan's central role in the life of our community.

An Leas-Chathaoireach

As 33 minutes remain, I propose that Senator Daly, Senator Honan and the Minister will have 11 minutes each. Is that agreed? Agreed.

Ms Honan

That is democracy.

Mr. Daly

I welcome the Minister and thank him for his speech. I would encourage him to continue the same dynamic approach he has adopted to the development of industry since he took office. I was glad to welcome him to County Clare when he met the local enterprise board and saw evidence of their success. I wish to put on record the enthusiastic work that has been done by the County Clare Enterprise Board since it was established. The report of the board's activities over the last year reveals an impressive record in the area of small industrial development within a small budget and a low cost per job ratio. That must be taken into account when one looks at such industrial initiatives.

Our comments relating to arrangements for the promotion of industrial development should be taken into account. Over the years, both Houses of the Oireachtas have had numerous debates about the administration and promotion of industry. Unfortunately, it seems that much of the time we are wasting our efforts because not much account is taken of our views at planning and administrative levels; I do not mean at the political level here but at the administrative level within Departments.

When the Culliton report was published almost immediate action was taken on some of its recommendations. It was mainly as a result of its recommendations that the decision was taken to divide responsibilities within the IDA. That fragmentation was not to the advantage of the country, industrially or in terms of job creation. I would like to hear the Minister's opinion on whether the decision to fragment the IDA into Forfás, Forbairt and IDA Ireland has been in the best interests of the drive to create employment.

It is necessary to set up strong regional development organisations. In this regard I support the successful work that has been done for many years by Shannon Development. Its role, remit and area of jurisdiction have been extended. Within that regional concept there is an important place for county enterprise boards. This may sound like I am running with the hare and hunting with the hounds, but I do not believe it is in our best interests to fragment organisations too much. There must be co-ordination. The success of such co-ordination has been demonstrated in Clare where there is a representative of Shannon Development, which has responsibility for tourism and industrial development in the region, on the county enterprise board. That type of cross fertilisation is important in ensuring a concentrated and co-ordinated approach. One certainly does not want to see a situation where people with ideas or businesses must jump from one agency to another, or set one agency against another, to get the best possible deal for whatever they wish to do.

There are a few areas to which the attention of the county enterprise boards should be addressed, as they have been most successful in what they have been doing so far. The first area involves the exploitation of opportunities for new technology within regional and county enterprise areas. With the arrival of the Internet and the range of new developments in technology it should be possible to have an agency which will not only help people seeking advice and assistance in the establishment of small businesses but identify areas which are not being filled at present. It should be possible to identify areas where services can be supplied to large multinational companies. We have many such companies in the mid-west region in areas adjacent to Limerick city and the university. There is a huge range of multinational companies and the county enterprise boards should source some of the supplies and services which are delivered to them. Many of them would be in the import substitution area and this would be of enormous benefit, especially to young graduates many of whom are at present unemployed.

There are about 3,000 students in second level schools in Ennis. Of the number who did the leaving certificate last year, almost 60 per cent went on to higher education; many more got involved in courses and very few went to the unemployment office. However, I understand that about 1,500 people are signing for unemployment assistance and benefit. It should be possible for the enterprise board to break down that figure according to the skills and talents of the people who are signing each week. The Department of Social Welfare is not doing it. We pleaded with the Department on several occasions to do it and when I was Minister I endeavoured to get the Department to break down the figures according to skills. How many of the 300,000 unemployed are fitters, welders, typists, graduates, etc.? How can one plan the future development of any town or its future prospects for development if one does not know what skills and talents are available within that area? I agree with Senator Kelly that it is necessary to identify ways in which opportunities can be exploited and developed within the regional and county areas.

My final point relates to the availability of seed capital to finance small projects that are just starting. The major problem is that young people cannot get the securities necessary to raise finance. They have good ideas which have been tested and approved by the enterprise boards. The boards are willing to give assistance but there is a lack of availability of the seed capital necessary to start up an enterprise. Many of these young people are energetic and keen to get work under way. They would probably have to sign for unemployment if they cannot get started. They have a contribution to make not only by working themselves but also by offering employment opportunities to others.

The enterprise boards must pay attention to the high technology sector and open up prospects of doing business with the big multinational companies in products that are at present supplied through imports. They also must pay attention to young graduates who could be organised to fill gaps in the market. Finally, they must look at the provision of seed capital for young people who want to start up enterprises and devise a method whereby they could go guarantor for these people rather than pay them grants.

Attention to these areas could make a major contribution to the creation of employment, and especially employment that will offer security. Young people want to know that if they go into an enterprise they will not be left high and dry with a financial institution tightening the noose on them every week. If the enterprise boards could offer assistance by way of seed capital or security to raise finance from financial institutions, it would remove a major burden from many of the young business people who wish to start their own businesses. It would certainly have a major impact on the creation of employment and offer the prospect of security in employment to many people in their local areas.

An Leas-Chathaoirleach

There are 23 minutes left. I understand Senator Belton is anxious to make a short contribution, so perhaps we might accommodate him. Is that agreed? Agreed.

Ms Honan

I welcome the establishment of the county enterprise boards although, like Senator Kelly, I have a vested interest in that I am a member of the Laois County Enterprise Partnership Board.

I welcome the fact that approval of grants is now the responsibility of each board. The allocation to the boards for 1995 was intended to enable them to fund a wide range of activities, such as promoting an enterprise culture, providing business information and advice, counselling, mentoring and management development as well as providing financial assistance for people setting up small industries. Advice and mentoring is most important to people, and particularly young people, who are setting up in business for the first time and do not have much experience. This is a worthwhile development.

In Laois 300 full-time jobs have been created and £638,351 has been allocated by the county enterprise board. That is a good return for the money expended. There is approval for over £1 million but the balance has not been taken up so far. Hopefully, that will happen in the near future. This success is mirrored in the 34 boards throughout the country so the establishment of the boards was a successful development. It represented a recognition by the Government that local unemployment problems and business development are best solved by people working at local level.

For a small country we are very centralised. We have persisted for too long in the belief that everything should be run from Dublin. It is not only Departments which are based in Dublin but almost all State agencies. This is bad for the country. There is great scope to devolve power, to give people more control over their affairs and, in the case of the county enterprise boards, to use the funding allocated to them. Between 1986 and 1991, for example, the population declined in two-thirds of the electoral areas in County Laois by up to 10 per cent. That is a substantial decline. Initiatives, such as the county enterprise boards which support small industries in towns and villages, is a step in halting that decline. We want people to remain in our rural towns and to stop the move towards the capital and our larger cities.

Few local bodies have money. Many of our local government bodies, such as health boards and county councils, have become little more than administrators. They provide local administration not local government because they depend on central Government for funding. We need to move away from our obsession with centralisation and county enterprise boards are important in that regard. However, they do not move sufficiently in the direction of devolution. As long as they are funded at the discretion of central government, county enterprise boards will be under the control of central government. If central government, for example, decided to withdraw funding in the morning, the boards would disappear. We have created a strange situation where taxes are collected in every county and forwarded to Dublin. Central government then creates a plethora of State controlled agencies to distribute this money back to the regions. Nobody seems to think that people in the regions might know best what to do with the money without having to put in through the Dublin merry go round.

The county enterprise boards are part of a number of new local development organisations being set up with direct State funding. Other examples are the Leader groups and the area partnership boards. If we include Forbairt, FÁS, regional tourism organisations and other development bodies, we are in danger of creating an enormous bureaucracy of local bodies. I approve of local bodies but they must be co-ordinated and they must work together. We should have one-stop-shops which include county enterprise boards, Leader groups and area partnership boards so that people do not have to go from one to the other, a frustrating exercise, as Senator Daly said. Laois County Enterprise Board and the Leader group have set up offices side by side. That has happened in other counties, such as Kildare, but it may not happen throughout the country. People starting up a business get frustrated if they have to go from one organisation to another. We are all concerned about creating employment.

During the past 25 years public policy has tried to diminish the role of the democratically elected local authorities which have been given few additional functions. In contrast, the number of Departments and their responsibilities have increased significantly. County enterprise boards, Leader programmes and area partnership boards have been set up independent of county councils. I know county councils have representatives on these boards, but local authority members are democratically elected. Other bodies are not locally funded or controlled and they are not accountable to the public. Many county councillors are angry about the democratic deficit. County councillors should be involved in more local organisations. The administrative infrastructure is already in place and county councils could take on new responsibilities at an additional minimum cost.

Job creation could be managed more efficiently and effectively through the local government system. A better result would be achieved if all the people in the county council worked together to improve employment prospects. If local government was reformed, funds for industrial promotion would be provided without any interference from central government. However, local government funding is a thorny issue which has not been addressed by successive Governments. We must also examine our taxation system which penalises people for working and, in some cases, makes it more attractive for people to stay at home.

Mr. Belton

As a member of a county enterprise board I am interested in this debate. It is difficult to please everyone. People complained there was not enough money for local enterprise when counties did not receive funding. Now they can choose between the area partnership boards, Leader groups and county enterprise boards rather than going home with their tails between their legs. They now have three choices.

Members on county enterprise boards do not get expenses; they work on a voluntary basis. I have been heartened by the interest shown in County Longford. We are happy that many projects in Longford have received funding. The Minister will soon make a decision on future funding, but I am glad that criteria, such as plans and incentives, will be taken into account. I understand that population will determine how much each board receives. However, if one area has a greater population than another, it should not mean they receive more funds. Other criteria, such as plans drawn up by the county enterprise board and the interest shown in the area, must also be taken into account. I am confident my county of Longford, and the Leas-Chathaoirleach's county, Roscommon, will feature in that criteria.

Mr. Doyle

The Senator would have an interest there also.

Mr. Belton

Of course I would, but people never get too confused where money is concerned.

Minister for Enterprise and Employment (Mr. R. Bruton)

I thank Senators for the many gems of wisdom, particularly Senator Belton's final comment which is at the root of all evil in this country. It will be difficult to do justice to the range of issues raised but I will try to cover them fairly quickly. A common thread which ran through a number of contributions was that there are too many agencies and that we should consolidate them and bring them under one Minister. This is a difficult area because these initiatives have evolved from different backgrounds. Some have developed through European initiatives to promote rural development. The county strategy teams have been set up to ensure reasonable liaison between them. They have a clear mandate to ensure the avoidance of duplication and to ensure sensible access rules so there will be one-stop-shop approaches.

It is encouraging that many counties have adopted that approach, including Senator Farrell's county of Sligo where a single point of contact approach has been developed. That is the way to deal with this because if we move towards consolidation, we will be swimming against what seems to be the tide of opinion in the Seanad where the idea of local autonomy is good. There is no point trying to smother these blooms with a centralised or consolidated approach. We cannot have the neatness which some Senators crave and at the same time have devolved autonomy.

Another common theme that has arisen is that loans are better than grants, a view to which I subscribe. However, there has been a difficulty in that Europe provides a good deal of the money with which we promote the local development operational programme. It has a clear view against loans which has constrained our ability to take the loans route. We have taken this route in some other areas, like the loan fund for small businesses — they have not tended to be micro start up businesses but established ones — with grant aid provided. I believe the loan fund for start up businesses has potential.

It is significant that initiatives are growing up around the loan fund area outside the county enterprise partnership boards, including First Step and the International Fund for Ireland in the Border counties. That should be encouraged and there is a role for county enterprise partnership boards in promoting loan fund development in alliance with the financial institutions. I would like to see grant aid levering other types of loan finance and a more co-operative approach to developing good financial vehicles for getting small businesses off the ground. The idea of loans rather than grants is something we should continue to try to develop.

I would like county enterprise partnership boards to be a focal point for local groups looking at local BES funds and the various vehicles for development at which counties should look. The idea of having a local plan, as a number of Senators pointed out, is to try to bring together efforts from different institutions and agents. The theme of access and the one-stop-shop has come up. Many county enterprise partnership boards are taking the one-stop-shop route and are trying to ensure single contact points. Forbairt has set up an enterprise link and a freephone service so people can telephone and get single point of contact advice as to whom they should go.

Senator Quinn raised the issue of promoting best practice, something the Department is actively doing. We set aside money last year to try to transfer the idea of best practice to different counties. The Department has looked at a number of areas, including project appraisal, single points of contact, developing work space, sustaining local mentors and many things which Senators said were successful. While we are trying to disseminate best practice, more can be done in that area.

Some Senators suggested the Department must sanction feasibility money of over £1,500. That is not the case under the new arrangements to which Senator Honan referred. Senator Daly made an interesting point about the opportunity for linkages. I know some county enterprise partnership boards have made that the focus of what they are trying to do as regards their plans. They have deliberately tried to establish the linkage opportunities and set about trying to develop them. I do not believe the Government should direct them in this regard. The board should look at its strengths and weaknesses. In Clare, which has a high technology base, there are certain types of linkages which might not be available in other counties. The notion of looking at linkages is particularly valuable and it should be done in relation to plans.

The Senator also touched on an area of weakness. Not since the mid-1980s has there been proper analysis of the unemployed. FÁS has some analysis of the background of the unemployed but it is not in an easily accessible set of tables where we can see the basic skills of people locally or the areas of enterprise most suitable for them. Senator Honan asked whether there should be a local funding base for county enterprise partnership boards which raises the much wider issue as to whether we should move away from bloc grants to something else. That is an issue of local government reform more than one over which I would have direct comment. I would like county enterprise partnership boards to use their money to mobilise other funds locally, even if they are not raising funds by way of a tax basis.

Several Senators touched on the issue of the differential and the proposal for differential funding. We cannot pretend it is reasonable for every county to have an equal share of funds. Without giving too many examples, County Galway is one borough although it includes a city and a county. It has a large population which spans rural areas and urban black spots, but it is treated on the same basis as any other county. As one goes through different areas, one can see that there needs to be some basis for differentiation. While I accept what Senator Calnan said that it cannot be based on population alone, we must look at a range of measures that take into account the problems of rural depopulation, the scale of unemployment, the capacity of the county to develop small businesses and its performance to date in terms of how it has used its resource cost effectively.

There is no doubt, as Senator Doyle said, that some boards have been very focused in the way they have used their money. We must look at the performance of boards and the quality of their plans as part of an overall system to decide the allocation of funds. We want to reward best practice and that comes through deciding how much money we allocate. Those who are using the money well should be recognised, not only by congratulations but also by allocating more funds because they are being used so wisely. That would start to promote the idea raised by Senator Quinn of best practice and disseminating best practice. If there is a practical result, people will take a keen interest.

I have tried to deal with an overview of the issues raised. However, there are some specific issues. I accept for instance the emphasis on services which came up in Senator Calnan's contribution and again in Senator Quinn's. Services provide a range of opportunities for us now and it would be a shame if we discriminated against them in any way. They are not discriminated against at county level and I hope that, in time, we will be able to develop vehicles whereby services will be also regarded as an equal partner in national policies.

I thank the Senators who contributed to what has been a useful debate on this issue, which is evolving. It is only in its first couple of years of operation. We are starting the process of evaluating its success and impact and we will, in the course of that process, be able to refine it as a vehicle and try to improve it. At the end of the day it depends on the local commitment and initiative. We cannot replicate or force that because it must come from the groups involved. By and large, this has been a successful approach and one that we should certainly run with and review at the end of three years and then look to its future.