Gerry Adams
Question:8Deputy Gerry Adams asked the Taoiseach the number of occasions that the Economic Management Council has met since the Christmas recess. [6184/12]
View answerTuesday, 28 February 2012
Questions (18, 19, 20, 21, 22)
Gerry Adams
Question:9Deputy Gerry Adams asked the Taoiseach if the Economic Management Council has any plans to meet again with the Irish banks. [6187/12]
View answer
Micheál Martin
Question:10Deputy Micheál Martin asked the Taoiseach if the Economic Management Council has met recently. [8002/12]
View answerMicheál Martin
Question:11Deputy Micheál Martin asked the Taoiseach the number of times the Cabinet Committee on Climate Change and the Green Economy have met in the past year. [10752/12]
View answerGerry Adams
Question:12Deputy Gerry Adams asked the Taoiseach if he will report on the meeting between the Economic Management Council and senior executives in the Irish banks on 21 February. [11164/12]
View answerOral answers (23 contributions)
I propose to take Questions Nos. 8 to 12, inclusive, together. The economic management council has met eight times so far this year, most recently on Tuesday, 14 February. Since the economic management council has the status of a Cabinet committee, the confidentiality of discussions at the management council are protected by the Constitution. In line with long-standing practice, it is not appropriate to answer questions about proceedings at the council and the agendas of future meetings.
Members of the council met with representatives of the three largest banks last Tuesday, 21 February to discuss a range of issues of concern, including small and medium enterprise lending. This follows up on a similar meeting held on 9 November last.
The Cabinet committee on climate change and the green economy has met twice in the past year, on 30 June and 20 December 2011. I expect this committee to meet on a regular basis as we develop policies to meet our challenging emissions reductions targets for the period to 2020.
There is a problem with the way these questions are grouped. I asked three questions. I am particularly interested in trying to get some sense of the meeting between the economic management council and the senior executives of the banks, particularly relating to the issues of citizens on variable rate mortgages who are in deep economic distress at present. Last week the chief executive of the Bank of Ireland was quoted as saying that it might further increase interest rates to protect the bank from the impact of the Government's new personal insolvency legislation. The Taoiseach did not answer that question. He made no reference to the banks in his answer. The families in mortgage distress are looking to the Taoiseach to ensure the banks reach sustainable agreements with them. Will the Taoiseach take up this and give us an answer on it?
The Taoiseach said that the council has the same status as a Cabinet sub-committee and that under the Constitution it is not appropriate to give details of its meetings. Surely that is simply an excuse. Is the Taoiseach suggesting he could be jailed or that it would be a constitutional offence? Is the Taoiseach a member of a slightly constitutional party? It strikes me that the information should be available in the interests of transparency. The Taoiseach has said many times during a long career in the House before he became Taoiseach that he wanted transparency and sought to reform politics. However, we are trying to get some details from him and he maintains that he cannot tell us anything.
My first question was about the banks. The Taoiseach is aware of how many people are in mortgage distress. Did the Taoiseach raise this with the banks? Was the Taoiseach successful in getting them to reach sustainable agreements with struggling mortgage holders?
It is important to distinguish between a meeting of the economic management council, EMC, and a meeting between the council and a group or organisation. The EMC is a sub-committee of the Cabinet. Essentially, its purpose is to deal with issues that will, if approved at the EMC, go on to be raised at Cabinet and dealt with in the same way as other issues brought to a Cabinet meeting. The EMC has met the banks on two occasions. The first meeting was on 9 November. The other meeting took place last week on 21 February. Meetings took place separately with Ulster Bank, Bank of Ireland and Allied Irish Banks. The issues raised included SME credit, mortgage credit, mortgage arrears strategies and so on.
The kind of issues that were raised concerned how banks are ensuring the targets they have set out will be met and practical initiatives to assist SMEs access credit. As the Deputy knows, both pillar banks said they intend to lend €3.5 billion in new lending this year. The meetings were very constructive and there is a realisation that banks must get back into the business of explaining to people that they are open for business. I had the opportunity of launching a small enterprise yesterday in the west, which had secured a loan from Allied Irish Bank. That enterprise is taking on 15 new employees and hopes to grow the business over the next period. The issue of SME credit was also raised and the willingness of the banks to implement and support the Government's initiatives set out in the action plan, for instance, the micro-finance agency, a partial loan-credit guarantee and access to the credit review office, which has done a remarkable job. In that context, the Minister of State and the person with responsibility for the banking sector in the Department of Finance were in Cork yesterday and are in Waterford today talking to businesses and banks about that access.
Deputy Adams raised the issue of mortgage credit and asked how banks are ensuring that credit is available to support the Government's important budget initiative. We asked what checks and balances are there to ensure the conditions that apply to mortgages are fair and balanced and not unduly restrictive, whether banks are monitoring the different outcomes between regions and the movement of houses in the north west or the west, the south west or the south east as against the Dublin area. They have all that evidence and we are eager that they will support the mortgage interest relief initiative. With regard to mortgage arrears strategies, the banks are setting out to deal with issues on a case by case basis, taking into account the Keane report, personal insolvency and how best to implement a strategy of dealing with individual cases where circumstances are always different.
One of the issues that came to light is that there is a significant number of small and medium enterprises where the principal person is working hard at driving the business but when the accountants do the books at the end of the tax year, there is often no projection for cash flow for the period ahead. Clearly, in the past when businesses approached banks seeking loans, the approach was based on property assets and the like and money was made available on that basis. However, valuations are much lower now and that no longer applies. Where no cash flow projections are available, this makes it difficult for banks to lend in the circumstances. Therefore, where this applies within the small and medium enterprise sector, it must be rectified so that when people look for loans and opportunities the application will be turned around quickly.
We asked questions about what leverage and authority local bank managers have and what was the level of the loans with which they could deal and whether they could deal with unstructured loans of up to €50,000. We asked what the position was in respect of bigger loans and whether they had to revert along the line and how fast applications could be turned around. They pointed out there was a single application form and that they were interested in getting out among the community again to talk about the capacity of the banks to lend and the availability of moneys.
We also discussed the question of the quite substantial deposits flowing back into banks, which are a signal and sign of confidence returning. The meetings were, in that sense, constructive. The point was made that the boards have changed, personnel have changed and banks are anxious to get back into the business of being available to the people to lend under proper conditions and to have a thriving banking system and economy.
Due to the manner in which the Taoiseach responded, I may have stumbled upon a way to get him to answer the question I asked. I asked him about families in mortgage distress and he responded about credit for small and medium businesses. Perhaps if I had asked him about credit for small and medium businesses, he would have answered my question about families in mortgage distress.
I accept the point the Taoiseach made about the small and medium business sector and the need for credit for that sector. The theory now is that the people now own the banks. This cost €60 billion of taxpayers' money. The Central Bank revealed that 107,708 mortgage holders were in serious distress at the end of 2011. This means that 92 families fell into mortgage distress every day towards the end of 2011. In other words, almost 100 families fell into mortgage distress every day from September to December 2011. My question is straightforward. Did the Taoiseach raise the issue of the need for the banks to reach sustainable agreements with these struggling mortgage holders? Either he did or did not. If he did, what was the banks' response?
Of course we raised the question of distressed mortgages with each of the three banks. They have set out their strategies, which are parallel to the decisions taken by Government but these strategies will have to be discussed individually because the circumstances of each case are always different. I pointed out to them that as part of the measures taken in budget 2012, mortgage interest relief was increased to a 30% threshold for first-time buyers who bought between 2004 and 2008. This was a core commitment in the programme for Government. I also pointed out the additional measures that exist to assist people in difficulty with meeting their mortgage repayments. In the majority of cases, there is no intention of doing anything other than bringing about a solution whereby people can continue to live in their homes. There are a very small number of hopeless cases in the context of being able to achieve a resolution.
The Deputy is aware the banks have been recapitalised so as to be able to meet the circumstances that will apply in a number of distressed mortgage cases and they are aware of that. The revised code of conduct in respect of mortgage arrears came into effect on 1 January 2011, just over a year ago. Compliance with that code is mandatory on all mortgage lenders registered with the Central Bank and I raised questions with regard to implementation of the code. With effect from 30 June 2012, lenders must have the required systems in place and must have the trained staff necessary to support the implementation of the code. As the Deputy is aware, the code sets out the framework with which lenders must deal with regard to borrowers in arrears or in pre-arrears.
We also discussed the implementation of the Keane report, which made ten recommendations. The Personal Insolvency Bill, which is complex legislation, is currently going through the Oireachtas. We are also dealing with non-recourse to judicial decisions. I hope that the parallel steps being taken by the banks, the implementation of the Keane report and the consequences of the Personal Insolvency Bill will bring about a sense of relief for many mortgage holders with difficulties. The over-riding intention is to bring about a solution for those people so that they will not lose their homes, will receive some relief in terms of repayments and come to an agreement between themselves and the lender as to how best to achieve this.
I expect to have discussions with the banks again in a couple of months so as to review progress both in respect of lending figures and with how they are getting on with the extent of arrears and distressed mortgage holders they have on their books.
I submitted two questions, one on the economic management council and the other on the issue of climate change and the green economy. However, that second question has somehow got mixed up with the four questions on the economic management council.
The people are very angry about the banks. In particular, given the recapitalisation, the people are angry the banks are not doing what the Government and others have said the banks will do or should be doing. I have made the point previously that there is a disconnection between the articulation of issues here and what is happening on the ground. People we meet on the streets and at our clinics say that what is going on is crazy. The situation in relation to mortgage interest arrears is getting worse. There has been no alleviation of the stress people are under. If anything, the strain is getting worse. There is no sense that the banks are responding in the spirit of the recapitalisation agenda. The entire approach to saving the banks was predicated on ensuring they would be in a position to meet the needs of the economy and the people. That is particularly true of the mortgage arrears issue. I remind the House that issues of mortgage difficulty and impairment were taken on board when the banks were recapitalised.
I heard what the Taoiseach had to say about micro-enterprises. People who have been in business for a long time are still contacting me to say their companies have been denied working capital. Many jobs are riding on the sustainability of the companies in question. I am talking about small businesses that have had good experiences in the past and business people who have not done anything untoward or been in any great difficulties. They are now finding it hard to access money, however. Regardless of all the big documents and action plans for jobs, the fastest way to create jobs is to provide for a meaningful system of access to credit for people and micro-enterprises. Mortgage arrears issues also need to be dealt with comprehensively and decisively because they are having a detrimental impact on families and households. This problem is acting as a drag on the economy by dampening consumer demand and sentiment. People are not prepared to spend money in the absence of clarity on mortgage arrears issues. I ask the Government to take on board the proposals we have made in that regard. The decisions of the debt settlement office should be binding on the banks. We can no longer let the banks make decisions on what they will and will not agree to. They are not responding to the sentiments that are being articulated here and across the country.
The Deputy is absolutely upfront here. Umpteen cases of people who cannot access credit - they have been turned down by their banks - have been brought to my attention. When they are asked about making an appeal to the Credit Review Office, some of them say they do not want to get into a bad situation with the local bank manager with whom they are dealing. When one talks to the banks, one is told that some businesses come in without a projection of what their cash flow might be. Previously, one could be sure that the banks would give it out against the property. It is fair to say this is a central issue in this regard. Small businesses around the country are willing to borrow for employment and export purposes. Enterprise Ireland is pushing very hard for new entrepreneurs, new innovators and new developers to get into business. Such people require financing. Yesterday, for the first time in a while, I spoke to a bank manager who had given a loan to a small business. The business in question is taking on 15 new employees and hopes to expand further in the coming period. It is important for that manager and his colleagues in the bank to be able to say publicly that they believe in a business and are prepared to lend money to it. That will reassure anyone who is listening that the bank is open for business and offering packages to those who are interested.
I am not a proponent of the banks. I have had strong differences of opinion with them. As Deputy Martin is well aware, we need a banking system that actually works. Bank managers should be authorised to do the job they are supposed to do, in conjunction with business people. They need to manage mortgage distress and arrears and facilitate business opportunities. If we do not have thriving small and medium sized enterprises, we will never have the kind of country that Deputy Martin and I know we can have. The banks have told us at the economic management council that their own credit and micro-finance operations are proceeding in parallel with what the Government is doing. They are engaging in discussions with people who have distressed mortgages, in line with the Keane report and in the context of the personal insolvency proposals.
The meeting I have mentioned was constructive. Representatives of a number of banks from various parts of the country gave evidence to the effect that there are signs that things are beginning to move in some sectors. There is a very long way to go. I have heard reports that suggest the housing floor has not yet been reached. People will wait for a further period to see what happens. In the recent past, I have met a number of solicitors who have finalised transactions regarding the sale of houses. I hope the banks will be willing to come back in again in a couple of months to review the progress that is being made. I hope the House will have made further progress with the implementation of the Keane report and the personal insolvency legislation. We want the banks to sit down with people who have mortgage arrears to decide how to work this out. The banks are aware that they have been recapitalised to deal with significant numbers of such cases.
Does Deputy Martin have a question on the climate change committee?
Yes. The Taoiseach said he might meet the banks again in a couple of months. I think he needs to meet them far more urgently. I would meet them in the next week or two to get something sorted.
There was a meeting today, actually.
I am concerned about the Government's lack of enthusiasm for dealing with the climate change issue, the environment generally and the green economy. These are serious issues.
They are.
They will not go away.
The Deputy is right.
It may be politically expedient in the short term to put them to one side. I do not get any sense that the Government is engaging with the fundamental energy and climate change challenges that will face this country and the world as a whole in the years ahead. The fact the Cabinet sub-committee has met on just two occasions is a manifestation of the Government's inertia on these issues. It is failing to engage with them.
As the Deputy is aware, the Minister for the Environment, Community and Local Government is directly responsible for the issue of climate change. The Minister announced last November, in conjunction with the publication of a review of national climate change policy, that an independent study would be carried out by the secretariat to the National Economic and Social Council. The study will inform policy development in this regard. On 23 January last, following engagement with the Joint Committee on the Environment, Transport, Culture and the Gaeltacht, the Minister published a work programme setting out the steps and milestones for the development of national climate policy legislation. That work programme covers the next 18 months. A process of public consultation will take place in the first half of 2012. The initial report of the NESC secretariat on potential climate policies and measures will be completed by the end of June and published in the second half of the year. The heads of a climate Bill will be developed and, following Government approval, will be considered by the joint committee by the end of 2012. The 2012 final report of the NESC secretariat will be considered by the committee in the first half of 2013. The work programme we have set out contains a number of milestones. We hope that process will conclude with the heads of the Bill having been considered by the committee by this time next year.
What role, if any, will the economic management council have in the implementation of the jobs programme that was announced by the Government recently? Will it have an overseeing role? Will various agencies of the State have to answer to it? How will the economic management council supervise the achievement of the target of creating 100,000 net jobs by 2015? As that has not been clarified, I ask the Taoiseach to do so now. What is the Government's estimate of the number of jobs that will be lost in the meantime? If the Government has a net estimate for job creation, such a figure must be known to it as well. Everybody considers that in the-----
(Interruptions).
The lips of the Minister for Education and Skills have not ceased to move since we started Question Time. That leads me to believe he might be playing the role of a political ventriloquist today.
I ask the Deputy to proceed. We are over time.
I will not be so impolite to say what that might make the Taoiseach. Many people consider that several billion euro of the bailout money to the banks was related to difficulties with household mortgages which the banks have not reflected in their policy of writing down debt. Is this the Taoiseach's understanding? Surely the alternative to having unfortunate people dragging mountains of debt around, with the accompanying stress and with unsustainable mortgage repayments, is that the mortgages should be written down to the current level of value of the house and in this way get rid of that overhang and allow people to spend their money in the real economy which would help to create jobs.
Deputy Higgins is actually putting forward a proposition which is unusual for him.
It is not unusual at all.
I thank him. As regards the mortgages situation, I have responded to questions from Deputy Martin and Deputy Adams. I refer to the range of issues in the Keane report, the consequences of the passage of the personal insolvency Bill through the parliamentary process and the fact that the banks have been recapitalised and, in a number of cases, they have the opportunity to write down mortgages by sitting down with each individual client borrower. The difference is between those who cannot pay and those who will not pay. However, having had discussions with the banks, I hope they will move on and make a real impression by releasing that pressure valve which exists in the case of so many people.
In reply to the Deputy's point about the jobs action programme, this is being overseen by the Department of the Taoiseach along with the Department of Jobs, Enterprise and Innovation. Assistance in this work has been provided by two experts who have joined the Department of the Taoiseach from Forfás for the work of monitoring and overseeing the programme. The Department of the Taoiseach and the Department of Jobs, Enterprise and Innovation will publish a report on the implementation of the action plan and the matters being dealt with. The agencies associated with individual Ministers and their Departments will respond by 9 March 2012 to a letter they will receive from the Department of the Taoiseach on this matter. The first quarter of the year will see a range of initiatives being implemented. I am launching an initiative next week entitled Succeeding in Ireland. This will provide an opportunity for the diaspora in America or Australia or wherever to be associated with the opportunity to recommend propositions for job opportunities. On each of those occasions I expect the quarterly published report can be debated in the House so that Deputies can give their views on whether the initiatives are bearing any fruit and whether the programme is up to date. I intend to see that the programme is implemented and Secretaries General, Ministers and the chief executives of the agencies involved will all receive this in writing and will be given the timelines within which they must respond.
Written Answers follow Adjournment.