Vol. 442 No. 2
6 Mr. Harte asked the Minister for Enterprise and Employment if his attention has been drawn to the criticism by the Task Force on Small Business of the cutback, in the 1994 budget, of funding for county enterprise boards; and if he will make a statement on the matter.
63 Mrs. Doyle asked the Minister for Enterprise and Employment if his attention has been drawn to the criticism by the Task Force on Small Business of the cutback, in the 1994 budget, of funding for county enterprise boards; and if he will make a statement on the matter.
I propose to take Questions Nos. 6 and 63 together. I am aware of the positive welcome which the Task Force on Small Business has given to the potential of the county enterprise boards to encourage and assist local enterprise. I have also noted its concerns regarding the provision for the county enterprise boards in the 1994 Estimates.
It is clear from the commentary in the report of the task force that it was primarily concerned to highlight the substantial addition to State spending on small business represented by the funding envisaged for county enterprise boards under the National Development Plan, 1994 to 1999. The task force noted the disparity, however, between the projected levels of programme expenditure under the plan and the provision made for county enterprise boards in the Vote for my Department this year. The provision in the 1994 Estimates was framed in the context of the establishment of the county enterprise boards on an ad hoc basis to operate an interim grants scheme. It relates to anticipated expenditure rather than the grand total of financial support for projects likely to be approved in the current year. The Estimates provision will need to be reviewed following the completion of negotiations with the European Commission on the novel Operational Programme for Local Development.
Is the Minister saying that the analysis of the Task Force on Small Business was inaccurate that they mistook what was happening with regard to funding? Is he suggesting they are arithmetically wrong? They state clearly that the £21 million originally earmarked in 1994 for the county enterprise boards should not have been reduced to £9 million. Is it correct to say they missed out on a technicality? Is it not the case that if they were properly advised by the Department they would not have made that error? Would he agree that when £9 million is divided among 36 county enterprise boards the result is that each receives a paltry sum with which it is expected to establish new employment?
In fairness the Task Force on Small Business came to the wrong conclusion, albeit in an understandable manner. The method of grant payment as distinct from grant approval is in line with the old western development model, which we are replacing. The amount of approvals since October 1993 was of the order of £7 million although only £330,000 was drawn down. As the Deputy will be well aware the grant will not be paid until all the other components of the project have been put in place. This is the case likewise with IDA Ireland and Forbairt.
We have written to the 35 county enterprise boards stating that their initial allocation will be £500,000 for this year and if having approved projects for this amount they have subsequent projects which merit aid, they can submit them for approval and subsequent grant payment. There is a time lag between the approval process and the date of payment. The Estimates procedure makes provision for moneys that have been paid out. The allocation is in the region of £9 million and it will be revised in the Estimates to make up the arithmetic shortfall that the task force spoke about in the Estimates at the beginning of this year.
Is the Minister stating that there will be no budgetary restrictions on county enterprise boards and if they submit projects that have passed their vetting procedure, money will not hold them back? What target does the Minister envisage the county enterprise boards achieving in terms of employment?
We have no employment targets because we simply do not know as the 35 county enterprise boards do not have a track record to enable us to establish a reasonable target. I can assure the Deputy that there will be no budgetary constraints. In other words, if the boards bring forward proposals for job creation that meet the criteria of the evaluation process, I have been assured that extra moneys will be made available to meet approved applications.
Did I misunderstand or mishear the Minister say that it depends on the "novel operational local development programme"? I am not sure what the connection is.
On the question of the timelag can anything be done about the interference of bureaucracy? As I recall in 1993 there was £17 million allocated to the county enterprise boards which was subsequently reduced to £11 million and £9 million but only £330,000 has been paid out. Despite the great number of projects approved it is difficult to get the cheque. Having regard to the type of small enterprise we are trying to assist where the speed of delivery of the cheque is almost as important as its value, does the Minister acknowledge that this delay becomes the pattern it may well undermine an otherwise valuable contribution to the development of local enterprise?
The county enterprise boards will be established as limited liability companies in the middle of May. The legal documentation necessary has been cleared by the Department of Finance following considerable discussion. The delay was not a source of comfort for me or any of the members of the 35 county enterprise boards. The original structure, inherited from the Department of Finance, was the County Western structure which tended to have a slow and bureaucratic way of processing, approving and releasing funding for projects. These difficulties have been addressed and this structure will be replaced by boards established as limited liability companies and given a block financial allocation which they will be able to pay out directly.
This principle is not applied only in the case of county enterprise boards but to all grants. As Deputies will recall, in the case of home improvement grants, while approval was issued the grant was not paid until the work had been carried out and until two thirds of the cost has been met by the applicant. It is not the fault of the officials responsible for administering the scheme that only £300,000 of the total of £7 million has been paid out, as applicants have a responsibility to provide the balance of the finance for the project. The county enterprise boards will not provide all the finance required. When the boards are established as limited liability companies no later than the end of May applications will be processed more speedily. I am not satisfied with the present system which is too bureaucratic.
Has the Minister given any consideration to allowing the county enterprise boards offer loan facilities as distinct from grants?
Yes, and I am anxious to ensure that they will be able to use some of the money to underwrite loans as distinct from offering a grant. We have to move away from the provision of grants towards investment in enterprise which could take many forms: a loan, a small equity participation, a subsidised loan or preferential shares as recommended by the Culliton report. It will be hard to do this in the international sector as we are competing with other countries but there is no such competition in the domestic sector.
Has the Minister accepted the recommendation of the task force on small business that the county enterprise boards should include more persons with practical business experience and that those who receive assistance should have mentors? The advice of the Task Force on Small Business on which the Department was represented was that several of these boards would run out of money early this year.
I have to dissuade the Member from quoting at this time.
I am describing a finding rather than quoting. Despite that finding the Minister tells us that they were wrong. Was there a breakdown in communications between the Department and the task force?
On the contrary, there was a realisation by people in Merrion Street, of the great work being done by the Department and the undertaking that it would not impose any restrictions on money for projects capable of generating employment. The original allocation was based on the assessment of the Department of Finance of how much finance would be drawn down. As the local board will issue approval we expect a greater amount of money to be spent in a given year. The advice given to the task force in late autumn has been superseded by the discussions we had with the Department of Finance.
