Ceisteanna Eile - Other Questions

Economic and Social Research Institute

Louise O'Reilly

Ceist:

55. Deputy Louise O'Reilly asked the Minister for Finance his views on a recent paper published by the Economic and Social Research Institute, ESRI, on 3 June 2021 which argues for an increase in State borrowing to increase Irish housing supply; his views on its findings; and if he will alter the fiscal policy in order to double the level of capital investment in public housing in budget 2022. [31795/21]

Gerald Nash

Ceist:

82. Deputy Ged Nash asked the Minister for Finance his views on a recent ESRI report (details supplied); his further views on whether, given the expected strong post-Covid-19 performance of the Irish economy and the likely continued low cost of sovereign debt, the adoption of a consistently negative Government primary balance can be pursued under a prudent and sustainable set of conditions which would be specifically for capital expenditure purposes; and if he will make a statement on the matter. [31609/21]

Catherine Connolly

Ceist:

131. Deputy Catherine Connolly asked the Minister for Finance if his attention has been drawn to a report (details supplied), in particular the proposal to pursue a consistently negative Government primary balance under a prudent and sustainable set of conditions with a view to doubling the existing capital investment in State-provided housing; and if he will make a statement on the matter. [31784/21]

Deputy O'Reilly is not here to ask her question. I call Deputy Nash.

It was reported to the Ceann Comhairle's office that I would take Deputy O'Reilly's question on her behalf.

I have no notice of that. I call Deputy Nash.

Enormous and ongoing deficits are never a good thing, we can agree on that. The thinking of the Government and the officials in the Department of Finance seems to be concentrating on getting the deficit down as quickly as we can, regardless of the pressing public investment demands and requirements. Given the times we are in, the propitious borrowing environment and the huge gap in housing supply, I am with the ESRI when it states the Government should double spending on housing supply, financed by a small, ongoing deficit of 1.5% of GDP on an ongoing basis. What is the Minister's response to the position of the ESRI?

I propose to take Questions Nos. 55, 82 and 131 together.

The Deputy has offered a view about my view towards deficits. We ran a deficit last year of €18.5 billion. The deficit this year, expressed as a percentage of our GDP, will be larger than the deficit for last year. I am well aware of the role of deficits and Government borrowing in stepping in to support our economy. Over the past two years when the demands on our economy and society have been so great, I and the Government have run very large deficits for our country to enable a response to the health crisis we faced.

The ESRI commented on a particular issue relating to housing in its report. Housing currently has a budget and funding allocation that is an all-time high for that Department in the amount of €3.1 billion. Total housing expenditure has now more than doubled since 2016 and capital expenditure for that Department has increased nearly fourfold over that period. It is absolutely the case that we must reduce our deficit steadily and over time because of the level of high public debt that our country already has and because we also know that when a country is borrowing a lot of money during more normal times, it can be a source of vulnerability to the country. We are already investing a significant amount of capital into addressing the urgent demands for housing for our citizens. I will engage with the Minister for Housing, Local Government and Heritage, Deputy Darragh O'Brien, and the Minister for Public Expenditure and Reform, Deputy Michael McGrath, regarding how we increase that investment further in the future.

Housing is the single biggest social issue facing this country. We all accept that we are running an extraordinary deficit in an extraordinary time at the moment. It would be remiss of all of us not to understand and accept that the Government has made a considerable investment to keep people safe, keep businesses open and keep people close to their employment at this unprecedentedly difficult time. We acknowledge that, relatively speaking, the investment in housing is significant compared to previous years and situations. However, it is nowhere near enough to deal with the underlying problems we have at the moment. I agree with the ESRI that running a relatively small deficit on a mid-term and ongoing basis in order to allow us to invest in critical social infrastructure such as housing is going to be important not only from a social perspective but also from the point of view of productivity and competitiveness. The Minister would acknowledge that the likes of IBEC and the American Chamber of Commerce Ireland have identified it as a key bottleneck and an issue we need to address. If we need to borrow and can do it sustainably and sensibly, we should do it.

My question is in this group and I thank the Minister for that but mine is a specific question. Has the Minister's attention been drawn to this report? If so, has he read it? If so, does he agree with the recommendation that the Government can afford to borrow and build the necessary housing? That is the specific question, which I ask in the context of a severe housing crisis. Telling me that we have doubled our housing budget has nothing to do with the question that is being asked. If he could, I would ask him to address the question because we have a housing crisis. I come from a city in Galway where people have been on the housing waiting list for 15 years. Only one or two properties are available within the cap of the housing assistance payment, HAP. That payment started off at a very low price when it was brought in by the Labour Party and Fine Gael in 2014 but it has now risen to €1.4 billion. That figure is taken from the ESRI report. Will the Minister deal with the report? There are some points in it that I do not agree with but I am asking for the Minister's viewpoint. Is he aware of the report, what is his opinion on it and what is he going to do about it?

Housing policy over the past decade has failed. There has been an excessive reliance on developers and investment funds to deliver supply since the State withdrew from the housing market. Today's housing crisis is causing serious social dislocation. It is damaging the life prospects and chances of many workers and families in our communities. It is also damaging for the competitiveness of the economy, as I mentioned earlier. It is the natural outworking of an unnatural and damaging housing policy pursued by the Government. The policy is shaped not only by the Department of Housing, Local Government and Heritage but also by the Department of Public Expenditure and Reform.

Professor McQuinn of the ESRI has demonstrated that even under conservative estimates, the Exchequer could raise €4 billion each year in additional resources on a prudent and sustainable basis. That would be enough to double the level of capital investment in housing from €2 billion to €4 billion in budget 2022. Sinn Féin has been making that argument for years and the only reason for the Minister to oppose it would be on ideological grounds. I ask him to commit to doing what the ESRI is calling for, that is, doubling the capital investment in housing and start to end the housing crisis that the Government's policies have caused and deepened over recent years.

I thank the Deputies for the different questions. In response to Deputy Nash, the answer is yes, I do. I am well aware of all the challenges faced by so many with regard to housing. We are putting in place a huge amount of additional investment to respond to it.

I will say to Deputy Connolly that I am aware of it and I have read it. I agree with some but not all of it. Am I going to act on it? I am facing many different demands to increase borrowing at the moment. I cannot, therefore, commit to any particular action with regard to additional borrowing for one policy area. That must and will be done in the context of the budget later in the year. It is relevant to make a point about previous levels of capital investment when we are talking about how there might be a need to increase capital investment in the future.

In response to Deputy Doherty, the State is not withdrawing from the building of homes in the country. The State is currently the largest supplier and builder of homes in the country. The reason we have increased capital investment for housing in the way we have is because of my acknowledgement of the need for the State to be a direct builder of homes.

The State withdrew from it for a long time. The problem is that even when the Government has re-entered, it has not been up to scale. Read what the Economic and Social Research Institute, ESRI, said and stop dodging the question. It said to double capital investment in housing. Sinn Féin has been saying it year after year. The Government has remained tone deaf to that message. As a result of that, the Government has caused a housing crisis through its policies. It did not happen by a national disaster. It was a result of housing policies that the Minister and the Government have pursued. Taking the politics out of it, the ESRI is saying that the capacity is there to double investment in housing from €2 billion to €4 billion. That should be done in budget 2022 and that would start to end the housing crisis.

The Minister might say he is going all in on investment funds and on developers and we will put this resource into social and affordable housing. It is not cutting it, however, which the ESRI is saying. The Government, therefore, needs to recognise that its policies have failed. It needs to be humble enough to recognise that it has deepened the housing crisis. It now needs to stop repeating the same mistakes over and over again. Change direction, double investment in housing and start to end this crisis for so many families.

I thank the Minister for his directness. He might tell me what he disagrees with because I have highlighted some of the things said by the ESRI. It said that without significant investment, another decade of inadequate housing supply, upward rents and upward costs of houses is looming.

It sets out that one in three households that was not in receipt of housing supports was in trouble prior to the pandemic. It was paying so much on rent, mortgages, etc. It said that if we borrow at very low rates and build houses, it could reduce Government expenditure. I want to correct something I said. The ESRI told us that the HAP is €1.4 billion in total. That is the cumulative cost to date and rising. Does the Minister disagree with any of that? If he does, what is his solution to homelessness, which is costing a huge amount, to HAP, to the rental accommodation scheme, RAS, and so forth? What is his solution? Are they just inevitable by-products of his ideology?

I have beliefs about the value of our society and great beliefs regarding the role of a strong State to meet the needs of our society. That is what I, this Government and the previous Government have been working so hard to do in responding to the many needs and challenges we know are there for our citizens in finding the homes they need at affordable prices and rents. I acknowledge that we have much more to do.

To answer Deputy Connolly's question regarding my views on the report, I believe things are missing in it. The report does not make adequate recognition of the capacity constraints of our economy and the difficulties our construction sector has in growing in scale to deliver the housing output we need.

Also missing from the report is an acknowledgement of the multiple other competing demands the Government and I face, and the need we will have, at the right point, to begin to change our level of borrowings. In answer to the Deputy's question, I believe those issues are missing from the report.

In response to Deputy Doherty, I am always humble in the face of meeting people who do not have a home or who cannot afford their rent or to buy a home. I am, however, equally resolute in making the point that in face of that need, we have made huge increases in the amount of money available to respond to our great housing challenges. This Government and I are determined to stick at it until we get the progress our country wants.

I understand that Question No. 56 is grouped with Questions Nos. 68 and 74. I do not, however, see any of the named Deputies here to ask the question, in which case I will move on to Question No. 57 in the name of Deputy Conway-Walsh.

Question No. 56 replied to with Written Answers.

Covid-19 Pandemic

Rose Conway-Walsh

Ceist:

57. Deputy Rose Conway-Walsh asked the Minister for Finance if businesses have seen their credit scores reduced during the Covid-19 pandemic; the potential impact this could have on their ability to borrow; and if he will make a statement on the matter. [31790/21]

I want to ask the Minister about businesses that have had their credit scores reduced during the Covid-19 pandemic and the potential impact this could have now on their ability to borrow. Given the extremely difficult year and a half we have been through, and the huge impact it had on many businesses as they have seen unprecedented restrictions on their ability to operate, what assurances can the Minister give to businesses and sole traders about their credit rating for the future?

One of the Department’s main concerns is to ensure that SMEs have access to sufficient lending or liquidity and that access to credit for SMEs is maintained. The Government has announced a range of measures to assist companies to deal with the consequences of the Covid-19 restrictions and to ensure that they have access to sufficient liquidity.

Lenders are obliged, under the Credit Reporting Act 2013, to submit information to the Central Credit Register, CCR. Submissions of information to the CCR must be consistent with the arrangements agreed and in accordance with lenders' obligations under the Credit Reporting Act 2013. The CCR does not produce credit scores. Rather, the information on a credit report provided by the CCR is factual in nature and the information is provided to the CCR by lenders. It contains no guidance, recommendation or prohibition for lenders on what decision they should make on an application for credit or repayment arrangements agreed with borrowers. Subject to complying with applicable law and regulatory requirements, it is a matter for lenders, of course, to make their own lending decisions in accordance with their own credit policies and risk appetites.

The Central Bank, as the regulator, has advised lenders that in their reporting to the CCR, they will need to apply judgment, for example, around whether a restructure has been agreed in response to an identification of financial distress and should be reported as such. The Central Bank’s SME regulations also set out the required treatment of SMEs by regulated entities with regard to the various aspects of business lending. This includes detailed provisions around the credit application process, requirements regarding security, credit refusals and withdrawals, the handling of complaints, the managing of arrears and having in place policies for engaging with SMEs in financial difficulty.

I thank the Minister. I believe that misses the point a bit in terms of how extraordinary the situation is in which businesses found themselves. When we were at the beginning of the pandemic, absolutely suddenly and without warning, revenue streams were cut off from businesses. Yet, as the Minister knows, they had many fixed costs and bills they had to pay. Many businesses could not pay those bills at the time in way that they normally would. They found themselves, therefore, having to default on debt.

What does the Minister have in place for those businesses? I know and welcome the business supports that came thereafter for businesses at that particular time. I do not want a situation where businesses now find that they are up and running, at last, but need an overdraft or a loan and find that they cannot get that because of the credit rating being downgraded, through no fault of their own, from what it was at the beginning. They need assurances for that. I know the Minister will agree that we need to save every possible viable but vulnerable business we can.

I respectfully suggest to the Deputy that I do not believe my answer missed the question she put to me. She asked me a question about credit scores.

I made the point that we have credit records rather than credit scores and I outlined the way in which that would be dealt with by banks and by the regulator. A point on which I agree with the Deputy is that we, of course, want to put in place the supports, and we have put them in place, to give every business that is viable but currently vulnerable every prospect of being able to survive this awful pandemic.

In terms of the engagement I have had with the SME community on this matter, I have not, to date, seen the demand for additional borrowing one might expect. The array of business supports we have put in place and the direct payments from the State have meant the demand for credit has not been as high as I would have expected. I will keep the issue under review because I believe we will get to a point at which the demand for credit will grow. I am confident we have a banking system that can recognise the difficulties SMEs were in during the pandemic and will still be in a place to lend to companies that are in a position to take on that additional debt.

I appreciate what the Minister said. However, I have been contacted by business owners to say that, when they looked at their credit rating, they found it had been impacted because of their inability to meet bills, particularly at the beginning of the pandemic. This is something of which we need to be aware and on which we need a quick response to ensure every business that can will be able to stay open. Given the employment those businesses create and their importance for towns, small and large, and rural areas, we need to keep them open. I ask that the Minister take this point on board and recognise there are problems in respect of credit ratings. We do not want those problems to increase if we are to support people in going forward to trade out of the horrific time they have been through.

I very much agree with what the Deputy said. In towns and villages throughout our country, there are small businesses that are even more important now than they normally would be. That is why the Government has put in place so many supports to help them. It is why we have the warehousing of tax liabilities and an employment wage subsidy scheme that is due to continue until the end of this year. It is why, when small businesses leave the Covid restrictions support scheme, many of them will receive a significant payment to help them with their reopening. It is for all these reasons that we are yet to see what the demand for borrowing might be. My view is that demand will develop, if it does develop, later in the cycle of recovery. Of course I will keep the issue under review but from the work the Central Bank is doing at the moment and from the work I see our banks doing, I believe all is being done to meet every credit need that is sustainable and affordable for businesses that are trying to reopen at the moment. I expect the demand for credit is yet to come.

Housing Policy

Pearse Doherty

Ceist:

58. Deputy Pearse Doherty asked the Minister for Finance the number of forward purchase agreements that were made prior to the passing of the financial resolution on 19 May 2021 providing for a 10% stamp duty measure on the bulk purchase of homes, such that the residential units under such agreements will not be subject to the measure when they are completed; the number of such units; the number of such forward purchase agreements that have been made since the passage of the financial resolution on 19 May 2021; and if he will make a statement on the matter. [31812/21]

In the middle of May, the Government brought forward a financial resolution to the Dáil to provide for a 10% stamp duty charge on the bulk purchase of ten or more residential homes. I assume the Minister, Deputy Donohoe, and the Minister for Housing, Local Government and Heritage crafted this measure in the full knowledge of activities in the housing market. Will the Minister indicate how many forward purchase agreements, which are exempt from the charge, were made prior to the introduction of this measure and in respect of which building completion and transactions have not yet occurred? Will he further indicate how many units are involved under those agreements and how many agreements, involving how many units, have been made since the resolution was passed?

The financial resolution passed by the Dáil on 19 May provides for a new higher stamp duty rate of 10% where at least ten residential units, excluding apartments, are acquired by an individual or corporate entity such as a company in any 12-month period. This new measure is triggered when a residential unit is acquired on or after 20 May 2021, with the look-back 12-month period commencing at that time on a rolling basis. The units acquired during that period are aggregated. When the tenth unit is acquired, it is chargeable at the 10% rate, and this rate also then applies to the other nine units and any other units acquired at the same time as the tenth unit. However, while any units acquired before 20 May are taken into account in establishing whether the threshold of ten units has been reached, the 10% rate of stamp duty is not applied to those units but only to units acquired on or after that date.

As the Deputy will be aware, multiple purchases by local authorities, approved housing bodies and the Housing Agency are outside the scope of the higher stamp duty provision. In this regard, he should also note that when putting this financial resolution on a permanent statutory footing, I propose providing an exemption from the 10% rate for the provision of the mortgage to rent scheme by private sector participants.

Finally, I am advised that the information sought by the Deputy in connection with forward purchase agreements is not collected by any Department. However, I will explore with the Minister for Housing, Local Government and Heritage whether it is possible to put in place a reporting regime for agreements of this nature.

That is an interesting but not surprising response from the Minister. He has no idea how many forward purchase agreements are already in place, yet he exempted every single one of them from the 10% stamp duty charge. He has no idea how many transactions have been completed since that date, yet he exempted them all from the increased stamp duty. That speaks volumes about how the Government was dragged, kicking and screaming, to this point, where it did want to be in the first place. The Minister did not want to tax the vulture funds and we know that from having this argument with him for the past number of years. He resisted it at every single twist and turn.

He has exempted some developments but he does not know how much is involved in that. He does not know how many bulk purchases could happen over the next number of years because he has no knowledge of how many such agreements are in place. As Minister for Finance, did he even look to find out that information? Did he inquire about it at any stage or did he just say, "Ah well, let it be", when he exempted all of them?

I made those decisions motivated by how we can put in place policies that deal with the issue that needed to be dealt with, which was the bulk purchase of family houses, while getting the balance right also allowing more apartments to be built in the future. I have information on the kinds of purchases, including forward purchases, that took place in recent years. However, on the question the Deputy asked regarding forward purchases that are currently being completed or are under way, that information is not available to me. This does not undermine the policy rationale for what I did. The reason I excluded those forward purchases is that they will enable more apartments to be built and made available to rent and more homes to be made available to people in the future. As the Deputy will be aware, taxation in regard to these investment funds occurs when income is returned to the investor who invests in the funds.

I ask the Minister to let me explain this to him. It is not about apartments. He exempted every single apartment from this stamp duty charge. This is about homes. He exempted funds that are buying full housing estates if there was a forward purchase arrangement already in place. That is the point. It is nothing to do with apartments, every one of which is exempt in any case under his policy. This is about people buying homes. It is about what happened in Maynooth being allowed to happen again.

The Minister has no idea how many such agreements are in place. He could read the reports published online that would give him some detail in this regard. His answer speaks volumes in that it shows he did not even look for that information or want to find it out. He came before this House and said that every single forward purchase agreement for homes will be exempt where a contract has already been entered into, as will every such project that completes over the next few months. This is being done because the reality is that Fine Gael did not want to go here in any case. It was dragged, kicking and screaming to this place where it had to introduce a minimum stamp duty. The provision in question will not make much of a difference because, if the rent yield is increased by approximately 10%, it will nullify the small stamp duty increase the Minister has imposed on only a certain section of homes.

The 10% stamp duty rate is ten times what is applied under the standard rate.

It is one third higher than the stamp duty rate that applies for commercial property. It is many times higher than the standard rate of stamp duty because of the intention I have to deter these kinds of purchases in the future. Of course, it must be seen in conjunction with the other aspect of that policy, namely, that it applies to ten or more houses that are purchased. That is the other part of the policy that is put forward. The only reason I put this policy in place is to get the balance right between trying to deal with an issue I accept needed to be dealt with, and allowing the supply in the future of more homes which will be apartments. If we were to extend this practice to forward purchases as well, the net effect would be fewer homes built for people in the future. I do not want to see that. I want to see more homes available. That is why the policy we have in place gets the balance right.

Financial Services

Bernard Durkan

Ceist:

59. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which he continues to explore ways and means to offset any negativity arising from Brexit with reference to banking and financial services here; if specific issues have arisen which might need corrective attention in the short and medium terms; if Ireland as an EU and euro state member can expect to flourish in the context of banking and financial services in the future; and if he will make a statement on the matter. [31741/21]

This question relates to the extent, if any, to which Brexit may have impacted positively or negatively on banking and financial services in this country.

I thank the Deputy. My officials, and officials in the Central Bank of Ireland, as our independent regulator, have been carefully monitoring developments to identify potential challenges in banking and financial services that could arise from Brexit and to take steps to prevent them occurring or, if that is not possible, to mitigate them. Thus far Brexit has had limited impact on the industry in the short term, given the preparation and relocations already undertaken as part of contingency planning for a no-deal Brexit.

A number of domestic legislative measures were introduced as part of contingency planning to mitigate some potential financial services risks, such as the insurance run-off regime and various legislative provisions to facilitate the successful migration of our settlement system from the UK CREST settlement system to Euroclear Bank Belgium. The signed EU–UK Trade and Cooperation Agreement covers financial services in the same way that financial services are covered in the EU's other trade agreements with developed countries. In addition to the few financial services provisions included in the EU-UK Trade and Cooperation Agreement, both sides agreed to establish a memorandum of understanding on structured regulatory co-operation on financial services. The memorandum will be an important measure to support continued co-operation between the EU and UK in financial services, given the integrated nature of our financial services systems.

To conclude on that, many of the negative issues we were concerned about with regard to financial services and Brexit have not yet developed. That is mostly due to the quality of planning put in place to deal with those risks. We have also had some gains in financial services across that period. In particular, I point to the success we have had with additional investment and employment from both Barclays and Bank of America Merrill Lynch.

I thank the Minister for his comprehensive reply. Does he foresee continued interest in potential relocation to this jurisdiction given we remain a member of the European Union? It was anticipated at an earlier stage that there would be fairly substantial relocation from the UK to this country. Has that happened and is it likely to happen?

I believe there are going to be further opportunities to grow the financial services sector here and to gain additional jobs. This is something the IDA is working very hard to deliver at the moment. To date we have been successful in attracting additional investment into our country as a result of the efforts of the IDA and the Department of Finance. The priorities I have at the moment are continued stability and safety, the protection of consumer rights with regard to financial services and ensuring the basic infrastructure of our financial services market continues to be secure with all of the change that is under way. We have done really good work on that to date and we will of course continue to look at other opportunities that are there. I point, for example, to some of the progress we have had with regard to rating agencies. We have seen Standard & Poor's and Kroll Bond Rating Agency locate their European head offices here in Dublin. We have done much but we do have more to do.

I further enquire about the degree to which the Minister and his Department continue to explore the possibility and the potential for relocation here and the potential for benefit to accrue to this country's banking and financial services as a result of remaining solidly within the EU, and the potential prospects that can create for those who invest in services here.

I thank the Deputy. The opportunities really are there. Our opportunities are more likely to relate to how we can increase the scale of the employers which are currently here, and how we can encourage them to have more operations and functions located here. If one looks at where we stand from an employer point of view, the breadth of employer and the breadth of investor we have at the moment is almost as high as it could be. As such, our focus should be on how we encourage and incentivise existing employers to locate more here. We have done so well to date but there are more opportunities in the future. As I have said, the IDA will lead in this, as will the Department of Enterprise, Trade and Employment. We will help in any way we can while of course being mindful of our mandate in relation to financial stability and the need for proper and effective regulation.

I thank the Minister. I can see that Deputy Murnane O'Connor has stepped out of the Chamber for a minute. I am going to skip all the way to Question No. 66.

Insurance Industry

Rose Conway-Walsh

Ceist:

66. Deputy Rose Conway-Walsh asked the Minister for Finance if his attention has been drawn to the fact that businesses are seeing large increases in insurance premiums for attempting to claim business interruption support; and if he will make a statement on the matter. [31789/21]

Businesses are seeing large increases in insurance premiums for attempting to claim business interruption support. I have been contacted by a number of business owners who have been quoted huge increases in their insurance premiums even though they have made no claims other than those for business interruption as a result of Covid. Are insurance companies increasing premiums for businesses that attempt to claim for business disruption? How widespread is this problem and what steps are being taken to protect vulnerable businesses?

I thank the Deputy for her question. As she will be aware, I am not in a position, nor indeed is the Central Bank, to intervene in the provision or pricing of insurance. This position is reinforced by the EU framework for insurance, called the Solvency II Directive. Consequently, companies cannot be directed as to how they price their policies or what terms and conditions they apply in relation to cover.

It is my understanding that past claims history is one of the rating factors that insurers generally will use in making their individual decisions on whether to offer insurance, and what terms to apply. However, I am firmly of the view that insurers need to take a longer-term perspective as regards their customers, particularly businesses that have been adversely affected by the pandemic and may have had to make a claim against their business interruption policies. If insurers have experienced an overall reduction in claims costs during the pandemic period and expect savings to be made as a result of lower award levels arising from the personal injuries guidelines, they need to pass these savings on to consumers and in particular, businesses that may have been closed for much of the period. This is particularly important as businesses start to reopen their doors and we work to restart the economy over the coming months. The Minister of State, Deputy Fleming, who has responsibility for insurance, recently met with individual insurers to press the need for premium reductions in this regard. The Minister of State is taking this agenda and this issue very seriously.

I know he intends to meet the providers later in the year to continue to monitor progress in this area and the impact of the overall reform agenda on both premium levels and risk appetites of insurers.

I can give the Minister an example of why the insurance companies are completely ignoring both him and the Minister of State. A business local to Belmullet has seen its insurance premium go from €1,233 in 2020 to in excess of €4,000 in 2021. This is a small business with a small turnover. Those kinds of extortionate increases would be crippling at the best of times but to try to find that kind of money after seeing such long periods of closure is impossible for many. Insurance companies have not yet paid the business disruption claims and they are punishing customers for even making a claim. We could potentially see a position where a business might see major hikes in premiums for making a claim that may or may not be successful. Even if the claim is successful, the business should not be punished for making a claim. This is the reality and it must be addressed.

I thank the Deputy. The Minister of State, Deputy Fleming, and I are very much aware of that reality and the challenge many small businesses face with the rising cost of insurance. It is the reason this and the previous Government have had such a focus on this matter. It is the reason the Minister of State has worked previously with the former Minister for Justice, Deputy McEntee, and the current Minister for Justice, Deputy Humphreys, on the implementation of guidance for claims settled in court precisely to create an environment in which we are seeing more reasonable claims. That can lead to a change in the premiums that both the Deputy and this Government want to see.

There are many different elements within our action plan for insurance reform that are being delivered. So far, for example, we have made progress on the implementation of personal injuries guidelines and set up an office to promote competition. There is also work under way on the role of the Personal Injuries Assessment Board. There are many different elements on the way because we want to address the affordability of premiums and meet the needs of businesses that the Deputy raised.

I appreciate what the Minister is saying but it is of no use to the business in Belmullet that has seen the price of insurance increase by so much. It is already a scandal that insurance companies are trying to escape paying for business disruption, despite it being exactly the type of protection people in business pay for. We have seen the industry resist passing on any savings to people's motor insurance resulting from the lockdown, and we have seen insurance companies trying to deduct State supports from insurance claims. That is an outlandish attempt to turn business supports into insurance industry subsidies.

There is clearly a view in the insurance industry that they can get away with what they want. This attitude has been encouraged by successive governments that have failed to hold that insurance industry to account. The Government must give a message to the business in Belmullet that has seen its insurance costs increase because it even made a claim, never mind whether it was successful.

This is about the regulation of a sector through an independent regulator with the power to hold firms to account where there are practices not in keeping with regulation or where there is a breach of law. I accept the point that the general matters I refer to may not be of solace to the specific company referred to by the Deputy, but it is the implementation of these policies by the Minister of State, Deputy Fleming, along with the Tánaiste, me and other Ministers that will make a difference in the coming months and beyond. That is particularly true of the work done by the Minister for Justice and the Minister of State, Deputy Fleming, on personal injuries guidelines that only came into effect on 24 April. That is a very important moment in how we deliver the reform agenda this Government is committed to.

As I indicated in my previous reply to the Deputy, the Minister of State, Deputy Fleming, has already met representatives of the insurance sector on this very matter. I know he and I will continue to meet them about this matter to ensure we can do all we can to see these changes beginning to be reflected in the premiums faced by businesses like the one referred to by the Deputy.

Question No. 60 replied to with Written Answers.

Credit Unions

Pádraig O'Sullivan

Ceist:

61. Deputy Pádraig O'Sullivan asked the Minister for Finance the status of plans to enable credit unions to become involved in financing housing projects; and if he will make a statement on the matter. [31796/21]

I apologise for being delayed. I ask the Minister about the status of plans to enable credit unions to become involved in financing housing projects.

I thank the Deputy for his question and, in answering it, I will refer to the sector's involvement in social housing projects. Following a review of the investment framework for credit unions in 2017, the Central Bank introduced amending investment and liquidity regulations for credit unions. Since 1 March 2018, credit unions have been permitted to invest in regulated investment vehicles where the underlying investments are investments in tier 3 approved housing bodies, AHBs, for the provision of social housing.

The regulations require that investments by credit unions in tier 3 AHBs must be made through a regulated investment vehicle. The maximum permitted investment amount per credit union is 50% of a credit union's regulatory reserves where a credit union has total assets of at least €100 million and 25% of a credit union's regulatory reserves for all other credit unions. These limits may facilitate a combined sector investment in tier 3 AHBs of close to €700 million. It is a very substantial investment that can be facilitated.

As such, the Government and the Central Bank have fulfilled their role and it is now up to both the credit union and social housing sectors themselves to progress and develop any specific funding mechanisms. I understand three groups are seeking to establish special purpose vehicles, SPVs, to allow investment into tier 3 AHBs, including the two credit union representative bodies, the Irish League of Credit Unions and the Credit Union Development Association. It should be noted that the Department of Housing, Local Government and Heritage has primary responsibility for the formulation and implementation of policy and for the preparation of legislation relating to housing.

I thank the Minister of State for his response. Our credit unions are among our most trusted financial institutions and are uniquely placed to support the delivery of housing and many retrofitting schemes. The Irish League of Credit Unions, representing approximately 226 credit unions with an estimated €18 billion in assets, looks set to follow in the footsteps of the Credit Union Development Association by linking with investment partners, as the Minister of State mentions, to form a special purpose vehicle to invest in the sector. Last summer, this association announced plans to launch a social and affordable housing fund, backed by more than 50 of its member unions. In co-operation with Initiative Ireland it intends to lend up to €300 million per year to deliver more than 1,000 homes annually.

The credit union sector has demonstrated it has the capacity to contribute to lending in this sector, and given the precarious nature of banking in this country, it will provide an appropriate vehicle for certain future homeowners to borrow, especially for social and affordable housing. Is there any permission for credit unions to engage in lending beyond the three AHBs mentioned by the Minister of State?

I thank the Deputy. I mentioned already that there is what is called headroom of up to €700 million that the credit union movement can invest in these housing projects. It is a question of them agreeing the structure of the special purpose vehicle if they choose to go down that route and getting clearance from the Central Bank of Ireland when there is a detailed proposal.

Today I met representatives of 30 credit unions in an organisation called Cultivate, which provides loans for the agri sector. They mentioned restrictions on borrowing but the Central Bank has made it crystal clear that no credit union in Ireland has gone to it recently seeking to extend the limits they are allowed. None of them has reached the individual lending limits to date. I encourage credit unions to put proposals to the Central Bank as quickly as they can. I hope the Central Bank can deal with those applications for special purpose vehicles and the associated regulatory matters in a very timely manner.

I thank the Minister of State. I have looked at previous parliamentary questions on this matter.

It was noted, as was said, that the three credit union bodies have indicated that they are interested in pursuing this. Is there any other institution or group of credit unions on the horizon that we were unaware of up to now? Perhaps the Minister of State will expand on that, if it is the case.

The Department of Housing, Local Government and Heritage ultimately has responsibility for formulating policy and proposing appropriate legislation, which is fine. I take the point that credit unions are quite happy with the criteria as outlined by the Minister of State, but will he elaborate on whether he believes the criteria inhibit in any way the potential for credit unions to come together to pursue this? Does he believe that the easing of any regulations to allow for the credit unions to come on board is necessary or appropriate? I would just like some elaboration on that.

I see three ways whereby credit unions can assist in providing funding for house building or for mortgages for people to purchases houses. One way is through the SPV we have discussed, which is a complicated exercise. The loan ultimately comes from the SPV in which the credit union has an investment, rather than coming through the credit union's own front door. I would be much happier to see credit unions being able to lend through their own front door, in their own name, rather than through an SPV. The most important thing that credit unions can do when they are beginning to work on it, and I gave the example of the agricultural sector, is to collaborate where they can to do a lot of their back-of-house work such as credit checking and financial modelling. If they come together on a collaborative basis without having to form an SPV, this would be another option. Finally, the major credit unions with substantial assets are in a position where a number of them are giving individual mortgages. I would like to see more of that as time develops.

Questions Nos. 62 and 63 replied to with Written Answers.

Question No. 64 is in the name of Deputy Jennifer Murnane O'Connor. I put her on forewarning that she may have an opportunity to move Question No. 65 also, along with its grouped questions.

Credit Unions

Jennifer Murnane O'Connor

Ceist:

64. Deputy Jennifer Murnane O'Connor asked the Minister for Finance the initiatives he is undertaking to boost credit unions; and if he will make a statement on the matter. [31764/21]

I thank the Acting Chairman. I want to ask the Minister of State what initiatives he has undertaken to boost the credit union sector.

I thank the Deputy for raising this issue. We are aware of the important role played by credit unions throughout society. It is one of the most trusted brands by the people when it comes to dealing with their financial affairs.

A number of commitments are set out in the programme for Government, including a review of the policy framework in which credit unions operate. As part of the review, the Department has held extensive engagement with the credit union representative bodies since September 2020 to seek feedback on their key priorities for the sector. I met with representatives of the sector and with different groups who made proposals. I am examining each and every one of the proposals, with staff in the Department of Finance.

On supporting and enabling the sector to grow, I will outline some recent developments in lending and investment regulations, SME, lending, access to finance for retrofit, current accounts and investment in approved housing bodies. The Central Bank has in recent years completed reviews of both the lending and investment frameworks. Since January 2020, credit unions have a combined capacity to provide up to €1.1 billion in SME and mortgage loans, with additional lending capacity available for those that can comply with certain conditions, or on approval by the Central Bank. As at December 2020, credit unions had combined mortgage and SME loans of €344 million, an increase of 12% on the previous year. There is tremendous scope for them to continue doing that.

I welcome the announcements that 19 credit unions, supported by Irish League of Credit Unions, the Credit Union Development Association and Metamo, have been approved by the Department of Enterprise, Trade and Employment for participation in the Covid-19 credit guarantee scheme. This is a tremendous opportunity for credit unions to obtain finance at low cost where the State guarantees 80% of the actual loan and the risk to the credit union is low. They can give out unsecured loans up to €200,000. It is a fabulous scheme and I encourage as many credit unions as possible to take this up and participate in the scheme as quickly as possible.

The Minister of State will be aware that I am a big fan of credit unions. In my area in Carlow they do so much good work. I must, however, ask him about the levies on the credit unions, which is a concern. Covid has been hard for people and they are trying to save an extra few euro. The credit union now has funding. It is important that the Minister of State would look at mortgages across all of the credit unions. Some credit unions are able to give out mortgages, but others are not, which is a concern. It is my understanding that 18 months ago the Government changed some of the loan criteria. Originally, in Carlow the credit union had a loan term of 25 years. This has now changed to ten years. A person can borrow up to €100,000 over ten years, not 25 years. I also have concerns about this. Even though we all know the great work done by the credit unions I ask the Minister and the Minister of State to examine these issues. People depend very much on credit unions, which are very much community-based. I ask that these issues be looked at.

I thank the Deputy for pursuing the issue on behalf of credit unions. She also mentioned the credit union in her own home town. It is important to note that 51 credit unions, representing some 50% of the sector in financial terms, currently have approval to provide current accounts and debit cards. This is the way forward. They must be able to meet the modern day requirements. I encourage the other credit unions in the sector to move into that area. Some credit unions offer a current account and cards but only allow a credit union member to withdraw cash from certain ATMs. I would like the credit union movement to have cards that can be used in any ATM of any financial institution. Getting more people using credit union facilities will help them to grow. I want to see the credit union system lending more money. Credit unions have a surplus of savings and deposits. It is important that they lend so they can earn a good rate on the loans, and earn income into the future.

As the Minister of State said, it is important that we in government encourage credit unions to give out loans. The funding is there. This must be looked at. More than ever we are now seeing the housing crisis, and there are more people investing in their homes during Covid by decorating and so on. This is what it is all about and this is what we need to encourage. I ask that we would work with the credit unions a bit more on what we could do to give out more loans, and on what the criteria are, in particular the criteria under which can invest and what they can invest in. This needs to be looked at. Even though I welcome the good work being done on all sides, there are issues that need to be addressed. We are all blessed with the number of credit unions in the State. They do an excellent job but they have money and we must make sure that this money gets out to the communities. We cannot have any barriers. I ask that no barriers are put in front of any credit union.

I agree wholeheartedly with the Deputy's comments on the strength of the credit union movement in the State. They are definitely held in very high esteem. She referred to levies earlier. Last year the Minister signed an order that dramatically reduced the levies payable by credit unions from this year onwards. It was one of the biggest single reductions they have ever achieved. We have assisted the credit union sector with legislation to allow them to hold their AGMs virtually, which had not been provided for in legislation up to now. Practically every credit union in the State has now held its AGM in a virtual manner, which had never happened previously.

Following the closure of Bank of Ireland branches and Ulster Bank, the only financial institution left standing in many towns throughout the State will be the credit union. There is a tremendous opportunity for them to increase their volume of business in the local communities now that other banks are closing their branches. There is also a tremendous opportunity for them to meet with business people, especially from the SME and retail sector, to provide loans, which they need to do to earn interest and to continue to grow and prosper.

Covid-19 Pandemic Supports

Cathal Crowe

Ceist:

65. Deputy Cathal Crowe asked the Minister for Finance the number of persons in counties Clare and Galway receiving support under the employment wage subsidy scheme; the number in each county who were receiving support under the scheme in May 2021; the number of persons in each county who have received support under the scheme and its predecessor since March 2020; the expenditure on the scheme in each county over that time; and if he will make a statement on the matter. [31771/21]

Jennifer Murnane O'Connor

Ceist:

71. Deputy Jennifer Murnane O'Connor asked the Minister for Finance the number of persons in counties Carlow and Wexford receiving support under the employment wage subsidy scheme; the number in each county who were receiving support under the scheme in May 2021; the number of persons in each county who have received support under the scheme and its predecessor since March 2020; the expenditure on the scheme in each county over that time; and if he will make a statement on the matter. [31763/21]

Marc MacSharry

Ceist:

79. Deputy Marc MacSharry asked the Minister for Finance the number of persons in counties Sligo, Leitrim and Donegal receiving support under the employment wage subsidy scheme; the number of persons in each county who were receiving support under the scheme in May 2021; the number of persons in each county who have received support under the scheme and its predecessor since March 2020; the expenditure on the schemes in each county over that time; and if he will make a statement on the matter. [31703/21]

Christopher O'Sullivan

Ceist:

80. Deputy Christopher O'Sullivan asked the Minister for Finance the number of persons in counties Cork and Kerry receiving support under the employment wage subsidy scheme; the number in each county who were receiving support under the scheme in May 2021; the number of persons in each county who have received support under the scheme and its predecessor since March 2020; the expenditure on the scheme in each county over that time; and if he will make a statement on the matter. [31793/21]

Brendan Smith

Ceist:

81. Deputy Brendan Smith asked the Minister for Finance the number of persons in counties Cavan, Monaghan, Meath and Louth receiving support under the employment wage subsidy scheme; the number in each county who were receiving support under the scheme in May 2021; the number of persons in each county who have received support under the scheme and its predecessor since March 2020; the expenditure on the scheme in each county over that time; and if he will make a statement on the matter. [31695/21]

John McGuinness

Ceist:

88. Deputy John McGuinness asked the Minister for Finance the number of persons in counties Kilkenny and Waterford receiving support under the employment wage subsidy scheme; the number of persons in each county who were receiving support under the scheme in May 2021; the number of persons in each county who have received support under the scheme and its predecessor since March 2020; the expenditure on the schemes in each county over that time; and if he will make a statement on the matter. [31701/21]

Willie O'Dea

Ceist:

92. Deputy Willie O'Dea asked the Minister for Finance the number of persons in County Limerick receiving support under the employment wage subsidy scheme; the number who were in receipt of the payment in May 2021; the number in County Limerick who have received support under the scheme and its predecessor since March 2020; the expenditure on the schemes in County Limerick over that time; and if he will make a statement on the matter. [31699/21]

Joe Flaherty

Ceist:

95. Deputy Joe Flaherty asked the Minister for Finance the number of persons in counties Longford and Westmeath receiving support under the employment wage subsidy scheme; the number in each county who were receiving support under the scheme in May 2021; the number of persons in each county who have received support under the scheme and its predecessor since March 2020; the expenditure on the scheme in each county over that time; and if he will make a statement on the matter. [31767/21]

Jackie Cahill

Ceist:

100. Deputy Jackie Cahill asked the Minister for Finance the number of persons in County Tipperary receiving support under the employment wage subsidy scheme; the number who were in receipt of the payment in May 2021; the number of persons in the county who have received support under the scheme and its predecessor since March 2020; the expenditure on the scheme in County Tipperary over that time; and if he will make a statement on the matter. [31761/21]

Cormac Devlin

Ceist:

102. Deputy Cormac Devlin asked the Minister for Finance the number of persons in County Dublin receiving support under the employment wage subsidy scheme; the number in receipt of the payment in May 2021; the number of persons in County Dublin who have received support under the scheme and its predecessor since March 2020; and the expenditure on the schemes in the county over that time. [31806/21]

Dara Calleary

Ceist:

105. Deputy Dara Calleary asked the Minister for Finance the number of persons in County Mayo receiving support under the employment wage subsidy scheme; the number in the county who were receiving support under the scheme in May 2021; the number of persons in the county who have received support under the scheme and its predecessor since March 2020; the expenditure on the scheme in each county over that time; and if he will make a statement on the matter. [31769/21]

James Lawless

Ceist:

120. Deputy James Lawless asked the Minister for Finance the number of persons in counties Kildare and Wicklow receiving support under the employment wage subsidy scheme; the number in each county who were receiving support under the scheme in May 2021; the number of persons in each county who have received support under the scheme and its predecessor since March 2020; the expenditure on the schemes in each county over that time; and if he will make a statement on the matter. [31697/21]

Barry Cowen

Ceist:

130. Deputy Barry Cowen asked the Minister for Finance the number of persons in County Offaly receiving support under the employment wage subsidy scheme; the number in the county who were receiving support under the scheme in May 2021; the number of persons in the county who have received support under the scheme and its predecessor since March 2020; the expenditure on the scheme in each county over that time; and if he will make a statement on the matter. [31765/21]

Christopher O'Sullivan

Ceist:

384. Deputy Christopher O'Sullivan asked the Minister for Finance the number of persons in Cork city and county receiving support under the employment wage subsidy scheme; the number of persons in County Kerry receiving support under the employment wage subsidy scheme; the number in each county who were receiving support under the scheme on the same date in May 2021; the number of persons in each county who have received support under the scheme and its predecessor since March 2020; the expenditure on the scheme in each county over that time; and if he will make a statement on the matter. [31611/21]

How many people in counties Carlow and Wexford are receiving support under the employment wage subsidy scheme? What was the number in each county who received support under the scheme in May 2021? How many people in each county have received support under the scheme and its predecessor since March 2020? What has been the expenditure on the scheme in each county over that time? Will the Minister make a statement on that matter?

I propose to take Questions Nos. 65, 71, 79 to 81,inclusive, 88, 92, 95, 100, 102, 105, 120, 130 and 384 together.

This has been an absolutely vital scheme. I will deal with County Carlow where, to date, under the employment wage subsidy scheme 6,800 employees have participated in the employment wage subsidy scheme. Prior to this, it was the temporary wage subsidy scheme and the number was 8,600. With regard to how much money has been paid out to date under the two programmes, the answer is €82 million, with €38 million on the employment wage subsidy scheme and €44 million on the temporary wage subsidy scheme.

I thank the Minister. As he said, this is a vital scheme and it is something I believe we need to continue. Throughout Covid we have seen many sectors affected through no one's fault. The Government has played a big part. It is vital that we make sure there is funding for businesses to survive. I ask the Minister to make sure that we deliver. I welcome that 6,800 employees in Carlow have received this because it has been much needed. I see it from speaking with people in business and working people. The money is needed. I ask that we do our best to make sure it continues.

I very much agree with the analysis put forward by the Deputy. This scheme has made a massive difference to workers and employers throughout the country. As the Deputy knows, the Government has made the decision to extend the scheme to the end of this year, in a completely unchanged way for the next quarter and with a view to seeing whether we can make some slight changes to the scheme in the final quarter to begin the process of making it more sustainable. I hope we will be able to change it over time. The scheme has played a role in the protection of many jobs in County Carlow and counties throughout the country. For this reason, we have made the decision to extend the scheme to the end of the year.

I thank the Minister. I am delighted it has been extended until the end of the year because it is a concern. We are now speaking about the Delta variant. We are very lucky that our vaccine roll-out is strong, and I am getting my second vaccine tomorrow and I welcome it. It is important that the scheme is looked at again at the end of the year because it has been such a help to businesses and employees. I thank the Minister.

I congratulate the Deputy in advance of tomorrow. It is great to know that this week 100,000 citizens from throughout the country will be getting either their first or second jab. This will continue in the weeks and months of this year. In any decision the Government will make regarding supports in future there must be a balance. We cannot keep the supports we have in place in an unchanged format forever but I have never met an employer who wants to be on the scheme. Employers who set up their own companies want to be standing on their own two feet, covering their own bills and covering their own wages and not reliant on the State for help to do it. On the other hand, any change in the scheme that is too sudden or quick will run the risk of creating big challenges for employers and their viability. We are trying to get the balance right and I believe we have done so to date. We will continue to monitor closely how the scheme is operating and whether it offers us any guidance on the design of the scheme in future.

Written Answers are published on the Oireachtas website.
Sitting suspended at 8.55 p.m. and resumed at 9.12 p.m.