I thank the Members of the Seanad for their valuable contributions yesterday and today on the reform of the system of supports to small and micro-enterprise. While I acknowledge a wide range of topics were introduced, I will address some of the matters raised on the proposed new LEO model.
Senators Mary White and Breian Ó Domhnaill raised concerns over the dissolution of the CEBs and the location of the LEOs within local authorities. While I take their views on board, following all the consultation that has taken place the view of the Government is that this will be a great opportunity for local enterprise and for jobs on the ground. I recognise the wealth of experience in the current CEBs and their years of entrepreneurial experience in business. I am happy that all of the current CEB staff will migrate to the LEOs and be ring-fenced for three years to allow the LEOs to embed and to ensure continuity of service to LEO clients.
The experience and expertise of the CEB staff will be further enhanced by the local authority staff with knowledge of broader economic development. A range of services will be incorporated to support and develop enterprises.
The services to be rolled out include general business advice; advice and information on rates and planning licensing - next January every licence will be issued through one portal; information on access to other Government services; revenue seed capital and seed protection; SOLAS employment; the Company Registration Office; and the Credit Review Office. Other services that have an impact on business will also be very much available, including advice and information on local business with regard to assessment of public procurement, enterprise support, training and support on how to start a business, mentoring and marketing, as well as a whole suite of services that will be driven by the centre of excellence such as entrepreneurship and enterprise development. This a new beginning and these services will be embedded in the new structure.
The experience of the CEB staff will be further enhanced by local authorities with knowledge of broader economic development. The new structures will bring in local authorities as direct partners in promoting entrepreneurship and supporting small and micro-businesses. Evaluation boards were mentioned. The practice of local business people sitting on them will continue - the new structure will bring in all those people.
Local authorities can provide important services and opportunities for small business. City and county managers recognise that the success of small business will be crucial for growth in their areas, and it is important to harness that commitment. The massive reform of local government includes the appointment of a new chief executive in the local authority, but the backbone of every county is the business environment in every village and town, contributing to the overall success of the county.
The LEO will be a stand-alone entity, with its own distinctive logo and branding, and its functions will be delivered by local authorities within the terms of a robust service level agreement - I advise Members to study the service level agreement, which emphasises critical new services - with distinct performance targets and metrics. It is important to bear in mind that the Minister for Jobs, Enterprise and Innovation will retain responsibility for the LEO budget and enterprise policy.
I will be visiting the majority of counties and working with local government to ensure the initiative is effectively rolled out. I note the points made by Senators Feargal Quinn and Darragh O'Brien on the burden of regulation. I reassure them that I chair an interdepartmental body which is looking at that very issue in an effort to minimise the cost and streamline administration for business. For example, there are more than 30 licences - from HACCP to liquor and restaurant licenses - with 15 different licensing authorities. From next year all of those will be centralised in one portal. That is a huge commitment - the jobs plan will be rolled out in January 2014 - and it will lead to a massive cost reduction. Everything will be available in the same location; people will be told the exact requirement and the application process for anybody setting up a business will be simplified. There will also be a one-stop-shop in every county.
The entrepreneurship forum established recently by the Government is examining the barriers to setting up a business and how to incentivise them. In addition, the centre of excellence and Enterprise Ireland will be charged with producing standardised, simpler grant application forms and report templates for the new LEOs.
I assure Senators Jimmy Harte and Labhrás Ó Murchú that the reformed structure is far from a cosmetic exercise. I agree that the CEBs have served the sector diligently in the past 20 years. They have done an outstanding job - the Sligo CEB has been most successful, for example. However, we are making effective changes to the structure. As I said yesterday, in recognition of the changes to the social, economic and technological landscape of this country in recent years, this strategic reform will make the operating environment for business more coherent, responsive and conducive to entrepreneurship at local level. Small business is the backbone of the economy - it contributes 98% of the economy and employs the best part of 750,000 people. We fully recognise the role of direct foreign investment, and the roles of Enterprise Ireland and the centre of excellence mean that a business plan can be drawn up for the area, including how the marketing of the region to attract direct foreign investment can be facilitated by the LEO working with all stakeholders in the county. They will consider how best to stimulate local enterprise and attract foreign investment. When one considers that more than 150,000 people work directly for Enterprise Ireland companies, how critical they are to every region can be seen. Enterprise Ireland will have a direct role whereas before it was excluded. Enterprise boards are geared up to working with companies employing fewer than ten people; Enterprise Ireland will have a direct mandate with any company. The LEO structure will draw and build on the positive expertise and culture of the successful CEB model.
I will now clarify the position on a couple of topics raised by a number of Members, including Senators O'Neill and Cullinane, and briefly outline the role of Enterprise Ireland and the centre of excellence, the framework service level agreement, and the make-up of the evaluations and approvals committee.
The role of the micro and small business division of Enterprise Ireland is to provide a range of supports. The service level agreement will be clearly benchmarked to the LEOs, which will enhance their impact on the future development of micro-enterprise and small business. Behind every large company are small wheels, and it is important that we recognise the critical role of the start-up companies. The number of new start-up companies is extraordinary, as is the fact that 3,500 net jobs have been created in the economy. Today, I visited Aviva. The Government has put €9 million into researching potential e-commerce technology. That work shows the level of collaboration with private companies; funds of €6.5 million have been provide by private enterprise. Today, I saw examples of small companies delivering e-commerce through new online technology.
The centre of excellence will provide strategic, administrative, technical and financial supports. The latter will include administering the distribution of such funding to each LEO in accordance with procedures agreed between Enterprise Ireland and the Department of Jobs, Enterprise and Innovation. The centre of excellence will develop procedures and best practice for the delivery of supports, including standardised financial support instruments and project proposal documentation, and will provide ongoing advice. That reminds me that the national standards have not been mentioned. The National Standards Authority of Ireland provides a certification service, with the ISO, the International Organization for Standardization, and training opportunities will be there for the future enhancement and education of business people on how to operate their companies.
Business and job creation will be the purpose of the new structure. The purpose of the one-stop-shop will be to promote and encourage business. Several Members mentioned the development of town centres. With the huge new autonomy given to local authorities, were they to decide a town centre enhancement or development incorporating a small business were required, I have no doubt that the plan of action and the business plan formulated by that body will form the action for the LEO.
Another function of the centre of excellence will be to organise training for LEO staff. The plan is that Enterprise Ireland will retain, enhance and develop the capability of the county enterprise board staff as they move into the local authorities. They will be invited and encouraged to attend Enterprise Ireland training courses on subjects such as finance, strategy and marketing.
On the role of finance for business, we have the micro-finance fund. As I have met the board, I know that presents the opportunity to be the vehicle for applications to be processed. People who have been refused financing by a bank can get up to €25,000. I know a number of companies that have been very much encouraged by the level of mentoring and support through the application process. There is also the one-stop-shop, the bank guarantee scheme, and the validation of loans by the two State banks, Bank of Ireland and AIB, which are committed to giving out up to €8 billion to businesses. It is important that they validate those loans, and the enhanced capability of LEO mentoring of financial support will help with this.
The staff assigned to the LEOs from the business development units of the local authorities will also be included in the training programmes. The skills of CEB staff are crucial to the success of the new model. We are therefore ring-fencing these staff for three years to allow the LEOs get up and running. They will also receive specific training from the local authorities on the new services and functions to be provided.
I was in a local authority. The proposals are front-of-house. Business is the backbone of the counties. Local authorities have a huge impact, whether through automatic water charges, the valuation of rates, the promotion of vacant properties or derogations to encourage people to rent units. All of this will be considered in the new roll-out of local government and the changes that will be taking place.
The centre of excellence will have a key role to play in maximising the impact of each LEO in the State.
The LEOs will be underpinned by a robust service level agreement agreed between Enterprise Ireland and each local authority which will set out protocols relating to budgets, project evaluation and approval; microenterprise policy guidelines as articulated by the Department of Jobs, Enterprise and Innovation; robust performance indicators - those people I have met in local enterprise offices and the enterprise sections of local government are hugely committed to helping people get on with their business; the roles and responsibilities of Enterprise Ireland, local authorities and the local employment offices; benchmarking of LEOs; and corporate governance. This detailed service level agreement will be periodically reviewed to ensure impact and value for money are being optimised via the LEO network.
The Government is committed to making Ireland the best small country in which to establish, grow and develop a business by 2016. We have the Single Market Act in Europe. The issues of entrepreneurship, giving a second chance to people who have failed, access to credit and red tape are at the core of the Government's approach, because we recognise fully that the domestic economy is the only vehicle. Large companies come here, but more than 650,000 people work in small businesses. This is the engine of growth. In the job I am in I see opportunities and new business and it is very encouraging.
A key element of this new structure will be the consistent application of policy throughout all LEOs, from the evaluation of applications to the spending of budgets allocated. This will be monitored using the service level agreement in each local authority. The ongoing drawdown of budgets by LEOs will be contingent on the achievement of agreed targets. The highest level of corporate governance will be applied, which will involve the allocation of budgets in line with agreed funding guidelines, including spot-checking and quality assurance, management of assets and liabilities and ongoing engagement with stakeholders.
A series of metrics form part of the framework service level agreement. This will be tailored to suit the size and capacity of each LEO and will be included in each local enterprise development plan to be agreed annually between each LEO and Enterprise Ireland. Senator Denis Landy asked about the location and staffing of LEOs. A working group representing county enterprise boards, local authorities and the Department is examining these issues. The work is ongoing and the Department is very much aware and conscious of the circumstances and staffing in each county enterprise board. We will come back to the Deputy on this.
Senator Paschal Mooney raised the role of local expertise, which will not be lost. Local authorities have a clear mandate. We have European funding of more than €70 billion through Horizon 2020 and we also have COSME funding agreed for the first time within the Commission's Directorate-General for Enterprise and Industry. Policy with respect to financial supports available to clients from LEOs will be determined by the Department of Jobs, Enterprise and Innovation and will aligned to microenterprise policy. To avoid double-funding, grant shopping and duplication, clear guidelines will be established between various local bodies to ensure each body adheres strictly to its funding remit. Support for projects under the remit of LEOs should not be duplicated by bodies such as Leader partnership companies and vice versa. Officials from the Department of Jobs, Enterprise and Innovation and the Department of the Environment, Community and Local Government are examining the development of such guidelines. The total budget allocated for 2013 to the LEO structure is €25.9 million, of which €15 million is for capital support. The Exchequer allocation is secured by the Department of Jobs, Enterprise and Innovation and will continue to be the primary source of funding for the provision by LEOs of grant aid support for the micro and small business sector. Individual LEO budgets will be allocated by Enterprise Ireland. It will be provided for Enterprise Ireland as a separate ring-fenced subhead and will not be available for core Enterprise Ireland activities. It may provide an allocation of funds for activities and projects, particularly with regard to enterprise, entrepreneurship and local authority funding for LEOs, but there is no requirement for matched funding.
An evaluation and approvals committee will be established in each LEO area. This committee will consist of a chairman, who will be either the city or county manager or another senior local authority official, not from the LEO, delegated by the city or county manager; the regional manager of Enterprise Ireland or his or her nominee; and five individuals with specific areas of business expertise, such as a record of entrepreneurship, accountancy experience, knowledge of particular markets, sectors, or technology, or banking or financial expertise. A public call for expressions of interest from individuals to serve pro bono on the evaluation and approvals committee will be made by the local authority or the city or county manager. A panel will be formed from which the first committee and subsequent vacancies will be filled. Appointment of the business sector representatives will be made by the city or county manager in consultation with the head of the LEO in each LEO area. Particular account will be taken of the individual's relevant experience and expertise. Appointments will be made for a maximum of three years to provide for a renewal of expertise on the committee; this is very important. I note Senator David Cullinane's concern about State-funded companies and compliance with labour laws. All grant approvals are contingent on compliance with national law.
In addition to drafting this legislation to implement last year's decision to reform the system of supports, the Government has made significant progress on the restructuring project. An implementation working group chaired by the Department of Jobs, Enterprise and Innovation continues to direct and oversee the preparation for the establishment of the new national infrastructure on an administrative basis at local level. I thank the departmental officials for the huge work they have put into this.
In May, the Ministers, Deputies Richard Bruton and Phil Hogan, and I showcased the first LEO in Fingal County Council, published the framework service level agreement between Enterprise Ireland and the local authorities, and launched the new branding and logo, which are very effective. Enterprise Ireland has established the new micro and small business division and centre of excellence. It has also agreed terms of reference for a single national website, and is in the process of agreeing protocols between relevant Government bodies, such as the Revenue Commissioners, the National Employment and Entitlements Service, SOLAS, the Credit Review Office, Microfinance Ireland and the Companies Registration Office to provide information, access and dedicated points of contact for referral of LEO clients. Work is ongoing at local level between county enterprise boards, CEBs, and local authority county managers on practical administrative arrangements regarding locations and accommodation for the LEOs.
The project plan for the coming weeks is to finalise arrangements for the transfer of CEB staff and their amalgamation with the business support units of the local authorities, and to continue the testing and preparation for the migration of ICT and financial systems to ensure a smooth transition for both staff and clients. Ahead of the formal transfer of functions, it is hoped that the LEO structure will be in place informally in a number of local authorities. To this end, a number of front runners have been identified and plans are ongoing at local level with a view to establishing advance LEOs.
Senator Colm Burke made a point about the role of services. It is very important that the services will be centralised and will provide enhanced financial advice based on a deep respect, understanding and concern for business. It is very important that we give service to this critical role of the economy. As several Senators stated, more than 200,000 Irish companies employ one person and, working with the Department of Social Protection, our job is to encourage people into training. When one looks at models in other European countries, one is amazed at the recognition, understanding and respect that can be given to people as trainers in their own companies.
Senator Martin Conway made a point about fantastic staff, and we fully recognise the extraordinary staff who serve this country exceptionally well. What is being embarked upon is to centralise this expertise. A huge number of people who are very successful want to give something back to Ireland, and we will avail of this expertise in the new structure.
With regard to Senator Michael Mullins's point, we must remember that 1.85 million people are employed in Ireland.
The job is to ensure continued progress on 3,000 jobs per month. This will be the role of IDA Ireland, Enterprise Ireland and the Town Centre Development. This is a unique opportunity for involvement by Enterprise Ireland at local level in the development of small companies into large companies. I believe the success of IDA Ireland will, through the centre of excellence and the remit of local authorities, be far greater.
On Senator Maurice Cummins' point, the action plan for Waterford, in terms of subsidiarity and getting people working on the ground, has been very successful. There must be a recognition of the capacity of young people and the technological sector to develop businesses.
Senator Michael D'Arcy spoke about high potential start-up companies and the issue of rates. The new structure provides a huge opportunity for local government to provide derogations to assist start-up companies. This has been very successful in other jurisdictions and will be the role of devolved government.
I am excited by the opportunity which this new structure presents for businesses on the ground. I welcome the points made by Senators Michael Mullins, Maurice Cummins, Michael D'Arcy and Paschal Mooney in regard to change. Senator Feargal Quinn also made a very good point in regard to crowd financing. His has much expertise in the business arena. We are looking at the avenues open to us to fund business. The Senator is involved in a very successful crowd financing operation. Information on funding will be made available through the local enterprise offices. I look forward to debating the Bill further on Committee Stage, at which time Members may table amendments, if they so wish.
This is important legislation that will assist in the Government's plans to reshape the landscape and make it more effective in meeting the needs of micro and small enterprises by bringing local enterprise supports into an integrated national network of local enterprise offices and creating a seamless support structure. This will be a one-stop-shop that will offer the full range of State supports available. Members may be aware of the community enterprise companies in County Leitrim. They are very successful. The point was made earlier that students are the next generation of business people. We want to encourage enterprise within schools and universities. The local enterprise offices will, as one-stop-shops, offer information on the full range of State supports available to the micro and small business sector. While there will be offices in areas such as counties Sligo and Leitrim these will be governed by the centre of excellence. I have no doubt elected people in the region will play a critical role in the roll out of this new structure. It is important that local representatives have a role in the management and structure of this service.
The new structure will also ensure that this vital sector will benefit from an expanded and benchmarked service across all regions, with all forms of entrepreneurship fostered and supported. We are all aware that a target has been set by the Taoiseach for Ireland to become the best small country in the world in which to do business by 2016. This is an ambitious but achievable target. A key component for the delivery of this ambition is the reform of the national micro and small business support service. One of the pillars of the Government's strategy for promoting jobs and growth is ensuring that micro and small businesses can start up, grow and export. Many of our small companies are very successful internationally and are listed on the Stock Exchange. This legislation will enable the creation of the best possible local environment for micro and small business and the development of a strong network for entrepreneurship.
The Government's overall strategy is aimed at ensuring entrepreneurs feel confident that we have their best interests at heart and that we are implementing necessary change. We are not giving them ten reasons not to start up in business rather we are giving them a reason to do so. The role of Government is to ensure that business start up is not blocked by red tape, access to credit and so on. The opportunity for our micro and small enterprises to succeed and grow underpins our future potential for increased employment, growth and prosperity. This Bill shows our commitment to change and reform to achieve this potential.
I thank my officials for their work on this Bill. I look forward to playing a critical role, with the support of all representatives, in rolling out this service.