Thursday, 18 Jun 2015

Written Answers Nos. 64-74

Flood Risk Insurance Cover Provision

Ceisteanna (65)

Barry Cowen

Ceist:

65. Deputy Barry Cowen asked the Minister for Finance if he has considered mandatory insurance based on the United Kingdom Flood Re model; and if he will make a statement on the matter. [24366/15]

Freagraí scríofa

Minister for Finance

Flood Re is designed as a not-for-profit flood fund managed and financed by the insurance industry in the UK. Under the Flood Re programme insurers will transfer into the fund those homes at high risk of flooding which they feel unable to insure themselves. Under the scheme, the flood risk element of house insurance premiums for these homes will be capped according to UK council tax bands. Flood Re will charge member insurance firms a total annual charge of £180 million for providing this service. The insurers will then pass this charge back to all their customers, resulting in an estimated levy of £10.50 on annual household premiums. Ireland, being a smaller pool could see significantly higher impact on premiums from a pooling arrangement. The UK Flood-Re scheme is only due to go live in April 2016 and so it would be premature to carry out a review of its impact at this stage.

The current Government approach to address the availability of flood insurance is to address the underlying problem through appropriate remedial works.  This involves:

(a) prioritising spending on flood relief measures by the OPW and relevant local authorities to address those areas of greatest need including areas where the insurance industry is finding it most difficult to provide cover - so that flood relief programmes can have maximum impact, where economically feasible,

(b) improving channels of communication between OPW and the insurance industry with the objective of ensuring that appropriate and relevant information on completed OPW flood defence schemes is provided to insurers to facilitate, to the greatest extent possible, the availability to the public of insurance against the risk of flooding.

This coordinated whole-of-Government approach is led by OPW, under the aegis of the Department of Public Expenditure and Reform, with further involvement from the relevant local authorities and other bodies in order to maximise the level of resources available to address flood relief works.  Because of cost and scale of these types of flood defence works, it is an approach which will see benefits over the medium and long term.

A Memorandum of Understanding (MoU) between Insurance Ireland and the OPW on the sharing of information in relation to completed flood defence works came into effect in on 1st June 2014 and the first full renewal cycle following the MoU has not yet been completed.  In January 2015, Insurance Ireland provided a report to OPW on progress so far.  While this report showed some improvements, it is expected that a fuller and more detailed report on progress under the MoU will be made available to OPW after June 2015.  I will assess the progress reported to OPW in the coming months and will consider whether the current approach is delivering the expected results and whether other approaches need to be considered.

In cases where individuals are experiencing difficulty in obtaining flood insurance and believe that they are being treated unfairly it is open to them to contact Insurance Ireland which operates a free Insurance Information Service for those who have queries, complaints or difficulties in relation to insurance. Their service can be contacted at [phone] or by email at [e-mail].

NAMA Bonds

Ceisteanna (66)

Pearse Doherty

Ceist:

66. Deputy Pearse Doherty asked the Minister for Finance in view of the ordering in February 2013 of the National Asset Management Agency to take over any Irish Bank Resolution Corporation assets, including any of the Agency's bonds not sold at the reserve price, the reason the bonds were allowed to be sold at a later date by the Special Liquidator at a discount under the reserve. [24231/15]

Freagraí scríofa

Minister for Finance

I am informed that the Special Liquidators sold the NAMA Subordinated Bonds at a price in excess of the reserve price set by an independent valuer.

NAMA Bonds

Ceisteanna (67)

Pearse Doherty

Ceist:

67. Deputy Pearse Doherty asked the Minister for Finance if he or his Department was consulted regarding the sale of National Asset Management Agency bonds held by the Irish Bank Resolution Corporation; if he will reveal the buyer of the bonds; and if any effort was made by the agency to buy back the bonds. [24232/15]

Freagraí scríofa

Minister for Finance

The sale of IBRC assets is a matter for the Special Liquidators of IBRC who updated me and my officials on sales processes throughout the Special Liquidation of IBRC. I am advised by the Special Liquidators that they will not be providing details of the bidders and ultimate purchasers of the NAMA bonds as this information is commercially sensitive.

I am further advised by NAMA that utilising NAMA's cash resources to purchase Subordinated Bonds from the Special Liquidators would have been inconsistent with NAMA's purpose of protecting and enhancing the value of assets in the interests of the State and with its  more specific objectives of removing the State's contingent liability arising from NAMA Government-guaranteed Senior Bonds and NAMA's objective of investing in its assets to increase future disposal values.

NAMA Property Sales

Ceisteanna (68)

Clare Daly

Ceist:

68. Deputy Clare Daly asked the Minister for Finance with regard to the operation of the National Asset Management Agency, the reason decisions regarding whether a property will go on the market or not are taken by the receiver; and if he considers it best value for the taxpayer that all properties for sale should be publicly advertised, in order that all citizens and potential buyers have an opportunity to purchase them. [24235/15]

Freagraí scríofa

Minister for Finance

The timing of a property sale by a NAMA debtor or receiver is based on a professional assessment of the market in the context of NAMA's statutory commercial objective to maximise the return on its acquired loans and the property and other assets securing those loans. NAMA requires that the sale of property by debtors and receivers is, as with the sale of loans by the Agency itself, conducted by professionally qualified selling agents on a competitive and, wherever feasible, open market basis. The marketing strategy for any given asset is determined by a range of factors, including asset class, value and location. 

I note in this respect the Comptroller and Auditor General's (C&AG) recent findings, which are set out in the C&AG's third special report on NAMA, that almost all NAMA property disposals examined by it had been sold through an open competitive process or, in the case of transactions involving other public bodies, with testing of disposal prices against market valuation. The C&AG concluded that this provides assurance that "prices obtained were the best on offer in the market at the time a property was sold".

I note that the Deputy has not referenced a particular transaction or property. If the Deputy has a query surrounding a specific sale, NAMA can be contacted directly through the Agency's dedicated email address for members of the Oireachtas - [e-mail].

Tax Code

Ceisteanna (69)

Pat Deering

Ceist:

69. Deputy Pat Deering asked the Minister for Finance if he is aware of the additional financial hardships experienced by family members who have inherited properties from a parent as a result of the increase in property valuations and the reduced thresholds; and if he will make a statement on the matter. [24236/15]

Freagraí scríofa

Minister for Finance

Capital Acquisitions Tax (CAT) is the overall title for both Gift and Inheritance Tax. The tax is charged on the amount gifted to, or inherited by, the beneficiary of the gift or inheritance.

For the purposes of CAT, the relationship between the person who provides the gift or inheritance (i.e. the disponer) and the person who receives the gift or inheritance (i.e. the beneficiary), determines the maximum life-time tax-free threshold known as the "Group threshold" below which gift or inheritance tax does not arise.

There are, in all, three separate Group thresholds based on the relationship of the beneficiary to the disponer.

The Group A tax free threshold of €225,000, applies where the beneficiary is a child (including adopted child, stepchild and certain foster children) or minor child of a deceased child of the disponer. Parents also fall within this threshold where they take an inheritance of an absolute interest from a child.

The Group B tax free threshold of €30,150, applies where the beneficiary is a brother, sister, a nephew, a niece or lineal ancestor or lineal descendant of the disponer.

The Group C tax free threshold €15,075, applies in all other cases.

Where a person receives gifts or inheritances in excess of their relevant tax free threshold, CAT at a rate of 33% applies on the excess over the tax free threshold. In recent years these thresholds were reduced and the rate has been increased in order to maintain the yield from capital taxes in the face of falling asset prices and as part of our fiscal consolidation efforts. In addition, taxes on certain capital are less harmful from an economic perspective than taxes on employment.

I am aware that property values have increased, with developments which had been restricted to the Dublin area now manifesting in other areas of the country, though not to the same extent in terms of price rises. I recognise that the increase in property values has a bearing on taxation of the inheritance and gifting of property with respect to CAT thresholds. In this light, I will be keeping Capital Acquisitions Tax thresholds, rates and other aspects of the tax under review, particularly in the context of preparations for Budget 2016 and the consequent Finance Bill.

IBRC Legal Cases

Ceisteanna (70)

Pearse Doherty

Ceist:

70. Deputy Pearse Doherty asked the Minister for Finance the amount the Irish Bank Resolution Corporation or the State have spent in legal fees in cases involving a company (details supplied); and if he will make a statement on the matter. [24244/15]

Freagraí scríofa

Minister for Finance

I am advised by the Special Liquidators that they are not in a position to disclose the requested information due to commercial confidentiality.

In relation to whether or not fees were incurred by the State in cases involving the company referred to in the question, my officials are in the process of ascertaining this point and will write to the Deputy directly clarifying the situation.

Banking Sector

Ceisteanna (71, 86)

Terence Flanagan

Ceist:

71. Deputy Terence Flanagan asked the Minister for Finance his views on proposals (details supplied). [24251/15]

Róisín Shortall

Ceist:

86. Deputy Róisín Shortall asked the Minister for Finance if he is aware of proposals currently under development in a bank (details supplied) to outsource work and staff from its Information Technology Division to a third-party service provider; the discussions his Department has had with this company regarding the possibility of redundancies; and if he will make a statement on the matter. [24378/15]

Freagraí scríofa

Minister for Finance

I propose to take Questions Nos. 71 and 86 together.

As the Deputy will be aware under the Relationship Frameworks the State does not intervene in the day to day operations of the banks in which it holds investments or their management decisions regarding commercial matters and hence any discussions around matters such as outsourcing are a matter for the bank, the relevant staff and their union representatives. Notwithstanding this position, my officials do take an active interest in how the bank's cost base evolves to ensure that the State's interests as shareholder are protected and to ensure that the Government's remuneration policy is enforced. 

The bank has previously indicated that as part of its restructuring plan to reduce costs and increase efficiencies, outsourcing of certain functions would be considered in consultation with unions and affected staff. I have also been informed by the bank that there have been no compulsory redundancies as a result of its recent outsourcing activities. Any staff who transfer under outsourcing arrangements transfer under the TUPE regulations.

IBRC Operations

Ceisteanna (72, 73)

Gerry Adams

Ceist:

72. Deputy Gerry Adams asked the Minister for Finance if he has reason to believe that the Irish Bank Resolution Corporation, before liquidation or since, has been involved in overcharging customers, in any form; and if he will make a statement on the matter. [24301/15]

Gerry Adams

Ceist:

73. Deputy Gerry Adams asked the Minister for Finance the policies in place at the Irish Bank Resolution Corporation, in liquidation, to rectify historic overcharging by Anglo Irish Bank and the Corporation. [24302/15]

Freagraí scríofa

Minister for Finance

I propose to take Questions Nos. 72 and 73 together.

As the Deputy will be aware the terms of reference of the proposed Commission of Investigation in relation to IBRC include the following explicit term of reference (1b) dealing with issues of public concern:

The Commission shall investigate all transactions, activities and management decisions, other than those relating solely to the acquisition of assets by NAMA which occurred during the relevant period and which "are specifically identified by the Commission as giving rise or likely to give rise to potential public concern, in respect of the ultimate returns to the taxpayer"

Both Houses of the Oireachtas have approved the terms of reference. It is important that I do not interfere with or prejudice the important work to be conducted by the Commission of Investigation. In those circumstances I have received legal advice that it would be inappropriate for me to comment publicly in respect of information received from IBRC in relation to certain matters which may fall under the scope of the Commission of Investigation.

Employee Shareholding Scheme

Ceisteanna (74)

Michael McGrath

Ceist:

74. Deputy Michael McGrath asked the Minister for Finance if he will provide, in tabular form, the number of Employee Share Ownership Trust Schemes approved by the Revenue Commissioners at the end of each year from 2010 to 2014; the number of beneficiaries of such Schemes; and if he will make a statement on the matter. [24304/15]

Freagraí scríofa

Minister for Finance

An Employee Share Ownership Trust (ESOT) is a trust established by a company for the purpose of placing shares into the hands of employees. It operates in tandem with a Revenue Approved Profit Sharing Scheme (APSS). Shares are transferred to employees from the ESOT through the APSS.  Under Revenue approved ESOTs and APSSs any shares appropriated are exempt from income tax in the hands of the beneficiaries at the time they are appropriated.

I am advised by the Revenue Commissioners that there were no Employee Share Ownership Trusts approved by Revenue in the years 2010 to 2014 inclusive. 2008 was the last year in which an Employee Share Ownership Trust was approved.