Written Answers Nos. 270-283
270. Deputy Bernard J. Durkan asked the Minister for Finance the reason home borrowers in the market here are required to pay higher interest rates than those prevailing throughout the European Union; if the rules of the Single Market apply in these circumstances; and if he will make a statement on the matter. [10431/17]
Amharc ar fhreagra271. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which home borrowers can avail of mortgage facilities at a comparable rate of interest to that available to home borrowers throughout the EU; and if he will make a statement on the matter. [10432/17]
Amharc ar fhreagraI propose to take Questions Nos. 270 and 271 together.
The issue of standard variable mortgage rates is a significant one for this Government and it has made it clear that it is not acceptable for lenders to charge excessive rates on such mortgages. The Programme for a Partnership Government, therefore, sets out a number of important and practical measures which can be taken to improve the position of variable rate mortgage holders.
Although Ireland is in a monetary union with other Euro area Member States, it has to be acknowledged that there are many factors, such as differences in national legal and housing systems, cultural preferences, language, the proximity of lenders to borrowers, which will continue to inhibit the full integration of the residential mortgage market and of mortgage interest rates in the Euro area and the wider EU. More directly, differences in the nature of mortgage and other credit markets, credit and market conditions, mortgage default rates and the funding of mortgage credit will also impact on the levels of mortgage lending rates between and within different countries.
However, there have been some developments which seek to promote a more harmonised market for credit across the EU. In particular, the 2014 Mortgage Credit Directive, which has now been transposed into Irish law by the European Union (Consumer Mortgage Credit Agreements) Regulations 2016, seeks to develop a more harmonised, efficient and competitive internal market for the provision of residential mortgages to consumer borrowers and this should help to promote the closer integration of EU mortgage markets over time.
In terms of the national context, this Government is committed to reducing the cost of secured mortgage lending.
Firstly, it wishes to promote competition in the supply of mortgage finance. To that end, the Competition and Consumer Protection Commission (CCPC) will work with the Central Bank to set out options for Government in terms of market structure, legislation and regulation to lower the cost of secured mortgage lending and to improve the degree of competition and consumer protection.
In liaison with the Central Bank, the CCPC has now commenced this work and last week announced a public consultation to gather views about the future of the Irish mortgage market. The closing date for submissions is 20 March 2017. The CCPC will produce a final report outlining their proposals by the end of May 2017.
In overall terms, the Government is of the opinion that increased competition is the best way to ensure that retail lending rates are driven down in a sustainable way for the market as a whole but without giving rise to potentially undesirable consequences for the provision of new mortgage lending. This is a policy area that the Government will keep under active review in its ongoing engagement with mortgage lenders and in implementing the Programme for Government commitments to help deliver on a long term basis better outcomes for all mortgage borrowers.
273. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which the lending institutions are lending to the construction sector with particular reference to the urgent need to offset the housing crisis; and if he will make a statement on the matter. [10434/17]
Amharc ar fhreagraOver the last number of years, the construction industry, like many parts of the economy, has gone through a period of deleveraging. According to the Central Bank's Credit, Money and Banking Statistics, outstanding loans have fallen from a peak of over €10.28 billion in December 2007 to €1.14 billion in September 2016. Although this process of deleveraging continues, the ongoing recovery in construction activity is evident in growth of new lending to Irish construction firms, which increased by 14 per cent in the year to the third quarter of 2016. Construction-related lending is in addition to that for the purposes of real estate, land and development activities, where total loans outstanding fell from a peak of €106 billion in September 2008 to €17.3 billion in September 2016.
In recognition of the need for the construction sector to move away from the former 100 per cent debt financing model and instead adopt a more appropriate risk-weighted model of funding, my Department has actively encouraged the development of alternative sources of development finance. ISIF, under the auspices of the NTMA, continues to explore ways of funding projects that will enhance the supply of housing. Currently Activate Capital, the joint venture between ISIF and KKR, is providing funding on a commercial basis to fund the development and construction of housing.
The availability of development finance alone will not be sufficient to encourage development unless projects are seen as commercially viable. As part of Rebuilding Ireland, the Action Plan for Housing and Homelessness, the Government has set out a comprehensive package of measures designed to address the structural constraints which continue to inhibit the viability of construction. These measures include the establishment of a Local Infrastructure Housing Activation Fund (LIHAF), the development of a fast-track planning approvals process for large scale developments and a commitment to undertake a root-and-branch review of the planning system.
274. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which working capital continues to be made available to the farming and business sectors with particular reference to smaller enterprises; and if he will make a statement on the matter. [10435/17]
Amharc ar fhreagraAs the Deputy is aware, supporting SMEs, including those in the farming community, in terms of access to finance has been a cornerstone policy for Government in our efforts to rebuild the economy and bring back jobs.
In terms of monitoring the working capital requirements for SMEs, my Department commissions biannual surveys to ascertain the demand for credit by SMEs. This survey series, most recently conducted by Behaviour & Attitudes on behalf of my Department, is the most comprehensive survey of SME credit demand in Ireland, covering 1,500 respondents and involving over 6,000 direct telephone calls to SMEs. SMEs of all sizes trading in all sectors, excluding property development and speculative activities, are included. The survey covers demand for credit from both bank and non-bank sources.
I would draw the Deputy's attention to the most recently published Department of Finance SME Credit Demand Survey, covering the period April to September 2016, which can be found at http://www.finance.gov.ie/what-we-do/banking-financial-services/sme-credit-lending.
The results of this survey show that, when pending applications are excluded, 84% of credit applications to banks were approved or partially approved. Purchases, replacement or lease of new vehicle/equipment is now provided as the main reason for applying for bank finance with 29% stating this is why they requested bank finance. Working capital/cash flow requirements were provided as the second highest reason for applying for bank finance with 27% of respondents stating that they required finance for this purpose. When asked about sources of finance for working capital, internal funds/retained earnings were the main finance source of working capital with 73% of working capital coming from this source (up 6%). The survey also showed continued positive trends in terms of trading performance, profitability and employment.
The SME State Bodies Group, chaired by my Department, provides a forum for the development and implementation of policy measures to enhance SMEs' access to a stable and appropriate supply of finance. As the Deputy will be aware, the Action Plan for Jobs over the past number of years has set out a range of commitments to ensure viable SMEs can access appropriate finance at a reasonable cost from both bank and non-bank sources. These Government policies have supported year on year increases in new lending to SMEs, as measured by the Central Bank.
It should be noted that the Strategic Banking Corporation of Ireland (SBCI) have reported that, as at end June 2016, 24% of their loans (by value) were to SMEs operating in the agriculture sector. The SBCI recently launched the €150 million Agriculture Cashflow Support Loan Scheme for Farmers, which was announced by the Minister for Agriculture, Food and the Marine in Budget 2017. This fund will provide highly flexible, low interest loans to farming SMEs, which can be used for working capital funds.
All viable SMEs operating in Ireland should have the opportunity to access sufficient finance to meet their enterprise needs in a manner that supports growth and employment in the economy and the Government remains committed to the SME sector, as reflected in the Programme for a Partnership Government. Consequently, my Department and the Credit Review Office, working with the other relevant Departments and Agencies, will continue to monitor the availability of both bank and non-bank credit to viable SMEs including those in the farming community.
276. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which he continues to use his influence with the banking sector to ensure the availability of adequate working capital particularly for the small and medium sized business sector; and if he will make a statement on the matter. [10437/17]
Amharc ar fhreagraThe Deputy will be aware that, in my role as Minister for Finance, I have no direct function in the relationship between the banks and their customers. I have no statutory function in relation to the banking decisions made by individual lending institutions at any particular time and these are taken by the board and management of the relevant institution. This includes decisions in relation to products as determined by the banks.
However, in line with Action 62 of the Action Plan for Jobs 2017, officials from my Department collate and examine data from AIB and Bank of Ireland on a monthly basis, including data pertaining to the various sectors. Furthermore, my officials meet the banks on a quarterly basis to ensure an informed understanding of the wider SME bank lending environment which assists the development and implementation of policies aimed at ensuring SME access to finance and increased competition in the SME lending sector.
Government policy is focused on ensuring that all viable SMEs have access to an appropriate supply of credit from a diverse range of bank and non-bank sources. In this regard the Government has developed a number of initiatives to ensure that the supply of credit in the market is sufficient to meet the existing and future needs of SMEs.
As the Deputy is aware, a key objective of the Strategic Banking Corporation of Ireland (SBCI) is to ensure that SMEs can access low cost flexible loans from a variety of sources. The SBCI channels its funds through lending partners known as on-lenders. The SBCI currently has three bank on-lending partners and five non-bank on-lending partners. The SBCI has a current funding capacity of €1.05 billion which it makes available to its on-lending partners as demand from SMEs arises. To the end of September 2016, a total of €458 million has been lent to over 10,600 SMEs and the SBCI has committed a total of €906 million to its eight on-lending partners. In 2017, the SBCI will continue to make significant funding available to SMEs across Ireland.
Another recent initiative is the €150 million Agriculture Cashflow Support Loan Scheme for Farmers announced by the Department of Agriculture, Food and the Marine. This fund will provide highly flexible, low interest loans to farming SMEs.
The Microenterprise Loan Fund, administered by Microfinance Ireland, is an additional source of credit that provides loans for up to €25,000 to start-up, newly established, or growing micro enterprises employing less than 10 people.
The Credit Review Office is another government initiative that helps SMEs who have had an application for credit of up to €3 million declined or reduced by the main banks, and who feel that they have a viable business proposition. This is a strictly confidential process between the business, the Credit Review Office and the bank. The Credit Review Office overturns more than 50% of appeals it receives.
The Government remains committed to the SME sector and sees it as the key engine of ongoing economic growth. I can assure the Deputy that my Department, working with other relevant Departments, Bodies and Agencies, such as the Credit Review Office, will continue to advance policies to ensure the availability of both bank and non-bank credit so as to ensure that viable Irish SMEs have sufficient access to finance.
277. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which he and his Department continue to monitor the levels of bank charges being imposed by various banks; the basis for such charges, nationally and internationally; and if he will make a statement on the matter. [10439/17]
Amharc ar fhreagraAll credit institutions in Ireland are independent commercial entities. I, as Minister for Finance, have no statutory role in relation to the charges applied by credit institutions. Section 149 of the Consumer Credit Act 1995, as amended, requires that credit institutions, prescribed credit institutions and bureaux de change must make a submission to the Central Bank if they wish to introduce any new customer charges or increase any existing customer charges in respect of certain services. Section 149 does not cover interest rates rather it applies to fees and commissions only. The Central Bank may direct the institution not to impose the new or increased charge or it may approve the charge, or approve it at a lower level than requested by the institution. Once approved, the bank is entitled to impose the charge.
My Department published a report on the review of the regulation of bank fees and charges in December 2013. This contains a detailed description of the process by which the Central Bank makes decisions on whether or not to approve proposed charges. It is available on my Department's website at www.finance.gov.ie. Among the key findings of the review was that while fee and commission income has become a more important source of income to the banks in recent years, net fee and commission income in Irish banks was well below the average of their European peers.
The website of the Competition and Consumer Protection Commission (CCPC) also lists the various charges imposed by the various financial institutions in Ireland for different types of transactions www.ccpc.ie.
Irish financial institutions have varying models for charges and have different regimes and conditions under which they are willing to grant transaction free banking. Individuals' use of their bank account will be specific to each individual and I would again strongly encourage people to look at this comparison site with their specific circumstances in mind in order to decide which institution offers the best product for their pattern of account usage. On Monday of this week, my Department launched a media campaign as part of a range of competition measures agreed with the European Commission to raise awareness and promote customer switching in the retail financial product area. This was agreed in the context of the restructuring plans for AIB and PTSB. The campaign is being funded entirely by the two banks. The campaign website www.switchyourbank.ie provides straightforward practical information and support on switching and I would strongly encourage people to visit it.
278. Deputy Bernard J. Durkan asked the Minister for Finance the extent to which his Department monitors credit needs throughout all aspects of the business sector without exception; if he is satisfied that this need is being met fully in line with economic requirements; and if he will make a statement on the matter. [10440/17]
Amharc ar fhreagraAs the Deputy is aware, small and medium sized businesses play a central role in the sustainable recovery of the Irish economy. Government policy is focused on ensuring that all viable SMEs have access to an appropriate supply of credit from a diverse range of bank and non-bank sources.
The Deputy will also be aware that in my role as Minister for Finance I have no direct function in the relationship between the banks and their customers. I have no statutory function in relation to the banking decisions made by individual lending institutions at any particular time and these are taken by the board and management of the relevant institution. This includes decisions in relation to products as determined by the banks.
All viable businesses operating in Ireland should have the opportunity to access sufficient finance to meet their enterprise needs in a manner that supports growth and employment in the economy. As the Deputy may be aware, section 3.5 (Ensuring Finance for Growth) of the Action Plan for Jobs 2017 (APJ) sets out a range of commitments to ensure viable SMEs can access appropriate finance at a reasonable cost from both bank and non-bank sources.
In line with Action 62 of the APJ 2017, officials from my Department will collate and examine data from AIB and Bank of Ireland on a monthly basis, including data pertaining to the various sectors. Furthermore, my officials meet the banks on a quarterly basis to ensure an informed understanding of the wider SME bank lending environment which assists the development and implementation of policies aimed at ensuring SME access to finance and increased competition in the SME lending sector.
In terms of monitoring the requirements for SMEs, my Department commissions biannual surveys to ascertain the demand for credit by SMEs. This survey series, most recently conducted by Behaviour and Attitudes on behalf of my Department, is the most comprehensive survey of SME credit demand in Ireland, covering 1,500 respondents and involving over 6,000 direct telephone calls to SMEs. SMEs of all sizes trading in all sectors, excluding property development and speculative activities, are included. The survey covers demand for credit from both bank and non-bank sources.
I would draw the Deputy's attention to the most recently published Department of Finance SME Credit Demand Survey covering the April to September 2016, which can be found at http://www.finance.gov.ie/sites/default/files/20161205%20SME%20Credit%20Demand%20Survey%20April%20to%20September%202016_0.pdf.
The results of this survey show that, when pending applications are excluded, 84% of credit applications to banks were approved or partially approved. Demand for credit remains subdued and the latest survey shows only 23% of requested bank finance in the previous six months down from 26% in March 2016.
Purchases, replacement or lease of new vehicle/equipment is now provided as the main reason for applying for bank finance with 29% stating this is why they requested bank finance. Working capital/cash flow requirements were provided as the second highest reason for applying for bank finance with 27% of respondents stating that they required finance for this purpose. When asked about sources of finance for working capital, internal funds/retained earnings were the main finance source of working capital with 73% of working capital coming from this source (up 6%). The survey also showed continued positive trends in terms of trading performance, profitability and employment.
The Government remains committed to the SME sector, as reflected in the Programme for a Partnership Government, and sees it as a key engine of ongoing economic growth. Consequently, my Department and the Credit Review Office, working with the other relevant Departments and Agencies, will continue to monitor the availability of both bank and non-bank credit on both a macro and sectoral basis in order to ensure that sufficient access to finance is available to facilitate participants in the SME sector to reach their full potential in terms of growth and employment generation.
279. Deputy Pearse Doherty asked the Minister for Finance if the closure of branches in Northern Ireland by banks (details supplied) was discussed with him; and if he will make a statement on the matter. [10445/17]
Amharc ar fhreagra280. Deputy Pearse Doherty asked the Minister for Finance if will ensure a bank (details supplied) engages fully with workers' representatives regarding its plans to close branches in Northern Ireland; and if he will make a statement on the matter. [10446/17]
Amharc ar fhreagraI propose to take Questions Nos. 279 and 280 together.
As the Deputy is aware the relationship between the Minister for Finance and the banks in which the State is a shareholder are governed by Relationship Frameworks which can be found on my Department's website. In accordance with these Relationship Frameworks the Minister for Finance has no direct function in commercial decisions made by the banks and these decisions are the responsibility of the board and management of the relevant institution. Notwithstanding the State's shareholdings in the banks, I must ensure that the banks are run on a commercial, cost effective and independent basis to protect their value as an asset to the State.
The bank informed me that their banking operation in N. Irl First Trust Bank had completed a detailed 18-month strategic review and it was to undertake a necessary reshaping and investment programme designed to ensure a sustainable future for the bank and its customers, and addressing the considerable shift in customer behaviour and their changing needs. Since 2010 there has been almost a 40% decline in branch usage coupled with a 117% increase in mobile transactions over the past two years resulting in the decision to close a number of branches.
The transformation programme will involve the consolidation of First Trust Bank's branch network with the closure of 15 branches in 2017, as well as a significant £10m investment strategy for personal and business customers, including five new business centres across the province. The bank has also agreed a partnership with the Post Office that will enable customers to conduct their everyday banking transactions in any of the 500 Post Offices across Northern Ireland.
I have been further informed that the planned changes will be managed in line with the bank's regulatory commitments and in consultation with staff and their union representatives in the Financial Services Union. The bank's existing voluntary severance programme will be extended to impacted staff.
281. Deputy Donnchadh Ó Laoghaire asked the Minister for Education and Skills the amount of youth guarantee money drawn down in each of the years 2014, 2015 and 2016. [10062/17]
Amharc ar fhreagraThe Youth Employment Initiative (YEI) is one of the main EU financial resources to support the implementation of the youth guarantee by providing job, education and training opportunities to young people aged 15-25 who are not in employment, education of training. YEI funding is reserved for use in those regions, including Ireland, where youth unemployment levels exceeded 25% during the reference year of 2012. The specific YEI funding allocation for Ireland of €68m is matched by equal amounts from our European Social Fund (ESF) allocation and from the Exchequer, giving an overall allocation of €204m.
The YEI is integrated into ESF programming and is being delivered in Ireland as a dedicated priority axis within the ESF Programme for Employability, Inclusion and Learning (PEIL) 2014-2020. Seven actions were originally selected for YEI funding, namely the Back to Work Enterprise Allowance; JobBridge; JobsPlus Incentive Scheme; Tús; Youthreach, Social Inclusion and Community Activation Programme and Momentum. These actions are underway and are being fully funded up-front by the Exchequer.
This funding is available for drawdown before the end of 2018 and while a claim for funding has not been made to date it is expected that the funding will be fully drawn down. The ESF Managing Authority and the Operational Programme Monitoring Committee (PMC) maintain an ongoing overview of the funding allocations under the PEIL and will re-allocate the available funding as required, in accordance with the EU Regulatory provisions. The PMC has agreed in principle to the inclusion of the Community Training Centres, which are funded by the ETBs in consultation with SOLAS, as an approved activity under the YEI with effect from 1 January 2017.
The Department of Social Protection has advised that it obtained EU funding under the European Commission’s call for proposals for preparatory actions under the Youth Guarantee Pilot, to pilot a Youth Guarantee Scheme in Ballymun which operated in 2014. The total cost of the pilot was €302,279 which included EU funding of €250,000.
282. Deputy Charlie McConalogue asked the Minister for Education and Skills if he will clarify the assessment of family tax credits from Northern Ireland as reckonable income in the assessment of student grants (details supplied); and if he will make a statement on the matter. [9564/17]
Amharc ar fhreagraSchedule 2 of the Student Grant Scheme 2016 lists the eligible payments for the special rate of maintenance grant. As at 31 December 2015, the reckonable income must include one of the eligible payments listed in this Schedule, or its equivalent from a Member State.
The aim of the Child Tax Credits system in the UK/Northern Ireland is somewhat similar to the FIS payment i.e. it supports families on low incomes. However, the qualifying conditions for each payment are very different, so while there is not a direct correlation between the two payments, the Child Tax Credit is accepted as a qualifying payment for the special rate of grant.
Article 22(4) of the scheme also provides for certain payments that are classed as income disregards. Only those payments listed in the scheme can be treated as “income disregards”. The Child Tax Credit is not listed as an income disregard and is therefore assessed as reckonable income under the scheme.
If an individual applicant considers that she/he has been unjustly refused a student grant or that the rate of grant awarded is not the correct one, she/he may appeal, in the first instance, to SUSI. Where an individual applicant has had an appeal turned down in writing by SUSI and remains of the view that the scheme has not been interpreted correctly in his/her case, an appeal form outlining the position may be submitted by the applicant to the independent Student Grants Appeals Board within the required timeframe.
283. Deputy Robert Troy asked the Minister for Education and Skills if he will give the authority to the Westmeath and Longford education training boards to release the proceeds from the sale of a former educational facility (details supplied) for reinvestment in the region. [9586/17]
Amharc ar fhreagraI wish to advise the Deputy that provision has already been made for the use of the majority of the funds realised from the sale of the property in question. The further utilisation of the balance of the funds involved is currently under consideration and the ETB will be advised in due course.
