Oireachtas Joint and Select Committees
Wednesday, 23 October 2019
Joint Oireachtas Committee on Jobs, Enterprise and Innovation
Update on Brexit Engagement: Minister for Business, Enterprise and Innovation
I welcome the Minister for Business, Enterprise and Innovation, Deputy Humphreys, and her officials to today's engagement.
In accordance with procedure, I am required to read the following. By virtue of section 17(2)(l) of the Defamation Act 2009, witnesses are protected by absolute privilege in respect of their evidence to the committee. If, however, they are directed by it to cease giving evidence on a particular matter and continue to so do, they are entitled thereafter only to a qualified privilege in respect of their evidence. They are directed that only evidence connected with the subject matter of the proceedings is to be given and asked to respect the parliamentary practice to the effect that, where possible, they should not criticise or make charges against any person, persons or entity by name or in such a way as to make him, her or it identifiable.
Members are reminded of the long-standing parliamentary practice to the effect that they should not comment on, criticise or make charges against a person outside the House or an official either by name or in such a way as to make him or her identifiable.
I remind members, visitors and those in the Public Gallery to ensure that their mobile phones are switched off for the duration of the meeting as they interfere with the broadcasting equipment even when on silent mode.
I invite the Minister, Deputy Humphreys, to make her opening remarks.
I thank the committee for the invitation to address members in respect of Brexit. When it issued its invitation, the Brexit landscape looked quite different from how it looks today. The agreement reached last week between the European Union and the United Kingdom on a revised withdrawal agreement and political declaration on the future EU-UK relationship is a welcome development. The agreement was endorsed unanimously by the European Council on 17 October and is now subject to ratification by the European Parliament, which I understand has indicated that it will await approval of the deal in the UK Parliament before it considers the agreement.
Critically, the deal has yet to secure approval in the UK Parliament. As members will be aware, last night the UK Parliament approved the second reading of the Bill aimed at ratifying the withdrawal agreement. This development is a positive signal from the British Parliament, although the timetable for the Bill envisaged for completion by 31 October was not approved. The British Prime Minister, therefore, has paused progress on the Bill until a response to the UK request for an extension beyond 31 October is received from the EU.
The President of the European Council recommends that EU leaders approve the extension sought by the UK and is consulting other EU leaders on the matter. The Taoiseach has today confirmed his support for President Tusk’s proposal to grant the extension sought. In so doing, he has made it clear it will be possible for the UK to leave before the end of January 2020 if the withdrawal agreement is approved by the UK Parliament before that date. There is still a way to go before we will have clarity on the process in the UK Parliament and it would be neither wise nor appropriate to speculate on the ultimate outcome of current proceedings in the UK Parliament.
The Government remains firmly convinced that ratifying the withdrawal agreement is the best way to ensure an orderly withdrawal. A no-deal outcome is in no one’s interest. Ireland has always said that, taking account of the circumstances of the UK request, we are open to an extension to facilitate an orderly withdrawal from the EU by the UK. This will require a unanimous decision of the European Council and President Tusk has indicated he is consulting EU leaders on the issue. While the possibility of a no-deal Brexit appears lower now than it did a fortnight ago, the Government is nonetheless continuing apace with no-deal preparations.
I fully recognise that the constant flux in respect of Brexit has created a deep sense of insecurity for citizens and businesses alike. It has also placed a considerable onus on businesses to engage in Brexit contingency planning and take costly mitigating actions. I hope there will soon be clarity on the direction of travel of Brexit, which will bring about much-needed certainty for businesses. My Department and the offices and agencies under my remit have been front and centre preparing businesses for all possible Brexit scenarios - initially for a more benign Brexit and, more recently, for a hard Brexit.
The committee's invitation asked me to address certain issues, including Brexit supports, engagement with businesses, forecasts on the potential impacts of a no-deal Brexit, stakeholders’ concerns, and supports for businesses in a no-deal Brexit. As members will be aware, it has been the strongly held position of the Government that a no-deal Brexit is to be avoided at all costs. The potential detriment to people’s lives, our economy and peace on our island has been evident from various analyses and studies undertaken since 2016. As I stated when presenting my Department’s budget for 2020, Ireland has never been better placed to deal with a large economic shock such as a no-deal Brexit, although it would undoubtedly present an unprecedented challenge.
Let us consider what has been achieved since the start of 2016. Almost 220,000 jobs have been created and the unemployment rate stands at 5.2%, the lowest since 2007. We are planning and investing for the future through Future Jobs Ireland; the nine regional enterprise plans and the regional enterprise development fund; and Project Ireland 2040, including the €500 million disruptive technologies fund.
In the period since the UK Brexit referendum in 2016, my Department and the offices and agencies under my remit, working with other agencies of the State, have been very busy preparing for Brexit. A full suite of financial Brexit measures and supports was put in place in budgets 2017, 2018 and 2019. Some of the most significant Brexit initiatives introduced include: Enterprise Ireland’s Brexit scorecard, the Be Prepared grant, the new market discovery fund and advisory clinics, local enterprise offices' technical assistance grant for micro-exporters, and Brexit mentoring and advisory services; Intertrade Ireland’s Start to Plan Brexit vouchers, Brexit implementation vouchers and Brexit advisory services; the €300 million working capital Brexit loan scheme; and the €300 million future growth loan scheme.
In addition, budget 2020 provided for a €650 million contingency fund available for the business, agriculture and tourism sectors in the context of a no-deal Brexit scenario. Of this, €110 million will become immediately available to my Department to support vulnerable but viable firms. This is the first wave of funding that will, if necessary, be used to activate four main schemes, which build on existing supports introduced in the past three budgets.
These four schemes are a €45 million transition fund for manufacturing and internationally traded services firms of fewer than ten employees; a €42 million rescue and restructuring fund for firms in all sectors with acute liquidity or insolvency problems; an €8 million transformation fund for larger firms, with €5 million for firms in the food sector and €3 million for firms in the non-food sector; and a €5 million micro-enterprise emergency Brexit fund which will be operated by the local enterprise offices in the form of repayable grants of up to €50,000. In addition, Microfinance Ireland will receive an extra €5 million to increase the loan ceiling from €25,000 to €50,000. An extra €3 million will be available for the Department's regulatory bodies for additional demands in market surveillance, accreditation and conformity. An additional €2 million will be provided to InterTradeIreland.
Ever since the Brexit referendum, my Department has regularly engaged with stakeholders. I regularly chair meetings of my Department's enterprise forum on Brexit and global challenges, which includes representatives from business and trade representation groups. I also chair meetings of the retail consultation forum. Through regular meetings of this forum, I have been able, with my enterprise agencies, to develop a wide array of supports to help businesses to prepare for Brexit. I have also chaired a number of round-table discussions with the main retail, grocery and distribution players to better understand contingency planning within that sector. Throughout 2017 and 2018, my Department held a series of stakeholder events on Brexit countrywide, focusing on my Department's policy areas. From July to September 2019, I hosted four Brexit outreach events in the Border region in partnership with the accountancy bodies of Ireland, the agencies of my Department, Revenue and InterTradeIreland. These events took place in County Donegal, where stakeholders from counties Leitrim and Sligo were invited; County Cavan; County Louth, where stakeholders from County Meath were invited; and County Monaghan. At these events I impressed on businesses the need to act quickly on a no-regrets planning basis across a range of actions, from supply chain management to customs procedures. I have also participated in panel discussions at other fora such as the National Ploughing Championships. Furthermore, I instructed my officials last September to email more than 220,000 companies on the register of the Companies Registration Office to encourage them to act now to prepare for Brexit. The enterprise and regulatory agencies of my Department have been highly proactive in their own right driving home their sector-specific messages. They have organised workshops, roadshows and stakeholder events nationwide as well as conducting national media campaigns to make businesses aware of the need for action in distinct sectors. Members may be familiar with, for instance, the radio advertisements currently running on the need for businesses to be aware of the changes in online retail business post Brexit.
In February 2018, my Department published the Copenhagen Economics study which examined the strategic implications arising for Ireland from changing EU-UK trading relations. The study examined the implications of Brexit for the Irish economy and trade and quantified the impact of possible new barriers to trade which might emerge as a result of Brexit. While all the scenarios examined in the study produced a result that was less favourable than a no-Brexit scenario, the economy is still expected to record strong, positive growth in the period to 2030. The report also highlighted a range of employment challenges in vulnerable agricultural and traditional manufacturing sectors and the disproportionate impact of Brexit on the regions. This analysis was conducted on the basis of no policy change, that is, of no mitigation measures being taken by Government or firms. In reality, extensive work and mitigation actions to prepare for the UK's exit, including a hard Brexit, have been undertaken by Government.
In my everyday engagement with businesses, as well as through the more formal channels of engagement referred to earlier, I know that businesses harbour a number of concerns. The area of new customs procedures on east-west trade, as well as checks and other controls on agricultural products, is of concern. Customs is an area that Irish businesses have not, in the main, needed to be overly concerned about but post Brexit, with the UK as a third country, that will no longer be the case. The Government has responded to the dearth in capacity of customs clearance agents by introducing Clear Customs, a specific initiative that combines training through Skillnet Ireland and financial assistance for recruitment, software, etc., through Enterprise Ireland. Concerns have also been raised about the ability at the ports of Dublin and Rosslare to manage extra capacity, including additional delays that could arise due to additional customs and phytosanitary checks. Again, the Government has invested heavily in additional infrastructure to handle additional traffic, including minimising the risk of delays. Importers and exporters need to be prepared for new customs and other agrifood controls to facilitate smooth running at the ports. I am also aware that businesses have been closely examining supply chain issues and that many have used the opportunity to diversify into other markets and to source product from other EU countries.
While the manner in which the UK will leave the EU remains uncertain, members can be assured that the Government is continuing to prepare for all scenarios, including a no-deal Brexit. The Government is fully aware of the vital importance of providing targeted measures to help those businesses that would be most affected by a no-deal Brexit. Budget 2020 is prudently framed and sets out a further range of measures designed to assist businesses, particularly indigenous businesses, that would be vulnerable but viable in a no-deal Brexit. As I said, given recent developments, a no-deal Brexit is looking less likely. However, until we have absolutely certainty, we must continue to prepare on the basis of such an outcome. My firm hope, which I am sure is shared by members of the committee, is that the agreement endorsed by the European Council last week will be agreed. We await the outcome of developments in Westminster in that regard.
Before I open discussion to the floor, I will put a question to the Minister. All members of the committee were very concerned to hear of the recent job losses in Shannon and Cork. I seek the Minister's opinion on the matter. Does she believe there is any correlation between Brexit and these job losses? Are they a sign of more to come?
I was disappointed to hear about the job losses in both Shannon, which I visited earlier today, and Ringaskiddy. This is a big shock to both areas and, most importantly, a huge shock to the workers and their families. Our thoughts and concerns are with them. All the supports of the State will be made available to the workers to help them to upskill or reskill and to ensure they get job opportunities in other areas. In the meantime, IDA Ireland will continue to promote the Shannon area as a very attractive place in which to do business. What we have in Shannon is a pool of talented people who will not have employment or work in Molex at the end of 2020. We will actively promote the area because one of the most valuable resources such areas have is a pool of talented people. There is confidence that there will be opportunities in other companies in the region. Nevertheless, this is a big shock and on a human level the workers and their families have a lot to take in over the coming days.
We always look at international economic and trade developments together with our enterprise agencies and the Department of Foreign Affairs and Trade through its embassy network, with a view to assessing how this will impact on the enterprise environment here. We all know that Ireland is a highly open, export-orientated economy operating in an intensely competitive global marketplace. This means that decisions taken by firms abroad as well as international developments can sometimes impact on their operations here. We cannot take foreign direct investment for granted - that much is clear. The past five years have seen record numbers of jobs created by overseas firms here but, unfortunately, jobs can also be lost, as this week has regrettably demonstrated. We should also remember that these announcements are not a reflection of the overall strength or competitiveness of our economy. I emphasise too that the developments this week are in no way connected to Brexit, concerns about the international trading environment or any loss of confidence in the Irish or European economies. The developments simply follow specific restructuring and strategic decisions taken by overseas firms.
In the case of Molex, I spoke to the chief executive officer at lunchtime yesterday. He told me that this was a reluctantly made decision and was in no way a reflection on the company’s wonderful workers in Shannon. It was started there in 1971 and the company regretted having to make the decision. However, 75% of what is manufactured there are end-of-life products and not required any more. This decision was made at a company board meeting in Chicago. It has two other plants, one in Sligo and one in Letterkenny, County Donegal. The chief executive officer assured me that it was business as usual with these sites and that it wanted to continue to have strong links with Ireland. IDA Ireland will continue to work with Molex to see if there are other opportunities where new products might come online.
The same applies to the Novartis plant at Ringaskiddy, County Cork. IDA Ireland will continue to work closely with it to see if there are further opportunities for investment there. The Novartis plant will lose 60 jobs next year and then the losses scale up to 2023.
It is not nice for workers to hear this news. However, there is very much a unified approach from the State agencies, the training and university bodies, as well as the local authorities, to these announcements. It is about how everybody can work together. A core group of the key stakeholders will be set up underneath the regional enterprise development plan committee. It will work to deal with the issue of jobs losses and see what opportunities we can secure for the areas in question.
The new proposal replacing the backstop will effectively see a border down the Irish Sea. Will the Minister explain what implications this will have on east-west trade?
A new fund of €110 million was announced as part of the budget, about which I asked the Minister on Question Time just after the budget. Has she any more details on the breakdown of what elements of this will comprise grants, repayable grants and loans?
What will the Department do to ensure a greater uptake of existing schemes referred to in the opening statement? On the number of businesses identified by Revenue as having traded with the UK in 2018, in a reply to a parliamentary question I tabled, it was stated only 1% of the 90,000 businesses, that is 531, have so far participated in the Government’s Brexit preparedness one-day workshops. That is a low uptake. Why is it so low? What has the Department done to increase participation?
On the state aid ceiling rules under EU regulation 1407/2013, has the Minister made a formal application to the European Commission for a temporary derogation and increased flexibility in the event of a hard Brexit?
The Minister referred to the two significant job loss announcements in the past 24 hours. All our thoughts are with the workers affected. Was there any early warning about these announcements? Previously there used to be an early warning system in the Department for potential job losses. Will the Minister confirm if that early warning system still exists? If so, why did it not work on this occasion? According to the Taoiseach on Leaders’ Questions earlier today, the first the Government seemed to know about these job losses was yesterday.
There is an early warning system but we were not aware of the job losses in either company in question. In the case of the first company in Shannon, I got a call late on Monday evening. I got another call late yesterday evening regarding the announcement in Cork. We were not aware of these before this.
IDA Ireland works closely with both of these companies. Sometimes, however, commercial decisions are made at a board level in a different country. These companies do not always say what they are doing because the information may be commercially sensitive. We did not have notification of these announcements but we have quickly responded. That is why all State supports have been put at the disposal of the regions in question. We will ensure we get investment into these areas to replace the jobs lost.
On the backstop and the new proposal, the deal reached between the EU and the UK negotiating teams differs from the previous withdrawal agreement and political declaration on the future relationship in four ways. The protocol on Ireland and Northern Ireland will now be a permanent arrangement for Northern Ireland rather than a backstop or an insurance policy. It is no longer temporary. However, the protocol can still be replaced, in whole or part, by a subsequent EU-UK future relationship agreement. The customs and VAT provisions in the protocol have substantially changed with the removal of the EU-UK single customs territory. Instead, this has been replaced with arrangements which will see Northern Ireland remain part of the UK customs territory. Northern Ireland will, therefore, stand to benefit from future UK trade deals, although it will continue to apply the rules of the EU customs code. Products entering the island of Ireland will undergo necessary regulatory and customs checks. The details of how this will work in practice are to be decided by the joint committee during the transition period.
The review clause, or Article 20, of the current protocol has been removed and replaced by Article 18, providing for democratic consent in Northern Ireland. This will enable the Northern Ireland Assembly to agree by a simple majority four years from the end of the transition period if it wishes to remain in customs and regulatory alignment. If a simple majority decides to remain, a vote will be held every four years. If the decision is made by the majority of both communities, the subsequent vote will not take place for a further eight years.
The bottom line is that there will be no border between this jurisdiction and Northern Ireland. That is important, especially if one lives where I live. We are protecting the all-island economy and the Good Friday Agreement.
When this is all agreed, the UK will become a third country. Accordingly, we will continue to work with businesses because they will have to prepare for a changed trading environment in which there will be tariffs and checks. That will be subject to a free trade agreement between the EU and the UK. The transition period will kick in and that gives us time to negotiate a free trade agreement.
The initial transition period is to the end of 2020 and there will then be an opportunity for an extension of a further two years.
The Deputy referred to customs arrangements. We have worked with businesses and developed a wide range of supports. Enterprise Ireland has developed a customs insights course. It is a 45-minute online course which is available to all businesses and the aim of it is to give companies a good understanding of the key customs concepts and the documentation and processes required to succeed post Brexit. Enterprise Ireland also has its Brexit: Act On Initiative, which helps eligible companies develop an action plan for Brexit, focusing on a range of areas including customs and logistics. The local enterprise offices are currently running one-day customs workshops. A total of 1,863 people have taken up the customs insight course and more than 200 have applied for the clear customs training which is an intensive course. I visited an office in Cavan which was rolling out that course and there were ten people there that day. That course relates to intensive customs clearance that a company should know about if it is doing a lot of business in the UK. That is being rolled out. Businesses are taking up these kinds of supports. There is no doubt about that.
The Deputy mentioned state aid rules. I met Margrethe Vestager, Vice President designate of the EU Commission, earlier this year. She assured me that the Commission stands ready to act and that state aid rules will not act as a barrier to supporting vulnerable but viable firms. She has put a dedicated team in place to support Ireland and my officials work very closely with her officials on what is needed. I am satisfied that she has clearly said to me that the Commission stands ready to act urgently to mitigate the impacts of Brexit on Irish firms. My officials continue to work with the Directorate-General for Competition as part of the technical working group.
Were there any more questions?
The Deputy is asking about the mix of funding. The mix of funding means that, in a no-deal scenario, the rescue and restructuring fund will be €42 million of bespoke loans or equity. The transition fund provides €45 million of bespoke grants, loans and equity, or all of them. The transformation fund is €8 million of bespoke grants. The emergency Brexit fund for microenterprise is €5 million of repayable grants. This is a suite of supports available which were announced in the budget and with different aspects, whether comprised of loans, grants or equity. It depends what suits the company involved. These supports do not prescribe a certain amount in grants, equity and loans because every individual application will be different. Enterprise Ireland is the expert on this matter and it will assess the company in question and decide what suite of supports best suits it. Grants are available through the local enterprise offices. Some of them are repayable or part repayable. There is no separate figure for any type of funding, it depends on what best suits a particular company.
It will be assessed on a case-by-case basis. It depends what best suits a company's needs. We are here to help a company that gets a bad shock and if these funds help it over the difficult period and it turns the corner into profitability, because this is taxpayers' money, there is no reason why that money should not be paid back.
The Minister stated that there will be no hard border between Northern Ireland and the Republic of Ireland. What will happen in four years' time if the Northern Ireland Assembly votes to move away from alignment?
Does the Minister accept that the potential of a hard border is still there? This is not a tick-box exercise. A meaningful vote, which we must respect, could go either way unless we are telling the unionist community that we are going to assume the vote will pass because their view on the matter will not be taken. A Minister cannot categorically guarantee that the vote in the Northern Ireland Assembly will go in a particular direction every four years because nobody knows that. Does the Minister accept it is possible that the vote could go the other way? In that case, a two-year cooling-off period would kick in and, thereafter, Northern Ireland would exit the regulatory alignment. It is not correct to give a guarantee to this committee, or anybody living north or south of the Border, that the reimposition of a border is impossible.
That is the cooling-off period. That period is not about deciding anything differently. I asked the Tánaiste about this directly. If the decision to end alignment is taken in four years' time, that will be the decision. The two years that would follow would allow us to get ready for the change, not allow for the Northern Ireland Assembly to change its mind. That is my point. The Minister is incorrect to say that no border can be reimposed. It is simply not the truth.
I thank the Minister. My point is that she gave evidence to the committee that a hard border in Ireland is not possible. She said this deal provided for a permanent solution and not a temporary one and that no border will be-----
It is not a suggestion, I have corrected what the Minister said. What she said does not reflects the facts. There will be a vote every four years for a reason and that vote could go either way. The unionist community, and the DUP in particular, have a different view. For the Minister to say it is a tick-box exercise-----
She knows the amount of work that has gone into this and it is the best possible outcome. We are satisfied that this agreement meets the red-line issue of trying to prevent a border between us and Northern Ireland. Nobody wants a border. I live on the Border. Senator Mac Lochlainn will also understand that. We do not want a return to a border with Northern Ireland.
Nobody wants a border but my point, confirmed by the Tánaiste, is that this agreement is not a guarantee of no border at any time in the future. That is simply not how the process works and it is disingenuous to suggest otherwise. It is also disingenuous to suggest this is a permanent arrangement. There is a rolling consent mechanism whereby a vote must take place every four years, maybe every eight years, to reaffirm that the status quoremains. That is not permanent, it has an uncertainty hanging over it every four years which is most unsatisfactory to businesses on this island. A business person thinking about investing in Northern Ireland does not know whether it will be aligned with the customs union, the Single Market and the all-island electricity market because that could change every four years. An investor will be cautious in those circumstances and will wait and see how things pan out over the next four, eight or 12 years. This is not a permanent solution and we cannot say that it is. To put that evidence before the committee is incorrect.
It is important to note that this is an opportunity that the all-island economy can continue to operate. We want people to be able to cross the Border and do their business in a way that does not impede them. The east-west relations between Britain and Ireland is a different scenario. That is why we are continuing to work with businesses to prepare them and get them ready for Brexit.
I will focus on the east-west relations in a moment but I was mainly focusing on the issues relating to Northern Ireland.
I came from the ISME conference today where we had a discussion on Brexit. There is an acceptance that rolling consent creates uncertainty because it could go either way.
The transition period is 14 months.
We have until the end of 2020 under the current transition period. The UK Government said that it does not want to go beyond 2020. If it wants to take the one or two-year extension provided, it has to make that application by June of next year. That may not happen. At the end of 2020, we could have a hard exit by Great Britain, which will impacts on east-west trade. There is no guarantee that it will ask for an extension to the transition period. We cannot say that. The belief of the Government that this will simply happen, given what we have had for the past three years, is a risky policy. This would not be a prudent approach by the Government. What analysis has the Minister's Department done in the event that the transition ends at the end of 2020? There will not be an FTA in 14 months. What impact will that have on the economy if Great Britain makes a hard exit in 14 months?
We have been preparing for a hard Brexit for quite some time. We have done all of the assessment and it is not a pretty picture. That is why a €650 million fund was announced in budget 2020. It is there so that we can draw on it as we need to. There is €110 million allocated to my Department and I have outlined all of the different supports that are available in the event of no-deal Brexit. They are in place and I am satisfied that we have done everything that we can to help businesses in a worst-case scenario. Enterprise Ireland, for example, has supported businesses to the tune of €74 million in 2018 to help them prepare for Brexit. Significant work has taken place and a great number of supports are available. If there is a no-deal Brexit, which we hope will not be the case, we have the supports there and are ready for a no-deal if it arises, whether that is at the end of 2020, 2021 or 2023. I assure the Deputy that we have the supports in place.
Returning to the Northern Ireland issue, there could be an FTA, and if there is a good agreement between us and the UK, we will not have to worry about a border between us, or what the vote is in Northern Ireland because at the end of the day, if the agreement is favourable, we will be able to continue. There many issues at play.
I am aware of that. I disagree on that point as well. We do not know what FTA we will have. We have no idea. We can roughly say today what the position of the UK Government. It wants zero tariffs and wants to strike its own trade deals. It is not interested in level playing field provisions. Deregulation seems to be the policy of the day. That is a far cry from where the EU is at. Neither of the negotiating teams, which not even started talking about the FTA yet, are miles apart. We cannot categorically tell the business community and citizens on this island that the FTA will solve all of our problems. We simply do not know that. The Minister or I cannot give the assurance that the FTA will mean that we will not have to worry about the Border ever again. It is important that we are at least honest about the pitfalls that we could find ourselves in.
We do not even know what they are yet. The past three years have shown us that anything can happen. The policy of the UK Government is worrying on this. The FTA it wants is not the agreement the EU is going to give. If the UK pursues the policy it is currently pursuing on deregulation and striking new trade deals, we will have a difficulty because our jurisdiction will not move in that direction. The Border issue will be live for many years to come.
Preparing businesses is fine and I have met many of them earlier. The Minister cannot come in here today, however, and say that there is a permanent solution to Northern Ireland and that the consent is just something we can accept and assume will go our way every four years. None of us can, particularly as elected-----
That is exactly the point I am making. As elected representatives, we have to be straight about the possibility that it may not go our way. We hope that it does but we are relying now on an inherently unreliable-----
We are relying now on an inherently unreliable political Assembly in the North to guarantee no Border on this island for decades to come. It is a precarious position to be in. It is not desirable. It is a far cry from what was considered a good solution, which was the original policy of the backstop. Any suggestion that this solution is better than the backstop is not true.
I must be careful in future when I yield the floor for one question and get back in a long time later.
The Minister is welcome. I thank her officials and the staff of her Department and across all of Government for the volume of work that has been put in. I made the same remarks in the Seanad. Behind the scenes for every single Minister, there has been a professional corps of civil servants who have put in a significant volume of work. On behalf of myself and my party, I want to formally recognise. That should be recognised on a regular basis. They have done a tremendous service to the country in the way they has managed this issue, from the Departments of Foreign Affairs and Trade to Business, Enterprise and Innovation and to Agriculture, Food and Fisheries.
I was not going to comment on the previous contribution but the backstop was preferable and a better option, but without some form of negotiation and compromise, I have no doubt that we would have had a hard Brexit this week. Should we not have compromised, the logical outcome is that we would have be experiencing a hard Brexit now. That was not acknowledged by the Deputy Chambers, who was trying to pick holes in a difficult situation that our country, Northern Ireland, and many citizens in the UK find themselves in.
Politicians, in reading the agreement, realise that it is by no means satisfactory or that will this be the end of it. This will be a rolling, ongoing process. We will find ourselves in difficulty year in year out, never mind the four-year vote. That was clear, however, and welcomed by all party leaders as a compromise who said it was not ideal but they could understand why it was needed to prevent a hard Brexit. We will have difficulties on the vote every four years and the citizens in Northern Ireland will be disadvantaged by it in investment terms because of the insecurity in the future. We need to work on that as a State to improve the lot of people in the Northern Ireland to try to ensure that life is better for them.
Deputy Troy asked a question about the mixture of grants and payback incentives. Many small businesses did not attend the briefings but they would have loved to have done. With one or two employees, and working seven days a week, they said to me that they cannot prepare for something that may not happen. When it kicks in, the Minister will find them knocking at her door. By the nature of their business, it is a day-to-day struggle.
The risk of a hard Brexit has decreased but it remains. She stated that she is still in day-to-day preparation. She mentioned Dublin Port, in particular, and the impact on traffic. Have the delay scenarios in Dublin Port been played out and the impact that that would have on the M50? The M50 is like a vein of the city. If that clogs up, it clogs up the business of the city.
A rainy day in Dublin is bad enough. A bad day in Dublin Port in the case of a hard Brexit could be disastrous. Have we rehearsed that scenario and the impact it would have? Have we put an extra 300 trucks on the M50 at 11 a.m. rather than at 7 a.m. as is usual?
What is the position regarding the delivery of permanent custom controls at Rosslare Europort? Is it intended to slow this matter down or speed it up? I have heard representations from the car industry on the importation of cars into Ireland and the potential impact of Brexit on this particular industry. Let us suppose that agreement is reached in Stormont and the current agreement comes into effect. Suppose then that a second-hand diesel car is imported into Northern Ireland and then sold, with the trader saying that the intention is not to sell it into the South. What will happen if the car is then sold into the South? That situation could apply to an awful lot of Ireland's imports. I am concerned about how small business people can compete if products can be brought from the UK through Northern Ireland and sold on in the South. I know the agreement calls for goods to be designated as staying in Northern Ireland, but how can the destination be controlled with an open border? My neighbour can buy a diesel car in Northern Ireland and re-register it in two months, or buy a product in Northern Ireland and bring it back here. It may have no registration, but different VAT controls and costs will apply. How will these businesses be protected?
I thank the witnesses for their time. I will not ask any further questions as we had the opportunity to do so in the Seanad.
I thank the Senator for raising those issues. The joint committee that will be set up between the UK and the EU will have to decide on a lot of issues. Obviously Revenue will be keeping an eye out for the sort of issues the Senator raised, including the issue of cars coming across the Border. It will be the same as it is now. A person cannot simply bring cars in from Northern Ireland.
The car is valued by Revenue on this side of the Border. A lot of planning has taken place at the ports. In recent months the immediate focus has been on ensuring that the infrastructure in place at ports and airports is sufficient to respond to a no-deal Brexit. The infrastructure group chaired by the Department of Public Expenditure and Reform has confirmed that sufficient infrastructure is now in place at Dublin Port, Rosslare Europort and Dublin Airport to respond to a no-deal Brexit.
Deputy Chambers went into a lot of detail about the Border issue. It is important to remember that the Senator is absolutely right. A no-deal scenario is an awful lot worse. The withdrawal agreement is a good result. It is important to realise that politics is the art of compromise. Sometimes it is better to reach a solution that will work than to dig in one's heels and achieve no change. We are satisfied, as I think most people throughout the country are, that the deal that has been negotiated between the EU and the UK is the best outcome possible at this time.
Everybody agrees that Brexit is not good for anybody. Everybody here has said that. There is a huge job of work to do now, because the agreement leaves an awful lot of detail to be sorted out. It is very difficult for everybody, including the Minister, to get a grip on it. There are a lot of different interpretations of the same statements. During the coming weeks, months and years this will be hammered out in committee meetings here, in Westminster and in the EU. This is just the beginning of our difficulties. It is not the end. It will be very difficult for everyone involved in politics in the coming years. This is truly a disaster for the country. We are making the best job we can of the disaster that is coming down on our heads.
I listened intently to the questions from Deputy Chambers and I must come to the view that they were asked with an eye to the next general election rather than the best interests of the country and what has just happened in the Brexit negotiations. With the exception of the DUP, the people of Ireland, North and South, have stood together. Civil society, businesses, farming organisations and political parties on the island of Ireland have stood together with one clear message. A decision made predominantly by English people cannot impact on the Good Friday Agreement. There can be no hard border on the island of Ireland, and in line with the Good Friday agreement, a solution must be based on the consent of the majority of people of the North of Ireland. That was the litmus test. These were the areas in which we had to stand together and defend Irish interests.
A point has been made about the backstop. The backstop was a compromise. It was the very least that we could accept. It protected all of the concerns I have just outlined. Deputy Chambers has stated that what has been negotiated is worse. She gave a very negative assessment and made negative predictions of what will happen in four years. That is the Good Friday Agreement. The Good Friday Agreement states that the majority of the people of the North of Ireland decide the future of the North of Ireland. There was an attempt by the DUP to turn that into a veto for a section of unionism. That has been rejected, which is fair and consistent with the Good Friday Agreement. The agreement that has been negotiated protects Irish interests on a range of levels. It is churlish and wrong to pick apart votes that will take place in four years. As I say, an eye was on the next general election while questions were put to undermine the hard work put in by the Irish Government, supported by all the political parties in Ireland, with the exception of the DUP, and our colleagues in Europe. It is important to put that on the record.
However, the agreement is not perfect and I will now mention some questions and challenges. I thank the Chairperson for allowing me to put that on the record. I was taken aback by the earlier line of questioning.
A very aggressive line of questioning was permitted today. It is the duty of all of us to reflect the collective and sometimes the individual views of the committee. I have to put on the record that I was taken aback by the aggressive nature of the questioning.
In fairness that is good advice, but I had to take two minutes, with the Chairperson's agreement, to respond to a line of questioning which was not predominantly about business and the matters the Chairperson has just mentioned.
I have read the terms of reference and all of the submissions. I thank the Chairperson for her patience.
As the Minister may know, the committee has received several submissions which are assisting us in our work. The British Irish Chamber of Commerce raises concerns in its submission that small traders are "ill-equipped" to deal with a "significant increase" in import-export declarations. The chamber is particularly concerned that smaller freight and haulage companies "do not have the required customs expertise to adhere to these potential new obligations". Will the Minister address those concerns?
In the budget for 2020, the Minister for Finance set aside €1.2 billion for a Brexit support fund. The Minister, Deputy Humphreys, has outlined some of the specifics of that funding today. Like me, the Minister is from a Border constituency where tourism and retail businesses, in particular, are feeling the hit from the uncertainty around Brexit, including currency fluctuations and the reduction in British tourist numbers. There is a real sense of crisis and urgency in the tourism sector in my county, despite the excellent work that has been done around the Wild Atlantic Way and other positive efforts to promote the area. Whether a deal is passed by Westminster or there is a no-deal scenario, does the Minister have any plans to release funding to assist struggling sectors right now?
We received a submission from the Irish Congress of Trade Unions, ICTU, which points out that the unions are not included in the Minister's trade and investment stakeholder group. Is this something she might consider correcting? We talk a great deal about preparing businesses for the challenges of Brexit but we must also prepare workers, who are facing upskilling and diversification challenges. ICTU is very much a relevant stakeholder in that regard and its submission asks that it be included in the process.
I thank the Senator for his questions. We have a range of supports to help small traders to deal with any new customs arrangements. I acknowledge their concerns and worries. The first thing we encouraged everybody to do was to register for an economic operators registration and identification, EORI, number with Revenue. Without that, one cannot do anything. The local enterprise offices, LEOs, have been rolling out training schemes to assist small businesses. If any trader is concerned or worried, the first port of call should be the LEO, where he or she will receive information and direction. If traders need more in-depth training on customs procedures, they can access the Clear Customs initiative which is being rolled out in conjunction with Skillnet Ireland. In addition, Enterprise Ireland has an online facility which provides the information businesses need regarding Brexit.
There is no doubt that Brexit will impact the tourism sector. An allocation of €7 million is included in this year's budget and €40 million in the 2020 budget to support the industry. That funding is available through Fáilte Ireland and Tourism Ireland.
The Senator makes a good point regarding ICTU and the need to support workers as well as businesses. We are very conscious of that. I have met with representatives of ICTU as part of our consultations regarding Brexit. I have also met with the Department of Employment and Social Protection, which will fully resource a short-term work support scheme to provide an opportunity for employers to retain skilled labour in a reduced capacity and avoid permanent lay-offs and associated redundancy costs. This will be particularly beneficial to retailers who may be impacted by cross-Border shopping in a sterling depreciation scenario and to businesses in the tourism, hospitality and fishing sectors. Food and engineering sub-suppliers may also need to go on a reduced working day. The scheme will provide a subsidy that allows workers' wages to be maintained and enables them to use the time they are not working to reskill or upskill via training programmes. There are other areas of the economy where we do need people. In addition, the National Training Fund is being further supplemented in budget 2020, which, coupled with the new flexibilities in training services, will ensure tailored training and upskilling for workers can be deployed. It is important that we have this suite of supports for workers as well as businesses. Having also met with representatives of Ibec, my position is that we must work together to deal with any difficult situations that may arise.
I am delighted to welcome the Minister once again. I support much of the work that has been done in regard to the withdrawal deal that was agreed by the United Kingdom and the European Union. In regard to Northern Ireland, the nightmare scenario would be getting caught in d'Hondt or some of the other mechanisms that could have been enforced on us, such as a straight Border poll. A majority vote is certainly a more favourable outcome of the recent negotiations in terms of whether the North will choose to remain or not remain in the arrangements agreed with the EU.
The Minister is one of the front-line members of Government in the Brexit process, business being one of our premium concerns. Does she have any insight as to how the Europeans see the future for Ireland? Every day we hear talk of Scotland's situation and, in regard to the North, there is constant talk of a border poll. It seems that change is coming down the line, sooner or later. I am curious as to how our friends in Europe view the €15 billion or so per year, via subsidies, the block grant and whatever else, that is required to keep the North afloat. Looking down the line at how things may eventually gravitate, does the Minister see that we have friends in Europe who will put their money where their mouth is?
We have the free trade agreement that was negotiated last February and Japan is looking to do more trade with the EU. One of our greatest selling points as a country is that we are a committed member of the Union, which gives us a quality of stability and certainty to bring to the table. We are seen as a stable country and a good place in which to do business. Moreover, after Brexit, we will be the only English-speaking country in the EU. We are highlighting those assets, how easy it is to do business in Ireland and our position as a good stepping stone into the rest of Europe. We have enjoyed the full support of our fellow EU member states throughout the Brexit negotiations and that support has been extremely important.
The EU is one of the best things that ever happened to this country and it is clear from surveys that the people are very much in favour of us being part of it. Membership has brought many advantages to us. When I recall the late 1970s and early 1980s, I see that we have come a long way and Europe has certainly helped us in that respect. Our businesses have access to a market of 500 million people. We will continue to step up our engagement with the EU in terms of research and innovation, industry, developing services, the internal market and the digital economy. We play an important role in Europe and we want to be part of shaping its future. There are many advantages to us being in the EU and we enjoy those as well as the support of the other 27 member states. I met Mr. Michel Barnier about two weeks ago and he said he is absolutely committed to ensuring that smaller countries such as Ireland are treated fairly. I am glad he has done that in the agreement.
I will not go down that road. All I can say is that the revised the protocol has reinforced the pre-eminence of the Good Friday Agreement, including preventing a hard border. We hope we are not going to be in that space.
I have a question about the loan schemes that were introduced in the past year or two. The level of take-up in respect of those schemes is probably lower than we or the Department would have expected. Many businesses did not want to take on additional debt due to the uncertainty of Brexit. What are the Minister's thoughts on that? Does the Department have any adapted supports for the future to take this into account?
The good news is that under the Brexit loan scheme, which is the working capital facility, some €45.2 million has been sanctioned at bank level. The future growth loan scheme is at €64.3 million as of 18 October last. The uptake has certainly accelerated. We plan to carry out a review. There is a wide range of supports in place and loans are a part of that. However, we plan to carry out a review of the working capital facility. I would be worried if it was all gone at this stage. They are loans and-----
Yes. I can understand why some businesses may have been reluctant to take on additional debt. I am telling them to have the overdraft in place and if they have difficulties with cashflow because of Brexit, at least it will be there and they can use it. That is the main thing.
Most of them complained about the Brexit loans. The British Irish Chamber of Commerce, the Irish Business and Employers Confederation, IBEC, and the Small Firms Association, SFA, said, among other things, that they are too restrictive and exclude some of the people who would be most vulnerable in a no-deal Brexit scenario. Chambers Ireland, for example, called for grants for specific services rather than broader consultancy issues that may arise. I do not know if the Minister has read them-----
Does she have plans to rectify that? The majority of them raised concerns. If there is something that can be addressed or rectified for the people who would be most affected by this, that would be welcome. The Minister said that businesses are reluctant to take up loans given the uncertainty. The uptake thus far is evidence of that. However, if she takes on board the concerns in the submissions to this committee, it might give cause to re-examine this to see if she can address the issues of concern and ensure that what is available is less restrictive, more accessible and for targeted services in particular, rather than broader consultancy issues.
The Minister would not have been facilitated with those submissions. They are committee documents. We asked the various stakeholders for their thoughts to help us formulate some questions. The Minister possibly would not have been able to see them.
-----I have said on numerous occasions that if they have specific examples of companies that have been unable to access the Brexit supports to tell me about them and I will look at each of them. I meet all the representative bodies, be it ISME or Retail Ireland, every four or five weeks and not one of them came up with a complaint each time I met them. I will be interested to read the letters they sent the committee.
The Minister should. The British Irish Chamber of Commerce stated that the loans are over-bureaucratic and not worth applying for. That is serious. Businesses do not want to increase debt. Chambers Ireland, IBEC, the Small Firms Association and the ICTU do not have a good word to say about them.
I thank the Deputy for raising that matter. The application, regardless of whether one gets the loan, takes 48 hours. One visits the Strategic Banking Corporation of Ireland's website to sees if one is eligible. Then one goes to one's bank and submits the application. I have met many businesses and, in fairness, one gentleman I met told me he had no bother getting the Brexit loan scheme. I asked the many businesses to tell me if there are problems with it so we could resolve them. I am surprised that all these organisations saw fit to send letters to the committee but not one of them has raised it with me. I do not know about what the British Irish Chamber of Commerce is saying. If there are specific details about what is wrong with it, I am happy to hear about them and deal with them.
Would the Minister consider that for small and micro-businesses, similar to what the State did in 2008 in order to keep people in jobs? For example, it would be for small businesses with fewer than 49 employees.
This falls under the Department of Employment Affairs and Social Protection. We have met the Department and, basically, regardless of what it is called, we want to achieve a support system that allows workers to do short-time work. There will be a payment. It is called the short-time work support scheme so they will be able to get support. They will get the majority of the wages that they were earning, but they will use that time to train and upskill. It might only be a temporary arrangement in which they will only be laid off for a short period. That will be able to assist them before they are back at full-time work again.
Did the Minister liaise with other Departments in respect of the employment subsidy scheme, particularly for those in the sectors, for example, the agriculture sector, that are most vulnerable?
The transport sector is another of the sectors most likely to be affected, as are companies which export solely to Britain.
I have met the Minister for Employment Affairs and Social Protection, Deputy Regina Doherty. Her Department and my Department are working together. We have agreed in principle what we want to achieve and we will announce the details soon.
We are examining how we can support workers. We are conscious that there are many supports in place for business but what about workers who find themselves in a position that they had not planned for? We are looking at putting a package in place that will support such workers. The Minister and I have met and reached an agreement in principle, which we will announce in the coming weeks.
I expect there will be a greater demand for supports in the Border counties. If the axe falls hardest on the Border region, companies in the area, such as food companies, manufacturers and companies engaged in internationally traded services, will receive most support. All of the schemes are demand led. I know from my experience, as does Deputy Munster, that the Border region will be impacted most.
The Minister stated the highest number of requests for supports will come from Border counties. If that is not the case, will the Minister prioritise businesses and workers in Border counties given that they will be most affected and the first to feel any impact?
Of course they will feel the impact. We are asking them to prepare for the challenges posed by Brexit. I have held a number of meetings along the Border. I visited all the Border counties where we had specific Brexit information meetings, in conjunction with the accountancy bodies because businesses often turn to accountants. Last year, I provided additional funding to InterTradeIreland, which supports businesses on both sides of the Border. Deputy Munster and I know that jobs lost in Armagh or Newry can have an impact on people south of the Border. A total of 5,008 SMEs directly engaged with the InterTradeIreland Brexit advisory service in 2019. That is in addition to the 4,175 engagements in 2018. There were 1,964 applications for InterTradeIreland Brexit planning vouchers, with 1,665 approved and 74 still pending assessment. InterTradeIreland has paid out a large amount of money to support businesses that trade on a cross-Border basis. The majority of these are businesses operating on both sides of the Border.
I am sure the Minister will agree that it is vital to examine the submissions and complaints made to the committee by the bodies that represent the people we are talking about, namely, businesses and workers. We will have a real problem if they feel the funding and advice provided is insufficient or too restrictive. It is important to address complaints and make the system more effective to benefit businesses and workers. It would be remiss of the Department and the Minister not to do that and I am sure they will do so. The Minister will see the position for herself when she looks at the feedback.
I will have to read the submissions because I have no idea what is in them. I am committed to going through them line by line and responding to them. I find it amazing that these bodies have not said a word to me.
IBEC outlined some concerns about the restrictive eligibility criteria for the Brexit loan schemes which, it stated, are overly focused on technological innovation. IBEC, Chambers Ireland and the British Irish Chamber of Commerce highlighted the reluctance of their members to take on additional debt.
As a result, loan schemes are not the most appropriate instruments to support businesses. At the same time, the money has to be repaid. That is the point we made earlier. The Department was not privy to the submissions beforehand. Further to what Deputy Munster said, they include many good comments that must be taken on board. The situation is very fluid as there is no agreement in the UK yet and the position is changing on a weekly basis if not a daily or hourly basis. Everything the Department does is subject to change depending on the circumstances it faces.
The Chairman stated that somebody had said loans were not an appropriate support but there is a range of other supports in place as well. We cannot give state aid to some companies and not to others. We must adhere to state aid rules. I will go through all the submissions and see what issues are raised. We will make contact with the organisations in question. We can get generic comments but we need specifics. When I am out and about I always ask companies if they have a problem. We want to expend the money; we are not trying to hoard it. We want it to be spent on supporting the businesses that need it. I am happy to read the submissions and if there are issues that need to be addressed, we will address them.