Mr. Seamus McCarthy:

The appropriation account for Vote 32 Enterprise, Trade and Employment indicates gross expenditure of €1.76 billion was incurred in 2020. This represented an increase of 89% over the 2019 level of expenditure, due mainly to the provision of funding for Covid-19 related schemes. In a number of expenditure areas, the level of funding provided for Covid-19 related spending was significantly more than was actually required in the year.

The 2020 spending was distributed across three expenditure programmes of varying size. The largest expenditure programme was in jobs and enterprise development. This accounted for €1.3 billion, or 72% of the total spent in 2020. Key areas of spending under the programme included €652 million for Covid-19 related business restart grant schemes which was routed through Enterprise Ireland; €192 million in other funding for Enterprise Ireland including its normal programmes; €198 million provided to the IDA; €79 million for local enterprise development; €48 million transferred to the Strategic Banking Corporation of Ireland and just under €25 million transferred to Microfinance Ireland, to fund various business loan schemes.

Expenditure on the innovation programme in 2020 was €414 million, which was similar to the level of spending in 2019. This included spending of €332 million on the science and technology development programme; €24 million on the programme for research in third level institutions; €24 million on subscriptions to international organisations; and €19 million for the ‘disruptive technologies’ fund. Expenditure on the business regulation programme was €77 million in 2020, again, similar to the 2019 expenditure level. This funding supported the direct operation by the Department of certain regulatory functions including the Workplace Relations Commission, the Office of the Director of Corporate Enforcement, the Companies Registration Office and the Patents Office. Funding was also provided from the programme for independent bodies, such as the Health and Safety Authority, and the Competition and Consumer Protection Commission.

Receipts into the vote amounted to just under €50 million in 2020. These substantially relate to fees for services operated by the Department, including employment permit fees in respect of foreign workers; Companies Registration Office filing fees; and trade mark and patent fees. Receipts also include retained staff pension contributions, both from the Department’s own staff, and the staff of agencies under its aegis. The surplus remaining unspent at the year-end was just over €182 million. The Department secured the agreement of the Minister for Public Expenditure and Reform to carry over €106 million in unspent capital funding to 2021. The balance of €76 million was due for surrender to the Central Fund of the Exchequer. The appropriation account records the cash transactions related to the vote in the year of account. In addition the vote has incurred a contingent liability arising from the operation of a number of credit guarantee schemes. This is explained in note 2.9 to the account which indicates that, at 31 December 2020, the Department’s maximal exposure under the guarantee schemes was €80 million on outstanding loans totalling €113 million. This was up from a maximum exposure of €5 million at the end of 2019 on outstanding loans of €30 million.

As outlined in chapter 6, small to medium businesses received grants from Vote 32 totalling around €633 million in respect of interruptions to trading as a result of Covid-19 related restrictions in 2020. The schemes were operated and funded by the Department of Enterprise, Trade and Employment, with the payments being made by the relevant local authorities. The funding was routed to the local authorities via Enterprise Ireland. The purpose of the grant was to assist businesses with costs arising from the restrictions. Under the scheme provisions, businesses were invited to self-declare their eligibility. Conditions of the grant included that the business was a commercial enterprise operating from a premises liable to local authority commercial rates; had incurred, or expected to incur, a 25% or more loss of turnover between April and June 2020; intended to retain staff on the temporary wage subsidy scheme and committed to remain open for trading or to reopen. Businesses were not required to explain how the money was to be used, and vouching for the manner in which the grants were applied was not required.

A grant scheme that relies on self-declaration should have a number of key controls. One of these is the completion of post-payment checks to ensure that claimants had satisfied the conditions of the scheme and were accordingly entitled to the payments they received. The conditions of the scheme were such that a significant number of businesses were likely to qualify for the financial assistance available. Nevertheless there is a risk that claims were submitted and paid where the prescribed conditions were not met. The Department signalled at the outset of the scheme that reviews of eligibility for the grants would be undertaken, but these have not yet occurred. As a result, there is no basis of assurance about entitlement of grant recipients to the amounts paid. At the time of completing this report the Department was in the process of procuring an independent audit of the scheme. Subsequently, the Department plans to carry out an evaluation of the effectiveness of the scheme.