Damien English (Meath West, Fine Gael)
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I thank the Chair and members for their time. I am pleased, on behalf of my Department and the officials present, to have the opportunity to present the Department's Supplementary Estimate to the members of the select committee. I have been asked by the Tánaiste and Minister for Enterprise and Trade and Employment to express his apologies for not being able to attend. He is otherwise engaged with Government business. The secretariat has been provided with a briefing by my Department's officials on the various elements of the Supplementary Estimate and I hope this has been of assistance to today's discussions. I will provide a little detail on the main elements.

The Supplementary Estimate has two distinct elements. The substantive element seeks €654.5 million in additional funding for the Department of Enterprise, Trade and Employment's Vote. The technical element seeks to redistribute €61.35 million in capital savings to fund priorities this year. On additional funding, €650 million is being sought to meet the cost of payments under the temporary business energy support scheme, TBESS, in 2022. In addition, €4.5 million is requested for a number of programmes that need additional funding to meet the cost of pay increases under the recently extended Building Momentum agreement due this year, as well as funding for priority areas where there has been increased demand for services.

Members will be aware of the announcement in the budget to introduce a temporary business energy support scheme to assist businesses with energy costs. The scheme will provide cash payments to support businesses impacted by the unprecedented increase in energy costs resulting from the military aggression by Russia in Ukraine. The funding for the scheme will be provided through the Vote of the Department but the scheme will be administered by the Revenue Commissioners, subject to the committee's agreement. The TBESS will be available to all businesses carrying on a trade or profession whose profits are chargeable to tax and this will include organisations such as sporting bodies and charities. It is estimated in the region of 400,000 businesses will be eligible for support under the scheme. The scheme applies in respect of electricity and natural gas costs for the period from 1 September 2022 to 28 February 2023. The Finance Bill, which provides the legislative basis underpinning the scheme, will allow the Minister for Finance to extend this period up until the end of April 2023.

The scheme will operate by reference to bills for the metered supply of electricity and natural gas through electricity accounts or gas connections. Where eligibility is concerned, in order to make a claim under the TBESS in respect of an electricity bill or a natural gas bill, a business must be able to demonstrate the average unit price for electricity or natural gas on the relevant bill has increased by 50% or more compared with the average unit price of electricity or natural gas in a reference period. In broad terms, this is the average unit price in the month 12 months prior to the claim period to which the relevant Bill relates. This is the best way to achieve the impact for the most businesses.

Qualifying businesses are entitled to claim a temporary business energy payment, TBEP, amounting to 40% of its eligible cost. The payment is subject to a cap for each monthly claim period. Claims for TBEP payments must be made within four months of the end of the claim period to which a particular electricity or natural gas bill relates. The eligible cost amount for an electricity or natural gas bill is calculated as the increase between the bill amount on that electricity or natural gas bill as compared with a bill amount in the applicable reference period. As advised, TBESS payments will be subject to a monthly cap, which in most instances will be limited to €10,000 per trade or profession. However, where a business carries on its trade or profession from more than one location, as identified by the business having multiple electricity accounts in different locations, the cap may be increased by €10,000 per electricity account, subject to an overall cap of €30,000 per trade.

Revenue has developed a dedicated web page and guidance on the TBESS. The guidance includes specific details of examples and sample bills to assist businesses in making claims under the scheme. Revenue will ensure the guidance is kept up to date and reflects any changes to the scheme arising from its passage through the Oireachtas. The key point of advice on the scheme from Revenue is businesses need to have tax clearance to register and claim, will be required to retain tax clearance for the duration of the scheme, and will need to have details of their reference bills for the period from 1 September 2021 to 28 February 2022 and the details for the claim periods in which they wish to make the claim. The Revenue Online System, ROS, is now available for registration for the TBESS. Businesses will be able to submit their claims for assistance under the scheme to Revenue over the next few days. We hope to be in a position to start payments once the legislation is passed by the Houses and enacted.

As members will be aware, the scheme as announced at budget time envisaged an overall package of €1.2 billion. The €650 million being sought through the Supplementary Estimate is required to meet the cost of payments under the scheme between now and the end of the year. Funding to support the cost of meeting payments in 2023 will be provided for in the forthcoming Revised Estimates, which are due to be published shortly and will be discussed and debated in the committee in the new year.

Aside from funding for the TBESS, the Supplementary Estimate is also seeking an additional €4.5 million in current funding to meet the cost of pay increases under the recently extended Building Momentum pay agreement due this year, as well as funding for priority areas where there has been increased demand for services, such as the Department’s employment permit service. The latter has been discussed in the committee on several occasions and much good work has been done to try to reduce the numbers there but that has come with a cost in the form of additional staff.

The number of employment permit applications increased to almost 28,000 in 2021 and is on track to be approximately 40,000 this year.

The Department continues to progress a significant number of policy and legislative initiatives in areas such as employment rights, insurance reform, competition and consumer law. The additional funding sought is required to meet the cost of those measures.

The IDA Ireland requires €1.5 million to enable it to meet the costs of the extended Building Momentum pay increases due this year. The remaining €1 million of the additional current funding sought through the Supplementary Estimate will be provided to Enterprise Ireland to allow it to meet an excess on its pension allocation. In that regard, Enterprise Ireland experienced an unexpected number of retirements in 2022 which required additional funding to meet retirement lump sum payments.

Insofar as the technical element of the Supplementary Estimate is concerned, the Department is seeking to redistribute €61.35 million in capital savings to fund particular priorities this year. Some €55 million in capital savings will be provided to support the new growth and sustainability loan scheme, which will be delivered jointly by my Department and the Department of Agriculture, Food and the Marine in partnership with the Strategic Banking Corporation of Ireland, SBCI, and the European Investment Bank Group. We briefly touched on that in the debate on the credit guarantee legislation. The predecessor to the growth and sustainability loan scheme, the future growth loan scheme, which was also a joint initiative of my Department and the Department of Agriculture, Food and the Marine, was very successful and demonstrated a demand for longer term lending. The growth and sustainability loan scheme, GSLS, will ensure that this type of lending continues to be available to small businesses for strategic investment purposes. In that regard, the GSLS will make up to €500 million in longer term lending available to SMEs, including farmers and fishers and small midcaps. Up to 70% of lending will be for lending for strategic investments with a view to increasing productivity and competitiveness and thus underpinning future business sustainability and growth. The GSLS will also target a minimum of 30% of the lending volume towards environmental sustainability purposes with the aim of encouraging our SMEs to take positive actions in support of the climate change agenda and to change and adapt in order to maintain competitiveness within the context of an increasing emphasis on the environmental sustainability credentials of goods and services among consumers and investors.

The SBCI will deliver the loan scheme on behalf of the Department of Enterprise, Trade and Employment and the Department of Agriculture, Food and the Marine. The SBCI will provide an uncapped 80% guarantee to participating lenders in the scheme, and the European Investment Bank Group will provide the SBCI with a counter-guarantee such that the risk share of the scheme will be 20% for lenders, 16% for the SBCI and 64% for the European Investment Bank Group. Accordingly, if defaults are greater than modelled for the scheme, there is no additional cost to the taxpayer, and the European Investment Bank Group will be required to pay a significant portion of the defaults from its own resources.

Lenders will be encouraged to participate in the scheme through the 80% guarantee provided by the SBCI on loans issued through the scheme. This is a matter of de-risking, and we have seen the scheme work extremely well. There is quite a large demand for it. When we engage with stakeholders they ask for another round of the scheme. I hope that today, with the committee's agreement, we will be able to put that in place.

A further €5.8 million in capital savings will be redistributed to support the European Space Agency, ESA, programme this year. That will increase the overall funding for the ESA to €27.17 million in 2022. Ireland's membership of the ESA, through the mechanism of geographical return, enables Irish industry to undertake technology development contracts for the agency commensurate with the value of Ireland's investment. We find it worthwhile.

As for the value of contracts placed by the ESA with Irish businesses, contracts to the value of €19 million were placed in 2021, of which €15.8 million was placed with 36 Irish-based companies and €3.2 million in contracts with Irish universities and research institutes. We will see that with the launch of EIRSAT-1 in the new year. We are trying to make sure that the drawdown of funds from the ESA benefits a combination of our education system and our research system along with our SMEs. We are seeing great progress in this area. Close to 97 companies have availed of contracts from the ESA, and we want to continue with that progress under our enterprise plan for space. Funding will also be provided to the ESA's advanced research in telecommunications systems, which enables industry to explore, through research and development activities, innovative concepts to produce leading-edge satcom products and services. The earth observation programme, which supports industrial activity using earth observation technologies, will also benefit from the increased allocation being provided to the ESA. The additional funding of €5.8 million will allow new contracts to be signed with Irish-based companies in the future and will help to meet targets for contracts to Irish-based companies as set out in the national space strategy for enterprise.

The remaining €550,000 in savings is being provided to the Department's humanitarian relief programme. The relief programme is an emergency humanitarian contribution to help businesses affected by emergency events which have not been able to secure insurance against such events. The scheme helps towards the costs of returning business premises and community, voluntary and sporting bodies to their pre-emergency event condition, including the replacement of flooring, fixtures and fittings and damaged stock. Normally, the amount is up to €5,000, but some companies can make a case to go as far as €20,000. The scheme this year is probably mainly for events in Donegal, Wexford, Cork and the south east.

The moneys required to fund the Supplementary Estimate package of €61.35 million come from capital savings achieved on certain Enterprise Ireland programmes and on the temporary partial credit guarantee scheme programme. In respect of Enterprise Ireland, the savings arise in the main from the fact that in the case of a number of its supports and schemes there is sometimes a time lag between the approval of applications and the projects underlying such applications being completed and submitted for payments. It can also be the case that clients themselves, for their own reasons relating to matters such as cashflow etc., may delay submitting their claims for payment. These delays have resulted in payments under some Enterprise Ireland schemes not being drawn down as had been expected.

As regards the temporary partial credit guarantee scheme, the experience has been that claims for defaulting loans against the guarantee are at a significantly lower level than had been expected or allowed for. It was not that we assumed that, but we had to allow for it. That will give rise to savings on the allocation.

The Supplementary Estimate before the committee is very much in the way of a concrete expression of the Government's solidarity with businesses and their workers' rights across the country. Generally, I think it reflects the views of the committee and the Dáil that we want to support businesses through a very difficult time and, by doing so, support jobs that are vital in every part of the country. I thank the members for their co-operation and I thank the Chair and his team.