Jimmy Deenihan (Kerry North, Fine Gael)

I wish to speak on behalf of the tourism industry. As the Minister, Deputy O'Keeffe, knows, access to and the cost of credit have become major issues for the tourism industry and for enterprises in all sectors of the economy. Companies in the tourism industry, especially hotels, have difficulty in obtaining credit. If they do get it they pay higher interest rates than in any other part of the EU and as a result they lose competitiveness.

The near collapse of the banking sector in Ireland, the need for Irish banks to restore their capital ratios, as noted by previous speakers, and the higher prices paid for funds by the banks have all contributed to this situation and lack of competitiveness. As the Minister knows, the difficulties faced by the tourism industry will be greatly exacerbated by the withdrawal from Ireland of Bank of Scotland. That bank has given loans in excess of €2 billion to the hotel sector alone and provides overdraft facilities for about 350 hotels. There is no evidence of an appetite among the other banks to take over these loans when Bank of Scotland withdraws. In these circumstances, Deputy Perry's proposal is very important and is critical for the tourism sector. It is vital for the Government to introduce a loan guarantee scheme for viable small and medium-sized enterprises in the tourism industry in order for these businesses to gain access to credit.

Last week the Irish Hotels Federation made a major attack on the Minister for the Environment, Heritage and Local Government, Deputy Gormley, because he would not take any action on rates. Approximately 180 hotels may be before the courts in coming weeks, having been prosecuted by county managers. That is why it is so important to have a scheme as proposed. Such schemes are in operation in the United Kingdom, the United States of America and many eurozone states, including France and Germany. The guarantee in the UK is for up to 75% of the loan amount, with a maximum loan exposure of €1 million. Borrowers pay a premium on the interest rates. If the scheme works in that country and in the USA, why would it not work in this country? I appeal to the Minister on behalf of the tourism industry with which he is familiar. This loan guarantee scheme could ensure doors are kept open for the 2011 season.

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