Richard Bruton (Dublin North Central, Fine Gael)

They have done extremely well. The truth is that this measure is different. We have to examine how to legally protect the State's interest and the structures that will be put in place. This involves the State taking on the risk. As Deputy Eoghan Murphy said, the State does not normally get into this sort of risk business and that is true. We need to get partners who are experienced in this area and we have used the Social Finance Foundation as that partner. We have relied heavily on First-Step, which has been a small player in this scheme. It has pioneered the work and it has been very valuable to us. To build something that is robust takes time. The work that has gone into to this make this initiative robust has been well worthwhile.

Some Deputies asked about the board. It will be appointed by the Social Finance Foundation. We will lean on people with real experience in this area. I can assure the House its members will not be political people and it will not allow any political interference in the decisions that will be made, which was a point raised by some Deputies.

Many Deputies emphasised the need for mentoring and advice. It will be crucial that those applying under this scheme, either through the county enterprise boards, local enterprise offices or through financial advisers, put forward a credible proposal. Obviously, this is about hard business, helping people with good business ideas to set up sustainable businesses that will be viable in the long term. It is not about half-baked ideas. It requires the work to be put in and the advice to be obtained in order that a good plan is put forward. We recognise that these proposals will be higher risks. We are building into this an expectation of a 20% failure. That does not represent charity by the State but recognises that the start-up projects in this niche area are risky. It is in the State's interest that people are given the courage to have a go. We want to do that but we want to do it in full prudence in the knowledge that it is taxpayers' money with which we are dealing and we will require proper rules to be applied.

A number of Deputies said that the schemes that are in place are not well enough known. I assure the House that I and the Minister of State, Deputy John Perry are putting in place a much stronger information campaign around many worthwhile schemes that are in place, of which Deputies may be aware but which they do not promote. I do not want to take up the time of the House going through them but I will mention one or two. The seed capital scheme, of which the Acting Chairman, Deputy Catherine Byrne, will be aware, is one where a PAYE worker can reclaim his or her tax for the past six years and put it into a company that he or she sets up to start a business. The take up of that scheme numbered only about 70 people last year, even though thousands of new businesses were formed. We need to promote that scheme.

Another scheme is the Revenue job assist scheme where an employer can get double wage tax relief for three years if he or she takes on a person who has been more than a year unemployed. The take up of that scheme only numbered a few hundred last year. A large cohort of people are leaving the live register and being taken into employment but the scheme is not being used. There is a good case to promote these and we will take that up. We need to get that information out and to use Enterprise Ireland, local enterprise offices, the Company Registration Office and chambers of commerce to spread the news. Many start-up companies talk about going into the valley of death when one's start a new company. It is challenging and there are many pitfalls but those starting up a business should use the props and the supports the State has put in place to help them find a secure passage through the process. We will take up what a number of Deputies said. Deputy Ann Phelan quoted a report from the interparliamentary group on that matter.

Some Deputies said they did not know about this scheme. We are developing it and I invite people who are interested to arrange to talk to my Department and we can go through it. Essentially, no sector will be excluded. Deputy Fleming referred to the loan guarantee scheme which excludes certain sectors under state aid rules but no sectors will be excluded from the microfinance scheme.

Some Deputies asked about what the interest rate will be. That depends on the money we get. We will have to lever up our equity by lending from the banks. We have to negotiate a keen deal with the banks. We also have to negotiate with the European Investment Fund to get a guarantee. I can assure Deputies that we will be trying to keep it as cheap as possible but we do not have a fixed price.

Some Deputies asked about the duration of the scheme and how long an applicant will be allowed to borrow, there is not a fixed duration. We are not putting a termination period on it. Obviously, it will hinge on the business plan that is put forward, the viability of the business and the length of time it is likely to need the money.

Deputy Ó Cuív raised the issue of de minimis rules on European state aid and if we are constrained by them. We are not in this instance constrained by them but we are interested in seeking to get higher de minimis rules, which is a matter in which the Deputy is interested.

Some Deputies asked if we will let other intermediaries do this, whether it will just be a wholesale facility in which other intermediaries will play a part. The microfinance institution that we will set up will be the provider and it will deal with advisers, whether they be local enterprise offices or other business advisers, but it will not have other partners delivering loans on its behalf. The reason for that is that we want to get access to the European Investment Fund guarantee. That requires that we can vouch for oversight and the due diligence in this respect. We need to keep that tight and in-house.

A number of Deputies, including Deputy Catherine Murphy, asked if this facility will be surrounded by bureaucracy. That is not the culture we are seeking to develop. Anyone who has experience of First Step will be aware that it has been very successful. The company where we launched this initiative last week is an example of its success. The couple who set up the company were refused a loan by the bands but they got one from First Step. They started out at farmers' markets and now they are setting up their own café, Ducks & Co., in Temple Bar which will open in July and I encourage colleagues to go down there. That company employes seven people on the back of a microfinance facility. We hope 5,500 such little businesses will get up and running. It is a very worthwhile scheme. I do not pretend it is a solution to our economic challenge. As Deputy Perry continually says, small business is at the core and heart of what will create employment. There is a segment in the microenterprise sector to which must give a battling chance to create employment and surviving and that is what this is about. I thank the Acting Chairman for her indulgence and the many Deputies who spoke. I look forward to Committee Stage where hopefully we can iron out the remaining queries.

See this speech in context