Gerald Nash (Louth, Labour) | Oireachtas source

On 5 November, I moved that the Credit Guarantee (Amendment) Bill 2015 be read a Second Time and I informed the House that I planned to table significant Committee Stage amendments thereto. I emphasise the Government's commitment to making a considerable change to the existing legislation, as was pointed out by the review, namely, strengthening and improving the guarantee in terms of risk spread, extending it to non-traditional, or non-bank, sources of finance and accommodating innovative new provisions. There needs be a role for promotional financial institutions, for example, the Strategic Banking Corporation of Ireland, SBCI, to work with us on enhancing the provision of credit to SMEs. We also need to be able to provide counter-guarantees in such a way as to enable promotional financial institutions to unlock EU finding opportunities, for example, Competitiveness of Enterprises and Small to Medium-sized Enterprises, COSME, Horizon 2020 and the European Fund for Strategic Investment, EFSI.

I listened with interest to the remarks of Deputies Calleary, Tóibín, Finian McGrath and Connaughton and will attempt to address some of those issues now. We will elaborate further on them when we get the opportunity to go through the fine detail via the proposed Committee Stage amendments.

The SBCI is now providing support to non-bank lenders and recently announced an initiative on leasing and hire purchase that will help SMEs. Committee Stage amendments are currently being finalised by my Department, working closely with the Attorney General’s office, the Department of Finance and the SBCI. With regard to the statistics I outlined on 5 November, I have taken note of the requests of Deputies Calleary Tóibín for drawdown figures. I draw their attention to the regular updates from the operator of the schemes, Capita Asset Services, as published on the website of my Department.

Regarding new products and services, the credit guarantee schemes to follow the enactment of this legislation will collateralise and deal with new markets and products. On the issue of the cost of the scheme, it is important to note that the new and novel approaches being taken do not come cheap. They come at a price and reflect the risk involved. With regard to the return on investment associated with the original schemes, a good return was achieved in terms of job numbers. There were 1,085 new jobs and 618 jobs maintained and consequent social protection savings in many cases. There are increased tax returns to the Exchequer because people are at work.

The Central Bank recently published a paper on the use of personal guarantees in Irish SME lending since 2012, stating that the level of use has fallen. I shall certainly be looking at the evidence as well as other matters covered.

In regard to borrowers whose loans are sold, some progress has been made with new protections in the Consumer Protection (Regulation of Credit Servicing Firms) Act 2015.

On the relaunch and promotion of the schemes, all relevant Ministers, Departments, the SBCI, banks and financial advisers will play an active role in promoting the new facilities available to SMEs. That will be the case right across the country because it is extremely important that we promote the opportunities provided for under the proposed new scheme.

On the legal issues relating to the Bill, credit guarantees and counter-guarantees comprise a very complex area. The drafting has been extremely technical, almost by definition, and there has been a team effort across all relevant Departments and agencies. Admittedly, there have been some difficulties and frustration associated with the implementation but there is an absolute need to get this right, for all the reasons pointed out by colleagues during this debate. There is a need for certainty in matters involving State guarantees, liability and cost and in order to ensure that such State liability has been tied down and is very clear. No country has introduced guarantees without extremely detailed examination and consultation. We need to take great care to ensure EU state aid rules are complied with.

We are talking about his today because of deficits and defects in the original scheme. We were very clear on that and have had the matter reviewed. We have both taken advice and listened. We are taking the necessary steps to ensure we have a robust scheme that works for the SME sector and where the market fails.

Deputy Tóibín referred to competition in the banking sector. We all know why there are only a small number of operators in the Irish banking system. That is exactly why we need diversity in terms of financial products available to SMEs and consumers. It is why the State is stepping in. We sought to improve on the original scheme to support new and innovative approaches and to try to drive an element of competition. This area is constantly under review.

On Deputy Tóibín’s question on the definition of crowd funding, for example, there is no specific definition. However, the scope of the scheme is being extended to cover a broad range of providers. I hope we are clear on that.

Deputy Finian McGrath mentioned a number of issues concerning public awareness of opportunities for access to finance and finance for growth. I remind the Deputy, who, unfortunately, is no longer present, that there is significant information available on . I suggest that when he is doing his next leaflet drop or hosting his next public meeting, it might be useful if he provides that information to his constituents, who would be genuinely interested in gaining access to that type of material. The information is also available on the website of the Department of the Taoiseach.

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