Catherine Murphy (Kildare North, Social Democrats) | Oireachtas source

This is a short technical Bill that is quite limited in scope. It is certainly one that should be supported. It relates to the agreement between the Ministers for Enterprise, Trade and Employment and Agriculture, Food and the Marine and the SBCI, which the Ministers must sign before the end of this month to deliver Brexit impact loans by the end of quarter two.

The effects of Brexit are still beginning to make themselves known. It is difficult to disentangle them from the pandemic. The latest trade numbers between Ireland and Britain show a major decline in exports and imports. According to the Central Statistics Office, CSO, the value of imported goods fell by 57%, or €1.6 billion, during the first two months of the year when compared to the same period last year. Exports declined by 12% over the same period. The effects are particularly evident in the food and drink trade between Ireland and the UK. The agrifood sector was identified as being most at risk from Brexit. However, it has not been the sector most impacted by the onset of Covid but that does not mean it would have an impact. Export of food and drink products to Britain fell by 35% from €641 million to €418 million in the first two months of 2021 when compared to the same period in 2018.

In the past year, the combination of the UK's formal exit from the EU and the Covid-19 pandemic have obviously left many SMEs in dire straits. Small businesses are particularly vulnerable to red tape and logistical issues caused by the UK leaving the European Union. They cannot afford the kind of lawyers and advisers a big or medium-sized company might be able to employ, so it is essential we do everything to keep these businesses afloat.

Since 2016, this Government and its predecessor have introduced a number of schemes to prepare businesses for Brexit and to assist those impacted by Brexit. These schemes have varied in terms of their success and take-up rates. I see a repeated pattern of making these schemes inaccessible to small businesses, not simply with the eligibility requirements but through the arduous application process. As of January there had been no draw-downs on the microfinance Ireland Brexit business loan. Those were the most up to date figures I could find, although maybe the Minister of State has more recent figures. Perhaps there have been some draw-downs; it would be useful to hear if there have been. By comparison, there has been approval of €21.8 million in loans to 848 businesses from the Covid-19 microfinance loan scheme. This scheme was introduced only three months earlier than the Brexit loan scheme. There is no doubt there is a demand for Brexit support among SMEs, and the low take-up rate is concerning and must be examined. We must learn from the business supports that do work and make the necessary changes to the ones that do not.

Many businesses are also reluctant to take on loans at this time, particularly given the levels of economic uncertainty in both the domestic and global economies. Many do not want to take on further debt and some of them cannot; that is just the reality of it. It is the responsibility of the State and the Department of Enterprise, Trade and Employment to see these businesses through this very difficult time and provide all the certainty and support it is possible to give. We must remember this is a sector that employs a very sizable number of people. When one considers the cost of creating a new job, this is a good investment provided the company is viable. The Minister of State must engage with the businesses that are not taking up loans to find out why they are not engaging with these supports and adapt the scheme where necessary to meet the need, where an SME is viable.

I am glad to see this scheme will assist businesses with the joint disruptions of Covid and Brexit. Few small businesses have escaped the damaging effects of the pandemic and those businesses which have been also affected by Brexit should not be forced to jump through multiple hoops and lengthy application processes to get the assistance they need. The effects of one crisis can be hard to distinguish from those of another so this broader approach is welcome. Indeed, this scheme will now be broadened to include primary producers for the first time and will allow them to lend for activities aimed at addressing the pressing challenges affecting us all, namely, the climate crisis. The Central Bank's lending survey from January indicated there would be an increased demand for guaranteed and un-guaranteed business loans this year as businesses begin to find their way out of the immediate effects of the pandemic. Similar to the many effects of Brexit, which are only gradually making themselves known, the ripple effect of the pandemic on SMEs is not entirely forseeable but we can be certain it will take some time for the sector to recover. The extension of this loan scheme through 2022 is welcome in providing a level of security to business and we must be open to extending it further if need be.

As I understand it from the committee discussion on this Bill, 19 credit unions are involved as lenders under the scheme. The inclusion of credit unions in these lending schemes is welcome but should be expanded across the country. It has been a number of years since the 2017 recommendations by the finance committee on the development of the credit union movement. Reform of the movement is happening but it is happening at a snail's pace, with only very limited progress toward establishing the sector as a strong competitive force vis-à-visthe main banks, and we have fewer of those now with the exit of KBC Bank and Ulster Bank. We must focus on the development of lending expertise in the credit union sector, particularly with regard to business lending. The Social Democrats believe much more must be done to drive greater competition in the banking sector. The extensive roll-out of a strong not-for-profit banking sector based on a reformed credit union movement would support this.

I will conclude by observing that pre-legislative scrutiny was waived for this legislation. Sometimes it is not required but the Opposition has been very generous to the Government on waiving pre-legislative scrutiny. The last time I looked there was something like 16 requests since last October. I am a great believer in pre-legislative scrutiny where appropriate. It is a really good stage of our legislative process. While one might think it would shorten the process, very often it gives more balanced legislation, reduces the need for amendments on Committee and Report Stages and we end up with a process that has been more inclusive. I would not like to see the waiving of pre-legislative scrutiny becoming the norm. It is very understandable because of Covid but we must put down a marker that this is not a desirable way to proceed. We must return as quickly as possible to having a full legislative process, including pre-legislative scrutiny.

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