Enda Kenny (Mayo, Fine Gael)
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Yesterday, the Taoiseach walked into the Chamber and plundered the public service income position to pay for the wanton waste of Fianna Fáil's management of the economy over the past ten years. In my view, it was to a disproportionate and unfair extent. His contribution yesterday said precious little about the situation for persons on the live register. We will be in the House when the live register figures are published, but, last night, the Minister for Justice, Equality and Law Reform, Deputy Dermot Ahern, who seems to have an agenda of his own which is different from the Taoiseach's, said the increase in the live register would be 33,000.

Michael Creed (Cork North West, Fine Gael)
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The Taoiseach better watch out.

Billy Kelleher (Cork North Central, Fianna Fail)
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Fine Gael should not go there.

Enda Kenny (Mayo, Fine Gael)
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I am not sure if he was referring to January. If that is the case, however, it will be the highest increase on record and an unemployment bloodbath. As the figures will be published this morning while we are in the House, will the Taoiseach inform the Dáil of the January increase in the live register and the total figure as of the end of January? How does he propose to tackle this?

Brian Cowen (Laois-Offaly, Fianna Fail)
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The figures are being released today. I do not know what the normal protocol is but I have no problem giving them to the House now. The January live register figure will be 36,500 higher than the December 2008 figure. The overall figure will be 327,900 in January. That is an indication of the change that has taken place in recent times.

The whole purpose of the discussions with the social partners was to see in what way we can provide more training places for and help to people who lose their jobs. Obviously, the decision on reductions in public expenditure is an important signal, both home and abroad, of our preparedness to manage and stabilise the public finances.

In the addendum to the Irish stability programme update submitted to the European Commission at the beginning of the year, we took into account this deterioration and estimated, for the purposes of the figures, that approximately 400,000 would be unemployed by the end of the year.

Enda Kenny (Mayo, Fine Gael)
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This is catastrophic. These are the worst unemployment figures ever in the history of the State. That is an increase of over 1,500 jobs lost per working day. The December increase was 17,000 but it doubled in January with 36,500 jobs lost, bringing the total out of work to 327,000. It is a long time since the former Taoiseach, the late Jack Lynch, said if unemployment went over 100,000, the Government should leave office. I do not know if the Taoiseach intends to do that or not.

This is a horrendous situation. I am often struck by the shock on the faces of people——

Seán Power (Kildare South, Fianna Fail)
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We can see that on Deputy Kenny's face.

Enda Kenny (Mayo, Fine Gael)
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——who become unemployed suddenly with no prospect for the future for themselves or their families. That is the real kernel of the problem. The Taoiseach's emphasis and concentration on cuts yesterday did nothing in raising confidence, hope or prospects for people to either retain or obtain jobs.

John Cregan (Limerick West, Fianna Fail)
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It is step by step.

Enda Kenny (Mayo, Fine Gael)
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I will make three suggestions to the Taoiseach that he might consider. Primary and secondary schools building projects must be put on the critical infrastructure list. These are critical buildings to which there will be no planning objections. A generic design can be used and they can be rushed through the planning process. With €8.1 billion in the capital programme and 20% savings in prices from construction firms, a schools building programme would allow for the employment of substantial numbers of tradesmen, craftsmen and construction workers. Will he take that constructive suggestion, if I may use a pun, to heart?

Is it the Taoiseach's philosophy that by increasing the VAT rate, the Government's take from it will increase? There has been a haemorrhage of both jobs and money north of the Border, despite the Tánaiste and Minister for Enterprise, Trade and Employment making patriotic gestures. When the capital gains tax rate was cut some years ago, the tax take increased substantially. Will the Taoiseach consider reversing the VAT increase introduced in the budget in light of the fact that it is not bringing in extra tax and haemorrhaging jobs and money north of the Border?

With this catastrophic increase of 36,500 on the live register in January, the Government will have to pay more in benefits. Will the Taoiseach consider an exemption in PRSI contributions for employers who take on new employees in 2009? Will he consider tax exemptions for firms involved in research and development for new products which have the potential to create new jobs? Will the Taoiseach consider some sort of loan to small businesses as part of a recapitalisation programme, which is beginning to work successfully for small businesses in Britain?

I make these suggestions in a non-contentious way on the basis of providing confidence and hope in job creation measures, which are so important in the context of this morning's announcement of 327,900 people on the live register, with an increase of 36,500 in January. That is unprecedented and there will be horrific social consequences for those tragically caught in this bind.

Brian Cowen (Laois-Offaly, Fianna Fail)
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Any increase in unemployment must be dealt with to the best extent possible. To compare this with earlier times and the comment regarding 100,000 people out of work is to make comparisons with a totally different country.

Bernard Durkan (Kildare North, Fine Gael)
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It is worse than then.

Brian Cowen (Laois-Offaly, Fianna Fail)
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The last time this figure was exceeded we were talking about 15% or 16% unemployment. The current figure represents approximately 9.1% or 9.2% unemployment. I make that point while in no way diminishing the position. There are far more people at work now, and having seen figures recently, there are still approximately 1.88 million people working. It is important to make that point.

There was a question on VAT rates. The sterling differentiation is the problem in that matter; that is, the valuation of sterling vis-À-vis the euro is the issue. More than half the products referred to by the Deputy do not attract VAT at all. If the contention is that the 0.5% increase in VAT has caused the problem, it is not the correct analysis of the position.

Bernard Durkan (Kildare North, Fine Gael)
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It did not help it.

Enda Kenny (Mayo, Fine Gael)
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It is not just down to depreciation.

Bernard Allen (Cork North Central, Fine Gael)
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People are being ripped off by chain stores.

Brian Cowen (Laois-Offaly, Fianna Fail)
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With regard to the other fiscal measures referred to by the Deputy we must work within the budgetary parameters set out for ourselves and we will work, both internally in Government and with social partners, to see what way we can help those people who lose their job in training, upskilling or reskilling. We will also look to other measures to see what way we can identify those jobs which are at risk and see what way we can try to maintain people in employment by bringing forward interventionist measures before people in vulnerable positions lose their jobs. That work is continuing with the social partners.

Enda Kenny (Mayo, Fine Gael)
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I asked about school buildings.

Pádraic McCormack (Galway West, Fine Gael)
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What about schools?

Eamon Gilmore (Dún Laoghaire, Labour)
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The Taoiseach has informed the House, in response to Deputy Kenny, that the country now has the highest number of people unemployed ever in our history, with almost 328,000 people unemployed. Last week I asked the Taoiseach what was the cost to the Exchequer of additional people being unemployed, between social welfare payments and lost tax revenues. The Taoiseach sent me a reply, which I received this morning, setting out those costs.

He informed me that the 120,000 extra people who lost their job in 2008 brought about a total cost in social welfare terms of €1,386 million for a full year and the cost in terms of lost tax is approximately €960 million. When the figures are worked out, that comes down to every job lost in the Irish economy costing the Exchequer €20,000 per year. The additional 36,500 who lost their jobs in January will cost the Exchequer €730 million in a full year.

For the past number of months and yesterday, everybody has been fixated on cutting public expenditure. I acknowledge that public expenditure must be addressed but to be frank, we are looking at the wrong problem. The problem that the Government needs to consider and that everybody, including commentators, must look at is what is happening in terms of lost jobs.

Brendan Howlin (Wexford, Labour)
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Hear, hear.

Eamon Gilmore (Dún Laoghaire, Labour)
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If we continue to lose jobs at the current rate, the Government will not be able to keep up in terms of cutting public expenditure. The social welfare cost alone of the people who lost their jobs last year is the €1.4 billion that must be paid in the pension levy. Every additional job lost will cost €20,000.

The Taoiseach spoke about the need to get some kind of consensual approach to dealing with the problems of the economy. The Labour Party is more than willing to engage with the Government, come forward with ideas and address solutions aimed at getting people back to work and saving jobs. That is the real solution. The figure that the country and Government must now consider is not public expenditure but employment. Getting people back to work is the solution and saving jobs is part of the way to dealing with the problem.

I suggest the Taoiseach address the events in Waterford Crystal. There are 450 workers there and if they lose their jobs, that will be an additional €9 million per year lost to the Exchequer. Will the Government address the jobs issue with the seriousness now required? Deputy Kenny raised the school building programme that has been suggested by the Labour Party for some time and there are other ideas. We can expand on and develop these ideas over time. Will the Taoiseach and his Government prioritise the saving of jobs and getting people back to work? Will he give that the central attention required rather than fixating on public finances and expenditure, which has been the case up to now?

Brian Cowen (Laois-Offaly, Fianna Fail)
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It is not an either-or situation. We must bring stability to the public finances and without that, the question of progress or regaining prosperity and growth does not arise. We must stabilise the public finance position. It is not a fixation exclusive of all other considerations but a necessary part of the rectification and correction needed to ensure Ireland comes through this very serious international recession to the best extent possible.

Deputy Gilmore indicated that one is considering only expenditure and not taxation items. If the gap in the public finances, which could be over €18 billion this year, is to be closed, it will either be done through expenditure savings and-or taxation measures. This particular year is one where we will see the most contraction in the Irish economy, as we try to come through this period and get back to economic growth in the years ahead. This will be the most difficult year.

To impose a further tax burden at this point in the cycle would depress demand even further, although I recognise the expenditure savings will have that impact. If the gap was to be closed any more quickly this year, we would have that impact, and that would not be the right thing to do. We must send the signal this year at home and abroad that we are seeking to stabilise the current position, which has a deficit of 9% and 10%.

With regard to how we can bring forward interventions that will maintain the maximum number of jobs in the economy, I agree that this is part of our task. One of those tasks relates to competitiveness and reducing our cost base. That is happening in the private sector at enterprise level and, in speaking to employers, there are many people doing this throughout the country. When people sit down and examine their position, the level of demand and orders and the number of employees, instead of simply implementing redundancies, many are putting in place measures such as work-sharing or short-term work.

People who work three days per week rather than five will go on the live register for the two days they are not working and that will add to the figure I supplied earlier. Those sort of arrangements are also being made. People are trying to adapt to the situation on the basis of trying to maximise the numbers who can remain in employment. It is a welcome development that this approach is being taken, at management, union and employee level, by many businesses. Rather than ten people being made redundant, decisions are being made for all employees to work a four-day week, to take a 10% wage cut or whatever in order to do what is necessary to retain the maximum number of people possible in employment during this difficult period. This is happening in many sectors.

We were obliged to address the position as it applies to the public sector. That was part of the rationale behind the decisions announced yesterday. What we have done will have a beneficial effect in the context of the public finances. Despite our best efforts to arrive at an agreement through the partnership process a decision in respect of those finances could not be deferred any longer.

On how we maintain demand in the economy, the stimulus programme we have brought forward is the capital investment programme. Based on data provided by economists, the €8 billion spend will have the benefit of retaining the equivalent of approximately 80,000 jobs. That stimulus, which, at 5% of total GNP this year, is the highest in Europe, will go towards retaining jobs. It will also have a reasonable impact in respect of how the Government can provide capital investment through the provision of schools throughout the country. There are generic designs relating to school construction and those type of cost savings and that kind of acceleration through the process to which the Deputy refers already exist. We are seeking to reorient some of our capital spend towards further school building, despite the fact that we do not have much room to manoeuvre. The level of school building currently taking place is at record levels when compared to even the best of times experienced in the past.

Pádraic McCormack (Galway West, Fine Gael)
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The Taoiseach is not listening.

Brian Cowen (Laois-Offaly, Fianna Fail)
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I am answering questions posed by the leader of the Labour Party.

While I acknowledge and accept that the rate of acceleration in unemployment is alarming, indicates the scale of the crisis with which we must deal and compounds the issue, it must be recognised that we are facing into our difficulties knowing that far more people are at work than ever before. The number in employment reached over 2 million at one stage, but this has now dropped back to 1.85 million.

Bernard Allen (Cork North Central, Fine Gael)
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And going down.

Brian Cowen (Laois-Offaly, Fianna Fail)
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Behind every statistic is a reality. I refer, for example, to families whose concerns are being exacerbated by the fact that their job security is at risk. I understand those concerns. I acknowledge that the unemployment rate of 9% is still too high and is rising. The Department of Finance, in the figures it submitted to the European Commission, has taken account and made provision in respect of those trends. As far as it is concerned, however, the €2 billion correction is needed in order to try to stabilise the position. That is why we made our announcement yesterday in respect of the decision that has been made.

Eamon Gilmore (Dún Laoghaire, Labour)
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There is a fundamental flaw in the Taoiseach's approach to this matter and it is in this regard that I basically disagree with him. The shorthand version of this approach to our problems appears to be that we should stabilise the public finances and the economy will recover. With the greatest respect, I am of the view that it will have to be the other way around — stabilise the economy and the public finances will recover. It is similar to pouring water into a sink. If one does not put a plug in the sink to stop the water flowing out, one will lose it faster than one pours it in. That is what is happening here. The Taoiseach is concentrating almost exclusively on the stabilisation of the public finances and on cutting public expenditure. In light of the rate at which jobs are being haemorrhaged, however, money is pouring out of the economy.

The incredible loss of 36,500 jobs in the month of January alone will result over the course of the year in a cost to the Exchequer of €730 million. The Taoiseach will be obliged to make cuts elsewhere in order to procure that money. The nub of the matter as regards our economic difficulties is that unless we get people back to work, business moving and the economy growing again, we will be faced with a problem the Taoiseach will not be able to solve. While acknowledging that the public finances are part of the equation, I again say to him that the core issue which must be addressed relates to jobs and getting people back to work.

The Taoiseach referred to the Government stimulus plan. The latter is not a stimulus plan, essentially it is the capital investment programme — the national development plan. It is what would have been in place in any event. That is what the Taoiseach is describing as a stimulus plan. Such a plan means actions that are taken in addition to provisions that have already been made in order to get additional people into employment. That is the issue we must address.

With respect, the Taoiseach is guilty of old-fashioned thinking in respect of squaring up the public finances in order that the economy will recover. That type of thinking belongs to yesterday. The United States is taking a different approach. In that country, the concentration is on addressing the question of getting the economy back on track and moving again. I accept that this approach would require additional injections of capital, extra efforts, different approaches and lateral thinking in the context of retaining people in employment.

Let us consider the position of Waterford Glass, which is a practical example. Some 450 people at the Waterford Glass plant are keeping the furnaces burning because they want to work and want to ensure that the operation remains ongoing. It is generally acknowledged that there is a future for Waterford Glass. The company may not continue to operate as it did previously but it does have a future and glass-making at its factory can continue. This is an iconic industry which is almost a symbol of the country. If it is allowed to disappear, apart from the impact on national morale, the Government will, according to the figures the Taoiseach provided earlier, be obliged to pay out €9 million each year in respect of those who will be made redundant. The Taoiseach, the Tánaiste and Minister for Enterprise, Trade and Employment and their Cabinet colleagues must engage in lateral thinking in order to ensure that this industry will survive and that the jobs relating to it will be retained.

If the Taoiseach speaks to the House not with regard to what the Government intends to cut but rather in the context of what it intends with regard to saving jobs and generating new employment, he will have the support of the Labour Party. That is the territory we need to occupy. Unless we take such an approach, the problems we face now will become much worse by the end of the year. At that stage, the Government will be obliged to make cuts far in excess of those announced yesterday.

Brian Cowen (Laois-Offaly, Fianna Fail)
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Deputy Gilmore stated that the way to proceed is to stabilise the economy rather than the public finances. There is a need to do both. One cannot stabilise the economy if one's deficits are increasing to 10%, 11% or 12%. The old-fashioned thinking is that this can be done.

Joe McHugh (Donegal North East, Fine Gael)
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What is the new thinking?

Brian Cowen (Laois-Offaly, Fianna Fail)
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During a previous period of difficulty, we saw what happened when decisions were deferred and when borrowing and taxation on income, labour, etc., were increased. I am sure what was done during those periods represented a genuine attempt on the part of the then Government to deal with the situation as best it could. I do not minimise the problems faced by that Administration because times were difficult. However, that approach does not work.

It must be recognised that what we are doing is not a technical exercise. I am not trying to stabilise the public finances for the sake of doing so. It must be done because we are spending more than we are earning. Revenues decreased by €8 billion last year and will drop by a further €4 billion this year.

Eamon Gilmore (Dún Laoghaire, Labour)
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That is because jobs are being lost.

Brian Cowen (Laois-Offaly, Fianna Fail)
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It is not just because jobs are being lost; it is because we are not competitive. Our cost base vis-À-vis those of our competitors is too high.

We announced that we intend to obtain a reduction in electricity prices. We must work with the regulator and those involved in the energy market in order that this might happen.

Michael Creed (Cork North West, Fine Gael)
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At last.

Brian Cowen (Laois-Offaly, Fianna Fail)
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The discussions with the social partners do not merely relate to the public finances. They also involve how we support enterprise and use the resources that will be available in the area of social welfare as a result of joblessness. We must identify those whose jobs are at risk and provide them with job maintenance programmes before they lose those jobs. Discussions in this regard are at an advanced stage. We will have a discussion on the economy today and tomorrow in respect of the decisions we made yesterday. Constructive suggestions from anyone will be welcome. I have never suggested a monopoly of wisdom in any part of the House.

Pádraic McCormack (Galway West, Fine Gael)
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The Taoiseach is not listening.

Brian Cowen (Laois-Offaly, Fianna Fail)
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I do not accept the idea that we are fixated with one aspect rather than all aspects of the problem. We have to acknowledge to the Irish public today that during the course of this year, as we see a contraction in the economy, we will see more unemployment. We must be straight with people and say this will happen. This is also incorporated in the figures we have been discussing. That is not to say for one moment, however, that we are being defeatist. We will do everything we can to ensure we have 1.7 million rather than 1.5 million people working. The number of people working in the economy ten years ago was 1.2 million. We brought that figure up to 2 million.

Bernard Durkan (Kildare North, Fine Gael)
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The figure is heading back to 1.2 million.

Brian Cowen (Laois-Offaly, Fianna Fail)
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Unemployment has now reached 330,000. The official figures on where finances will need to be at the end of the year could well incorporate an unemployment figure of up to 400,000, which is well over 10% of the total workforce.

Joan Burton (Dublin West, Labour)
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That will not help our——

Brian Cowen (Laois-Offaly, Fianna Fail)
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I am making the point that we have to be straight with people. If one is in a recession, there are job losses and casualties.

Pádraic McCormack (Galway West, Fine Gael)
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If one is in a hole, one should stop digging.

Brian Cowen (Laois-Offaly, Fianna Fail)
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I have listened in silence to what Deputies have to say.

Paul Connaughton Snr (Galway East, Fine Gael)
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The Taoiseach has no answers.

John O'Donoghue (Kerry South, Ceann Comhairle)
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Allow the Taoiseach to continue, please.

Brian Cowen (Laois-Offaly, Fianna Fail)
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If Deputy Connaughton has something to say in the course of the day, I will be glad to hear it. In the meantime, under this procedure, I am entitled to make these points.

We must do everything possible to maintain jobs in the economy and I assure the House we can and will do so. However, we cannot delude ourselves that not trying to stabilise the public finances would in some way keep more jobs in the economy. Such an approach would have the opposite effect. We must stabilise the public finances, continue with the capital investment programme to build competitiveness for the future and seek reductions in costs, as is being done in the area of labour and enterprise costs and will also happen in the area of electricity costs and energy prices. Work must also be done on what enterprise supports can be provided for start-up businesses.

On Waterford Crystal, we have been working on this issue for some time. The issue is that an investor is needed to provide a viable plan and capital to ensure business can continue in Waterford and Ireland. This is our objective but private investment will be needed to achieve it. I am glad an investor has arrived and I hope the receiver will listen attentively to what this investor has to say. I also hope the outcome will be the choice of those who want to continue with employment in Waterford rather than those who simply want to take the brand and generate the product elsewhere. The House is united in this hope and in trying to see in what way it can be realised. The Government, through the enterprise agencies, stands ready to assist any viable programme that may come forward which is consistent with us being able to assist. That is the position and there is no split in the House on the matter.

Joe Costello (Dublin Central, Labour)
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Why are the banks not giving credit to small businesses?

Brian Cowen (Laois-Offaly, Fianna Fail)
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We need a viable plan and are doing all we can. The Minister from the area is working with Deputies from all sides of the House who have a similar concern about the issue. The Government and line Ministers concerned are also trying to find a way which would maintain a production capacity in Waterford. This is the outcome we would all like. As Deputies are aware, as a receiver has been appointed; the problem is that he is the person who determines the outcome. We are being supportive in every way to workers' representatives and the concerned business people of Waterford and the south-east region to see what way we can assist the process and achieve the outcome we all hope will emerge. There is no split in the House on that matter.