Leo Varadkar (Dublin West, Fine Gael)
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Question 99: To ask the Tánaiste and Minister for Enterprise, Trade and Employment if she will provide a State backed loan guarantee system to encourage banks to lend to small and medium enterprises and to exporters of all sizes; and if she will make a statement on the matter. [5349/10]

Mary Coughlan (Donegal South West, Fianna Fail)
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Last week, I confirmed that work is under way in my Department on examination of a possible scheme of loan guarantees for the SME sector. This is in line with one of the recommendations in the Mazars report on credit availability. As I also made clear last week, there are significant issues to consider before any final decision can be made. For example, we need to be certain of the extent to which any scheme would assist SMEs, if a scheme would actually result in an increase in total lending and if the cost of borrowing by SMEs under such a scheme would not prove prohibitive. A properly tailored and targeted scheme could prove successful in assisting viable companies secure credit that they might not otherwise obtain.

Enterprise Ireland and Forfás have examined loan guarantee schemes in the UK and in some other countries. Forfás, together with the Department, is carrying out a further examination and on completion of this work, I will bring the results before the Government. We will need to ensure that any scheme developed assists businesses directly, while safeguarding the taxpayer.

Leo Varadkar (Dublin West, Fine Gael)
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The Tánaiste is really taking her time on this issue. We are probably two years into a recession at this stage and great numbers of small businesses are closing. They are closing because they cannot get credit. The Government rushed into a bank guarantee overnight. It rushed the NAMA legislation through the Houses, yet it has taken almost two years to decide whether we will have an SME loan guarantee. There are 200,000 small businesses in the country, employing 800,000 people. One of their biggest problems is that they cannot get working capital. They are able to get new loans, but they cannot get loans turned over nor can they refinance. That is the core issue.

It seems that there is a row between the Tánaiste and the Minister for Finance and their Departments. She wants to do this but he is not permitting her to do it. Is there a dispute between the two Departments? When will the Tánaiste make a decision on this? Will we have to wait until the upturn before there is a decision?

Mary Coughlan (Donegal South West, Fianna Fail)
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I am not having any row with the Minister for Finance, nor is there any row between both Departments on the issue. We have looked at several initiatives on how to stabilise some of our companies, such as the stabilisation fund and the subsidies scheme. We have also introduced other interventions to keep people in work. We have set up a credit supply group in my Department, in which we have had a greater working relationship between the representatives of business and banks.

One of the recommendations of the Mazars report was to investigate the possibility of a loan guarantee scheme. Other member states introduced such schemes and the impact of some of them on the SME sector has been negligible. We are taking a broader perspective on schemes that have worked and I am taking the UK scheme into consideration, as well as the schemes that were recently set up in Chile and the US.

I do not accept the claim that we are slow on this matter, given that risk analysis has to be undertaken to protect the taxpayer. Having said that, there is a common view held on all sides of the House that there continues to be difficulties in accessing credit, and this is one of the other initiatives that will be considered. I hope the analysis done by Forfás and Enterprise Ireland will soon be available to the Department.

Leo Varadkar (Dublin West, Fine Gael)
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It is the Tánaiste's job to make decisions on these matters. Britain made its decision on the enterprise finance guarantee more than a year ago at this stage.

Mary Coughlan (Donegal South West, Fianna Fail)
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That did not work.

Leo Varadkar (Dublin West, Fine Gael)
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Nobody in this House under estimates the Tánaiste's capacity to commission reports, to appoint task forces or to ask agencies to study things. What we doubt is her ability to make decisions and to make them correctly and in a timely manner. When will we have a decision on this? The enterprise finance guarantee has been brought into the UK and it works. The British Government guarantee is a small portion of the loan which will ensure that the banks are prepared to extend credit to small businesses. When will the Tánaiste stop commissioning reports, appointing task forces and make a decision on this matter?

Mary Coughlan (Donegal South West, Fianna Fail)
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The matter has not come to me for final decision. I will make the decision immediately after the work has been done. The best performing schemes have been those in which there was no subsidy. There is a 15% subsidy in the UK scheme. The UK introduced a number of initiatives that fell through and I will not invest time or taxpayers' money in schemes that will not work. I do not want to create an expectation that is well beyond the remit of any loan guarantee scheme, but the work is almost complete and the matter will be brought before the Government for consideration and final determination very soon.