Dara Calleary (Mayo, Fianna Fail)
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To ask the Minister for Jobs, Enterprise and Innovation the position regarding the loan guarantee scheme; when it will be fully operational; the reason for the delay in launching the scheme; the proposed interest rate regime; when he expects it to become operational; and if he will make a statement on the matter. [41821/12]

Richard Bruton (Dublin North Central, Fine Gael)
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Before the clock starts, I take the opportunity to welcome Deputy Calleary to his new role as this is the first time we have had an opportunity to speak in the House.

As Deputies will be aware, the Oireachtas enacted the Credit Guarantee Act 2012 in July 2012. I signed a commencement order on 30 August 2012. Since the Bill passed, considerable work has been undertaken to prepare the scheme to go live.

This included training workshops conducted with the banks to prepare for the scheme, bilateral legal agreements negotiated with the banks to participate in the scheme, an accreditation process undertaken for banks to participate and the drafting of the necessary scheme under section 5 of the Act. Drafting of the primary legislation and the statutory instrument was complex and time consuming. Nevertheless, we have delivered on our quarterly commitments under the action plan for jobs in terms of the credit guarantee scheme.

With the consent of my colleagues the Minister for Finance and the Minister for Public Expenditure and Reform, I have now made the necessary scheme under section 5 of the Act. The scheme, which is SI 343 of 2012, was laid before the Oireachtas on 13 September. Officials in my Department are working on the final arrangements in conjunction with the participating banks and the operator of the scheme, Capita Assets Services. Launch of the scheme is imminent.

With regard to the interest rate, this will be a matter for the individual participating banks. As required under EU State aid rules, a premium will be charged by the State to companies availing of the scheme. This has been set at 2%.

Dara Calleary (Mayo, Fianna Fail)
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I thank the Minister for his good wishes. I look forward to working with him.

I want to raise a couple of issues arising out of the Minister's response. The Minister has missed his target in terms of the assurance given on passage of the Credit Guarantee Bill 2012 at the end of the previous Dáil term that the scheme would be up and running in quarter three. We are now into quarter four. I cannot understand the reason all of the technical issues to which the Minister referred were not addressed while the scheme was being negotiated and all the heavy lifting was under way. Issues such as training, briefing of the banks and so on should have been addressed in parallel with the legislative process. The Minister knew, given the Government majority and broad support of the House for the legislation, that it would be passed.

I would like to put this matter in context. While this training, briefing of the banks and so on is under way, the reality in terms of lending on the ground is stark, as set out by the Central Bank in its report of September last. I know there is an understanding in the Minister's Department of the seriousness of the lending situation. However, I fear this is not properly understood in the Department of Finance. They are either blind or ignorant of it. Gross "new" lending was down one third in the first quarter of 2012 versus the last quarter of 2011. Only Greece has refused more small business loans than Ireland during that quarter, with one in four businesses seeking credit in Ireland being refused in the past six months versus one in 28 in Greece. It is constantly stated that Ireland is not Greece. However, small businesses seeking loans would get an easier hearing in Greece while there is a continual faffing around here in terms of the introduction of the loan guarantee scheme.

I am incredibly concerned that it is being left to the banks to set the interest rate.

Mattie McGrath (Tipperary South, Independent)
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It is a scandal.

Dara Calleary (Mayo, Fianna Fail)
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Has nothing been learned that the banks are once again being put in the driving seat of a scheme put in place to guarantee the future of small businesses? I do not need to tell the Minister or his officials that small businesses around this country are creaking at the seams. There is hay rolling down streets for the want of access to finance by businesses. The Minister need not bother reading out the statistics supplied to him by the Department of Finance in regard to the Credit Review Office. Businesses on the ground are not getting finance. If they are, they are getting it at penury rates and conditions and only in respect of the re-financing of existing working capital. As such, this lending cannot be defined as new. While people are being trained and we are negotiating interest rates, businesses are laying off people and are unable to create jobs or access whatever demand exists.

When will this money be in the pipeline and when will a business be able to apply for money from the scheme? Is it fair to say it will be quarter one of 2013 before moneys are released under this scheme?

Richard Bruton (Dublin North Central, Fine Gael)
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My Department has launched two new credit schemes. While these schemes were considered by the previous Minister, he did not deliver them. My Department has delivered two new instruments, the microfinance scheme which was launched last week and the loan guarantee scheme which will be, as stated in my reply, launched imminently, which means within the next fortnight.

There are huge problems in terms of bank lending. We are seeking to introduce schemes to assist where the system is not working. It is important we give a break, through the provision of microfinance, to those wishing to start up a business. We are also seeking to introduce a scheme for loan guarantees.

To answer Deputy Calleary's point, the banks are still those who give the loan. Where a loan has been turned down the credit guarantee scheme is applied, and in return for this guarantee we charge a 2% premium on top of the rate which would otherwise have been provided to the lending. Our scheme is to intervene where people are turned down wrongly because of a system whereby the bank rejected the risk on the grounds of collateral or because of the sector. This intervention is very targeted.

As the Deputy stated, I accept wider issues exist with regard to banking. We need to get to grips with banking and no State scheme can fill the gap whereby banks must take primary responsibility. They are who are responsible primarily to deliver credit to a small exporting economy and they must deliver it.