Billy Kelleher (Cork North Central, Fianna Fail)
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7. To ask the Minister for Jobs, Enterprise and Innovation his views on the operation of the credit supply clearing group; and if he will make a statement on the matter. [24432/13]

Richard Bruton (Dublin North Central, Fine Gael)
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The credit supply clearing group was established in May 2009 to identify patterns of events where the flow of credit to viable businesses appeared to be blocked and to seek to identify credit-supply solutions relating to these patterns. The group worked to provide a clear picture of emerging lending patterns, while facilitating direct discussion by all the relevant interested parties in addressing problems. It was chaired by my Department and included representatives of the banking and business sectors, with departmental representatives and representatives of the primary support agencies. The group met on eight occasions and the last meeting was held on 19 April 2010.

On foot of the work of the credit supply clearing group, the former Government established the Credit Review Office which took over the role of the credit supply clearing group in terms of identifying emerging lending patterns and credit-supply solutions relating to these patterns, while at the same time facilitating direct discussion with the relevant interests in addressing these problems.

Access to finance remains a critical element of the current Government’s economic recovery strategy. Oversight and monitoring by the Government are maintained by a Cabinet sub-committee on mortgage arrears and credit availability, of which I am a member. Policy development is supported by a Department of Finance-led State bodies group and a funding consultation forum which includes all relevant stakeholders and comprises representatives of the banking and business sectors, with departmental representatives and representatives of the primary support agencies. The terms of reference of the committee are centred on understanding, exploring and resolving the difficulties facing SMEs seeking credit.

The collapse of the banks has made it more difficult for SMEs to access credit. In response to this challenge the Government has implemented several policy initiatives: the micro-enterprise loan fund and the credit guarantee scheme; the establishment of the development capital scheme, targeted at mid-sized indigenous firms, with a total available fund of €225 million; the development by the National Pensions Reserve Fund, NPRF, of a range of support funds for the SME sector, totalling €850 million; the provision of €175 million of new Exchequer funding through the seed and venture capital schemes - this is leveraged for such projects up to approximately €700 million in line with experience; the pursuit of collaborative initiatives with the European Investment Bank such as the provision of a loan guarantee for some of the Microfinance Ireland portfolio; the Credit Review Office has been strengthened and is now overturning over half of the decisions appealed to it.

While surveys reveal rising demand for SME credit and a decline in bank refusal rates, the challenge remains substantial. As the issue of access to credit remains a major concern for Irish business, the Government maintains a close watch on developments in the area. The Action Plan for Jobs 2013 sets out a number of actions to continue to address matters in the coming year.

Dara Calleary (Mayo, Fianna Fail)
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Some of my transferred questions were to seek the Minister's views on whether the Credit Review Office had sufficient resources to fulfil its mandate. What are the Minister's views on the success of the office to date? One of my questions sought clarification on whether the Minister agreed there should be formal targets for the banks in respect of debt resolution for SMEs similar to those pertaining to mortgage arrears. I will cheekily ask the Minister these questions now if he can answer them.

It is important to indicate that the February report from the Central Bank on SME lending showed that, of a total of €8 billion in new lending advanced by the pillar banks, only an estimated €2.5 billion was deemed to be new lending, with the balance constituting loans that had been rolled over. Therefore, only €2.5 billion represented new money to support new projects. The pillar banks' SME loan books contracted by €2 billion in 2012 as the €2.5 billion in new lending was outweighed by €4.5 billion in net repayments. Therefore, we are still in very serious circumstances and there are no signs of a resolution.

While the rate of refusal may be declining, it continues to be the case that there are no submissions. Individuals are being advised by local branch management not to proceed with their loan applications because they will not get anywhere. We all know this. No amount of enterprise weeks or radio programmes concerning bank branches will get the Minister beyond that issue.

Businesses must submit a formal application to get into the credit review process. However, when they are being told by their relationship manager not to submit one, they are in a very difficult position. With regard to legacy debt of SMEs, particularly on property, will the Minister consider proposing to the Minister for Finance that targets be set for resolving the issue?

Richard Bruton (Dublin North Central, Fine Gael)
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That is quite a range of questions. The Credit Review Office is working extremely well. The real issue is that we need to see more businesses appealing decisions. There have been approximately 25,000 credit refusal decisions in total, not enough of which have been appealed, either internally in the bank or to the Credit Review Office. A strong message to businesses that are refused credit is that they should pursue an appeal. I would be very disturbed if there were any suggestion relationship managers were discouraging this, as the Deputy suggested. We are seeking to ensure banks will outline clearly in writing as a standard part of their responses the right to appeal and the availability of alternative loan mechanisms such as the loan guarantee and micro-finance.

The resources of the Credit Review Office are being strengthened. That was part of the decision at budget time by the Minister for Finance. The Central Bank is developing debt resolution targets for the banks. It is addressing this issue in much the same way as it addressed mortgages. It is recognised that we need to see viable businesses put back on a footing where they can continue to develop.

I fully acknowledge what the Deputy is saying on the low level of new funding for SMEs. This is the issue we are targeting. As the Deputy stated, there is only €2.5 billion in new lending to SMEs. As the Deputy knows, the Government has put roughly €2.5 billion in SME funds into place through various models to supplement this. However, we need to see more activity by the banks in this regard.

On the last comment, the overall stock of debt is declining for SMEs. The issues to be examined are new lending and restructuring. Restructuring is not all bad. That some lending amounts to restructuring is not bad because it is a way of resolving some of the issues that arise. We need, however, to continue to focus on this issue. That is what we will do in the course of the year.

Dara Calleary (Mayo, Fianna Fail)
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Another issue is the delay in approvals from the time an application is submitted. While it is still a problem that applications are not being submitted, the review of a submitted application may be dragged out for months such that the project for which finance is originally sought may no longer be viable. The business may actually have moved on. Will the Minister put turnaround targets in place in order that the pillar banks will have to revert to applicants with a full decision within, perhaps, four working weeks rather than stringing out businesses? I could provide the Minister with many cases in which businesses have been strung out for nearly 12 months from the time of applying for a facility until the reaching of a decision. In many cases, that decision is negative.

Eoghan Murphy (Dublin South East, Fine Gael)
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What are the Minister's views on other forms of financing available? It is not just a case of banks' lines of credit and Government financing. There is crowd funding on the Internet, whereby people can lend their own money to small local enterprises. In the United Kingdom up to €90 million has been lent in this way, with a default rate of only 1%. In Ireland €175,000 has been raised thus far, for only five businesses. There are 1,250 registered lenders willing to lend their own money to small local businesses. Does the Minister support that kind of initiative? How can we encourage that sector to grow?

Tommy Broughan (Dublin North East, Labour)
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Recent commentary from the ESRI and the ISME bank watch survey have been damning of the Minister's record on the provision of credit for small companies. A majority of SMEs are still desperately struggling with this problem and the Minister does not seem to have been able to target them. At the end of the day, the disastrous fiscal austerity programme of this Government is a key factor. Levels of demand are depressed. One only has to visit retailers in the jewellery and grocery sectors, and other retail developments, to see that demand is totally depressed after five and a half years of the macroeconomic madness in which we have been engaged. What is the Minister's Department doing in this area? The overall macroeconomic policy is damning in terms of demand.

Peadar Tóibín (Meath West, Sinn Fein)
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One point we have raised over the past couple of years is the cost of credit. It is extremely prohibitive. Yesterday representatives of the national organisation for newsagents came before the Joint Committee on Jobs, Enterprise and Innovation. It indicated that while some Government systems were in place prices were too high. Banks are not passing on cuts in interest rates to homeowners or businesspersons. That has a significant dampening effect on people drawing down credit and puts those with credit in existence under enormous pressure. This body should act as an interface between businesses and the banks to ensure we get a lower charge for credit. Indeed, if one compares us with the likes of Germany one would find credit costs half the price it does here.

Richard Bruton (Dublin North Central, Fine Gael)
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There are many questions. On Deputy Murphy's point, we support crowd funding. It is one issue which is being examined in the course of this year by the group I established. My Department and the Department of Finance are involved in it. It offers potential.

I accept the point made by Deputy Calleary that there is a delay in getting approvals. It is monitored by RedC, formerly Mazars. I hope to see improvement in that. The banks are being made aware of the dissatisfaction that they are not meeting the turnaround targets.

The ESRI was far from damning in its approach. It recognised that there is a problem with access to finance, as is inevitable following the sort of bank collapse which has occurred in this State. We have also received substantial praise for the range of instruments we have brought in. This week the OECD visited Ireland. We have micro-finance, loan guarantees and the SME fund. These are entirely new instruments for the State and innovative approaches by the Government to meet access to finance. We would like to see them rolled out more quickly, but we can still point to at least 400 jobs that are in place today that would not have been if we did not have micro-finance and credit guarantee schemes.

The other schemes involve development capital and seed funding, and are absolutely crucial if we are to see Irish companies start up, develop and go to scale. They are innovative and have never been tried in the country before. The Deputy needs to allow some time for them to work. I share his impatience, but they are innovative. Far from the rant he had about Government strategy, these are the sort of smart innovations that we need in an economy like ours.

The Deputy, above all, should know that we inherited an economy heading for 120% debt, with the huge hole in its public finances. We are providing a jobs strategy which is credible because it takes into account the fact that we need sustainable public finances. If one does not have sustainable public finances one will not be able to build sustainable enterprises. These two approaches have to go in tandem. The stimulus funds, SME finance and using global sourcing of €500 million are all innovative approaches to resolve our huge crisis.