Tommy Broughan (Dublin North East, Labour)
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9. To ask the Minister for Jobs, Enterprise and Innovation if he will report on the level of take-up of the credit guarantee scheme since its establishment; the way the scheme is actively being promoted by his Department to prospective applicants; and the targets he has set for overall take-up of the scheme in 2013; and if he will make a statement on the matter. [24339/13]

Richard Bruton (Dublin North Central, Fine Gael)
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The credit guarantee scheme is an initiative that was called for by entrepreneurs, businesspeople and their representative bodies for several years. Despite commitments to deliver such a scheme, previous Administrations failed to do so. Upon taking office I sought and received Government support to design from scratch a new scheme which was successfully launched on 24 October last year. As at 10 May, 36 live CGS facilities have been put in place, resulting in €3,661,100 being sanctioned through the scheme by participating lenders. It is expected that 190 new jobs will be created and 115 maintained under these facilities. This is lending and job creation that otherwise would not have happened

The scheme does not involve the taxpayer replacing the banks in providing lending directly to business. It is aimed, rather, at filling a gap in the market for bank lending to particular types of businesses with a shortage of collateral, or in innovative sectors that the banks may not be familiar with, by shifting a proportion of the risk to the State and thereby incentivising the banks to lend. In designing the scheme, a balance was struck between exposing the taxpayer to excessive risk on the one hand and, on the other, ensuring a proper incentive for lending to businesses. The scheme was designed in accordance with international best practice.

The Minister of State with responsibility for small business, Deputy John Perry, and I promote the scheme at every available opportunity, locally, regionally and nationally, as appropriate. In addition, a direct link to information on the scheme can be found on my Department's website homepage, . Quarterly progress reports are also published on the website. The latest progress report, detailing the analysis and performance of the CGS for the quarterly period ending 31 March 2013, is now available.

The scheme is designed to facilitate up to €150 million of additional lending to eligible SMEs per annum. It is demand-led and the uptake may be lower than €150 million in any given year, depending on company needs. Take-up of the scheme is being closely monitored by its operator, Capita, and my Department. I committed to review it after 12 months of operation.

Tommy Broughan (Dublin North East, Labour)
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When he launched this very welcome initiative, the Minister referred to the creation of 1,300 jobs for each €150 million of additional funding under the scheme. He knows my own interest in this matter from my involvement in projects in Coolock and elsewhere on the northside over many years. Does he agree that the outturn thus far has been somewhat disappointing? The first Capita report was limited in the insight it offered because it only covered a few months of operation of the scheme. The second, however, is more comprehensive and it shows only 24 facilities in place and a total funding allocation of €3.1 million. The Minister said he has promoted the scheme very widely throughout the country. Is it possible that some small and medium-sized enterprises are still not aware of the scheme? The ESRI commentary, despite what the Minister says, certainly points to a problematic situation for firms seeking to obtain credit. Has he considered extending it to any other institutions?

I heard the Minister speaking about multinationals this morning on "Today with Pat Kenny". Is it an objective of the Department to begin planning for a situation where there is a greater reliance on SMEs and where our own indigenous industry is given priority?

Richard Bruton (Dublin North Central, Fine Gael)
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Taking the last question first, the Government is absolutely committed to SMEs, responsibility for which belongs to the Minister of State, Deputy John Perry. Under the Horizon 2020 framework, for which the Minister of State, Deputy Sean Sherlock, is responsible, we are upping the target this year to 20%. We recognise that the future for Ireland is in developing an indigenous enterprise culture and a robust innovative capacity. Much of our work under the action plan for jobs initiatives has been about easing the pressures facing small indigenous business through the provision, for example, of access to finance, supports for companies and innovation, the move to trade online and other types of opportunities which allow businesses to thrive in a very challenging environment. It is important to emphasise that this is not an either-or situation. It is not a question of saying we do not want foreign investment. Such investment is essential, but we also want to build strong clusters which comprise both international firms and vibrant indigenous businesses. That is the objective and we are working to ensure it happens.

I would like to develop the credit guarantee scheme further. It is important to bear in mind that it operates at the point of sale, that is, it is administered through the banks. There is an issue of getting that message across so that more people who are refused funding will consider it and more bankers will consider it as an option for their clients. We are working with the banks to deliver that more effectively on the ground. We are also preparing a review of the scheme. Like the micro-finance fund and the development capital scheme, it is a new initiative which will require tweaking as we go along. We are committed to introducing innovative funding mechanisms. The bottom line is that the retreat of banking from risk-taking will not end today or tomorrow. It is happening throughout Europe, not just in programme countries like Ireland. In that context, there is a requirement to develop new instruments.