Dáil debates

Thursday, 12 October 2017

Ceisteanna - Questions - Priority Questions

Brexit Issues

10:00 am

Photo of Niall CollinsNiall Collins (Limerick County, Fianna Fail)
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1. To ask the Minister for Jobs, Enterprise and Innovation the contingencies and supports in place to safeguard Irish businesses and exports from a hard Brexit scenario including revision of state aid rules; and if she will make a statement on the matter. [43201/17]

Photo of Niall CollinsNiall Collins (Limerick County, Fianna Fail)
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I want to ask the Minister to outline the contingencies and supports in place to safeguard Irish businesses, exporters and exports from a hard Brexit scenario that may transpire from the ultimate conclusion of the Brexit process, and also any measures she is taking regarding the revision of state aid rules.

Photo of Frances FitzgeraldFrances Fitzgerald (Dublin Mid West, Fine Gael)
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The first thing the Department has been doing is engaging extensively with business and working cross-departmentally to deal with the challenges posed by Brexit, as well as continuing to provide support for diversification, development and innovation. We have been working with the Strategic Banking Corporation of Ireland, SBCI, to develop tailored and targeted supports to address the needs of businesses impacted by Brexit. We have the new Brexit loan scheme, which will provide affordable working capital financing to Irish businesses that are either currently impacted by Brexit or could be in the future. This is €300 million that will be available to SMEs employing up to 500 and it will be open to all businesses, not just to State agency clients.

I am also looking at the development of a longer-term business development loan scheme which would assist firms in long-term investing for a post-Brexit environment. All of the discussions with the Commission and other member states have centred around Brexit. Last autumn, officials of my Department initiated discussions with DG Competition to sensitise the Commission to potential difficulties likely to be encountered by Irish firms. This has been central to any discussions I have had with Ministers from the UK and, indeed, I raised it with Mr. Barnier when I met him earlier this year.

Much can be done within the existing state aid framework. As a precautionary measure, however, we recently filed a rescue and restructure scheme for approval under state aid rules. Once approved, this scheme would allow for grants or equity supports of up to €10 million to SMEs in severe financial distress as a consequence of Brexit. Our new loan schemes are also being developed in the context of EU rules. However, should the situation change, it may be important to negotiate some Brexit-related flexibility in state aid rules with the Commission. It is also possible that, if the trading situation worsened, it might be necessary at that point to make a strong case to the Commission that flexibility on State aid is needed. We are developing that case and working on it.

Photo of Niall CollinsNiall Collins (Limerick County, Fianna Fail)
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It will not come as any surprise to the Minister that a recent survey of up to 600 Enterprise Ireland client companies found that, in the past six months, just 38% had taken measures to respond to Brexit, with the remaining 62% effectively doing nothing. The Minister outlined in her reply that she has set up a €300 million loan scheme. Can she give us more detail in that regard? All we are hearing is what flowed from her press conference in recent days. What type of loan scheme is it or is it a guarantee scheme? We understand that, effectively, the Minister is allocating €23 million of Exchequer funding and the remainder is to come from other sources of funding. Where will it come from and what criteria will apply in terms of a maximum and a minimum? When and where can companies apply? Can they apply as of today? How long will it take this scheme to get up and running?

Photo of Frances FitzgeraldFrances Fitzgerald (Dublin Mid West, Fine Gael)
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It is a loan guarantee scheme for SMEs that need extra liquidity to cope with working capital challenges brought about by Brexit. Obviously, we want to support businesses that would be viable if they had access to that capital. It will give affordable working capital financing to Irish businesses that can demonstrate they are currently impacted by Brexit or will be in the future. It will be delivered through the Strategic Banking Corporation of Ireland and through commercial lenders to get much needed working capital into Irish businesses. The aim is to make up to €300 million available but the total cost to the Exchequer will be, as the Deputy said, about €23 million. My Department will contribute €14 million and the Department of Agriculture, Food and the Marine will contribute €9 million, and SBCI will use this budget to leverage the overall fund up to €300 million. It is open to all eligible businesses with up to 499 employees. The minimum loan size will be about €25,000 and while the maximum loan size is still under review, it will be in excess of €1 million. SBCI will have a website towards the end of this month where businesses can register an interest and SBCI will then develop the various criteria and engage with the businesses. It will be the new year when it gets up and running. It is an important scheme in the context of Brexit.

Photo of Niall CollinsNiall Collins (Limerick County, Fianna Fail)
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The Minister will be aware from her Department that, previously, when the country faced a crisis, the then Government introduced a number of measures, including in 2009 an enterprise stabilisation fund that allocated up to €100 million over two years to support exporting companies. There was also an employment subsidy scheme which at the time helped employers to support over 90,000 jobs. They were very innovative schemes at a time when people needed supports. Has the Minister given any consideration to introducing similar measures and, if not, why not?

Following on from the Minister's earlier comments on the relaxation of state aid rules, and what we perceive as the need to relax the application of state aid rules, given the current ceiling for companies is €200,000 over a three-year period, does the Minister not feel a more robust and active engagement is needed with DG Competition and with the Ministers she meets at the Council of Ministers meetings in order to address these issues? It is hugely important that we have all the defences available to us, rather than arriving at the problem juncture before deciding we have to work on relaxing state aid rules. Let us have it sorted and bring it in, if necessary.

Photo of Frances FitzgeraldFrances Fitzgerald (Dublin Mid West, Fine Gael)
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I and my officials in the Department are very alert to these issues, and we have to be in the context of Brexit. This is an enormous challenge for business and one of the greatest challenges Irish businesses have ever faced. We want businesses to get involved with supports that are there at present.

As I have already said, we have filed a rescue and restructure scheme under the state aid rules, but that is another initiative that is well under way. A number of other countries have done this and I reassure the Deputy that we are working with like-minded countries in relation to the challenges posed by Brexit.

My officials are actively having the kind of discussions the Deputy mentioned should the need arise to put the case on state aid rules as I have outlined it. We are very alert to the issues. I encourage all businesses to get involved with the supports that are there, to work with Enterprise Ireland and to engage with the agencies. There are various supports, including the €5,000 be prepared grant to begin the process for smaller businesses, which could be taken up more than it is at present. A new hub for businesses will be provided next year, which will also give some financial support to help them continue the process of preparing. The Deputy is right that we need to see more companies examining precisely what the impact of Brexit will be on their businesses. More and more companies are engaging on the issues and preparing their own plans to deal with the challenges they face, especially those companies that have a high dependency on the UK market.