Thursday, 22 November 2018
Ceisteanna - Questions - Ceisteanna ar Sonraíodh Uain Dóibh - Priority Questions
1. To ask the Minister for Finance the work being undertaken by his Department and agencies under his aegis such as the Revenue Commissioners to prepare for all possible Brexit scenarios at the end of March 2019; and if he will make a statement on the matter. [48709/18]
The purpose of this question is to afford the Minister an opportunity to update the House on the work his Department and agencies under its aegis, especially the Revenue Commissioners, are doing to prepare for Brexit and particularly all possible scenarios in that context. We discussed this issue last month in dealing with Priority Questions and I hope the Minister can update the House on it today.
The Government welcomes the agreement reached between the UK and EU negotiators on a draft withdrawal agreement. However, it must be acknowledged that we are not yet at the end of this process and that uncertainties remain. Our priority now is to work towards the finalisation of the draft withdrawal agreement and the political declaration on the EU-UK future relationship.
The Government's contingency planning for Brexit was initiated well in advance of the UK referendum in June 2016. To that end, co-ordination of the whole-of-government response to Brexit is being taken forward through cross-departmental structures chaired by the Department of Foreign Affairs and Trade. My Department, with the Revenue Commissioners and the Central Bank, is actively engaged in this work which has now been intensified. Our overriding approach is to be careful with the public finances in order that we can build resilience and continue to remain competitive.
With regard to the Revenue Commissioners, we took a number of key decisions in July and September on measures for the necessary checks and controls for trade on an east-west basis. An open recruitment campaign was undertaken in September and attracted more than 3,000 applications. Some 43 trade facilitation staff have been appointed since September and the Revenue Commissioners have informed me that they are fully on track for the first phase of 200 trade facilitation staff to be trained and in place working on a 24/7 basis by 29 March 2019. The recruitment and training of the remaining 400 staff are set to progress on a phased basis over the transitional period. All of the investment in IT has now been made to cope with the different options we may face.
The Central Bank has been actively engaged in the process. It is working to ensure financial services firms are adequately prepared. It continues to work with firms in seeking to ensure all authorisations required for post-March next year are in place.
There has been some progress, with 43 trade facilitation staff recruited by the Revenue Commissioners. I understand the training programme has a duration of five weeks and the Minister has confirmed that the Revenue Commissioners remain on target to have 200 extra staff in place by the end of next March. Presumably, this phase of the recruitment process will end next February to have all of the staff in place, which is welcome. Is the Minister giving a commitment that the recruitment process will continue or does it depend on the outcome of the negotiations? Given that it is based on the central scenario of a deal and a transition period, I assume the 600 staff will still be required in that context. Can the Minister give more detail on his reference to financial services and the risk which must be mitigated in respect of firms currently selling into Ireland on the basis of the passporting provisions? What assurance can he give that this issue will be dealt with in advance of Brexit?
First, I expect recruitment to continue across the period. As the Deputy mentioned, the key point is that it is based on a central case scenario of a Brexit transitional period being in place. That appears to be possible, but there is more work to be done. In addition, regardless of the eventual Brexit scenario, the United Kingdom is becoming a third country from a customs policy perspective. Therefore, the commitment we have regarding the 600 staff will have to be fulfilled. We have made progress on it, even since the last time the Deputy questioned me. On whether recruitment will continue, it will, albeit in a different way. Now that we have received 3,000 applications and built panels of civil servants from other Departments who may wish to work in this area, I expect us to move to the selection and training phase.
Regarding the work of the Central Bank, it has been actively engaged with financial services companies on how they can maintain access to and from the United Kingdom. From my engagement with these companies, it is clear that they have been working on this scenario for quite some time. An increasing number of them have established a presence in both the United Kingdom and Ireland to allow them to continue to operate in the Single Market, while also servicing their businesses in the United Kingdom.
I have been teasing out the latter issue through parliamentary questions. A significant amount of financial services activity here, consumer facing financial services, is based on the freedom of movement of services. Therefore, it is based on the operation of a branch or the passporting provisions. Avoiding any disruption will require a change in the regulatory status of some of these firms. Are these plans being put in place? Are firms changing their prudential regulation to Ireland and not just being regulated here for conduct of business purposes?
We want to avoid a scenario where people in Ireland have, for example, insurance policies at the end of March 2019 that are invalidated because of the regulatory status of the firm they have bought that policy from. We need reassurance that in the area of financial services it will be seamless, because there can be no disruption on that issue.
We are seeing an increasing number of companies change their licensing arrangements so that they can fit in with the macroprudential and financial stability requirements of a post-Brexit European Union. There is still a considerable amount of work to be done in this area. From my engagement with the Central Bank, I am very confident that it is doing all that can be done on this. My message is that we do need financial services entities, as is the case in the rest of the economy, to engage with the Central Bank to ensure the right work is in place in advance of March. While much of that work is under way, there is still a fair bit to be done. I am regularly updated on these matters directly via the Central Bank and we also have a financial stability group in place, which includes the Central Bank and the Department. The group provides the regular reporting mechanism by which I am updated on this and other Brexit issues.