Damien English (Meath West, Fine Gael)
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I move: "That the Bill be now read a Second Time."

I thank the Ceann Comhairle and Members for their co-operation in getting the Bill to this stage and the committee for having this Bill prioritised for publication. I am pleased to bring forward the Credit Guarantee (Amendment) Bill 2022. It is further important legislation as part of the Government's efforts to help the wider enterprise sector to meet the considerable challenges presented by the invasion of Ukraine and the subsequent significant rise in business costs.

The main purpose of this Bill is to make certain amendments to the Credit Guarantee Act 2012, as amended, in order to help businesses to access essential liquidity through their banks and other financial institutions. The finance is needed as a result of the pressure increased costs have put on viable but vulnerable Irish businesses. The Bill also includes a short technical amendment to the Loan Guarantee Schemes Agreements (Strategic Banking Corporation of Ireland) Act 2021. This will enable the Ministers for Enterprise, Trade and Employment and Agriculture, Food and the Marine to enter into further agreements with the Strategic Banking Corporation of Ireland, SBCI, to facilitate access to finance for qualifying enterprises.

I will explain why this Bill is necessary. The impact on the Irish economy of the invasion of Ukraine and the knock-on effects on costs, especially in fuel, have resulted in a surge in operating costs for businesses and a drop in confidence across the board. With the increasing duration of elevated energy prices, the negative economic impacts are and will continue to be felt by all sectors.

The Central Statistics Office, CSO, consumer price index, CPI, states that costs rose by 8.2% between September 2021 and September 2022. The highest level of inflation for 38 years was recorded in June 2022 at 9.1%, a level not seen since 1984. September marked the 12th straight month where the annual increase for the CPI has been at least 5%. These increased costs will cause significant strains on the working capital position of our SMEs and they will need to spread their costs over the next one to three years to deal with the oncoming price spikes. It is also expected that the increase in energy prices, as well as other raw materials, and some essential inputs required by Irish businesses such as fertiliser and feed, will drive price inflation for goods heavily reliant on energy and other mentioned inputs for their production. These developments may damage profitability and growth, thereby resulting in a reduction of economic activities, potential job losses and business closures. Businesses will need assistance to adapt their operations to a changing business environment and to restructure suppliers and their cost bases. Confidence is being negatively impacted by the ongoing uncertainty and so an important part of the rationale for Government intervention is to rebuild confidence. A significant and ambitious credit guarantee scheme will assist lenders in providing liquidity to these companies and send a strong signal of support and confidence to both lenders and borrowers.

For context, there are approximately 270,000 SMEs in Ireland, based on CSO figures. SMEs account for 66.4%, or two thirds of all persons employed in businesses in Ireland. SMEs generated 43.6% of total turnover in the business economy and 36.9% of gross value added was attributed to these enterprises. They are the majority of businesses in every county. They are the dairy farmer, the family-owned newsagent and the software startup. They create jobs and generate wealth in locations where large businesses do not establish themselves. They are in every sector and the people who own them and work there are from every background. SMEs are very much the fabric of Irish society. They are more than just numbers. Every time we have this discussion in the House the desire to assist SMEs through difficult times is evident in Deputies from all parties and none. I recognise that and recognise the support to bring this Bill through as quickly as we possibly can. That is why I and my Department are so keen to provide any support we can to keep these businesses afloat and help them survive through the next few difficult months. We hope they will be in a position to thrive thereafter when we get through yet another difficult time for businesses.

The Government has been busy in making assistance available to businesses to allow them to tackle and overcome the expected costs pressures of this year and next. The first of these is the €1.25 billion temporary business energy support scheme announced on budget day. It will provide qualifying businesses with up to 40% of the increase in electricity or gas bills up to €10,000 per month. It will help small businesses most, but also medium and larger businesses. It will be administered by the Revenue Commissioners, backdated to September and will run until at least February 2023. We hope to be in a position to have that open before the end of this month. The second initiative is a €200 million targeted Ukraine enterprise crisis scheme and was launched last week by the Tánaiste and the Minister for Public Expenditure and Reform, Deputy Michael McGrath. This is designed to assist viable but vulnerable businesses in the manufacturing and internationally-traded services sectors that are suffering the broader effects of the war in Ukraine, as well as increasing energy costs. One strand of the scheme will provide up to €2 million in grant aid for energy-intensive companies impacted by the exceptionally severe increases in gas and electricity costs. It will be administered through Enterprise Ireland, IDA Ireland and Údarás na Gaeltachta and eligible businesses must produce an energy efficiency plan which shows how they will get their energy costs down in the months and years ahead. Operating in tandem with the Ukraine credit guarantee scheme will be the new growth and sustainability loan scheme. This will make up to €500 million in low-cost investment loans of up to ten years available to SMEs, including farmers and fishers as well as small mid-caps, with no collateral required for loans up to €500,000. A minimum of 30% of the lending volume will be targeted towards environmental sustainability purposes. Amendments in this Bill to the Loan Guarantee Schemes Agreements (Strategic Banking Corporation of Ireland) Act 2021 will facilitate my Department in establishing the growth and sustainability loan scheme.

This legislation which will make the amendments necessary to implement a specific Ukraine credit guarantee scheme. This will replicate many elements of the highly successful Covid-19 credit guarantee scheme. That scheme saw over €700 million in lending to 9,850 businesses. This helped maintain 81,000 jobs in just 21 months of availability. In the Ukraine credit guarantee scheme, the State will be guaranteeing 80% of the loans included in the scheme. Lenders will still retain 20% of the risk to ensure they have skin in the game. Viable businesses will be supported. The Ukraine credit guarantee scheme will include primary producers such as farmers and fishers as well as small mid-caps with under 500 employees. This is something which we can do under flexibilities from the European Commission in its temporary crisis framework on state aid introduced to respond to the aggression by Russia against Ukraine. It is very similar to the framework the Commission created for the Covid pandemic and its efforts during Brexit as well. This Bill is aimed at putting in place State-backed guarantees so businesses that employ up to 499 people can go to the banks and other participating financial institutions for lending across a range of financial products. We had a mix of lenders involved in the previous schemes, including credit unions and non-traditional lenders, as well as the main banks. Likewise, we hope to see a similar number of people offering this scheme as well. As part of the state aid requirements the businesses will pay a fee to the State for a guarantee related to their borrowing. If a business defaults in its repayment of those loans or overdrafts, the financial institution can then call in the guarantee from the State, which will cover 80% of the outstanding debt. The financial institutions will still have to carry 20% of that default itself. The State is providing significant certainty to the banks with this guarantee as we propose also to remove the portfolio cap for the financial institutions. Due to these measures, it is a requirement that all financial institutions taking part demonstrate a reduction in the interest rate charged to enterprises for those loans and other financial products covered by the scheme.

I will go through each of the sections. Section 1 provides that references to the "Act of 2012" mean the Credit Guarantee Act 2012. Section 2 amends section 2(1) of the Act of 2012 to provide for the inclusion of a new definition of "Ukraine credit guarantee scheme" in the Act of 2012 that is needed for other changes made elsewhere in this Bill. Section 3 amends section 3 of the Act of 2012 to allow for the extension of classes of enterprises which can qualify for the Ukraine credit guarantee scheme, to include small mid-caps. Primary producers, namely, farmers and fishers, also qualify. Section 4 amends section 4 of the Act of 2012 to include the new Ukraine credit guarantee scheme within certain subsections of that section, thus giving the Minister the power to give guarantees. This section also disallows section 4(3) and section 4(4) of the Act of 2012 for the purposes of the Ukraine credit guarantee scheme as different provisions are being made for those aspects through the new section 4B, which is being inserted by section 5 of this Bill. The existing scheme is subject to a portfolio cap of 13% under the 2012 Act, as amended, but there is no portfolio cap for the Ukraine scheme. The existing scheme has a maximum yearly credit amount which can be guaranteed of €150 million whereas the Ukraine scheme has an overall maximum credit amount of €1.2 billion.

Section 5 introduces a new section 4B into the Act of 2012 that gives power to the Minister to give guarantees in accordance with the Ukraine credit guarantee scheme. The Ukraine scheme will be open for guarantees to be put in place until the 31 December 2024. These guarantees will not extend beyond six years in duration. The maximum amount of credit to be covered by these guarantees will not exceed €1.2 billion and the Minister’s liability in respect of those guarantees will not exceed €960 million. Section 5(4) includes definitions relevant to this scheme.

Section 6 amends section 12 of the Credit Guarantee (Amendment) Act of 2016 to ensure the maximum liability of the Minister in relation to the existing credit guarantee scheme shall remain at not exceeding €15.6 million and that there will be a separate provision for a maximum liability in relation to the Ukraine scheme of €960 million included through section 4B(3), which I have already mentioned.

Section 7 amends the Loan Guarantee Schemes Agreements (Strategic Banking Corporation of Ireland) Act 2021, by increasing the aggregate liability limit to €180 million from a limit of €50 million in respect of contributions committed under all agreements between the Minister for Enterprise, Trade and Employment, the Minister for Agriculture, Food and Marine and the Strategic Banking Corporation of Ireland for the time being in force.

Section 8 is the final section and contains technical matters about the Short Title, commencement arrangements and citation.

In all parts of Ireland, large numbers of people are employed in small firms. When we talk about SMEs we must appreciate that these businesses account for over 1 million employees and this represents just over 68% of total employment in the Irish business economy. It is important people realise when we talk about using taxpayers' money to support businesses it is to support jobs and the jobs those businesses have. The businesses often take the risk and put all the effort in and there is often great employment there. We are clear in the Houses, and I think it is supported by everybody, that in supporting businesses we are supporting jobs. It is an important connection to keep emphasising to the taxpayers whose money we use to assist through these schemes. By implementing this new credit guarantee scheme we will ensure finance providers can provide these businesses with access to liquidity. The scheme will be available to the end of 2024 to give SMEs certainty that they can access funding for their working capital needs. Certainty can breed confidence and we have seen the benefits of the credit guarantee schemes over the last number of years. I think Deputy Nash was a Minister of State back in 2012 when we working on the original credit guarantee schemes. It is a pity they were not in place a little earlier because they would have helped in those early years.

Fortunately, we have been in a position, with Brexit, the Covid crisis and now the war in Ukraine, to operate schemes of a significant nature that can make a big impact in supporting businesses and keeping jobs in place.

The amendment to the Loan Guarantee Schemes Agreements (Strategic Banking Corporation of Ireland) Act 2021 is important as it will allow the Ministers for Enterprise, Trade and Employment and Agriculture, Food and the Marine to enter into agreements with the SBCI to implement loan schemes based on funding available from the European Investment Bank Group to Ireland. If we want to ensure businesses throughout the country succeed and prosper in the face of the fundamental challenges we face, it is essential that we take the necessary steps to ensure appropriate loan schemes are in place. This Bill is aimed at assisting the vast majority of businesses throughout the country. We had a very positive experience in the Covid-19 credit guarantee scheme. We can now replicate that widely available and cost-effective measure. I look forward to hearing the views of Members. I hope they can all support the intentions of the Bill. I look forward to working with them on some of the details on Committee and Report Stages.

Cormac Devlin (Dún Laoghaire, Fianna Fail)
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The next speaker is Deputy O'Reilly, who is sharing time with Deputy Quinlivan. Deputy O'Reilly has 15 minutes and Deputy Quinlivan has five minutes.

Louise O'Reilly (Dublin Fingal, Sinn Fein)
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I will be shocked if I take 15 minutes, as will everybody else in the Chamber. I promise I will not try to do so.

I welcome the opportunity to speak in this debate. The Bill is short and fairly technical but, as the Minister of State outlined, it will, when passed, have significant ramifications for business. Its purpose is to make certain amendments to the Credit Guarantee Act 2012 to support the needs of business to access additional finance in response to the economic challenges resulting from Russia's illegal invasion of Ukraine. It does so by creating a specific Ukraine credit guarantee scheme. The development of such a scheme is very welcome, especially given that the Covid-19 credit guarantee scheme ceased to operate on 30 June, albeit there was a roll-over of some loans under the scheme. Given the cost-of-doing-business crisis, the impact of inflation and the war in Ukraine, there certainly is a need for another scheme to go live.

The Ukraine credit guarantee scheme will provide funding to assist businesses that are viable but vulnerable in manufacturing and internationally traded sectors impacted by the fallout of the war. The focus on viable firms is important as there is an opportunity cost in regard to State moneys. The focus must be on saving jobs as well as supporting businesses. The €1.2 billion State backing of the Ukraine credit guarantee scheme is broadly in keeping with the Covid-19 credit guarantee scheme when we factor in that less than half of the €2 billion allocated for the latter was drawn down.

The focus on providing low-cost working capital to SMEs, primary producers and small mid-caps of up to €1 million on a six-year term, with no collateral requirements for loans up to €250,000, is welcome. The 80:20 guarantee rate split between the State and the lending financial institution is welcome but I ask that it be kept under review. If there is an unwillingness on the part of financial institutions to lend moneys as a result of the guarantee rate split, the Minister of State might be in a position to revisit this.

While more than €750 million was lent out through the Covid-19 credit guarantee scheme, that represents only 35% of a €2 billion scheme. When we drill down more deeply into the numbers, we see that as of September 2022, 9,848 micro-SMEs and mid-caps received loans under the scheme. However, there are 248,344 SMEs in the State, according to the latest figures from the CSO. Given the level of need of businesses due to the Covid crisis and Brexit for liquidity, working capital, purchase of equipment, new products or processes, fitting out of premises and moves towards energy efficiency, the causes of the low level of take-up of the Covid-19 credit guarantee scheme should be addressed to ensure the same barriers do not exist in regard to the Ukraine scheme.

I welcome that there is no portfolio cap under the scheme. The original decision by the Government to include a 50% portfolio cap in the Covid-19 credit guarantee scheme was a mistake, which was rectified only under pressure from Sinn Féin, particularly my colleague, Deputy Doherty. The removal of a portfolio cap negates a problem whereby banks refused to lend to small businesses in dire need of affordable credit. Portfolio caps usually mean banks see it as unattractive to lend money through schemes to SMEs and, where they do lend moneys, it usually results in extremely high interest rates. Not having a portfolio cap should make it easier and more attractive for banks to lend to SMEs through this scheme. Furthermore, the permitting of moratoriums on capital and-or interest for certain periods of time, specifically up to one year, is also welcome. However, the decision to leave this choice up to the individual lender, based on its assessment of the customer, must be kept under strict review. Businesses have a fear lenders will automatically refuse such a moratorium.

Given that the Joint Committee on Enterprise, Trade and Employment waived its right to engage in pre-legislative scrutiny of the Bill, as acknowledged by the Minister of State, and that we have committed to working with him, the Tánaiste and the Department on the Bill, it is important that the scheme goes live before the end of the year. Businesses need access to low-cost working capital to help them to spread increased input costs and to limit disruption to supply chains. There is a similar need for urgency in regard to the temporary business energy support scheme as many businesses are averse to taking on additional debt through loans.

We are all well aware that the current difficulties being experienced by Irish businesses, especially SMEs and family businesses, are significant and many. Costs have risen across the board for a variety for reasons but, in the main, due to the increase in energy prices and the all-encompassing effect of inflation. The horrible war waged by Russia against Ukraine has also caused significant disruption and prices increases for businesses. Businesses have tried to remain agile to adapt to these changes through absorbing the increased costs in an attempt to remain competitive. Naturally, this has an impact on the margins of SMEs, micro-businesses and family businesses in the immediate term. In the long run, this might prove to be unsustainable.

Sinn Féin is acutely aware of these difficulties, especially the impact of increased energy costs for businesses. We have previously met with officials in the Department of Enterprise, Trade and Employment on these matters. We have proposed solutions such as the business energy support scheme and called for the creation of a new SBCI-led and State-backed credit guarantee loan scheme in our alternative budget to help energy-intensive sectors, especially SMEs, micro-businesses and family businesses that are facing the brunt of these increased costs, particularly energy costs. Sinn Féin has also lobbied hard over the past year for other measures to address the increasing cost of doing business. In April, an Teachta Doherty brought amendments to financial motions to reduce the cost of home heating oil, petrol and diesel in response to the cost-of-living crisis. That move by Sinn Féin forced the Government's hand in response. Similarly, we have been consistent in our efforts to see insurance premiums reduced for businesses. There is a cost-of-doing-business crisis, not just a cost-of-energy crisis, and the Government must remain agile to respond to all aspects of these crises.

I want to put on the record that the supports the Government is introducing are very welcome. We will work with the Minister of State to ensure this Bill is passed. However, he needs to take a long, hard look at how some businesses are treating their workers. It is all very well to have welfare for businesses. I do not suggest for a moment, although it has been suggested by others here, that workers' rights can or should be bought. They should not and cannot be bought because the price of doing so eventually becomes too high. However, we need to have a conversation about low pay and poor working conditions. The Minister of State will be aware that following the receipt of a phenomenal amount of State support in some circumstances and a small amount in others, some companies paid out dividends to their shareholders, having been in receipt of supports during the pandemic. That made people very angry. While we all want to see businesses that are viable but vulnerable supported to remain in operation, there are some businesses that may not need those supports and will be in a position to absorb some of the costs. I urge those business owners and employers to have a think about applying for supports when they may not, in fact, need them.

I welcome the Ukraine credit guarantee scheme but I hope the Government pays close attention to the performance reports from the SBCI and stands ready to make changes or adjustments to the scheme as needs be.

Maurice Quinlivan (Limerick City, Sinn Fein)
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On 24 February, the Russian Federation invaded its neighbour, Ukraine, and unleashed its military forces on it. The first and main victims of the invasion were and are the people of Ukraine. The lives of civilians have been upended, with many fleeing their homes and homeland. Others, who could never have imagined doing so, have joined the military to defend their homeland. A huge number of Ukrainians have fled their homes and many have landed in Ireland in the intervening eight months. I want to put on the record that they are very welcome. Unfortunately, some have tried to pit our people against these refugees and have implied their arrival is impacting on the lives of Irish people who have to compete for services. To be clear, these forces of negativity and division are wrong and they must and will be resisted at every level.

As the illegal invasion of Ukraine has progressed, its impact has permeated across the globe. It has led to a rise in energy and food costs and has exacerbated the cost-of-living crisis in our country.

We rightly call for compassion and assistance for households that have been impacted. While believing that more could have been done for families and workers, it is equally important that SMEs are supported during the most challenging economic climate. SMEs are the bedrock of our economy and must be supported. We are now in the winter months and like households, businesses are worried. Interest rates are rising as are energy and other costs. We all regularly meet SMEs owners with extortionate gas and electricity bills. Having rode out the Covid-19 pandemic we would have hoped that the prospects for SMEs would improve. It was a bitter blow to see the cost of doing business dramatically increase with the onset of the invasion.

SMEs and small mid-cap companies are, as I said, the bedrock of our economy. SMEs account for 99.8% of active enterprises and 68.5% of employment in the State. They are crucial to generating activity in our economy and it is right that they are helped during the challenging economic environment.

While it would have been desirable to have pre-legislative scrutiny on the Bill, I appreciate that given the existing crisis it was necessary to have available supports introduced as promptly as possible. I was glad that committee members agreed with me on that and we waived that. The scheme is for SMEs, primary producers and small mid-cap companies. It allows for an amount of up to €1.2 billion to be made available until 31 December 2024 under the Ukraine guarantee scheme. Coupled with the loan guarantee scheme, this proposal should aid viable but vulnerable businesses during the time of economic difficulty.

The introduction of offering up to €1 million with collateral and up to €250,000 without collateral is welcome in this environment. It is worth noting that the criteria for applying are not excessively complicated so as not to deter eligible businesses. The need to demonstrate a 10% increase in costs versus 2020 figures should be relatively easy for most firms to demonstrate. In the main the premia on these loans are quite low. They are less than 1% in most cases. However, I have a slight concern that a premium of 1.55% for four- to six-year loans for mid-cap businesses may be challenging if the prospects for an individual firm of such a size do not improve.

All of us in this Chamber recognise that gaining energy independence is crucial to the development of our economy. Investment in an abundance of offshore wind energy producers is crucial to our economic growth and stability in the years to come. Last Friday, I attended the launch of the review of the port masterplan vision 2021 in Shannon Foynes. It was an important and timely event. As a State we need to develop Shannon Foynes as a matter of urgency. It has the potential to be the Ardnacrusha of our generation. The days of depending on fossil fuels are over. The ongoing war in Ukraine has demonstrated that such dependence is a risk to our well-being and development. While developing our wind energy is a decade-long project, it is vital that we wean our industries off non-renewable resources. Initiatives to support energy-intensive industry are important. It is important that they demonstrate increased costs on energy.

Part of the proposals I most welcome is the need for firms availing of supports to put forward an energy-efficiency plan. Such a specification is important to ensure that we as a society are committed to moving to a more renewable energy space. My party will support the Bill. It will offer some confidence to our SME base at a time business sentiment among SMEs has fallen from 67.9% to 61.1%. It offers a limited optimism to these businesses when future optimism in business has been recorded as falling.

It is important that the available offerings are open to as many businesses as possible and as such I encourage the Department to engage in a targeted promotional campaign to ensure all eligible businesses are aware of the supports and are assisted in the application process.

Gerald Nash (Louth, Labour)
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I am pleased to speak on behalf of the Labour Party on this important Bill. Members will be more pleased to hear that I will not use my full 20 minutes. I will keep to the standard set by previous speakers. As the Minister of State mentioned in his contribution, I was involved in amending the Credit Guarantee Act 2012. The work I did was in 2015. The beauty of the parent legislation, if I can describe it as such, is that it is capable of being amended to address issues facing our economy from time to time as they arise. We have had various iterations and forms of schemes in place since, most recently, of course, the Covid-19 guarantee scheme to which the Minister of State and previous speakers referred. Systems have evolved since 2012. Each subsequent scheme has been informed by the lessons learned from the operation of the previous schemes. That is a good thing. As the Minister of State said, the previous schemes send a strong signal that the State is prepared to invest and to put money at the disposal of SMEs during rocky economic periods. Credit guarantee schemes such as the Ukraine scheme will provide SMEs with the ability to spread the increases in their costs arising directly from inflation caused by the illegal war being waged on Ukraine. It should also have the effect of increasing the appetite risk of lenders and facilitate them in providing additional liquidity to businesses at a time liquidity will be critical for all the reasons we are only too well aware of. Simply put, no viable business should have to fold because of the war in Ukraine and the increase in energy costs. As it stands some SMEs may struggle to survive in any case, notwithstanding support schemes like the TBESS and the €200 million Ukraine support scheme referred to earlier, which was initially announced in September. That scheme provides supports of up to €2 million for manufacturing businesses that intensively use gas and are involved in the international traded sector. Access to credit and liquidity is vital for business and for jobs. That is why we need to be open to more agile ways of responding to the needs of jobs and business at this challenging time. We should not rule out the addition of supplementary support schemes as the need arises into the future and as the challenge evolves.

When we talk about a credit guarantee scheme, we need to be sure that the rates and the premia are set at the right rate. What I hear about the banks’ response in the context of interest rates is that we will ask them to go easy on the interest rate because the reality is that the interest rate has to reflect the reality of the reduced risk that the banks have given the fact that the Government has decided essentially to take on 80% of that risk. That is not insubstantial. That is significant State and taxpayer support in any language. The risk of default is largely borne by the State. We also know and the Minister of State will know from his own experience that the last thing that challenged businesses want is take on even more debt at a difficult time and, therefore, the conditions need to be as positive and as minimal as possible to allow as many impacted businesses to take up the benefits of a scheme like this.

I am aware of concerns, for example, about the uptake of the credit guarantee scheme notwithstanding the figures that he referred to earlier. I hope that lessons can be applied from that scheme and I have no doubt that they were. This scheme is targeting the companies most at risk of a downturn in the economy. We are sure that the rate of economic growth will slow next year and modified domestic demand will be down. That is bad news for locally traded firms in the everyday economy. It is important that when the scheme becomes operational that the firms that would stand to benefit most are aware that these supports are available. There is a job of work to be done then by Enterprise Ireland and the local enterprise offices to promote the scheme.

Have Enterprise Ireland, the local enterprise office network and the Department more generally undertaken any formal assessment of the number and nature of jobs that are at risk as a result of the high price of gas due to the illegal war being waged on Ukraine? It is important that as we discuss the Bill that the House be informed of this. I have no doubt that Enterprise Ireland has modelled some projections in regard to where those jobs are most at risk and what sectors or subsectors of the economy are most at risk.

It is important that we design the schemes that are available to us with those companies in mind and that an evidence base informs the design. That was something that I raised with Enterprise Ireland a couple of short months ago in the work that I did with it, the trade unions and the employer, namely, the Premier Periclase plant in Drogheda, which the Minister of State will be familiar with, that has been in existence since the 1970s. It is a heavy, intensive user of gas and it has a heavy manufacturing process. It is an exporting company. It came out for examinership last May and because of the difficult circumstances relating to the ever-rising cost of gas, to cut a long story short, it let approximately 40 of its 50 staff go and now has a skeleton staff of approximately ten. By the way, I pay tribute to Enterprise Ireland and the work directly of Mr. Leo Clancy, the chief executive, in working with us to do everything the agency could with the tools it has available to assist the retention of jobs in that employment. Unfortunately, notwithstanding the fact that under the Ukraine scheme there is a €200 million fund for intensive users of gas in the manufacturing exporting sector, the reality quickly dawned on that company that, in fact, if you leave that aside and while that support is welcome, what that would do is essentially pay two months of its gas bill with the increases it has experienced over the recent period. This company is transitioning from being an intensive user of gas to more sustainable ways of using energy to fire and power its plant over the next two years. It is in the process of doing that. At that stage, it made a very interesting point during the 30-day consultation process on redundancies, that what would have been even more useful for it in retaining employment was the development of a form of a furlough scheme alongside energy supports to keep people in employment.

This has been a hobby horse of mine for the past two and half years since Covid hit. This country needs to create a scheme like the German-style short-time working scheme to target sectors or subsectors of an economy that might be experiencing difficulties at a particular period to keep people in employment. The German Kurzarbeitscheme was one of the primary reasons the German economy did not go into the kind of recession we experienced and it did not experience as many job losses as we did back in the late 2000s into the early 2010s. The argument might be made that we do not need a wage subsidy scheme or a form of a German-style short-time working scheme when we are nearing full employment. The question then is: what do we do to retain skills? The skills, for example, in the Premier Periclase plant in Drogheda involving fitters, electricians, experienced engineers, experts in quality control and so on, are lost as those jobs are lost now and they will not come back. Once they are gone, they will not come back. It is about protecting our indigenous enterprise base and its skills.

We should not rule out the evolution of schemes to assist companies and jobs into the future. I have said time and time again that one thing that is lacking in the tools available to the State to support jobs and businesses during downturns is that form of a German-style short-time working scheme that was proven successful in that country. A scheme of that nature could be introduced here to make sure that when the next downturn comes we are not scrambling around to find a new way to support jobs and businesses and we would have a scheme that we can customise and tailor to different sectors of the economy during difficult periods.

When we do that - nobody has promoted this idea more than myself over the past two and a half years – why do we not attach conditions to the development and accessing of these schemes by businesses? It is insane that, despite my protestations, back in March 2020, we did not introduce conditions, for example, as a previous speaker said, or lay-off policies or lay-off conditions to State support. The idea that dividends and bonuses should not be paid is something that we have to interrogate again. With the way the economy is going and the reality that we may be at least facing a technical recession next year, these issues will come into public view again and they need to be examined and addressed once and for all.

In conclusion, the Labour Party supports the principles of the scheme. We are proud to be involved in the development of the previous schemes, which worked reasonably well. It is important that lessons are learned from the development and practical use of the previous schemes; I think some of those lessons have been learned. I will reiterate the point that I made earlier relating to premium and interest rates and so on. On interest rates, it should not be the case of merely asking the banks to do something and go easy on the interest rate. We should use the power we have to ensure that the interest rates, the premium and so on reflect the reality of the reduced risk for banks given the ratio of the risk the State is taking compared to them.

Alan Dillon (Mayo, Fine Gael)
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I welcome the opportunity to speak on the Bill, which will go some way to alleviate the worries of viable but vulnerable firms in the manufacturing and international trade services sector, and not just those that have existing relationships with Enterprise Ireland, which is welcome. Through no fault of their own, they are very worried heading into the winter as they face rising costs, higher interest rates and issues with consumer confidence.

The scheme, which will help those impacted by Russia’s invasion of Ukraine, has two strands. In my constituency, a number of these companies face a difficult future but now have other options to remain viable. I foresee a number of companies that have contacted me are using the second stream of the Bill, which helps support companies impacted by severe increases in energy and business costs. This is occurring across the board, but Mayo-based manufacturing companies that trade internationally have found that since the war in Ukraine, the rising energy costs and commodity prices are making it harder for them to get certain materials to keep their businesses running and viable.

Those companies with energy costs worth at least 3% of their turnover prior to the war can avail of grants up to €2 million for costs incurred between February and December this year. That is welcome to keep their businesses afloat and protect jobs, which is vitally important, especially where I am from, in the west.

The first stream of funding will also be of benefit to small businesses or producers in the west with fewer than 500 employees that are facing liquidity problems as a result of, again, Russia’s invasion of Ukraine. They can avail of up to €500,000 in grants, repayable advances, equity or loans, which could be the difference in a business staying open and, therefore, saving jobs.

I also welcome the Minister of State’s work alongside the Tánaiste, in particular, to unlock this €1.2 billion fund in low-cost loans to SMEs and small, mid-cap companies of up to 500 employees under the Bill. It is important that the scheme is opened before the end of the year to ensure low-cost unsecured working capital is provided where it is needed most for SMEs and primary producers to help them to spread the increased input costs and limit disruption to the supply chain.

Joe Flaherty (Longford-Westmeath, Fianna Fail)
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I commend the Minister of State on his work on this. The Government has moved swiftly. It is an excellent and measured response. It is indicative of a fast-paced and reactive Department. Again, I commend him on his work.

I welcome the legislation. We have seen it first-hand at the enterprise committee and it will facilitate the creation of a €1.2 billion Ukraine credit guarantee scheme as part of a suite of additional measures to aid businesses through what is a particularly volatile and disruptive time for many of them. It is affecting every business, from local shops to SMEs to large producers. Many food producers and exporters are dependent on the legislation getting through as quickly as possible.

The amendment will allow for the establishment of a new Ukraine credit guarantee scheme with an end date of 31 December 2024.

I assume there will be capacity to review that date closer to the time. Loans can be made by qualifying finance providers under the scheme and can have a term of up to six years from the date of drawdown. That is to be welcomed by businesses.

The proposal will amend the loan guarantee scheme agreements from the 2021 Act, which will increase the limit of aggregate liability in respect of contributions committed from €50 million to €180 million. That is indicative of the scale of the crisis that many of these producers are currently facing and the reason we need such a response to the situation. The technical amendment was approved by the Government in September to facilitate designated Ministers engaging in future agreements with the SBCI for the delivery of EIB group-backed SME loans. This is particularly important in light of ongoing economic uncertainty and the need to promote resilience, investment and recovery. Those have very much been bywords for enterprise in Ireland, particularly in the export-led community. That is why, as a Government, it is critical that we stand shoulder to shoulder with these businesses at this difficult time.

The proposed Ukraine credit guarantee scheme will unlock up to €1.2 billion in low-cost unsecured working capital for SMEs, small and mid-cap companies and primary producers and allow them to spread the cost of an increase in input cost and disruption to supply chains while they move to new suppliers, absorb the cost of disruption and evolve their business models to become much more resilient. That is indicative of a can-do attitude within the Department of the Minister of State. He and his officials are to be commended on the fast pace at which they have responded on this issue. Similar schemes are available in other member states and the proposed scheme will reduce the interest cost for working capital for SMEs in Ireland in a similar manner.

A significant and ambitious credit guarantee scheme will assist lenders in providing liquidity to these companies but, more important, it will send a strong signal of support for and confidence in producers in Ireland. The Ukraine credit guarantee scheme will facilitate additional credit risk appetite from lenders to the SME market, maximising the ability of businesses to access appropriate finance at a time liquidity will be critical. It has the capacity to enable lenders to begin or continue providing urgently needed liquidity to businesses in every sector and region. That is the critical aspect of the scheme - the potential it offers for almost every business that is operating in a manufacturing capacity to access it. That, in turn, will enable them to sustain employment across the country. It also leverages the knowledge and lending experience of lenders with respect to their customers.

It is important to point out that the proposal is similar, in terms of loan type, tenure and credit amounts available, to the Covid-19 credit guarantee scheme, which resulted in more than €705 million in lending going to almost 10,000 businesses since it was launched in September 2020. In essence, we are going with a proven model that has worked and helped us through a previous crisis. We know the Department has the knowledge and expertise to ensure this will work. The loans under the Covid credit guarantee scheme have helped to maintain more than 81,000 jobs to date. The scheme closed for applications earlier this year in line with expiration of the underlying temporary state aid framework. Through the proposed legislation, the Government can now, in a widely available manner that proved effective throughout Covid, supply similar lending to businesses in need.

Significant progress has been made with the operator of the scheme, namely, the SBCI, and the on-lenders, to prepare for a rapid deployment of the scheme. The message we are getting from businesses and manufacturers is that once the legislation is finalised, they will need to be able to access this quickly. Similarly, businesses need to be able to tap into the energy scheme for businesses within hours of the Finance Bill 2022 being passed. They will need to be able to log on, register for the scheme and get their payments back for September and October. I am conscious that cannot happen without the Bill being passed but businesses are crying out for this to happen. I know I am straying off the subject but it is important that departmental officials and the Minister of State take back the message that those payments need to be issued within hours of the Finance Bill passing through these Houses because there are many small- and medium-sized businesses urgently hanging on and desperate to get those payments.

I commend the work of the Minister of State on the Bill. It has been an exceptionally busy time in his Department. He has faced the challenge head-on. I appreciate there was some prior knowledge in terms of the work that was done in Covid but it is indicative of Ireland as a country where we do business and are receptive to doing business but, more important, we support and stand shoulder to shoulder with people who want to do business. We are a progressive modern European nation that stands shoulder to shoulder with our European cousins at a time of crisis but it is important that we also stand shoulder to shoulder with our own people when they are suffering at a time of a crisis that is not of their making but results from a war on a European front. We need to make a strong statement in that regard and we have done so through our support for Ukraine but also, more important, with the decisive and impressive action to support businesses.

Rose Conway-Walsh (Mayo, Sinn Fein)
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Redundancies in the tech sector have been receiving much of the media and political attention in recent days. It is a serious situation for the people involved and, indeed, the wider economy. At the same time, I am concerned that we are facing a crisis in small businesses operating in local economies. Towns and villages in my county of Mayo and elsewhere in the State are in danger of seeing a wave of business closures. Businesses are hibernating for the winter with the intention of reopening in March or April because they just cannot sustain the high costs, particularly the high cost of energy. They know that they will not generate enough revenue through the winter months to meet those costs and that if they remain open, they will face into spring of next year with an accumulation of unsustainable debt. The impact on unemployment and underemployment in these areas is concerning. Other businesses are making the decision to close permanently. That is mostly down to the sky-rocketing energy costs, but also the other input costs of insurance and commercial rents. As most businesses in small towns are interconnected, this is having a disturbing impact on local economies. People who go into their local town for to visit some shops then go on to cafes and spend the limited amount they have.

As my colleague, Deputy O'Reilly, and others have stated, Sinn Féin will support the Ukraine credit guarantee scheme. The legislation will mean the State will be guaranteeing loans with public funding of up to €1.2 billion, with the State fully liable for €960 million of that. That is the State guaranteeing 80% of the value of the loans. The significant reduction in risk for the lending banks needs to be reflected in the interest rates the banks charge and in how they treat their customers. However, many businesses have taken on debt, either during Covid or in the past year, given the unsustainably high energy bills. They also have Revenue debt from tax warehousing. Many people are afraid to take on debt as they have seen bills increasing every couple of months for almost a year and businesses are being hit from all sides. Their costs are going up and they see a reduction in the customer spend. When workers and families are hard pressed, local businesses struggle too. To use the language of economists, demand is being destroyed, and that is spreading through local economies.

For more than a year, I have been calling on the Government to take action to address the artificially high electricity prices that have been crippling households and premises. I cannot understand its inaction in that regard. Yes, Putin has been strategically reducing gas supplies in Europe for more than a year, but why does that mean that gas from the Corrib field off the coast of Mayo has to cost eight times as much as it did two years ago? Indeed, that organisation enjoyed a profit of €560 million for the first half of 2022 alone. Why does gas continue to set the price for all electricity, including that generated from wind energy? The cost of energy is destroying small businesses and will do untold damage. I am genuinely fearful for villages and towns throughout the country as a result of what has been allowed to happen.

Is a sunset clause built into the Bill in terms of how the evaluation is going to be done so that the spread of the fund across businesses can be measured to ensure it is getting to the businesses that need it, rather than just the ones that have more resources and are able to access it?

We need to keep that monitored because this fund needs to get into the heart of the smaller businesses and communities that desperately need it as a lifeline. I welcome it but I want an even spread and equity in respect of it. Have evaluations been done of the other business support scheme to see what the spread of it has been and to identify any blocks that might be there as regards access for all businesses that desperately need it?

Alan Farrell (Dublin Fingal, Fine Gael)
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I welcome the opportunity to discuss this Bill, which will support small- and medium-sized businesses that are the backbone of our economy. It is vital that we protect these enterprises that are faced with factors impacting on their ability to do business, especially when these particular factors are broadly outside their control. The Bill will introduce a €1.2 billion State-backed Ukraine credit guarantee scheme that will provide low-cost working capital of up to €1 million on a six-year term to SMEs, primary producers and small, mid-cap businesses, with no collateral required for loans up to €250,000.

As has been mentioned by almost all speakers, the war in Ukraine has had a major impact on the world market and whole industries. However, SMEs are particularly vulnerable to the uncertainty that this war has given rise to. It is worth noting that the Central Bank has done a body of research on the potential impacts of the war in Ukraine on the Irish economy. This research shows that a prolonged conflict would present a significant risk in addition to that which SMEs have already suffered. We should also be aware of the indirect impact this war will continue to have on Irish businesses. I am thinking specifically of the economic ramifications for our strong trading partners. For example, the German economy has had to deal with a greater level of disruption to its domestic economy due to its previous reliance on the Russian oil and gas network. As Germany is a country with deep trading ties to Ireland, businesses here may lose out. We could also apply that same logic to our friends across the water who, for a number of different reasons, coupled with the inflationary effects of the war in Ukraine, have seen significant impacts to their economy.

The Covid-19 credit guarantee scheme, now elapsed, shows the value of such an intervention and, together with other Government measures, prevented the pandemic from bringing a wave of business closures with it. Similarly, this credit guarantee scheme will send a clear message to the financial markets that businesses here have the support of the Government. That being said, it must be noted there are undoubtedly thousands upon thousands of businesses that will carry forward a lot of warehoused debt, perhaps Revenue debt and other associated debt, from the Covid period, when certain businesses were shut down or curtailed in some way for a sustained period. That is why this particular scheme is imperative. It is necessary for us, however, to look at the broader picture of the impact on small- to medium-sized enterprises, which remain the very largest providers of employment in this country above and beyond any other sector, whether it is foreign direct investment, FDI, or domestic. That is worth noting. The Bill will ensure that a line of credit will be available to SMEs into 2023 and allow them some breathing space to adapt their businesses. As my colleague, Deputy Flaherty, mentioned, however, the speed of deployment of this scheme is imperative. I am absolutely certain that with the prerequisite knowledge that was gained during the Covid years, the Department has become adept, along with other Departments and agencies, in rolling this out, but it is imperative.

Part of this particular scheme has one eye on adaptation as a key principle of the scheme for those who avail of it. They must show that they have an energy efficiency plan in place within their business. On that, I think of a quite simple yet frustrating thing, for instance, in the retail sector, namely, open fridges. We will not get into the nitty-gritty here, but these are an incredibly inefficient way of providing customers with products that need to be chilled. They also cost a fortune to run. Many of the retailers I have spoken to in recent months say open fridges are provided by their suppliers and that, often, position within the store is considered, along with other marketing considerations but, frankly, we can make this problem go away with the stroke of a pen through statutory instrument. We are at that stage, not just as regards the cost of doing business and the cost derived from the energy market, but also from an environmental perspective, as the Acting Chair will know only too well since we serve on the Joint Committee on Environment and Climate Action together. A simple measure that would have a real impact would be simply to rule open fridges out, phase them out and, after a particular date, have no new open fridges permitted and get rid of them over a period. It is something as simple as that. I think of the retailers who undoubtedly sent the Minister of State copies of their bills, as they did me and other Members, showing dramatic increases of 200% to 500%. I saw one bill go from €9,000 to €52,000 for a two-month period. This was a particular retailer who happened to be locked into a very good contract until recently but, when renegotiation came around, was left holding a very different rate for their energy costs, which is debilitating. As I said, many politicians have received copies of these energy bills from retailers, in particular. I welcome their campaign because it is entirely necessary.

That being said, with all the things we have learned during the course of Covid, it became abundantly clear, whether it be through the pandemic unemployment payment, the temporary wage subsidy scheme, TWSS, or other supports, that the Department and the Government are acutely aware of the situation that small- to medium-sized enterprises are in. That is why this scheme and its forebear started quite quickly, once it became apparent that costs were rising so dramatically and that this would force the closure of several businesses. I commend the Minister of State, the Tánaiste and other Departments on the work they have done in supporting small- to medium-sized enterprises in the State. I very much look forward to the passage of this Bill and, more important, the implementation of the scheme as quickly as possible.

Patricia Ryan (Kildare South, Sinn Fein)
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I welcome the opportunity to speak to this Bill. It is a relatively short technical Bill that will amend the Credit Guarantee Act 2012. These amendments will support the needs of businesses to access additional finance in response to the economic difficulties resulting from the brutal war being waged by Putin against Ukraine. It will do this by creating a specific Ukraine guarantee scheme.

Sinn Féin welcomes this Bill, which will provide a €1.2 billion State-backed scheme that will provide low-cost working capital to small and medium enterprises. The scheme will be similar to the Covid credit guarantee scheme. Businesses are often wary of taking on more debt through loans. The Government must ensure that the terms and conditions of the scheme are favourable to struggling businesses. I have spoken to business owners in the past who have been critical of previous schemes, mainly due to the red tape involved. While there must be checks and balances with taxpayers' money, applying to the scheme cannot be so onerous a task that it puts people off asking for help.

Irish businesses, especially small family businesses, are operating in a very difficult environment. Costs have risen across the board, especially the cost of energy. Businesses have tried to adapt to these changes but it is a constant battle between observing increased costs to remain competitive and keeping their heads above water. Sinn Féin is very much aware of these difficulties and has met with the Department of Enterprise, Trade and Employment and the Department of Finance, in order to push the measures that would help businesses in the face of ever-increasing pressures. In our alternative budget, we proposed solutions such as the business energy support scheme and also called for a new Stated-backed credit guarantee loan scheme to help SMEs, especially those in energy-intensive sectors.

Sinn Féin stands with small business owners. In April this year, my colleague, an Teachta Doherty, brought forward measures to reduce the cost of home heating oil, petrol and diesel in response to the cost-of-living crisis. As a result, the Government was forced to act but as usual it was too little, too late. Sinn Féin has also been to the fore in seeking reform that will address the high cost of insurance premiums for business. On the subject of business supports, the temporary inflation payment scheme that assists nursing homes with energy inflation must go further. The unfair deal that is the nursing home support scheme needs to be reformed, especially for voluntary nursing homes and section 39 organisations.

Martin Browne (Tipperary, Sinn Fein)
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I welcome the opportunity to speak on this Bill. Since the cost-of-living crisis began to emerge last year, there have been repeated calls on the Government to act swiftly. Unfortunately, the Government's response has not been swift enough for many, but we must acknowledge when it does act. The Bill is important as it makes €1.2 billion available to SMEs, primary producers and mid-caps that have fewer than 500 employees. It will therefore provide low-cost unsecured working capital for SMEs and primary producers to help them to spread increased input costs and to limit disruption to supply chains. That is to be welcomed. However, I wish to address the concerns that have been expressed to me by a number of businesses which, unfortunately, have had to close some of their branches or shut their doors altogether.

One such businessman, a butcher who is a member of the Irish Butchers Guild, told me he was forced to close one of his outlets which employed six staff. That had a significant impact on the local economy. Only in the past 18 months he invested €150,000 in that shop, and now it and the six jobs it provided are gone. The shop made great progress towards becoming more energy-efficient and it galls the butcher to see the energy providers record higher profits. While such businesses were considered an essential service during the darkest days of the Covid-19 pandemic, they feel forgotten about now. They see the temporary business energy support scheme as somewhat helpful but not enough to offset what they have termed the new astronomical overheads they face. They also point out that covering the winter months does not assist the sector enough as it is over the summertime that they use the most electricity. Another butcher warned me that the retail butchers are closing week on week and that time is really running out to save these businesses.

While I appreciate the contents of the Bill, time is of the essence. Unfortunately, the Government's delay in providing meaningful supports has been too long for many such as the businesses to which I have referred. If there is one thing I would like to say to those on the Government benches, it is about acting swiftly in the face of a crisis. I do not mean acting irresponsibly; I mean acting appropriately. I also mean addressing the other pressures being placed on businesses in order that they have more room to manoeuvre when faced with a crisis such as this. Take insurance premiums, for example. There was a large drop in the personal injuries awards recorded by the Personal Injuries Assessment Board, PIAB. It has been calling on the insurance industry to slash premiums in line with the fall in personal injuries awards. It is only through truly supporting businesses in good times as well as bad that they can have the stamina to deal with crises such as this.

I urge the Minister of State to consider the words of the butcher concerned and to tailor responses that take account of the individual nature of energy use by specific businesses. For example, assistance during the winter months may help some but not others. Further loans may be acceptable to some but not be an option for others. I am thankful for this opportunity on behalf of Tipperary businesses.

Peter Fitzpatrick (Louth, Independent)
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I welcome the opportunity to speak on this important Bill and will support its progress on Second Stage. Irish businesses are facing into energy price increases on top of supply chain problems in the middle of another significant jump in the official inflation rate. There are incredible challenges right across the business and SME sectors, particularly for companies such as leisure centres, call centres and food processors, which use large amounts of gas or electricity and whose business model has been completely destroyed.

For example, Ireland Active, the representative body for leisure centres, gyms, swimming pools and commercial sports facilities, has stated that the cost of heating pools is resulting in extraordinary bills. In Dundalk alone there are three leisure centres. Additionally, businesses that during Covid complied with the remote working model now have many employees who have been working from home since the pandemic and who are weighing up their options coming into the winter. Many consider it more costly to work from home, with heat, gas, electricity and Wi-Fi costs on the rise and are returning to the office. Businesses will therefore bear the brunt of these price hikes, with some experiencing a 300% to 400% increase in utility costs. These price hikes could result in layoffs or business closures when the temporary business energy support scheme payment does not even pinch the surface.

This emergency response credit guarantee scheme will help. It will be a loan guarantee scheme, similar to the Covid-19 credit guarantee scheme, and will provide confidence to Irish businesses that lending is available for working capital and short-term to medium-term investment purposes. It is expected that winter and early spring will see increased funding pressures on SMEs. The Ukraine credit guarantee scheme will provide €1.2 billion in low-cost lending to business and will work alongside other measures announced in the budget, such as the temporary business energy support scheme, in supporting businesses through this energy crisis.

In order to qualify for the scheme, borrowers will have to declare that their costs have increased by a minimum of 10% on their 2020 figures and that the loan is being sought specifically as a result of difficulties experienced due to the Ukraine crisis. Therefore, it is required to prove an increase in input costs, disruption to supply chains or the move to new suppliers. The scheme will operate under two streams and will provide between €20,000 and €500,000 per firm to ensure there is sufficient liquidity available in the markets, thereby reducing additional costs for firms. For energy-intensive companies impacted by exceptionally severe increases in gas or electricity costs, the scheme will provide for a minimum of €20,000 and a maximum of €2 million per firm.

In my speech on budget day I acknowledged the Government's efforts to improve the circumstances of the business community, and I agree that the amendments to the Credit Guarantee Act are necessary in order to provide for this scheme. No additional delays should be imposed. We need to ensure that this legislation is fit for purpose, successfully progresses through the next Stages and is enacted as quickly as possible to facilitate this scheme being available to business for liquidity purposes.

Under the Loan Guarantee Schemes Agreements (Strategic Banking Corporation of Ireland) Act 2021, it is imperative to provide prudent legislative scope, via the Credit Guarantee (Amendment) Bill 2022, to acquire an appropriate share of European Investment Bank funding. Currently, €50 million is available to Ireland for SME loan guarantee schemes. This amendment will increase the limit of the aggregate liability in respect of contributions committed from €50 million to €180 million while also providing the option for relevant Ministers to engage in further agreements regarding loan guarantee schemes with the Strategic Banking Corporation of Ireland. Therefore, the legislative amendment of the Loan Guarantee Schemes Agreements (Strategic Banking Corporation of Ireland) Act 2021 is particularly important as social and economic conditions remain uncertain, and given our pressing needs to assist resilience, investment and recovery within the business sector.

I wish to raise a few different points about the Bill itself.

With regard to section 3, I welcome the amendment of section 3 of the Credit Guarantee Act 2012, which makes provision to extend the scope of eligibility to cover additional classes of enterprise to include SMEs, small mid-caps and primary producers, that is, businesses with up to 499 employees. I agree with this change, which will set limitations to eligibility. For the most part, the flexibility will significantly assist a lot of businesses.

Section 4 of the Bill will amend section 4 of the Act of 2012 to include this new credit scheme within certain subsections of this section. I welcome the removal of a portfolio cap from the current 13% and the increase in the maximum yearly credit amount which can be guaranteed from €150 million to €1.2 billion.

Additionally, a new section 4B is introduced by section 5, which disallows subsections (3) and (4) of section 4 of the Act of 2012, including different provisions for the Ukraine credit guarantee scheme. These amendments, as well as giving the Minister the power to give guarantees, will provide for significant reliefs and guarantees for businesses until 31 December 2024. As such, I agree with the amendments, which will set guarantee limitations which will not extend beyond six years and will not exceed €1.2 billion. I acknowledge that the Minister's liability in respect of those guarantees will not exceed €960 million. Additionally, section 12 of the Credit Guarantee (Amendment) Act 2016 is amended by section 6 to ensure that the maximum liability of the Minister in respect of the existing credit guarantee scheme shall remain as not exceeding €15.6 million and that there will be a separate provision for a maximum liability in respect of the Ukraine scheme. Again, I agree with those changes.

With regard to section 7, amendments to the Loan Guarantee Schemes Agreements (Strategic Banking Corporation of Ireland) Act 2021 will increase the aggregate liability limit to €180 million in respect of contributions committed under all agreements between the Minister for Enterprise, Trade and Employment and the Minister for Agriculture, Food and Marine, and the Strategic Banking Corporation of Ireland. These increases to the ceiling of funding under the Ukraine credit guarantee scheme to €1.2 billion are required and provide that the Minister may work with the Strategic Banking Corporation of Ireland in making new loans available to SMEs. This is significant for the SMEs as the objective is to maximise the impact of the scheme for borrowers in the short to medium term and address their liquidity requirements.

It will assist viable but vulnerable firms of all sizes in the manufacturing and international trade services sectors that are suffering liquidity problems or are affected by the severe rise in energy costs as a result of Russia's invasion of Ukraine. However, it must be noted that in order to qualify as viable, it must be a new loan with no refinancing.

I fundamentally agree with these criteria and, as such, I agree with the amendment. I acknowledge that the scheme will therefore assist in the absorption of the cost of disruption to supply chains and the evolution of businesses in becoming more resilient in the face of business shock.

In line with Government policy, section 8 contains the Short Title and commencement arrangements. I have spoken to many businesspeople in Dundalk over recent months and have been flabbergasted at the cost increases they are facing. Not all businesses will be able to sustain these increases in costs and they will eventually have to be passed on to the end users. These amendments incorporate provisions to provide up to €500,000 per firm to ensure there is sufficient liquidity available in the markets and up to €2 million per firm for energy-intensive business.

Overall, the Government has made significant strides in aiding businesses in Ireland. While I accept, as I am sure every other Member does, that we cannot save every business, we need to have a serious look at the businesses that can be saved, particularly those that contribute to tourism and our tourism offerings. In the budget, we delivered significant funding in the form of the temporary business energy support scheme and today, with these amendments to the Bill, we hope to make an additional improvement to businesses, specifically SMEs, small mid-caps and primary producers. We must ensure these businesses have the capacity and supports to survive. I hope the amendments announced in this Bill will make a significant impact for the better.

We need to have a clear strategy in what we are trying to do. I acknowledge the measures introduced by the Government. However, costs in this country are starting to spiral. This legislation incorporated in these amendments ensures there is sufficient liquidity available in the markets and up to €2 million per firm for energy-intensive business. No additional delays should be imposed. We need to ensure this legislation is fit for purpose, successfully progresses through the next Stages and is enacted as quickly as possible to facilitate this scheme being available to business for liquidity purposes. This is an unprecedented crisis and more needs to be done to ensure that as many businesses as possible are protected.

Matt Shanahan (Waterford, Independent)
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This Bill makes amendments to the Credit Guarantee Act and supports the needs of businesses to access additional finance in response to the economic difficulties resulting from the Ukraine war. I am a member of the Joint Committee on Enterprise, Trade and Employment and this is something we have been flagging and requesting to be done as quickly as possible.

The State-backed Ukraine credit guarantee scheme proposes to provide low-cost working capital of up to €1 million to SMEs, primary producers and small mid-caps on a six-year term with no collateral required for loans of up €250,000. The devil will always be in the detail. On the one hand, it sounds great - potentially six years moneys are available - but the Bill does not guarantee what the cost of finance will be or any terms and conditions the pillar banks might attach to that. In order to qualify for the scheme, the borrower will have to declare that costs have increased by a minimum of 10% on its 2020 figures. I do not think this will be difficult for any business trying to access this scheme. The borrower must show that the loan is required as a result of difficulties being experienced due to the Ukraine crisis. I presume this relates to the cost thresholds rising. It states that the business must be viable and it must be a new loan with no refinancing. I am not too sure what the statement that a business must be viable is supposed to mean. In respect of a good few businesses of which I am aware, if energy prices follow their current trajectory, it is very hard to see how these businesses will be viable without additional supports from the Government. They are certainly not in a position to take on more debt.

The loan as guaranteed is based on an 80% State-backed guarantee with 20% backed by the lender so it is much the same as what we did during Covid. The standard facility size varies from €10,000 up to potentially €1 million under the current Act. The Minister of State says this will remain for the State-backed Ukraine credit guarantee scheme. It also sets out that a broad range of facilities will be available from the lender so we are talking about flexibility in financing - overdrafts, term loans and potentially fixed-interest loans. Yet again, I would have thought that this is down to the individual lending provider. A premium guarantee of 0.29% of interest payable is required in order to provide that.

I have concerns that I wish to raise with the Minister of State. One involves interest rates. We know that over the course of the next year, we could see another interest rise of up to 0.75% or 1.5%. That raises the question of what the retail interest rate applied by the pillar banks in respect of somebody accessing this scheme will be.

Second, many businesses will require restructuring of their business operations. The problem is that they are going to need capital to keep the lights on but must also undertake restructuring of the business. This might require the payment of redundancy payments. Can they use some of this money if they want to downsize and have to let staff go? I think they probably cannot do so. How will that help them restructure their business?

I raised other concerns with the Tánaiste some weeks ago at a meeting of the Joint Committee on Enterprise, Trade and Employment. I asked him about the status of a company with warehoused debt during Covid. My understanding was that from about January or February of this year, companies that had availed of the warehousing debt scheme had started to open up and were making repayments on that warehoused debt. I understand that some of them were slow in getting going because their business had not recovered as they had hoped and there might have been some debt forbearance from Revenue. However, I believe that has come to a pretty drastic stop in the past three months. I am informed that the benign attitude Revenue took to businesses impacted by Covid up to now has come to an abrupt end and demand letters are going out for the repayment of restructured moneys, be they PRSI, PAYE or corporation tax, and that there have been demands with sheriff's notes attached. Certainly the environment has changed, which I presume is down to a tacit decision by the Department of Finance to figure out which businesses are viable and which ones can or cannot be funded into the future. This opens up the vista of many private businesses having to make decisions about whether they can find capital themselves to support their business activities and avail of this scheme or whether they are throwing good money after bad. I suggest that without a scheme other than debt financing, it will not be possible to save some of the businesses given that their energy costs have gone up 200%, 300%, 400% or 500%.

Energy inputs constitute a key measure for a lot of companies. I wrote to the Minister for Finance and raised the case of a processing company with the Tánaiste two weeks ago. The company in question has seen its average monthly energy costs go up from €8,000 to €57,000 per month. It employs 50 people and the increases in energy costs are still not finished. The difficulty is that this company uses gas and electricity in its processing. The business is based on heating and cooling and it uses heat for cooking but must also use it for sterilisation of machinery afterwards because it involves food processing. It requires refrigeration and freezing for the same reasons - to preserve food. It does not have a hope of making up the difference. Availing of the maximum of the Government scheme would provide it with €18,000 when the cost is €57,000, so it must find €39,000 every month. Unfortunately, this is the reality facing many businesses at different scales.

I also raised the issue of craft butchers with the Tánaiste last week. We have about 600 butcher shops. Some of these butchers spoke to the media recently. Their average energy costs have increased from between €800 and €1,000 per month to €4,000 or €5,000 for the same reason, namely, that they are using heat and refrigeration.

We are telling businesses that we need them to engage with mitigating strategies - solar panels being an obvious one. Small shops probably do not have the roof space to put up any solar panels in the first instance. Second, those trying to access a solar provider at the moment to install rooftop solar panels will find it very hard to get anyone with an installation window of less than five or six months to talk to them. That is the waiting time they are all quoting at the moment. Some of them do not have the panels or the workforce so telling businesses to put some solar panels on their roofs and they might get 20% of their energy costs back is not a mitigating measure because they will not be around in six months' time.

Another issue concerns people in intergenerational businesses. By that, I mean a parent or grandparent who started a business and passed it on.

I refer to businesses, particularly in the countryside, where a younger family member is working that business and part of the remuneration of the business is still being paid to the founder. That person might be contributing to a pension, getting a small support payment or whatever it might be. For people in this situation to find new capital, and it is probably not in the business, the only place it is possible to go is the shop of mom and dad, or perhaps an uncle or aunt if someone is lucky. The difficulty for these people is that they are being asked to put up capital they are probably trying to keep for their own pension requirements. They are wondering whether, if they put this money in and things continue to go badly for the next 12 to 18 months, all they will have done will have been to saddle the business with additional debt, keep a business that will ultimately not be viable going and cause their nest egg to go up in smoke.

Will the Department of Finance consider some kind of increased credit for such people? I know of a gentleman now cashing in a 20-year investment policy to put funds into his business as working capital because he has no home to go to in respect of trying to find alternative capital. The point is that this is money he was putting aside for his retirement, and this man is close to retirement age. In fact, I think he has already reached it. This is a hard decision. It is difficult to ask business owners to stump up in this way and to tell them we will support them with an energy rebate and fixed-cost debt because this is just not going to do it for them.

We must do more in the enterprise space in terms of trying to get people out to look at real and professional restructuring. The small company administrative rescue process, SCARP, legislation has been enacted. I would love to say that I hope it will not be used by many businesses but I am afraid it will be because, unfortunately, this will be the only way people will be able to get some protection from their creditors while they try to arrive at a new solution. Even in this context, many businesses will be included. To a degree, as I said, perhaps the Department of Finance is taking a longer term view of which businesses it should support and trying to see if the strongest can survive in the months to come.

From the level of communication I am receiving, I would say there are significant problems among SMEs. We must do more. This is a start, but I am concerned that many businesses are not going to get financed. We could not get the pillar banks to take on risk during Covid-19, even when they were only handling 20% of the risk. They would not take that on and that was a problem. It is going to be a problem here as well because many banks are going to look at cash flow numbers, sales projections and margins and tell people their businesses are not going to stand up to all these repayments, particularly when energy costs have gone up by 300% or 400%.

I know we are in a difficult position and the Government is trying to do something but, unfortunately, I believe we must do more. Although this measure is a start, I honestly do not think it will be enough. We must do something far more significant in respect of energy credits on an ongoing basis.