Darragh O'Brien (Fianna Fail)

I welcome the Minister to the House for this important debate. I commend him for the amount of time he has spent in this Chamber on the small business area. The report from the advisory group indicates that we have more than 200,000 businesses employing approximately 665,000 people. We all know people in areas in our constituencies who are running businesses.

I will focus on several points. I commend the advisory group on its report, which is easy to read and contains some actionable points. Section 3 contains the big ticket items and the biggest ticket item is credit. The banking survey undertaken by the county and city enterprise boards last September showed that 48% of small business owners felt their businesses were being curtailed by banking restrictions. That figure is up from 44% in the previous year. All the initiatives Government can bring forward are important but the elephant in the room for the past three years has been that the banks are not lending as they should to business. I do not want them to lend to businesses that are not viable. None of us propose that.

We had a case in my constituency in north Dublin. I will not mention the company's name but it is well known. As a result of the Bank of Ireland arbitrarily withdrawing the company's overdraft facility 48 people were made redundant before Christmas. I have written to the Minister, Deputy Bruton, about the issue. The Minister, Deputy Joan Burton, is trying to assist in terms of the redundancy payments and, if the Minister present does not mind, I will pass the details to him also. This is a clear case involving a profitable company with 48 staff which is 25 years in the recyclables business. It was a market leader and broke new ground in this area 25 years ago but Bank of Ireland pulled the plug. Mr. John Trethowan will say, as he rightly states in the report, that there are two sides to every story. That is understood. I know this company inside out. I have a background in finance and therefore I have an interest in that. Our biggest single issue is credit.

I ask the Minister about costs and commercial rates. In my local authority of Fingal County Council - and I commend the county manager - the councillors and those who supported the last four budgets in Fingal have seen significant reductions in rates. We have had reductions of between 6% and 10% year on year. That has been done because of the late Minister, Mr. Brian Lenihan. On the basis of a local authority making savings and showing that savings are made, there was a repatriation of the amount of savings from the Department of Finance to the local authority. If we set a target for Fingal of savings of €10 million and it reached 40% of those savings, they were repatriated to the council. In recent years the county manager, Mr. David O'Connor, proposed to the members that those savings would go directly to reduce business rates. That approach incentivises county councils to reduce their costs on the basis that they will get a rebate, and that rebate goes off against commercial rates. I ask the Minister to examine the Fingal model on that because it is working.

The county enterprise boards are crucial. They were not given enough support by many Governments, including the previous Government. For small start-up businesses and existing businesses that are finding it difficult to trade the county enterprise boards provide an excellent resource. The county enterprise board in my area, headed by Mr. Oisin Geoghegan, does a superb job and more businesses should be aware of what the enterprise boards do. We must do some work on letting people know about mentoring, grants and various other services.

On the cost to businesses, and this goes against my party's stance on the issue, I support the initiatives the Minister, Deputy Bruton, is taking with regard to premium hours and Sunday rates. Having been in Government I am aware of the pressures small businesses are under. In the retail and hospitality sectors the premium rates and Sunday hours must be tackled. If an individual is working from a Wednesday to a Sunday, that is part of their working week. Obviously, bank holidays and exceptional circumstances should be included. I welcome the initiative on the ability to pay principle for a business. It should not be abused but I support the Minister, Deputy Bruton, in what he is trying to do, and the Minister. We must become more cost effective and Government has to support our businesses to do that.

I refer to the back to work allowance for people who wish to set up their own businesses. They may have lost their jobs and want to become self-employed but the process in terms of the Department of Social Protection, FÁS or SOLAS does not work as well as it should. I ask the Minister to examine that because people who have lost their jobs are coming up with good business plans and good business ideas and they can apply for the back to work allowance. That means they get at least a portion of a salary for the first year which is reduced into the second year but it takes an inordinate length of time to get that approved. It is a confusing system for people also. I ask that something be done between the Minister's Department and the Department of Social Protection to ensure that process is more seamless and that we support people who want to get back into the workforce under their own steam. We should support that entrepreneurial spirit.

Credit is the issue. My colleague, Senator Sheahan, raises that issue regularly. The €3 billion targets per pillar bank, Bank of Ireland and AIB, are not being met. I refer to roll-over commercial loans. In the past two months some of our covered institutions have imposed increases of up to 2% in the variable commercial rate. I ask the Minister to specifically examine that. When loans come up for review and are rolled over, the institutions in question deem them to be new business and use them to meet their lending targets. When a bank removes an overdraft from a small business and provides for a term loan in its place, that is also deemed to be new business. Irish business people are not fools; nor are we. I am not asking the banks to lend to businesses which are going to fail, rather I am asking them to support those which will survive. They were supported by the same businesses, by us as taxpayers and by the country as a whole to ensure they survived. It is good to see the capitalised banks coming through that system, as they would have gone under. The principle that applied to them should also apply to viable businesses. We need to grapple with that issue which is a difficult one. The Minister of State should not believe the figures he is being given by the banks. We need to drill down into them, as it is not new business. The banks are not supporting businesses.