Denis O'Donovan (Fianna Fail)

I welcome this debate and welcome the Minister of State to the House. My main bone of contention is the lack of credit from the banks. I will tell a brief story. In 1977, my father had just died and I, armed with an honours law degree, approached three banks with my mother, God be good to her, seeking to borrow £100 to send me to Dublin to the law school there at the time. We were refused the loan of £100 by all the banks, which we found difficult and embarrassing because they had the money to lend. I came out ashamed from the last bank. Eventually, one of the banks rang up and said that if my mother signed as guarantor we could have the £100.

Now the banks may not have the money to lend, but we are back in this sort of situation. Now, because of lack of credit, restaurants, drapery stores and small corner shops in our streets and towns will close. When the problem with regard to offshore accounts was uncovered, what did the banks do but go off and do a sweetheart deal with the Revenue and hand over the names of everybody involved. I did not condone offshore accounts, but many people were advised by the banks to put their savings into them. As a solicitor, I was asked by bank managers if I knew of anybody getting a few bob from a claim or selling an acre or a site, and asked to send them down to the banks to be sorted out with an English bank account or whatever. That was rife at the time, but when the muck hit the fan, the banks did their deal. I knew one man who committed suicide over a small little bit of money. He had €4,000 or €5,000. I do not know what the banks told him, but he, an elderly man, could not handle the shame for his family and he got the rope. That happened, but the banks did not give a damn.

The previous Government bent backwards to help the banks in their hour of need. It probably went too far with bank guarantees and all of that. Anglo Irish Bank should have been put into the bottom of Bantry Bay, with 20 tonnes of stone on top of it to keep it down. That is my view. All the banks seem to be interested in now is profit and they are closing little shops and not so small businesses. I know of a restaurant that closed in west Cork last year because of an overdraft of €20,000 being reduced to €10,000 unilaterally without any prior consent or consultation by the bank and a Revenue debt of €12,000. The restaurant employed a total of 21 full-time and part-time employees. This is short-sightedness. It was a successful restaurant which was very popular.

I also know of a drapery store and a sports shop in west Cork which are surviving from day to day. It is almost like begging as each day they wonder whether the bank will allow them to continue in business. The banks state that they are lending but I also know of a man in Dublin who is not very well paid but in a profession and whose wife is a midwife. They have saved approximately €40,000 and are trying to get a loan to buy a house. They have been trying for three years and still have not received a loan and this is a good time to buy property.

The Government should no longer pay lip-service to the banks. We own the AIB, whether it is a good or bad thing, and we have a share in the Bank of Ireland. We also own several other banks. I do not mean this in a derogatory fashion but the Minister, Deputy Noonan, the Taoiseach and the Tánaiste should bring in the banks and kick their backsides a bit because they are not lending. We see and hear advertisements in the media stating that if people deal with particular banks, those banks will look after them. However, they are not giving credit to businesses, and let us be fair and honest about this. If I do one thing today I want to nail this lie.

Another issue crippling small businesses, and I am not sure how we can tackle it, is that of rates. Much re-rating of property took place in the late 1980s and 1990s. I know of one property struggling to pay now which was re-rated for €26,000 or €27,000 from €9,000. The business people accepted it at the time because it was a boom and money was being made, although they challenged it as much as they could. The Valuation Office decides the rates but we blame the local authorities which collect them. They were decided in the boom and no thought was given to a downturn. It is like building a boat for calm weather, but sometimes one must go out on a day which is not that calm. Rates are crippling many businesses, as are the abnormal rents some people charge their clients.

This morning I advised a friend of mine who has a little shop and who is in difficulties. Rather than closing the shop he plans to lease or rent it for three or four years until the economy recovers. It has been in his family for five generations. My advice was to set the rent at an amount which will not give him much profit but which will ensure the tenant will survive. He accepted it as good advice. He does not have a mortgage on the building but the business is going down the Swannee. H proposes to lease it for three or four years after which he might be able to sell it and make a few bob or when things come around - as they will although it might take three, five or seven years - another family member might be able to meet the challenge again.

My main point is that I ask the Minister of State to for God's sake go back to the Minister and the Cabinet and ask them to tackle the banks and get them to face reality. If the Government does not do so the closure of small businesses in the next 12 to 18 months will be frightening.