Damien English (Meath West, Fine Gael) | Oireachtas source

I will try to answer as many questions as I can. I will also deal with Committee and Report Stages.

I thank Members for their support for the Bill. I sense that there is general support for it, although some have concerns and worries about the ability of the banks to respond to the situation. The discussion is similar to that which we had here two weeks ago. It is a recognition by Members of the importance of supporting businesses and reaching out to them as best as we possibly can.

It is important to remind Senators that this is only one part of our toolkit to support businesses. There are a range of supports. The July stimulus plan will be announced later today and if it is agreed by the Cabinet, it will enhance those supports, including the restart grants mentioned by Senators. There will be confirmation in respect of the wage subsidy scheme, as well as support for the tourism sector, which has been mentioned by many Senators. Ongoing supports for certain sectors are needed. We will be able to build on what is in the Bill.

The Bill addresses liquidity and access to finance, which companies need and want. We would all prefer for there to be grants rather than loans, a point made by Senators Casey and Crowe and many others. We have to introduce a combination of both. It would be great if, as a country, we were in a position to grant aid everything but we are not. I do not think any country in its response to this crisis is able to do that. It is important to have the right combination of grants and loans.

We must recognise that the initial response to Covid-19, after the health response, involved support of about €12 billion. The wage subsidy scheme alone comprised over €2 billion in taxpayer subsidised support as of yesterday. The July stimulus will build on that. The €2 billion fund in the Bill is part of previous announcements and is now coming through.

We will add to this in the budget and the economic plan. The previous Government and this Government, as well as future Governments, will add, respond and make changes to the Bill where necessary. This should not be seen as being just one intervention.

I want to allay fears around what will happen with the banks. The Tánaiste and the team in my Department and other Departments have already sat down with the banks, and will do so again in the weeks ahead once the Bill has been passed, to go through the details of the scheme. The requirement of the scheme is that there is an reduction in interest rates and greater access for SMEs in order that they can draw down funding under better terms and conditions.

As I said, there will be a range of policies. Senator Gavan asked for this to be put into legislation, but that cannot be done. There will be different schemes and solutions, and a table will show the better offerings available compared to what was previously available. That will be very clear and transparent. We will monitor that through the Strategic Banking Corporation of Ireland, SBCI, and our own network.

Senator Kyne asked about engagement. We will engage with the sector, through representative bodies, individual businesses, our Department and all our networks and we will keep an eye on and monitor the situation to ensure the scheme is working. We can come back to the House if it is not. Most Senators will recognise that we cannot put everything into the Bill. There can be discussion and debate.

Senators Crowe, Casey and others are in business and can see what is happening. They know how difficult things are and understand the nature of the response will involve a blend of solutions that can be adapted and increased as we go along. As Senator Crowe said, the most important thing is that the scheme is up and running as quickly as possible. That is why I want to thank the House for facilitating the debate today and fast-tracking the Bill through the House. We want to reach out to businesses as quickly as we possibly can. Ideally, this would have been signed off on in May.We were not here in a formal capacity as a new Government so we could not do that but we are here now. It is important that we react and that is what we are trying to do.

Everyone welcomes the wage subsidy and it is important that we recognise it as a subvention for jobs and businesses from the State through the taxpayer. Everyone benefits from that. We are looking to expand grant levels, which was an issue that many Senators raised. We are looking at the restart grants to make them more accessible and include a different range of businesses and make a larger amount available than that in the July stimulus package. That will have to pass at Cabinet level and we will see how that goes.

I totally get Senator Casey when he says that businesses do not want more debt. I get that. Part of this scheme will involve refinancing existing debt and making loans cheaper.

Issues about grants, deferral of tax and many other matters were raised. Senator Casey also asked about an independence in the system, which is a fair point. The Credit Review Office is there and has worked quite well over the past number of years. That office is there to bring independence. There is an appeal mechanism within the existing bank network and a credit review for all credit decisions. That can be utilised more because it is a good service. I think decisions are overturned and a loan issued in approximately 50% of the cases with which that office deals, although I stand to be corrected on that. I think that figure is roughly correct but I will check it when I meet with representatives of that office next week.

Apart from the usual system of monitoring what is happening with bank loans and the issue of lending, the Strategic Banking Corporation of Ireland, SBCI, which will administer the scheme on behalf of the Government, will also monitor activity. The way the scheme works is that banks will be apportioned some of this guarantee funding and if they do not use it or draw it down, or if they make their terms sufficiently unattractive that their customers do not want it, we can reapportion it and the guarantee will be given to another bank. That is what we will try to do there. We can monitor things and that should bring the independence the Senator wants. I know what he is saying overall about independence. There is a doubt and mistrust of the banks from most people, and I accept that. We are trying to work on that issue.

Some Senators have talked about restaurants and bars. Senator Ahearn raised the example of a restaurant that was ready to launch but was not an existing business. We will look at that area and see if we can do anything. There is an effort with the restart grant to try and accommodate businesses that were not rate payers. It may be under that space that a restaurant that was not a rate payer, such as the one the Senator mentioned, might come in. We were looking to increase that from €2,000 so there may be space there. Others are probably able to give examples from around the country. We try to adapt or look at schemes where necessary.

Farmers and producers are very happy that they are to be involved in this scheme. Senator Lombard, Senator Ahearn and others mentioned those types of people. It is important that farmers and producers are included and that is the change in criteria. Many Senators have referenced the existing credit guarantee scheme, saying that it has not been effective enough and has not worked. I reiterate that the schemes are totally different. The Senators who have drawn the comparison are comparing two different schemes, the old one and the new one. Farmers and farm producers will be a part of this scheme and we will try to reach out to them as best we possibly can.

I recognise the network of LEOs, be they in Tipperary, as mentioned by Senator Ahearn, or anywhere else. LEOs are doing great work. We are trying to find ways to beef up their staffing and give them more resources to allow them to do more work. LEOs have an even greater reach now, since the Covid-19 crisis, and have been helping many more companies with financial products and drawing down available supports through filling out financial application forms and so on. LEOs have been offering advice on the different funds available and online trading. We will try to work with LEOs because they do great work. We will do work through local authorities, along with Enterprise Ireland and our Department. LEOs will be well stretched and we recognise the increase in their reach and in the demands on their time, along with all other agencies, over the past few weeks.

There was a request that the restart grant would reach out further to include bed and breakfast accommodation and sports bodies. Many Senators made that point today and in recent days. GP surgeries were also mentioned. There is a range of areas that were not catered for in the existing grant scheme for which there will be an attempt to cater in announcements to come in the days ahead.

Senator Keogan raised a couple of issues. Some of the information she has about the scheme is probably out of date and she might want to check some of her sources. It is absolutely not true to say that 90% of businesses cannot avail of this grant. That is not the case whatsoever and I am not sure where she is getting that statistic. If it is helpful, the term she used referring to "firms in difficulty" is to do with old state aid rules. Under this framework, some of those state aid rules have been adjusted in part. This temporary framework recognises that firms are in trouble and the majority of them will need help. To be eligible this time around, firms must show that their turnover has been affected by more than 15% in the past few months or the time period ahead. I would like the Senator to recognise that change. She stated as fact that 90% of businesses cannot avail of the grant but I will state as fact that it is not true. This scheme will be very accessible for SMEs and will be used but they will have to address the turnover issue I have mentioned. Some Senators have expressed issues with the banks. We want to get this support out as quickly as we can and the best, most effective and cheapest way to do that is to use the existing bank network. If we were to set up an entirely new system, we would not have the offering out to the companies before December and we would not be able to do it at this cost. We are not giving the banks additional profits. The aim is that the benefits of the scheme be passed on to businesses through low interest rates.

A number of speakers have a concern that we are de-risking the banks and taking all the risks with the 80:20 arrangements whereas some want 90:10 and so on. The reason we give a guarantee and de-risk is to have a lower cost of finance and to reach out to the companies who cannot borrow under existing terms and conditions. There is a reason we take that risk. The reason the taxpayer is potentially on the hook for €1.6 billion is the banks will pass on a reduction in the interest rate and make available lower cost money. The banks do not have to do that if they do not want to. If they want to draw down our guarantee, it will come with a request to them regarding interest rates, availability and terms and conditions. That is what it is about; it is not about the banks not taking risks. We are subsidising their risk because we are asking them to do something they might not want to do or be in a position to do. That is the difference and that is why we have a credit guarantee scheme and why it has been successful all over Europe and will be successful here.

Many Senators are quoting figures from recent months or years. They are not comparable because they refer to a different scheme. Under this legislation, we are amending the credit guarantee scheme. The portfolio cap is a major difference and that is why money will be made available cheaper and we fully expect to see a massive increase in the drawdown on this scheme. It will be a much more successful scheme. The credit guarantee scheme was introduced in 2012, not 2008 as stated by some Members and it was amended in 2016, but there was not a massive draw on it because it probably was not needed. We had a jobs recovery, and businesses and the economy were doing well. It was brought in to deal with a problem of the 2008-2012 period but by the time it was up and running and with different conditions, it was not of great benefit. It was not needed and there was no big demand in either House to change it but there is now because of Covid-19. We need a new scheme and that is what we are getting.

As I said would probably happen, Members used the UK scheme to compare ours, without going into the proper details. There are two schemes in the UK. One is for microloans below €50,000 and it is similar to ours. Above that, there is another scheme, which is also similar to ours, for loans ranging from €10,000 to €1 million with an 80:20 guarantee. There will be lower interest rates and it is comparable to the UK model. I would rather people did not compare apples and oranges. They should compare like with like and if we are still different, we can row over that. However, there are two different loan schemes in the UK. The bounceback loan is for under €50,000. We have a similar scheme here from Microfinance Ireland. We debated it in the House two weeks ago. There is a massive draw on that. Applications are up eightfold. It is a successful scheme and we are building on that, as we said we would last week. We committed to working on the interest rates, and we are doing that as well so we are making good progress there.

The enterprise support grant, which Senator Keogan asked about, is not administered through our Department. The grant is available to self-employed people who close their PUP claim after 25 June. It is administered by the Department of Employment Affairs and Social Protection. The Minister, Deputy Humphreys, is in charge of it. It was available to those who had closed their PUP claims and who had employed fewer than ten people. It was only available after 24 June, which is literally four-----