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

It is good to be here again. This is a positive Bill. I welcome the support for the Bill of most contributors on First Stage. With the co-operation of both Houses and the assistance of our teams here, we can deal with this legislation quickly. I thank Members for their support and assistance on that. It is an important Bill for supporting our SME and agricultural communities and our food producers. We also do very important work here in scrutinising the legislation. It is not ideal, therefore, when we ask our colleagues to fast-track stuff. I recognise that and I thank the House for co-operating.

I welcome the opportunity to present the Bill to the House. This short and technical Bill will enable the Ministers for Enterprise, Trade and Employment and Agriculture, Food and the Marine to enter into agreements with the Strategic Banking Corporation of Ireland to facilitate access to finance for qualifying enterprises.

The new Brexit impact loan scheme is part of the Government’s response to Brexit and enactment of this Bill will allow us to launch the scheme in the coming weeks. The Brexit impact loan scheme will be an important support for Irish businesses throughout the country that are facing challenges arising from Brexit while also dealing with the impacts of Covid-19, something we discuss a lot in these Houses. I am conscious that Members are familiar with the situation. It will be available to SMEs, including those in the primary agriculture and the seafood sectors. That is different to the previous Brexit scheme that did not include those sectors so it is important that they are included this time.To bring this loan scheme to the Irish market as soon as possible, it is imperative that the Ministers are granted the necessary powers to enter into the agreement with the Strategic Banking Corporation of Ireland in the coming weeks, which includes providing the necessary Exchequer funding. The Bill is about giving us permission to do so.

The scheme is an important component of the Government’s Brexit mitigation measures for businesses as it will provide them the opportunity to borrow for periods of up to six years for liquidity, working capital and investment purposes. The previous loan was for three years. We know from feedback, engagement with the sector and representative bodies and feedback from Members that there is strong demand for a longer six-year product, which is what the Bill will cater for.

The Brexit impact loan scheme has been developed to support those businesses experiencing liquidity issues as well as those wishing to invest and diversify their business by ensuring they have appropriate and affordable financing available to them. This support will provide vulnerable but viable businesses the opportunity to access finance and help them to survive through this period of turbulence, which, of course, will help to maintain jobs. As we speak about businesses, producers and farmers, we recognise that behind them are the jobs we want to create and save. When the Government and colleagues refer to a jobs-led recovery this is what we want. If we are to have a jobs-led recovery we have to support business and stand beside and behind businesses to make sure they have access to variable supports, grants and wage subsidies. We must also recognise that many businesses will have borrowing requirements. We will make this possible through these loan guarantees. A loan guarantee such as that in the Bill will make it easier to access finance and, more important, it will reduce the cost of the finance.

Lending through the scheme will also fuel future economic growth in our important indigenous sectors by helping them to remain competitive. We know the opportunities are out there and we have seen during Covid a number of companies increase their sales, turnover, production and number of employees. Approximately one third stood still and another third is under serious pressure because of Covid. Thankfully, we have seen thousands of businesses reopen in recent weeks, which will certainly assist them. Many will have a difficult period ahead as they try to trade their way through Covid and Brexit. This is what we are trying to deal with.

To unlock the European guarantee fund counter-guarantee, which will be used to leverage funding of up to €330 million for the Brexit impact loan scheme, the Department of Enterprise, Trade and Employment and the Department of Agriculture, Food and the Marine will collectively contribute €29 million in taxpayer funding. Given the particular exposure of the food and agriculture sectors to Brexit, the scheme will be 40% funded by the Minister for Agriculture, Food and the Marine. It is planned that the existing Brexit loan scheme and the Covid-19 working capital scheme will be closed in parallel with the launch of the Brexit impact loan scheme, and the Exchequer funding previously allocated to the Votes of the Departments for the Brexit loan scheme and Covid-19 working capital scheme will be utilised to cover the €29 million cost to the Exchequer of the Brexit impact loan scheme.

The Bill presented today also provides for the potential for further such agreements in the future if needed. The question has been asked as to whether €330 million is enough to cover demand. We believe we are in the right space with this figure but the Bill allows the lending to be increased if needs be. The Attorney General has advised that primary legislation is needed to provide the necessary powers to both Ministers to enter into such an agreement. This is why we are here today.

I will now go through the Heads of the Bill. Section 1 defines the "relevant Minister" as the Minister for Enterprise, Trade and Employment or the Minister for Agriculture, Food and the Marine, as the Ministers entering into the agreement with the Strategic Banking Corporation of Ireland for the Brexit impact loan scheme.

Section 2 provides the Minister for Enterprise, Trade and Employment and Minister for Agriculture, Food and the Marine with the power to enter into agreements with the Strategic Banking Corporation of Ireland, with the consent of the Minister for Finance and the Minister for Public Expenditure and Reform. This includes providing the necessary financial contribution from the Irish Exchequer and limiting this to an aggregate total of €50 million should the Ministers wish to implement additional schemes concurrently. It also includes the discharge of any additional fees and expenses. Definitions for "qualifying enterprise", "SME" and "small mid-cap" are also referenced here.

Section 3 provides for a review of the operation of the Act after four years following its passing. Section 4 provides that expenses incurred in the administration of the Act be paid out of moneys provided by the Oireachtas. Section 5 provides for the Short Title and commencement provision.

This short Bill is important as it will allow the Minister for Enterprise, Trade and Employment and the Minister for Agriculture, Food and the Marine to enter into an agreement with the Strategic Banking Corporation of Ireland to implement the Brexit impact loan scheme. It is a critical component of the Government’s response to Brexit and the scheme has been developed in the context of the compounded financial challenges that Brexit impacted businesses face due to the Covid-19 pandemic. Relative to the existing Brexit loan scheme, the new scheme will provide for longer loan terms, eligibility to primary producers, a wider range of loan purposes, including for investment as well as working capital, and for some level of refinancing. Refinancing will be important for some businesses that drew down these products when the scheme opened up in 2018 but due to Covid and other reasons did not get a chance to fully utilise or fully repay the loan. Given that the arrangement under the Brexit deal did not kick in until 1 January this year, many businesses probably put their preparations on ice for a period and are only now kicking in. Companies now know what their financial and other requirements are to be able to trade through Brexit. This product is a timely response to that market as well.

If we want to ensure that businesses throughout the country succeed and prosper in the face of fundamental challenges like Brexit, it is essential that we take the necessary steps to ensure appropriate financial supports such as this scheme are in place for businesses.

When we debated the Credit Guarantee (Amendment) Bill 2020, much of the conversation focused on what lenders would be involved in the scheme and who could avail of it. Similar to that legislation, this is an open call. In addition to the main banks, which were the original players with regard to the credit guarantee we discussed last year, the credit unions and other lending institutions have come forward. Similar to this legislation, we expect all those providers of finance to apply to the open call to provide this service.

The interest rates on most of the products available last year that we assess have ranged between 2% and 3%. For the majority of drawdowns, they are 2.99%, which is a reduction of between 2% and 4% on all the other products that were available prior to the credit guarantee. Interest rates were a major issue for Senators when we discussed the credit guarantee for Covid.