John McGuinness (Carlow-Kilkenny, Fianna Fail)
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Question 136: To ask the Minister for Enterprise, Trade and Employment his views on ICTU's comments on the BES schemes; if his Department has had contact from the Commission regarding same; if he is confident the extensions will go ahead; and if he will make a statement on the matter. [2562/07]

Micheál Martin (Cork South Central, Fianna Fail)
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The BES and SCS are central tax incentive schemes to Ireland's overall strategy for the small business sector. I established The Small Business Forum in 2005 to specifically look at the environment in which small business operate. As part of their review the Forum considered whether the strategies being followed to support and develop the spirit of entrepreneurship in Ireland were effective and appropriate, and in this regard made particular recommendations on improving the BES and SCS schemes.

The report of the Small Business Forum, "Small Business is Big Business", found that over 97 per cent of businesses operating in Ireland today are classified as small, employing almost 800,000 people. Given this context, the Forum raised a number of issues that need to be addressed if the small business sector is to realise its full potential and continue as a key driver of the Irish economy that will be demanded in the years ahead.

As the Deputy will be aware, my colleague, the Minister for Finance, Mr. Cowen, T.D., in his Budget 2007 statement announced that both the Business Expansion Scheme (BES) and Seed Capital Scheme (SCS) were being renewed from 1 January 2007 for a seven year period to 31 December 2013, subject to the approval of the European Commission. I strongly supported this decision, as there is a strong business case for extension of both the BES and SCS. Businesses particularly small and start-up companies often experience difficulty in accessing early stage development capital and the BES and SCS help to bridge the financial difficulties experienced by new entrepreneurs.

As indicated by the Minister for Finance in his Budget Statement, the Business Expansion Scheme and the associated Seed Capital Scheme are approved State Aids and their continuation and the changes proposed will require the approval of the European Commission in line with the "Community Guidelines on State Aid to Promote Risk Capital Investments in Small and Medium-Sized Enterprises". I understand that the EU Commission have written to the Irish authorities, seeking more information regarding the status of the schemes and the expected formal notification date of the scheme to the Commission. The Department of Finance together with an official from my Department have already engaged with the Commission on this matter and it is expected that the formal application for approval will be made shortly. It is not certain when the European Commission will make its decision.

As the Deputy will be aware the renewal of the Schemes is also subject to the approval of the Oireachtas in the Finance Act. It is expected that the Finance Bill will be published at the beginning of February. Assuming a favourable decision by the European Commission, the relevant sections of the Finance Bill will, when enacted, be commenced by Ministerial Order.

I can assure the Deputy that the Department of Enterprise Trade and Employment is working very closely with the Department of Finance to secure the approval for the schemes as a matter of priority. We appreciate the importance of both schemes to encourage entrepreneurs and private investors to invest in new start-up business and micro enterprises, and we are doing everything necessary to finalise matters with the European Commission as quickly as possible.