Catherine Byrne (Dublin South Central, Fine Gael)
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Question 128: To ask the Tánaiste and Minister for Enterprise, Trade and Employment the steps she will take to protect small businesses here which are being hit hard by the economic downturn; her plans for incentives to small businesses who will create employment and bring revenue here; and if she will make a statement on the matter. [28279/09]

Billy Kelleher (Cork North Central, Fianna Fail)
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The banks' recapitalisation package was about securing the long-term health of the economy and about enabling our banks to get back to the business of lending to viable projects and about saving jobs. The package includes many supports for SMEs, including:

The recapitalised banks have committed to increasing their lending capacity to SMEs by 10% over 2008. This should ensure that sound businesses will receive support from their banks.

A €100 million environmental and clean energy innovation fund is also being established by each bank as well as a further €15m each to new or existing seed capital funds. Much of this funding will flow to small and medium enterprises

SMEs are also covered by the Code of Conduct on Business Lending to SMEs. This code which was published by the Financial Regulator came into effect from 13 March 2009. The application of the code will promote fairness and transparency in the treatment of SMEs by the banks and should facilitate access to credit for sustainable and productive business propositions.

Allied Irish Bank, Bank of Ireland and Ulster Bank will also provide funding for SMEs on foot of €300m facilities provided by the European Investment Bank to assist developing SMEs.

The recapitalised banks agreed to pay for and co-operate with the carrying out of an Independent Review of Bank Lending to SMEs. Additional banks have now participated in this Review with the result that the 5 major lending banks are now included. The purpose of the review is to ascertain the position on credit availability to SMEs here and to recommend appropriate action to improve credit availability. The independent review has now been submitted to the Minister for Finance, and will be published shortly. I welcome the completion of this review as it should allow all stakeholders have an objective view of the state of lending from the banks to SMEs and provide some clarity on the level of credit being declined.

Arising from the Recapitalisation Package, the Minister for Finance, and the Tánaiste also established a Credit Supply Clearing Group with bank, business (including ISME and SFA) and State representation. This group is responsible for identifying patterns of events where the flow of credit to viable businesses appears to be blocked and for seeking to identify credit supply solutions relating to these patterns. The group is however, not an appeals mechanism for cases where credit has been refused by the banks. Individual business decisions remain the responsibility of the banks. The Credit Supply Clearing Group is being chaired by the Department of Enterprise, Trade and Employment and will work to provide a clear picture of any emerging lending patterns while facilitating direct discussion by all the relevant interests in addressing problems.

To assist and complement the work of the Credit Supply Clearing Group, I have held seven regional meetings beginning in Cork on Monday 29 June to discuss with representatives of business, banks and the State sector, their experience of gaining access to bank credit at local and regional level. To date, meetings have been held in Cork, Waterford, Dublin, Bundoran, Shannon, Galway and Athlone. The last meeting will be held in Dundalk on Monday next 13 July. In the course of these meetings, I met with local representatives of the major banks, business representatives from local Chambers of Commerce, ISME, SFA, IFA and the Irish Hotels Federation. Local representatives from the various State Agencies such as Enterprise Ireland, City and County Enterprise Boards and Fáilte Ireland, also attended. The outcome of theses meetings should facilitate a greater understanding of the issue at both regional and national levels.

Outside of the banking sphere, the Department's continuous support for enterprises arises through maintaining a positive business environment and through particular interventions from the State development agencies such as Enterprise Ireland, FÁS and the County and City Enterprise Boards. The significant allocations in my Department's Estimates for 2009 for the development agencies ensures that we can continue to build on this strategy for the future.

The Government has also introduced formal arrangements to reduce the payment period by central Government Departments to their business suppliers from 30 to 15 calendar days. This commitment has effect on all valid invoices received on and from 15 June 2009 and should help ease cash flow difficulties for SMEs.

In addition to the above package of measures to assist the SME sector, the Government is proposing to introduce a Temporary Employment Subsidy Scheme. The purpose of this scheme will be to help the economy to retain its productive capacity and help employers to retain the labour, knowledge and skills of the workforce, thereby supporting a faster return to sustainable growth; help employees to retain their jobs, and ensure that economic and fiscal stability is promoted by avoiding the costs of unemployment including statutory redundancy payments and the longer-term cost of social welfare.

It is proposed that the Temporary Employment Subsidy Scheme will apply to companies in the manufacturing or internationally traded service sectors that are currently engaged in exporting. In addition, in order to qualify for support it is intended that a company must not have been in difficulty on 1 July 2008, and a financial assessment must establish that it is now facing such difficulties as a result of the global and financial economic crisis that redundancies are likely to have to be considered within 12 months. It is also intended that a company must also be judged to be viable and capable of growth in the medium term in order to receive support under the Scheme. Enterprise Ireland will be administering the Scheme and they will determine whether a company meets the eligibility criteria of the scheme.

It is intended that a National Steering Committee will be established to oversee the implementation of the Scheme and it would consist of representatives of the relevant Government Departments and the Social Partners. The Government will continue discussions with the Social Partners with a view to implementing the Temporary Employment Subsidy Scheme over the coming period. It is intended to have the scheme in operation with the first tranche of payments being made to companies after the summer.