Written answers

Thursday, 8 October 2009

Department of Enterprise, Trade and Employment

Small Business Forum

5:00 pm

Photo of Ciarán LynchCiarán Lynch (Cork South Central, Labour)
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Question 75: To ask the Tánaiste and Minister for Enterprise, Trade and Employment the recommendations of the Small Business Forum which have been implemented by her; the progress made in implementing other recommendations; and if she will make a statement on the matter. [35060/09]

Photo of Mary CoughlanMary Coughlan (Donegal South West, Fianna Fail)
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The Third Progress Report on the Implementation of the Small Business Forum's recommendations was published on my Department's Website on 10 December 2007. This Report sets out in detail the substantial progress made on implementing the key recommendations since the SBF Report's publication in May 2006.

In the intervening period, Government has continued to implement outstanding elements of the SBF recommendations and to address additional concerns of SMEs in response to changing economic circumstances.

While identifying a number of key issues facing the SME sector, the Small Business Forum placed a particular emphasis on the environment for conducting business in Ireland and on access to finance for SMEs. Government focus has been on actions to sustain a positive business environment, including the proper functioning of the banking system, allied with specific targeted supports for SMEs through the enterprise development agencies.

In particular developments in the financial sector and wider economy during the intervening period broadened the concerns for SMEs in relation to gaining access to finance and bank credit. My Department has held regular meetings with the representative bodies of the SME sector and other stakeholders in relation to issues impacting on the sector and established the Roundtable on Access to Bank Credit and subsequently the Credit Supply Clearing Group to specifically deal with access to bank credit issues.

The Government has focused on creating a fit for purpose banking system and taken actions to sustain the banks and facilitate the flow of credit to the wider economy. The Bank Guarantee Scheme, the Banks' Recapitalisation Scheme, the nationalisation of Anglo Irish Bank and the publication of legislation regarding the establishment of the National Assets Management Agency were all aimed at this.

Under the Recapitalisation Scheme additional measures were introduced to support SMEs including a commitment to increase lending capacity to SMEs by 10%, the establishment of a €100m environmental and clean energy innovation fund by each bank, the contribution of a further €15m by each bank to new or existing seed capital funds, the introduction of the banks' Code of Conduct on Business Lending to SMEs, and the undertaking of an Independent Review of Bank Credit.

In the context of access to finance, Irish Banks have drawn down European Investment Bank (EIB) funding for loans for SMEs. In 2009, the EIB made €300m available to Bank of Ireland, Allied Irish Banks and Ulster Bank for onward lending to SMEs carrying out investment projects. This was additional to €50m previously made available to Bank of Scotland Ireland through its UK parent.

Within my own Department, the enterprise development agencies such as Enterprise Ireland, FÁS and the County and City Enterprise Boards have continued to assist enterprises through their grant and advisory schemes. Significant allocations were made in my Department's Estimates for 2008 and 2009 to sustain the work of the development agencies. The €100m Enterprise Stabilisation Fund and the €250m Employment Subsidy Scheme are additional measures to make funding available to assist SMEs through the current difficulties.

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 enterprises.

Since the Third SBF Progress Report, the Finance Act 2008 introduced specific measures to benefit SMEs. VAT Registration Turnover Thresholds were further increased - for the second successive year - from 1 May 2008, to €37,500 for services and to €75,000 for goods respectively. Small companies are now permitted to calculate their Preliminary Corporation Tax payments based on 100% of the prior-period tax liability if their tax liability for the prior period did not exceed a certain threshold. This threshold was increased to €200,000. This was effective for preliminary tax payment dates arising after 5 December 2007. · New companies, which do not expect their tax liability for the first year to exceed €200,000, are no longer obliged to pay preliminary tax in that first year. This was effective for preliminary tax payment dates arising after 5 December 2007.

A second edition of the Small Business in Ireland Report was published by the Central Statistics Office in May 2008. This Report improves data availability and presents a comprehensive analysis of the contribution of small business to the Irish economy. Recommendations previously implemented continue in force and progress has also been made in other areas addressed by the Small Business Forum.

As I announced last week, I intend to re-convene the Small Business Forum to gain its assessment and views on the impact of the current economic situation on the needs of the SME sector as it positions itself for recovery. The SBF will also consider the new arrangements now necessary for ongoing structured dialogue between policy makers and stakeholders in the sector to ensure a continued common understanding of all the issues and the potential means of address. This meeting of the Small Business Forum will take place in the coming weeks.

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