Dominic Hannigan (Meath East, Labour)
Link to this: Individually | In context

Question 211: To ask the Minister for Jobs, Enterprise and Innovation when he will make the partial credit scheme operational; the amount of money that will be invested in the scheme; the way the scheme will operate; his projections for the scheme for the years 2011-2012; and if he will make a statement on the matter. [24981/11]

Richard Bruton (Dublin North Central, Fine Gael)
Link to this: Individually | In context

I am working towards the introduction of a targeted, Temporary Partial Credit Guarantee scheme which will be in operation later in the year.

The current position is that the contract for the design of the Scheme was awarded to Capital for Enterprise Limited (CfEL) on 26th August following a competitive tendering process. CfEL is a Non-Departmental Public Body owned by and reporting to the UK Department for Business, Innovation & Skills. CfEL have extensive experience of developing and operating the Small Firms Loan Guarantee and Enterprise Finance Guarantee schemes in the UK. CfEL is currently actively engaged on the design of an appropriate scheme.

Once a suitable scheme design has been agreed in early October, there will then be a further tendering process to select an operator to allow for the roll out of the scheme towards the end of the year.

As the Scheme is still in the design phase I am not in a position to set out specific details to the Deputy. Under the scheme, a loan guarantee will be provided by the guarantor (the State) to the lender, under strict criteria to target specific identified market failures, thereby facilitating the outflow of additional credit from the banks. Both the borrower and the bank will retain exposure in the event of default. The State will be exposed only to the portion of the loan guaranteed up to a pre-specified limit.

Allowing for a level of default and taking into account income from premiums, there will be an overall direct net cost to the exchequer. However this net cost will be compensated by exchequer gains in terms of employment sustained and created, savings on welfare payments and increased direct and indirect tax payments. It should also have a positive impact on exports, contributing to further jobs in the medium-term.

The Government's commitment will be for an initial period of one year. Specific performance criteria will be set down that allow for review and revision of the scheme at the end of that initial period, before any commitment to a roll-over of the scheme for subsequent years.