Our country has been through four months without precedent in the history of our State. Lives were lost, businesses were closed, and it took a terrible toll on our families, our communities and our country. Yesterday we began Phase 3 of our reopening plan. Things are still very difficult for many people, but confidence is slowly coming back, and people are hopeful once again.
The new Government’s job over the next few weeks and months is to give meaning to that hope by backing our people and our business and doing what we can to help.
During the darkest days of the pandemic we developed a vision for how our country would emerge from the crisis and how we would get workplaces and businesses open and our country back to work.
Now, as Tánaiste and Minister for Enterprise, Trade and Employment, it is my responsibility to realise that vision and help our country recover, repair the damage that has been done, and restore confidence and prosperity.
It can be done. To achieve this ambition the July Jobs Stimulus will be radical and far-reaching. It needs to be. It will be of scale to meet the challenge. It will be done soon. We have no time to waste. This is the critical moment when we must make the right decisions to set us on the right course for the next five years and beyond.
Today I am seeking the approval of the Dáil for the Department’s Revised Estimate for 2020 so that we can help our enterprises survive and emerge from this Emergency. This will also enable us to operate the programmes that will help our consumers, our workers, our businesses and our society.
The stakes are high because we need the authority from this House and the funds to continue the invaluable work being done beyond the next couple of weeks.
The projected gross expenditure for the Department in the original Estimate was €970.9 million. This was broken down between €338.9 million in current expenditure and €632 million in capital expenditure. This represented an increase of approximately €21m over the 2019 REV allocation.
The Current Expenditure provision of €338.9million secured for the Department in the December 2020 Revised Estimate represented an increase of €8.7 million on the 2019 current expenditure ceiling of €330.2million. This additional funding was intended to provide for pay increases to staff of the Department and its Agencies arising from the Public Service Stability Agreement; additional pension requirements; Brexit-specific recruitment in the Department, regulatory bodies and the Agencies; targeted Brexit information campaigns; and the expansion of our global footprint as we continue to promote Ireland as a leading destination for FDI, trade and research.
The Revised Estimate being presented to the House to-day does not involve any additional current expenditure funding beyond what was provided for in December.
In terms of Capital Expenditure, the Department secured €632 million in Capital funding in the December Revised Estimate. This represented an increase of €12 million, that is 2%, on our 2019 allocation of €620 million. The additional Capital funding secured for 2020 was intended to develop ambitious programmes including the second phase of the highly impactful Disruptive Technology Innovation Fund; the renewal of the SFI Research Centres Programme; and respond to the challenges and opportunities presented by Brexit.
The Revised Estimate being presented to the House today seeks significant additional capital funding to enable the Department to continue the various Government approved COVID enterprise initiatives and supports which have been developed in recent weeks and months. €483million in additional capital monies is being sought to enable these capital programmes this year. The total capital ceiling now being sought is €1.115 billion which represents an increase of 76% on the allocation provided in the December 2020 REV and 80% on the REV 2019 capital allocation of €620 million.
As part of its initial response the Department reprioritised and repurposed a number of existing supports for respond to COVID-19. This included the repurposing of:
- Enterprise Ireland Online Retail, Lean Continuity Voucher and Financial Planning Grant Schemes;
- Local Enterprise Offices’ Business Continuity and Trading Online Voucher Schemes;
- Intertrade Ireland’s E-Merge and Emergency Solutions Schemes;
- Credit Guarantee Scheme;
- Working Capital Loan Scheme; and
- Microfinance Loan Scheme.
The Department has also been to the forefront developing further actions to assist business in this challenging crisis. These were approved by the previous Government, which give rise to the need for the €483 million in additional capital funding being sought in the Revised Estimate before the House to-day.
The additional capital monies breaks down as follows:
- €180 million for the Sustaining Enterprise Fund;
- €11.79 million for further recapitalisation of the Microenterprise Loan Fund;
- €41.21 million to fund a €450 million increase in Strategic Banking Corporation of Ireland COVID lending including through the €250 million expansion of the COVID Working Capital Scheme and the €200 million expansion in the Future Growth Loan Scheme; and
- €250 million for the Restart Grant.
Specifically, the €180 million being sought for the Sustaining Enterprise Fund will enable Enterprise Ireland to increase overall funding under its Financial Grant Planning Scheme by €2.5 million. Over 540 businesses have received grant aid approval under this Scheme.
The Sustaining Enterprise funding will also enable EI to increase the funding available under its Retail Online Scheme by €6 million and provide an additional €12 million to its Hubs and Incubation Centres.
The Fund will also enable EI to fund its new Sustaining Enterprise Scheme. The €124 million Scheme is directed at SMEs in the manufacturing and internationally traded services sectors and is available to enterprises with more than 10 employees which have applied for funding from a financial institution. This includes SMEs that have applied to the SBCI for the COVID-19 Working Capital Loan Scheme.
Under the Scheme, eligible companies can apply for a minimum of €100,000 up to a maximum of €800,000 per undertaking in a number of forms including repayable advances, equity, loans. Funding under the Scheme must be approved by Enterprise Ireland by the 31st of December 2020. While the volume of applications under the Scheme have been relatively modest, we expect that applications will increase significantly as businesses resume trading.
It also means we can increase the funding available under the Local Enterprise Offices’ Business Continuity and Trading Online Voucher Schemes by €27 million and €6 million respectively. Over 10,600 Continuity Vouchers and more than 3,200 Trading Online Vouchers have been approved to date.
The Sustaining Enterprise Fund is also providing €2.5m for Intertrade Ireland’s E-Merge and Emergency Services Business Solutions to help businesses deal with challenges in areas such as on-line sales, emergency cashflow, and loan applications.
Aside from the Sustaining Enterprise Fund, the additional capital funding being sought in to-day’s Revised Estimate will provide €250 million for the Restart Grant. This grant is targeted at micro and small businesses which have suffered a dramatic loss of turnover due to the COVID-19 restrictions and who require assistance reopening.
This Fund is a direct grant scheme for impacted businesses. Grants of between €2,000 and €10,000 are available to businesses which commit to reopening and to reemploying their staff.
The grant scheme operated through local authorities opened at the end of May. We believe that up to 100,000 small and micro businesses will apply. Businesses can apply online and payments will be made directly to businesses by electronic funds transfer. It will be a straightforward and efficient application and assessment to make things as easy as possible for businesses to reopen, restock and reemploy staff. Over 15,000 businesses applied for the new grant scheme in the first week.
The additional capital will provide the necessary funding for significant access-to-finance, including an increase of €450 million in the lending available through the Strategic Banking Corporation of Ireland. This will be achieved by an expansion of €250 million in the COVID Working Capital Scheme and an expansion of €200 million in the Future Growth Loan Scheme.
The Working Capital Scheme was originally launched as part of our Budget 2018 response to Brexit and was redesigned in light of the challenges posed by the pandemic. The revised COVID Scheme, a joint Scheme with the Department of Agriculture, Food and the Marine, is administered by the Strategic Banking Corporation of Ireland and was an immediate first step in meeting the liquidity needs of SMEs.
The additional funding of €250 million will help SMEs and small mid-caps negatively impacted by COVID-19, to access appropriate and competitively priced finance for their working capital needs. The Scheme provides loans from €25,000 up to €1.5 million, with the first €500,000 unsecured, and a maximum interest rate of 4%.
The costs of the scheme are split on a 60:40 basis between the Department and the Department of Agriculture, Food & the Marine.
€27.6 million in funding is required to meet the cost of the Department’s contribution to the €200 million increase in lending under the Future Growth Loan Scheme. This Scheme was originally launched in April 2019 to respond to an identified market failure in the availability of longer-term lending for investment purposes to small and medium sized enterprises.
However, as with the Working Capital Scheme, the Future Growth Loan Scheme has been repurposed to assist enterprises in responding to COVID-19.
It seeks to provide longer-term financing by SMEs including farmers and fishers, and small mid-caps, in the event that alternate State help is not available. This will enable them to manage payment of current and accrued liabilities related to trading that have arisen as a consequence of the COVID-19 outbreak.
Loans under the expanded scheme will range from €25,000 to €3 million per eligible business, with loans of up to €500,000 available unsecured. Loan periods of 7 to 10 years will be made available for investment loans and 5 to 10 years for financing debt management, and competitive interest rates will be applied.
The Future Growth Loan Scheme is also administered by the SBCI, backed by the European Investment Bank and the European Investment Fund. The cost of the Scheme is being met by my Department and the Department of Agriculture, Food and the Marine also on a 60:40 basis.
Loans to the value of €140 million have already been approved under the Scheme.
The Microenterprise Loan Scheme was originally established in 2012 to provide loans to micro-enterprises which cannot obtain funding through traditional sources. With the advent of the current crisis, a discrete COVID-19 Loan was introduced to help them access funding.
MFI’s COVID loans are available for eligible microenterprises facing a 15% or more reduction in income or profit.
Loans of up to €50,000 are available with terms that include a six months interest and repayment moratorium, with the loan repaid over the remaining 30 months of the 36-month loan period.
The demand for MFI help continues to be very strong with more than 580 loans to the value of €14.9 million approved so far.
It is obvious that more needs to be done. So, the Department is developing a further set of interventions
Some measures, such as the discrete COVID Credit Guarantee Scheme, further expansions of the Microfinance Loan Fund and the Future Growth Loan Scheme, require primary legislation and this is currently being drafted.
Apart from the additional COVID funding, the Revised Estimate of €1.4539 billion which is presented to the House to-day also includes the funding required to operate the normal programmes in Jobs and Enterprise Development, Innovation, and Regulation
As set out in the Revised Estimate, a total of €951.7 million is being provided to fund the various activities under the Department’s Jobs and Enterprise Development Programme. This is more than double the provision originally provided in the Revised Estimate published last December
The vast majority of this additional allocation is due to COVID-19. The €951 million in funding will also ensure that the normal enterprise development and job creation activities can continue. Additional funding is also being provided to enable our Enterprise Agencies to respond to the UK’s departure from the EU
With the Innovation Programme, a total of €414.2 million is being requested in the Revised Estimate. This funding will help various innovation and research activities as well as our membership of international research organisations, including the European Space Agency and the European Southern Observatory
It is vital to our long-term recovery that we fund the second phase of the Disruptive Technology Innovation Fund and the renewal of the SFI Research Centres Programme.
The €87.9 million in funding sought for Regulation will ensure that we can continue to promote a business environment that facilitates investment and development, competition in the marketplace, high standards of consumer protection and corporate governance.
Our Regulatory Offices and Agencies have been at the forefront of our COVID business response, helping consumers and businesses as the country navigates the return to work plan.
Today we are also seeking the approval of the Dáil for the carryover for use this year of €42.15 million in unspent capital from 2019.
€23.5 million will be allocated to Enterprise Ireland to help the border region prepare for Brexit. €6 million will be provided to the Local Enterprise Development Offices. €3 million will be allocated to Micro Finance Ireland for recapitalisation to meet increased demands arising from Brexit. €6.425 million will be provided to SFI. €425,000 will be provided to meet commitments under the Programme for Research in Third Level Institutions. The final €2.8 million will be for the Disruptive Technology Innovation Fund this year.
Brexit is still a major challenge and the Revised Estimate presented to the House to-day provides further exchequer funding to continue the critical work in preparing our businesses for it.
Budget 2020 recognised the potentially disastrous effects of a No Deal Brexit. While we hope the ongoing discussions will be successful, the possibility of no agreement cannot be ruled out. Budget 2020 made provision for a Contingency Fund to be made available in the event of a No Deal Brexit to help enterprises and sectors most affected. This contingency may well be required and will have to be given further consideration in the months ahead.
I present this Estimates to the House to-day to ensure that we can continue to assist businesses impacted by COVID-19 and to operate our normal enterprise, innovation and regulation programmes.
Failure to approve the Estimates would mean the Department would not have the legal basis to provide this help or operate its programmes. This would have devastating consequences on everyone who is now getting back to work and set-back our economic recovery.
I welcome the opportunity to discuss the Revised Estimates with Members of the House.
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