Matt Shanahan warns SMEs face insolvency as energy bills soar

T-shirt, I fear the budget will prove to be a lot done, more to do. Certainly the supports for SMEs will not be enough to prevent a wave of insolvencies and redundancies in the coming months. I have brought the case of one manufacturing business to the attention of both finance ministers. It implies 45 people in the south east. Its production processes use both gas and electricity and heating and cooling procedures. Its energy bill has rocketed from €8,000 a month to €45,000 per month. The owner sees the writing on the wall. He has told me personally that the second last thing he wishes is for his business to close. The last thing he wishes is for him and his family to go broke. The supports on offer to him as they stand are not adequate for his business to remain operational, to remain offering wide employment and viable. His situation is not unique, Taoiseach. I would ask, can you convene a business task force to study this unfolding crisis in the SMEs sector? Will you look at examining an enduring temporary layoff scheme in the mould of COVID's eWIS? Or perhaps even a more aggressive and ambitious renewals or retrofit scheme for SMEs? And can we look to segment the energy supports to ensure that particularly the agri-food producers who consume huge amounts of energy and production can be additionally supported? Something needs to be done Taoiseach. On another note, and conscious that this may be one of my final exchanges with you Taoiseach, I wish to draw your attention to the inequity of the continued resourcing of the Western Development Commission versus other regions. The West is now awake and it is one of the strongest performing regions of Ireland. The Midlands, Borders and the South East are the economic laggards. To thrive and deliver on the programme for Government's aspiration for balanced regional development, these regions need the strategic regional thinking and resourcing that the WDC has delivered to the West for a generation. I look at the miserly outrun of capital spending in the South East as a case in point. As the State plans to spend £10.8 billion on capital projects next year, there is a paltry amount to spend on strategic projects in the South East, border and Midlands. These regions need the form of conceptual thinking, the strategy development based on deep applied research and regional cohesion that the Western Development Type Commission structure offers. It is an indefensible detail to me and to many that we see the continuing funding of the WDC while depriving other regions who need these resources so badly being ignored. Thank you for raising the twin issues of South East economic development and enterprise development and the issue around general business supports in the current energy crisis. The Government has introduced or is introducing a temporary business energy support scheme as announced by Minister O'Donoghue in the Budget and that scheme will be open to businesses that carry on a case in one trade, are tax compliant and have experienced a significant increase in their natural gas and electricity costs. It will be administered by the Revenue Commission, as you know, operate on a self-assessment basis and businesses will be required to register for the scheme. It is proposed that the scheme will operate by comparing the average unit price for the relevant bill period in 2022 with the average unit price in the corresponding reference period in 2021. Once eligibility criteria are met, the support will be calculated on the basis of 40% of the amount of the increase in the bill amount. In addition to that, and of course there is a monthly cap of 10,000 per trade that will apply and an overall cap will apply on the total amount which a business can claim. It is designed to be compliant with the European Union state-aid temporary crisis framework and will need approval by the EU Commission. There is a range of other business supports and I do not know whether the particular company that you referenced would come under the Enterprise Ireland scheme which will be the 200 million targeted Ukraine enterprise crisis scheme to assist viable but vulnerable manufacturers and exporters. There is a 1.2 billion state-backed Ukraine credit guarantee scheme that is there for SMEs, primary producers and small mid-cap businesses with fewer than 500 employees. There is a new growth and sustainability investment loan scheme and then there is 4 million gone to the local enterprise office network to include a new capital grant for micro enterprise for energy efficiency and so forth. In relation to the South East and the Western Development Commission comparison, again I would say that employment in the South East has grown by 8.6 per cent in the last year. That is Q2 2021 to Q2 2022 and that covers the counties of Carola, Kilkenny, Waterford and Wexford. There is now 79 IDA client companies in the South East employing about 15,000 people. In June the sod was turned under Glambia Co-op and Royal AWARE's 200 million continental chiefs facility at Bellevue and that strategically important national project would support the incomes of over four and a half thousand family farms, 80 jobs and 400 construction jobs in the South East will be created. Over 6,000 people are employed in around 100 enterprise Ireland client-based companies in County Waterford and the local enterprise office also supports a thousand jobs. And you know yourself there has been very significant investments announced in the last two years now on the IDA front. Airgen investing 12 million in its manufacturing facilities in Waterford City, Bosch and Lamb last July in 2021, a 90 million investment in expanding its manufacturing operations in Waterford. Infosys, again 250 jobs in the state-of-the-art delivery centre and public relay at US communications and analytics firm also establishing in Waterford. So I will come back to you in the second question. I gave a range of metrics this morning at the Enterprise Committee on the real performance of the South East. I have not got the time to go through them here, but unfortunately they do not tally with what you have described there. What I would say is the supports that government are offering to the SME sector in particular are not enough. A lot done, as I said, but they will not be enough to hold back a wave of insolvencies and redundancies over what is essentially a geopolitical issue but is going to take out good competitive businesses and their employees are going to be the victims also. In relation to WDC, I would say its job is largely done. I am not looking to see it scrapped. I am actually looking to see something that has been really, really successful brought to play in other regions. I think some of the problems that are outlined there in relation to the border are essentially got to do with regional issues around there, but Taoiseach, I think we have to look at this. I asked the Tornister this morning would he consider this. He has opened the door to considering it. I think, as I say, this needs to be done. If we are going to put regions on par, we must have a similar bodies to support their economic and policy development into the future. There is a regional enterprise plan that has not been put in place for the South East. We need to analyse more deeply the factors that give rise to the growth in given regions. The Medtech cluster in the West has probably been one of the more significant developments. It is based a lot on research and development at University College Galway and then if you connect down to the Midwest with UL and Limerick. I think the South East Technological University is key here and has been key, actually, and has been key as well, to be fair, because there comes a stage when you have to – I accept that historically this has been an issue in terms of different regions progressing at different levels, but what I have announced there is very significant FDI investment in Waterford and in the South East more generally. That will grow and is very strong. I mean, Horizon Therapeutics 350 jobs announced recently, as you know. All of those matter and I think will have impact and as we expand the South East Technological University, I think it will have a very key role to play, I think, in the enterprise side of it. There is infrastructure and has been allocated through URDF and so forth. There has been issues on the private sector side there that was not the fault of the state, but that funding is still in place for the local authority there and for the region and for Waterford itself. And there is a regional steering committee has been formed to implement a regional enterprise plan. So you just need to be careful that we just don't keep on creating bodies and bodies and bodies, rather than analysing the factors that will give rise to continued growth and development in Waterford. I would be open to having that analysis and, you know, different approaches work for different regions.