Call for State to set up fund to use EIB €15bn

A CALL has been made for the Government to establish a fund for small businesses using the €15 billion fund established by the European Investment Bank (EIB) "which Irish banks have so far refused to access".

In a private members' motion, Labour enterprise, trade and employment spokesman Willie Penrose condemned the banks, which were not extending credit to businesses but instead "taking every opportunity to tighten terms, impose charges and restrictions.

The motion also "deplores the failure of the Government to either ensure the banks make credit available or to provide alternative sources of credit".

"This is not new," Mr Penrose said. "Had action been taken when this problem first came to light, we would not now be in this extremely difficult position." He also called on Government departments to settle their bills within 10 days, rather than 30 days.

Minister for Finance Brian Lenihan said, however, that the EIB "has already been in discussion with a number of Irish banks about participation" in the scheme. "I have urged the banks to utilise the facility to the maximum extent possible so that funding can be made available to small and medium enterprises (SMEs) as soon as possible."

He said "the banks' first priority should be to ensure that the flow of funding is channeled appropriately to support and underpin sustainable economic activities on the necessary prudent, responsible basis that is clearly in the interest of the bank, the borrower and the wider community".

Seán Sherlock (Labour, Cork East) said the EIB "has to become our saviour not the private equity capitalists. The private equity capitalists don't care one jot about the future of the Irish economy and as soon as they've had their pound of flesh they're on to the next target." "It should be noted that the Carlisle Group which is flirting with a bank in this country were also funded at one stage in their history by the Osama Bin Laden family."

Kathleen Lynch (Labour, Cork North-Central) quoted Warren Buffett "who once said that 'when the tide has gone out it's only then you see who's swimming naked'. Well the tide has gone out on this Government and it ain't a pretty sight."

Arthur Morgan (SF, Louth) said that "if the Government does not act now, the credit drought will perpetuate the recession and lead to immeasurable economic and social problems."

He also called for a review of late payments legislation to enforce the 30-day payment rule, because some companies had to wait up to 120 days for bills to be paid.