Bank Interest rates and insurance cover are major concerns

30 April 2020

Speaking in the Dáil today Labour TD for Wexford, Brendan Howlin raised a number of issues with the Minister for Business including:

  • That business supports must be linked to engagement with the industrial relations machinery of the State
  • The very high interest rate being charged by banks on loans and overdrafts
  • The need for insurance support for businesses when they reopen
  • How social distancing will be enforced in the workplace
  • The regional impact of the unemployment crisis
  • The need for certainty on business leases
  • Certianty on business rates and financial support for local authorities
  • Job Security for dock and port workers

In his contribution, Deputy Howlin said:

“Clearly, from everything we know, businesses in Ireland have never faced the unique pressures that they are facing and that exist right now. Government supports will remain vital if we are to achieve our collective responsibility, which is to keep businesses and jobs afloat. I want to use the few minutes I have to make a number of points that have been made directly to me by businesses. I could raise any number of points but I will raise nine particular issues.

“Let me start with security of tenure and lease security. We acted decisively and clearly, and rightly, to protect private tenants from eviction in this time. I am afraid we have to act with the same degree of certainty and getting advices is not what is required. People are now worried. The Minister rightly says that the bulk of landlords are decent but some are not. Some leases are being terminated. We need to legislate in that regard. I would like to hear the Minister’s view on that.

“In terms of business rates, there has been talks about leeway and forbearance on business rates. Let us be quite clear. We should have a clear understandable pattern right across the country in every local authority that there will be a forbearance in the same way as, for example, businesses are affected by 25% to access the Minister’s wage subsidy schemes. They should have forbearance on rates but that cannot be carried by local authorities. Thirty per cent plus of the revenue of local authorities is rates. Therefore, it must be a national scheme supported by central government.

“The third point I want to raise is in relation to a point raised forcibly to me by National Union of Rail, Maritime and Transport Workers, RMT, the maritime union that represents seafarers. They have raised real concerns with me that shipping companies are utilising this crisis to force compulsory redundancy or alteration of work patterns that had been hard fought and won over decades. The pay and conditions of both deck workers and port workers have to be protected. I would like the Minister to take particular interest in this. Obviously, it will be primarily an issue too for her colleague, the Minister for Transport, Tourism and Sport.

“The fourth issue I want to raise is in respect of businesses and companies getting State support. It is vital, as I say, that they get that support but it must be a condition of ongoing State support that such businesses engage with the industrial relations machinery of the State. This unparalleled crisis simply cannot be used by a minority of companies and businesses as a cover to undermine workers’ pay and conditions. That has to be implicit in the rules and regulations governing any drawdown of support. Many of my colleagues have already talked about the supports that are actually available. I will not recite them again because they have been effectively recited by previous speakers. I refer to the actual degree of drawdown of some of the supports the Minister listed when we asked what is available, particularly to small and medium-sized enterprises. The actual drawdown has been pitifully small. When cash flow is short and liquidity is difficult one does not want to add significantly to one’s debt.

“The most recent rate at which the National Treasury Management Agency, NTMA, has said the State can borrow is 0.25%. Why is that banks are lending on at 4% or 5%? When I contacted her about various companies that require supports, the Minister wrote to me saying that the first thing a business should do is go to its bank. She said it again today. I had a conversation with the director of banking and the head of SME lending of the second largest bank in the country. If one talks to the banks, one realises that they really are taking a business-as-usual approach whereby they determine who might be viable in this crisis. If they give a borrower an overdraft, it is at an interest rate of more than 8%. That is no help at all to people and companies who are stuck in this situation.
The extent of the crisis requires not a business-as-usual approach, but rather an understanding that money must be available in the same way as when the banks were faced with a crisis in 2008 and 2009. They did not adopt a business-as-usual approach then. They marched hotfoot down to Merrion Street and made it crystal clear that they wanted a complete and total bailout. What happened? The banks’ debts were socialised and put on the backs of the people. It is time the banks were forced to realise that they need to pay back the debt they owe to the SME sector. It cannot be up to them to determine whether a business is viable in the middle of an unprecedented storm, and if it is determined to be viable, to lend it money at a punitive rate.

“By the way, if a bank gives a borrower a three-month or six-month moratorium on his or her payments, that will be added up at the end, with the interest rate clocking up all the time. The banks’ great forbearance will actually make them more money. That is not an acceptable approach. That is not what is required of the banking sector. I ask the Minister for Business, Enterprise and Innovation to pass that message on to her Cabinet colleagues.

“A critical issue that has been raised with me is the issue of insurance. I want to underscore this because I had a difficult conversation today with a very significant businessman in my own constituency. From a different perspective, it is the issue of liability or the duty of care. It will now be impossible for companies and businesses to get Covid-19 insurance. Any renewal of insurance will not cover that. It will be impossible for businesses to open without that insurance. That is what they are telling me directly. They cannot take the risk of being liable for their employees or their customers becoming victims of Covid-19 if they are not insured against it. We must have a solution to that, some sort of indemnity or insurability. One cannot sue if one gets the flu when visiting the local supermarket. We need to address that issue or businesses will not re-open when this phase passes. I ask the Minister to look at the issue of insurance liability as a matter of urgency.

“There are a couple of other points I want to quickly raise. My colleague, Deputy Nash, has already raised the importance of monitoring when businesses start to slowly open up again. The Minister stated that this is a matter for the Health and Safety Authority. We are all getting calls from individual workers who are sometimes petrified. Who do they reach out to? Who will go into the workplaces to speak? I spoke to an individual who was working in a call centre during the early stages of this. The centre has since closed. That individual was terrified to complain, even though the employees were working cheek by jowl. Who will monitor the position in order to insist and ensure that guidelines are observed? Do we have the capacity and scope to do that?

“The regional impact will not be uniform. The various authorities in the south east are telling us that half of all jobs are already affected. Will the Government carry out a regional impact analysis so that we can have a regional differentiated response?

“My final point relates to seasonal businesses. I have tried to outline for the Minister the nine important issues.

“I come from a county that relies on tourism. Some very successful businesses do not operate in January and February and are now excluded from the schemes the Minister has put in place. What will I say to those who would normally have looked forward to a very successful summer season but who cannot get the wage subsidy scheme supports because they did not operate in January or February?”

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