New €700million seed and venture capital scheme to support hundreds of innovative Irish companies as part of a suite of Government schemes to provide billions of euro in new credit to businessPackage of tax measures to support SMEs; DJEI Capital Budget protected at over €500million; Minister announces further reforms to budgeting within Department
5 December 2012
The Government’s plan to rebuild the economy and create sustainable jobs and growth was given a boost today [Wednesday] by the inclusion of a package of pro-jobs measures in Budget 2013, according to the Minister for Jobs, Enterprise and Innovation, Richard Bruton TD.
Commenting, Minister Bruton said: “The Government in Budget 2013 made the choice to support job-creation by avoiding increases in income tax, and restated the Government’s absolute commitment to the 12.5% corporation tax rate.“
I am pleased that today’s Budget shows the priority that this Government attaches to rebuilding the economy and creating the jobs and growth we need. In a very difficult Budget, a package of pro-jobs tax measures are being delivered, the capital budget for enterprise supports is being protected, and a series of innovative finance schemes being delivered to leverage exchequer funding with private funding to provide more of the credit our businesses badly need.”
Budget 2013 will enable the delivery of a range of new and improved supports for companies in need of credit. The Government is using scarce resources to leverage funding from the private sector to provide credit for businesses across the spectrum of sizes and sectors:
- Seed and venture capital scheme. €175million exchequer funding is expected to leverage a further €525million in private sector funding to create a total of €700million available. Well over 100 innovative Irish companies are expected to benefit, with thousands of jobs created and hundreds of millions of euros in additional exports generated. Full details will be announced as part of Action Plan for Jobs 2013
- €25million additional exchequer allocation under the Development Capital Scheme which will now provide a total of €225million in funding to mid-sized indigenous firms, to target the development of a strong mittelstand-type indigenous sector
- The National Pensions Reserve Fund is developing a range of support funds for the SME sector, initially ranging in size from €100million to €400million, to provide equity, credit and recovery investment
- Continued implementation of the €90million microfinance scheme, the €450million Credit Guarantee Scheme and the €120million second call under Innovation Fund Ireland
- Increase to €4billion of the lending targets for the two pillar banks for 2013. Both banks are on course to meet their 2012 targets of €3.5billion
- Improvements to the Credit Review Office including extending its team of reviewers. The CRO has overturned over half of the bank lending decisions which have been appealed to it.
A package of new tax measures to support SMEs was outlined by the Minister for Finance Michael Noonan TD, including:
- A 25% increase in the threshold for VAT cash receipts basis accounting, to improve cashflow for SMEs. The threshold will be increased from €1million to €1.25million
- Doubling the amount of expenditure that qualifies for the R&D tax credit for SMEs, to support more innovation by businesses. The threshold that applies without reference to the ‘2003 base year’ (which principally applies to larger businesses) has been increased from €100k to €200k
- Extending the Employment Investment and Incentive, which was due to run out in 2013, to 2020. This supports investment in businesses by providing income tax relief of up to 41% on investments totalling up to €10million per company
- Measures to reduce the burden of tax compliance for start-ups and small businesses, including improvements to the 3-year Corporation Tax Relief scheme and moves to look at ways of reducing costs of compliance for micro businesses
- An extension of the Foreign Earnings Deduction scheme, to support exporting companies putting “boots on the ground” in 8 more countries
Minister Bruton also announced that his Department’s capital budget has been broadly protected for 2013 with a total allocation of €505million after agreement was secured on retention of own resource income and capital carryover. Among the measures this will deliver include:
- Delivery of DJEI measures under Action Plan for Jobs 2013, to be announced early next year
- IDA will target approximately 12,000 new jobs in 2013 with its capital budget fully protected
- Enterprise Ireland will support 95 new High Potential Start-Up companies with commitments to create at least 1000 new jobs. EI through the new Potential Exporters Division will also engage with 300 new first-time exporting companies
- Delivery of three new Technology Centres in Pharmaceutical Production, Data Analytics and Connected Health to support the commercialisation of research ideas, spin-out companies and job-creation. The network of 15 Technology Centres will interact with 250 companies in 2013
- Delivery of an enhanced support structure for micro-enterprise and small business through a Centre of Excellence in Enterprise Ireland and Local Enterprise Offices
- SFI will continue its support to a cohort of 3,000 researchers who are working with over 600 industry partners who employ over 90,000 people in Ireland
- As part of the ambitious SFI strategy 2012-2020, the budget announced today will facilitate a substantial increase in large-scale research centres. SFI will look to invest €100m in large, internationally visible centres (100+ researchers - typically with 20+ industry partners) over the next 6 years in collaborations with industry.
Minister Bruton welcomed the statement by the Minister for Finance Michael Noonan TD on the work being finalised on the “PlusOne” scheme, which will provide a strong and clear financial incentive to employers to hire more people who are long-term unemployed, replacing Revenue Job Assist and the Employer PRSI Incentive scheme. Minister Bruton stated that he looks forward to working with Departments over the coming weeks to finalise the scheme.
Minister Bruton also announced a series of further reforms to the way budgets are managed within the Department. Last year the Minister announced that his Department and its Agencies would enjoy greater autonomy to carry over unspent capital allocation as well as greater freedom to reinvest the proceeds of own resources. Today the Minister announced that Service Level Agreements between the Department and all its Agencies, governing the expenditure of funding announced today, will be finalised in the early months of next year. Memorandums of Understanding will also be finalised with the Department’s Offices in the same timeframe.
Making the announcement today along with Ministers of State Sean Sherlock TD and John Perry TD, Minister Bruton said:
“As part of the Government’s plan to rebuild the economy, we are determined not only to get our public finances onto a sustainable footing but also to put in place a series of measures to support the growth and job-creation we need. The Irish economy is in transition, from the old failed economy based on property, banking and debt to a new, sustainable economy based on exports, enterprise and innovation. In the past 18 months we have implemented a range of measures to support and accelerate this transition, including the Jobs Initiative, a series of pro-jobs measures in Budget 2012 and the Action Plan for Jobs 2012.
“In the past year we have seen that transition take shape, with 20,000 new jobs created in the private sector after three years in which 250,000 were lost. Headline unemployment figures have remained stable as construction and the public sector continue to shed jobs, but we have also seen jobs growth in the sectors we are targeting, with 2,000 extra people employed in ICT, 4,000 in tourism, and 10,000 in exporting sectors. Major jobs announcements in 2012 include those by PayPal, Kerry Group, Apple and Mylan.
“I am pleased to say that today’s Budget shows the priority that this Government attaches to rebuilding the economy and creating the jobs and growth we need. In a very difficult Budget, SMEs are being prioritised with a package of pro-jobs tax measures, the capital budget for enterprise supports is being protected, and a series of innovative finance schemes being delivered to leverage exchequer funding with private funding to deliver the credit our businesses badly need.
“I am determined that, with continued strong implementation of employment supports such as those announced today, we can accelerate the transition to a sustainable, enterprise-driven economy and create the jobs and growth we need”.NOTES FOR EDITORS
Main highlights in 2013 in terms of the DJEI capital budget include:IDA
2013 allocation: €86million
- The IDA’s capital budget is being protected at €86m to enable IDA deliver on its ‘Horizon 2020’ Strategy which covers the period 2010 to 2014
- The €86m will be used to support FDI clients in three areas R&D, employment and capital grants. The split is roughly half on R&D grants and half on other grants
- The targets that have been set in Horizon 2020 are:
Ø 105,000 new jobs (62,000 in IDA supported companies and a further 43,000 indirect)
Ø 640 Investments
Ø 50% of investments located outside Dublin and Cork
Ø 20% of greenfield investments originating from emerging markets by 2014.
Ø Annual client spend of €1.7bn in R, D&I by 2014.
- IDA Ireland is confident that it is on target to secure 11,500 new jobs announcements in 2012 which will result in the creation of a further 8,000 spin off jobs. Final figures in this regard will be available in early 2013
- In 2012 there have been 801 IDA investment announcements with the potential to create over 8,550 jobs. [Among those announcing investments in Ireland so far in 2012 are Allergan Mayo (200 jobs); BskyB Dublin (800 jobs); HP Galway / Kildare (280 jobs); Abbott Sligo (175 jobs), PayPal Dundalk (1,000 jobs), Mylan Dublin (500 jobs) and Apple Cork (500 jobs).]
- The 2013 jobs target for IDA will be in the region of 12,000 jobs.
*Note: In 2011 IDA client companies created over 13,000 new jobs, the overall net employment gain at IDA client companies in 2011 was 6000 ( 6950 jobs were also lost ). The IDA is optimistic that job losses in its client companies in 2012 will not be as high as in 2011.Enterprise Ireland:
2013 Subhead B4 allocation (science, technology and innovation): €127million
Investment of €127million to Enterprise Ireland in 2013 will allow us to:
- Continue to drive the innovation performance of indigenous industry and commercialisation of research
- Support 95 Innovative High Potential Start Up companies in 2013, across a range of sectors, including Lifesciences, ICT, Food and Energy. These companies are the source of potential star performers of the future and will create 1,000 jobs in 2013. Each HPSU will also create at least €1m in export sales
- Support the Innovation Voucher programme, which enables small businesses to purchase innovation expertise from a third level institute. In 2013, Innovation Vouchers will support small companies in Ireland to complete 520 projects
- Support companies in Ireland to undertake 60 important collaborative projects with Irish third level institutions, through the Innovation Partnership Programme.
- Roll out 3 new Technology Centres in the areas of Pharmaceutical Production, Data Analytics and Connected Health. 12 to 15 companies will be supported by each new centre and this number will increase over time
- Build on the multi-annual €22million Technology Transfer Strengthening Initiative, aimed at driving forward the research commercialisation agenda. This 4-year programme will produce 150 companies and will license 514 commercial technologies to industry. This programme will also deliver the streamlining of industry engagement with the public research system, through a central Technology Transfer Office
- Enterprise Ireland’s entrepreneurial training programme, the “New Frontiers programme” will train over 150 new entrepreneurs and produce 100 new companies in 2013
- Around 80 in-company R&D projects will be approved in 2013, with a project value of over €100,000.
2013 Subhead A7 allocation (enterprise supports): €69.5m
Funding for 2013 will specifically allows:
- €18m Investments to be made under the second call of the Innovation Fund Ireland to continue to attract significant venture capital players to Ireland and to provide an increase in the availability of ‘smart capital’ for Irish companies
- Continued operation of the Graduates 4 International Growth Programme (G4IG), an initiative that brings together a graduate and a company that are both focused on making a lasting impact in overseas markets
- Additional Lean Programmes to increase business efficiency and competitiveness aiding company sustainability and protecting jobs
- Engagement with 300 first-time exporting companies as part of the new Enterprise Ireland Potential Exporters Division. The target for 2012 was 250. This involves participating on workshops, mentor support or grant aid. In addition, there have been 15,238 unique page views on the potential exporters web page and over 720 companies have completed the online self assessment tool
- Management Development Programmes e.g. Excel at Export Selling, Leadership 4 Growth, International Selling - leadership and strategy programmes aimed at developing and enhancing leadership capabilities to lead companies capable of achieving sustained international growth
- Respond to the environmental and energy efficiency agenda through targeted support
- Participation by hundreds of companies in trade events and missions throughout 2013
- An additional €25 million will be expended on the Development Capital Scheme over the same period. This scheme is being extended due to unforeseen demand during the most recent call for proposals. It will address the funding gap that has emerged for mid-sized, high-growth Irish businesses that wish to scale to the next level. It will also lead to increased availability of risk capital for manufacturing and internationally trading services SMEs in areas such as engineering, food, life-sciences and electronics
- Through the Credit Guarantee Scheme and the Microenterprise Loan Fund, the Government will continue to address the issue of access to finance to business with over €5 million being provided under the former initiative in 2013 and the once-off funding in 2012 for the Microenterprise Loan Fund leveraging additional private sector resources in 2013 and beyond
- To assist growth, innovation and job creation in SMEs, funding of a new Seed and Venture Capital Scheme and an extension of the Development Capital Scheme is being rolled out over the period 2013-2018. This will lead to increased availability of risk capital to knowledge intensive SMEs in their Seed, Start-Up and Development phases and will leverage significant private sector investment through increased numbers of funds operating in the Irish Market.
2013 Capital Allocation: €15 million
Establishing the network of Local Enterprise Offices (LEOs) in 2013 will deliver the commitment in the Programme for Government to reform the system for delivery of support to small and micro businesses to make the operating environment more coherent, responsive and conducive to entrepreneurship. Maintaining the capital budget at €15 million will underpin the roll out of the new model.Science Foundation Ireland (SFI)
2013 allocation: €152.3million
The 2013 capital allocation to SFI is marginally reduced by 2% but will still allow SFI to continue to underpin the Action Plan for Jobs commitment to use research and innovation to drive job creation, through funding enterprise facing research teams and major research centres across many strategically important areas, such as cloud computing, future internet, energy, marine/ocean energy, health, medical devices, pharmaceuticals and agriculture.
The Programme for Research in Third Level Institutions
- The primary SFI focus in 2013 will be on the announcement of a number of large-scale research centres, a €100m exchequer investment over six years involving multiple industry partners in research prioritised areas, that will leverage in excess of €30m in industry contributions to these centres. These large scale centres (typically 100+ researchers & 20+ industry partners) will further enhance IDA Ireland’s FDI capabilities. In 2004, approximately €120million of IDA’s investment wins were in research and innovation related projects. In 2011 this figure has risen almost six-fold to €700million.
- In 2012 more than 40% of IDA jobs announcements so far have been in companies with links to SFI research teams. That’s over 4,000 jobs in companies linked to SFI funded researchers.
- The funding allocation of €152.3m in 2013 will allow SFI maintain its direct support to its current research community of circa. 3,000 researchers who are connected to over 600 companies who employ over 90,000 people in Ireland. SFI will also offer supports to young talented scientists to grow the necessary skillset to support Ireland’s future sustainable, high-value jobs capability
- SFI supports to Ireland’s research community will help to maintain Ireland’s reputation for world-class research in a number of strategically important areas. Overall Ireland is ranked 20th globally (up from 36th in 2003) in terms of our research capability
- In specific fields we are currently ranked 3rd in the world for Immunology research (key to Life Sciences sector); 6th in Nanotechnology and 8th in Materials Sciences (both areas - key to Ireland’s Life Sciences, ICT and Energy sectors). These high standings are primarily, though not exclusively, a result of excellent research carried out by various SFI-funded teams. Such global rankings are seen as a key attractor for these sectors in terms of IDA’s FDI capability
- In 2013 SFI’s remit will also be extended. This will see SFI funded activities move into the applied research arena, as well as continuing to provide key supports for oriented basic research. The extended remit will also enable SFI to fund on a wider geographical basis, meaning that for the first-time SFI will be able to fund on an all-Island basis.
- In addition the Foundation will be able to enhance commercialisation of previous research investments, primarily through their Technology Innovation Development Awards programme. This is in line with commitments in both the Action Plan for Jobs and the Programme for Government to drive commercialisation across the State’s innovation system
- SFI will also be able to provide important supports so that Ireland is better placed to leverage increasing levels of research funding from external sources, such as the EU and win prestigious awards such ERC grants in the years ahead. SFI will also progress Ireland's relationships with key international partner countries, such as Brazil, India and China
- In 2013 SFI will partner with Teagasc as part of key thematic funding supports to the Agriculture sector, through a call for research proposals relating to Smart-Agriculture.
2013 allocation: €16.7million capital
The €16.7m capital investment in PRTLI Cycle 5, aimed at delivering world class research infrastructure, will continue to improve Ireland’s competitive offering in the research arena. Funding under this multi-annual programme will deliver:
- Over 20 key infrastructural projects across Ireland’s Higher Education Institutes which over the lifetime of Cycle 5 are supporting 2,000 jobs in Ireland’s construction sector
- The PRTLI offerings, delivered through the Higher Education Authority on behalf of the Minister for Jobs, Enterprise and Innovation, will enhance Ireland’s competitive offering in terms of research capability.
- InterTradeIreland €6million
- Tyndall Institute €2.9million
- Shannon Development €3.6million
- Interreg €3million
- NSAI €500,000
- In line with its commitments under the Comprehensive Review of Expenditure the Department and its Agencies have delivered €15m in efficiency savings in respect of 2013. This means the Department will continue to deliver comprehensive programmes of activity and supports in respect of Jobs and Enterprise, Innovation and Regulation at a reduced cost to the taxpayer.
- The 2013 Gross Current allocation is €2.4m less than the 2012 forecast outturn. The figures for 2012 and 2013 reflect some additional costs associated with the transfer of staff from the Equality Tribunal into the Department from the Department of Justice and an increased provision in respect of the 2013 Presidency.