Dáil Éireann debate -
Wednesday, 28 Apr 2010

Budget 2010 set out the forecasts for the general Government deficit for the period to 2014. The target for 2011 is for the general Government deficit to be 10% of GDP, which is an improvement over the planned deficit for this year of 11.5% of GDP. The most recently published fiscal data, the Exchequer returns for the first quarter, were broadly in line with expectations and demonstrate that the budgetary plan, as set out in budget 2010, is on track. Consequently, at this early stage of the year, there are no proposals to revise the targets.

The Exchequer deficit at the end of March 2010 was €3.9 billion compared to €3.7 billion at the end of March 2009. My Department published monthly targets for both tax revenue and net voted expenditure earlier this year. In regard to tax revenue performance, €7.2 billion in tax receipts was collected by the end of March. This was 15% below the same period in 2009 and was €266 million, or 3.5%, below target. A significant year-on-year decline is expected in the initial months of 2010, with tax revenues forecast to end the year 6% down on 2009. The overall tax revenue target for 2010 is just over €31 billion and, based on the information available so far this year, this target remains valid.

Total net voted expenditure at the end of March 2010 was €10.7 billion, representing a decline of some €1.1 billion or 9.2% on the same period in 2009. This significant year-on-year reduction reflects both the expenditure policy changes which the Government has implemented and also, to a lesser extent, timing issues. The Revised Estimates volume, published on 18 February, projected a 1.9% reduction in total net voted spending for 2010 as a whole.

In budget 2010, my Department estimated that the general Government deficit for 2009 would be 11.7% of GDP. The estimate for the headline deficit for 2009 has now been revised to 14.3% of GDP. The difference between these two estimates is 2.6% of GDP, of which 2.5% of GDP relates to the technical reclassification of the €4 billion transfer to Anglo Irish Bank made in 2009. It is important to note that on foot of this reclassification, no additional borrowing has taken place and the underlying position of a deficit of 11.8% of GDP for 2009 is broadly the same as that published in the budget last December. This technical reclassification has a once-off impact on the headline deficit. As such, it does not affect the Government's forecasts for the level of debt, or the forecasts for debt servicing costs, as the €4 billion had already been taken account of in the budgetary debt position. Furthermore, the fiscal consolidation plan as set out in the budget is not impacted by the reclassification.

Additional information not given on the floor of the House.

In regard to the recently announced further recapitalisation plan for Anglo Irish Bank and Irish Nationwide Building Society, consultation is ongoing regarding the treatment of the sums involved. Pending agreement of the restructuring plans for both institutions, it is appropriate not to make a provision in the deficit measurement until the matter can be reviewed on foot of any decision by the European Commission on the plans. As the Deputy is aware, the additional capital of €10.9 billion is being made available by way of promissory notes, payable over a ten to 15-year period. This will increase the general Government debt by the full amount in 2010. However, as regards the actual borrowing that needs to be raised arising from this, it is likely that an additional Exchequer borrowing requirement of approximately €1 billion will now be required in 2011 for Anglo Irish Bank and INBS. A likely indication of the interest costs associated with this additional borrowing would be in the region of €55 million per annum and, in the context of the overall budgetary numbers, this is manageable.

Work is ongoing regarding the adjustments that will be necessary in budget 2011 and, while difficult decisions will be necessary, the Government is committed to the implementation of the fiscal consolidation plan as set out in last December's budget. The budget projected that a €3 billion adjustment — €2 billion of which would relate to current expenditure-tax revenue adjustments — would be needed in 2011 as part of the process to restore the public finances to stability. While the nature of the adjustments to be introduced will be a matter for budget 2011, a number of areas for consideration in the context of future adjustments were outlined in budget 2010. The report of the special group on public sector numbers and expenditure programmes, the work currently under way regarding local authorities and the report of the Commission on Taxation will also have a role to play in the determination of future budgetary policy.

With regard to the impact of the promissory notes, which will come to perhaps €21 billion over the next ten years, adding €2 billion each year, will the Minister in order to meet the commitments he has made to the EU in respect of borrowing over the coming years have to find that €2 billion in further cuts in expenditure or further increases in taxation? Given that we have had 250,000 job losses in the course of this recession to date, does he still hold to the view that writing whatever cheque is necessary to keep the banks afloat and fiscal retrenchment is enough to confront the jobs crisis? Does he not agree with many who believe a real strategy for the jobs economy is critical and missing from his approach to date?

The Deputy raises two broad questions. First, our commitments under the Stability and Growth Pact remain unchanged as a result of this, and the reclassification which has already taken place does not affect in any way our Stability and Growth Pact obligations.

Deputy Bruton went on to ask what impact this will have on the accounting treatment of the recapitalisation of Anglo Irish Bank and of Irish Nationwide announced by the Government in March. The matter is complex and far from clear at this stage. Further information is required in terms of the ongoing consultation with the EU about the restructuring of the bank. The further recapitalisation of Anglo Irish Bank announced on 30 March has to be considered separately from the 2009 recapitalisation. The 2010 recapitalisation should be seen in the context of a restructuring plan for the bank currently being negotiated with the European Commission. The recapitalisation of €8.3 billion by issuing a promissory note has been recorded as increasing Ireland's general Government debt by that full amount in 2010 and, pending the agreement of the restructuring plan, it is appropriate not to include it in the deficit measurement until the matter can be reviewed on foot of any decision made by the European Commission on the plan.

I should stress that regardless of the eventual treatment in the general Government balance statistics, the reality is that in terms of the Exchequer borrowing requirement these payments will be made over the coming years, beginning in 2011, and will be reflected in the year such payments are made. They will not affect our obligations under the Stability and Growth Pact or the volume of reductions that may be necessary in Government expenditure.

Is the Minister giving the House a categorical assurance that the EU has agreed that in order to meet the 3% deficit by 2014 the Minister will not have to find this €2 billion per year either from spending or taxation? Does he have an assurance on this, despite his claim that it is complex and difficult?

Preliminary quarterly national accounts data show that the volume of GNP contracted by 11.3% last year. While this was the largest decline on record and represents a very significant decline in our living standards, it was not unexpected. In the December 2009 budget, my Department had assumed a double-digit contraction for GNP last year of the order of 10.5% and a 7.5% decline in GDP. The preliminary data show that the decline in GDP last year was 7.1%.

I am advised that the very sharp fall in national income last year was due mainly to a large decline in consumer spending and a contraction of nearly 50% in the level of new house building. In addition, the volume of exports fell last year, although given the prevailing international climate our export performance was relatively good.

In terms of the labour market, I understand that quarterly national household survey data show that when those outside the labour force but who are interested in finding work are added to the number of unemployed, the rate increased to 16.5% in the final quarter of last year compared with 10.8% a year earlier. Such developments are a matter of concern for Government and this is why we have taken decisive action to stabilise the public finances, to rectify our banking system and to facilitate an improvement in competitiveness. Action in these areas is essential to ensure economic recovery and, hence, an improvement in the labour market.

While quarterly national household survey data are the widest measure of labour market developments, they lag behind live register data. I understand these latter data are available for the first quarter of this year and that they provide some evidence that unemployment is close to its peak. However, a decline in the size of the labour force is part of the reason for this and the Government is under no illusion in this regard. The labour force is declining for two reasons, outward migration and falling participation rates.

In terms of migration, I am advised that the number of non-Irish nationals in the labour force is estimated to have declined by 33,600, 10%, year-on-year in the fourth quarter of 2009. While no firm data are yet available, there is also considerable anecdotal evidence of outward migration of Irish nationals. I am also informed that the labour force participation rate fell by 1.7 percentage points year-on-year in the fourth quarter of last year, although participation rates remain higher than the euro area average. The budget day forecast is for unemployment to average 13.25% this year. While this is still too high, it must be remembered that this time last year some commentators were projecting an unemployment rate in excess of 16% for this year.

There is now mounting evidence that economic conditions are stabilising and most commentators now expect a resumption of positive growth from the second half of this year. As the economy gains momentum, we can expect a positive dividend in the labour market, both in terms of reduced unemployment and the return of many recent migrants.

Turning to the public finances, the Exchequer deficit at end-March 2010, at €3.9 billion, was generally in line with expectations for that point of the year. Tax and expenditure performances to end-March were broadly in line with my budget plan. At this early stage it is unwise to draw too much from the monthly data as there is considerable volatility in the figures. My Department continues to analyse the emerging trends and I have no reason to change my view in relation to budget day targets. When data for the first half of the year become available, a clearer picture will become evident.

While the Minister and his Government remain obsessed with bailing out the banks and the developers, will he not agree that the greatest single social and economic challenge facing the country is to get nearly half a million people back to work? Will the Minister say what measures, if any, he proposes to stem the relentless rise in unemployment, under-employment and emigration? In case the Minister is not aware of it, there are literally hundreds of thousands of people on short weeks, three-day and four-day weeks. This is as a result of a desperate effort by small and medium-sized employers in particular, to hold on to people and to give them some work. I note from the figures provided by the Minister there is a significant flow of emigration. The only reason the unemployment figures are slightly better than expected is because Fianna Fáil has returned the country to the valve of emigration. We are emigrating some of our best and brightest. What measures, if any, does the Government have to give hope to people that they can get employment in this country?

I am not sure what the Deputy's question is because what was said was in the nature of a political statement. The policy of the Government in this matter is, first, to stabilise the public finances. Dramatic progress has been made in that regard. The reduction required in 2009, as a result of the various budgetary measures, was 4% and the envisaged reduction or adjustment is 2.5% this year in GDP terms. These reductions have been commented upon here and elsewhere as being essential to put this country on a competitive path. The second pillar of Government policy is competition. Clearly, the adjustment in the public finances has dramatically improved competitive conditions in the economy, with reductions in prices of goods and reductions in the cost of labour. This has made Ireland a more attractive place in which to invest and work.

With regard to banking, the Deputy, as she always does, took an opportunity to preface her statement with the defamatory suggestion that I am engaged in bailing out people. I am engaged in bailing out the economy which is very important and it requires a functioning banking business. I recall on 29 September 2008, on the night of the guarantee, the Deputy was willing to let all funding dry up in the banks on that occasion, which would have led to far more unemployment and far more serious economic dislocation in this country. That is now accepted by all reputable economic commentators. The Deputy can continue to peddle economic illusions to the people or she can face up to the realities as this Government has had to do and address the hard economic realities that require to be addressed.

Where is the Minister's jobs plan for the people who are out of work and who are taking the plane and the boat again to emigrate and leave the country where they were educated and had reasonable hope of making a living for themselves and their families? For the Minister to throw dust in the eyes of those people and have nothing to say to them is little short of a national disgrace. The Minister spoke about the sacrifices of Irish workers in both the public and private sectors on his €4 billion adjustment. That €4 billion adjustment, as EUROSTAT confirmed, was directly countered by the €4 billion the Minister put into Anglo Irish Bank which is a total waste of money. I acknowledge that on 29 September I told the Minister's officials there were problems with Anglo Irish Bank and Irish Nationwide Building Society. The Minister chose to believe in the crony friends of Fianna Fáil whereas I did not. If the Minister accuses me of that, I accept that accusation but where is the Minister's jobs plan? I ask him to show the House his jobs plan and to give hope to people who are out of work.

The Deputy is well aware there is no point in extending false and deceitful hopes to people, based on false policies, and standing up here every morning talking about jobs when she is incapable of creating a single one. The one thing that will create jobs is making the right economic decisions that will put this economy on a road to recovery. That is in what the Government has been engaged for the past two years, in the teeth of unrelenting opposition from the Deputy. This is what will restore jobs in this economy, not rhetoric and false promises——

The position is that the Government has also invested substantially in job maintenance schemes. As part of an overall package, we are investing in training and retraining. There are record numbers in third level education, all of whom are preparing for an economic recovery, which all forecasters claim will be under way later this year.

Under the Credit Institutions (Financial Support) Scheme 2008, the remuneration packages of directors and executives, including total salary, bonuses, pension payments and any other benefits, were subject to review by the covered institutions remuneration oversight committee, CIROC, arising from the provisions of the Credit Institutions (Financial Support) Act 2008.

Paragraph 47 of the scheme required each covered institution to prepare a plan to structure the remuneration packages of directors and executives. For this purpose, remuneration includes total salary, bonuses, pension payments and any other benefits received from a covered institution and its group entities, or otherwise, received by a director or executive arising from the performance of his or her functions as a director or executive. These plans covered executive bonuses including share options, if any.

CIROC reported on 27 February 2009, recommending reductions in prevailing base salary, bonus and pension levels for chief executives, chairs and ordinary board members that it considered to be, in many cases, markedly excessive.

The Government considered the CIROC recommendations in light of the further downturn in the wider economy, the current position as regards the financial position of the covered institutions and the fact that larger economies such as the United States of America and Germany have set lower caps on the salaries of government-aided financial institutions than those suggested by CIROC.

In that regard, the Government considered the CIROC recommendations regarding bonuses, pensions, long-term incentive plans and board sub-committees are appropriate but that remuneration terms should generally be lower than those recommended by CIROC.

I wrote to the chairpersons of each of the covered institutions on foot of the publication of the CIROC report seeking immediate action from the boards to revise remuneration plans so that revised remuneration packages of everyone in their organisations reflected the concerns of Government in such a way as to respect the salary cap of €500,000 or amounts recommended by CIROC, whichever is the lesser.

CIROC acknowledged it will be appropriate to introduce new bonus arrangements at a future date taking account of any long-term incentive initiatives. However, this should arise only where an institution is no longer part of a Government guarantee scheme.

CIROC also considered pension arrangements for top management should be reviewed with the payment of cash allowances to compensate for the effects of the pensions cap imposed by the Finance Act 2006. CIROC felt it unacceptable that arrangements be put in place which would be inconsistent with the intent of the relevant legislation. CIROC signalled consideration should be given to the appropriate balance between personal employee contributions and the employer contributions in respect of the pensions of senior executives.

Additional information not given on the floor of the House

Pension arrangements for senior executives in each institution should, in CIROC's view, be at least broadly similar to those applicable to the generality of the staff of the institution.

CIROC in its report recommended that the remuneration of other executives should also be adjusted to take account of the revised salaries for chief executives. The reduced salaries for executives should have regard for the need for adequate headroom between them and the chief executive.

It is a matter for the remuneration committees of the covered institutions to ensure these recommendations are being adhered to. However, it is possible that in some cases the remuneration committee is restricted because of contractual arrangements entered into with individual senior executives prior to the publication of the CIROC report. It is not in any bank's interests, as a matter of policy, to pay personnel with lesser responsibilities than the CEO higher amounts than that of the CEO unless they have no other option.

I have no legal power under the scheme to force new agreements in such cases for the duration of the existing contracts.

In general, the experience of the Department is that the recommendations of CIROC are being complied with or being attended to satisfactorily on an ongoing basis or both.

The respective covered institutions operate in a commercial fashion. Subject to contractual considerations, they are expected, in the present economic circumstances, to take account of the necessary downward adjustment in remuneration levels affecting all sectors of the economy.

The Minister wrote to all covered institutions requesting revised remuneration plans. Has any institution not sent a revised plan?

The €1 million bonus payment to Irish Nationwide's former chief executive officer, Mr. Michael Fingleton, was not covered by the CIROC's recommendations. Considering, however, that the Minister has put €100 million of taxpayers' money into the building society through special investment shares, has he written to its board requesting it pursues the retrieval of this bonus through legal channels?

Revised plans were received from Bank of Ireland, AIB, Anglo Irish Bank, Irish Nationwide and EBS and were approved. I do not have the information relating to Irish Life to hand.

Before I became the holder of the shares referred to, I inquired of Mr. Fingleton's position. The legal advice given to the Irish Nationwide Building Society indicated that the 2008 €1 million bonus payment to the former chief executive officer was a contractual one and its payment did not contravene the bank guarantee scheme.

Yes, I have. The board received legal advice that it was not permitted to request a refund. That was obtained prior to my assumption of a shareholding in the building society via the special share device.

If the Deputy, however, wishes me to reopen the matter with the board, I am prepared to do so.

On 15 April 2010, the High Court appointed full time administrators to Quinn Insurance Limited. This follows the company's decision to consent to the appointment made by the High Court on application made by the Financial Regulator.

It is the opinion of the Financial Regulator and Quinn Insurance that this step is in the best interests of policyholders. The company is still able to pay claims and renew policies in the normal way in Ireland and continues to settle claims in the UK. It also puts the business on a sound commercial and financial footing which best serves the proper and orderly regulation of Quinn Insurance and the wider insurance market.

I am conscious of the position of employees of Quinn Insurance as a result of the appointment of the joint administrators to the company. I am aware a key element in safeguarding employment in Quinn Insurance is the reopening of its UK business.

In this regard, I welcome the decision by the Financial Regulator to allow the company to write motor insurance cover for provisional driver licence holders in the United Kingdom, including Northern Ireland, with effect from 22 April. This is an important first step in ensuring the value of the business is maintained as it enhances the prospect of the administrators being able to sell the firm as a going concern.

The submission of detailed business plans and proposals for the reopening of further lines of business in the UK is a matter for the administrators. The Financial Regulator informed me he has been engaged with the administrators in recent weeks and is giving all proposals full consideration. Before making any decision on this matter, the Financial Regulator will have to be satisfied that any proposals stand up to scrutiny and are supported by robust and detailed information, actuarial analysis and pricing.

The Government remains concerned about the position on employment in Quinn Insurance generally. That is why the parties involved must continue to work to find a solution that addresses the issues of putting the company back on a sound commercial and financial footing. This is the best way of protecting jobs and the wider interests of the taxpayer.

The administrators said they will continue to engage constructively with staff and management at the company as they endeavour to secure its future. They will be meeting with staff representatives on Friday, 30 April, to advise them of their decision on what measures are necessary for employment levels as part of the recovery plan for the company.

I cannot comment directly on the issue of the number of companies that have expressed an interest in acquiring Quinn Insurance as this is a matter for the administrators rather than my Department. However, I am aware the administrators have indicated that a significant number of companies have expressed an initial interest in the company.

A complete analysis of the financial position of the company is still being carried out by the administrators and this must be completed before there is further progress on this matter.

Regarding the broader Quinn Group, I have been informed by the Minister for Enterprise, Trade and Employment, Deputy Batt O'Keeffe, that the chairman and chief executive of Enterprise Ireland met with the senior management of the group earlier this month. He has indicated that Enterprise Ireland stands ready to provide all possible support to the company with a view to maintaining the maximum number of jobs when the company's position is clarified presently.

The Minister will be aware there is a great deal of shock and uncertainty among employees in the Quinn Group. All of them support the work of the Financial Regulator and administrators. What is the Government's approach to the protection of employment in the group?

Two weeks ago, newspapers reported the chairperson-designate of the State-owned Anglo Irish Bank on the €2.8 billion debt owed by Mr. Quinn and his family to the bank. The Minister has a relationship agreement with the bank. Will he clarify if he was consulted about those proposals by the bank?

If a State bank is, in effect, acquiring an insurance company, do issues arise regarding competition or EU regulation? In particular, in the context of the relationship agreement, has the Minister been advised by the chairman of Anglo Irish Bank about the proposals that were reported in the media about two weekends ago? That is all we need. The lights have gone out.

Yes, but I think I can throw some light on the questions the Deputy asked. I agree with the Deputy. The Government is very concerned about the preservation of employment, both in the insurance company and in the wider Quinn Group. That is a core concern of the Government, which is the reason we asked the chairman of Enterprise Ireland to take an interest in this matter just before Easter. I am aware he has liaised with the Minister for Enterprise, Trade and Employment about that particular aspect, which is of fundamental importance.

The Deputy rightly made the point that there is a substantial indebtedness, which has been acknowledged by Mr. Quinn, his companies and associated members of his family, to Anglo Irish Bank.

The next issue we must examine is the question of what the Government has done to support the efforts of the administrator and the regulator to sustain the viability of the Quinn Insurance company. In that connection, the Government authorised the Secretary General of the Department of Finance to put our regulator in possession of a letter of comfort from the Department of Finance for the attention of the United Kingdom authorities which made clear the legal implications of the nature of the State guarantee that already exists in our legislation for policy holders. Naturally, the United Kingdom authorities were concerned about that.

If it is a short supplementary I can continue with the Deputy's questions.

We then have the question of Anglo Irish Bank and the relationship agreement. As I said in my reply, I am not privy to information on who is bidding in the capacity of any information the regulator would give me from the administrator but I am aware, from the chairman of Anglo Irish Bank, that Anglo Irish Bank is naturally anxious to minimise the exposure of the taxpayer in connection with the realisation of any liabilities or security it has over both the wider Quinn group and Quinn Insurance. In that connection, it is preparing a proposal for the consideration of the administrator but that proposal will have to be considered by the administrator of the court and will have to be approved under the relationship agreement by myself and the Government as well.

The Minister spoke about the motor insurance business being resumed in the UK market, which is a matter of great concern to employees of Quinn Insurance. He spoke also about motor insurance for young drivers but I understand that is only 10% of the market in the UK. Is the Minister aware of the progress, if any, that is being made on other lines which are apparently profitable — nobody is talking about unprofitable lines — and what the timeframe might be? The Minister referred to the Secretary General of his Department sending a letter to the UK authorities, presumably to the Financial Services Authority, HM Treasury or to both——

First, in regard to the United Kingdom motor business, as Deputy Burton correctly stated, the learner driver side of the market has been opened and substantial progress is being made on other elements of the motor business. However, the pricing of any policies offered in the United Kingdom must be at realistic levels. That issue has delayed progress somewhat to date but I have been advised by the regulator today that he has made progress on that issue and hopes to resolve matters within a relatively short period of time.

On the question about the chairman of Enterprise Ireland, his involvement is focused exclusively on the job creation aspect and advising the Minister for Enterprise, Trade and Employment of the possibilities in that regard and, through him, the Government.

I do not have a preferred approach to the future of Anglo Irish Bank as suggested by the Deputy in his question. Indeed, I made that clear in my reply to the debate on banking which took place before Easter. As I told the House on 1 April 2010, my only concern is to minimise the cost to the taxpayer of Anglo Irish Bank. The Deputy will be aware that Anglo is currently updating its restructuring plan to take account of the EU Commission's response on the initial plan submitted by the bank on 30 November last. The plan will examine all options for the bank's future, including immediate liquidation, wind-down over a longer period of time, a split between a good bank and an asset management company, and maintaining the bank in its current form as a going concern. The revised plan is to be submitted to the EU Commission by the end of May of this year. Significant further work remains to be done by the bank and its advisers on the updated restructuring plan to test and verify the assumptions in each scenario for the future of the bank.

The Deputy will appreciate that at this critical juncture in the process and having regard to the commercial sensitivity of the information and the need to ensure proper protocols are observed in dealing with the EU Commission, it is not appropriate for me to publish the details of the plan which is still a draft. The EU Commission in publishing its decision will include all information pertinent to the decision, subject only to an objective assessment on the commercial sensitivity and confidentiality of the information.

I assure Deputy Bruton that my main concern is to ensure that in any plan the interests of the taxpayer are paramount and that my preferred approach to the options presented in the plan will be consistent with that concern. Any plan submitted by the bank will be reviewed by me and my advisers and I will take advice also from the Central Bank, the Financial Regulator and the National Treasury Management Agency.

I have no plans, therefore, to give full details of the worked costings of the options regarding the future of Anglo Irish Bank at this time. I noted Deputy Bruton's article in the Sunday Business Post last Sunday and I am formulating a reply to it.

Has the Minister obtained any independent estimate of the cost of these various options within Anglo Irish Bank? I ask that question because I heard him quote in the past documents coming from Anglo Irish Bank in respect of its estimate. It based that estimate on the basis that the loans being transferred to NAMA were worth €26 billion when it transpired it was out by €7 billion. There was a massive gap. Are we depending on the somewhat rose-tinted assessments that are conducted within Anglo Irish Bank for the direction of public policy in this area or has the Minister independent assessment? If so, will he publish that assessment?

It cannot have escaped the attention of the Minister that even the former chairman of the finance committee is now taking issue with the notion of Anglo Irish Bank as a going concern and believes we should opt for an orderly wind-down. Has the Minister moved away from the notion that Anglo is a going concern? Has he abandoned that which was the pillar of the Government's approach for a very long time and repeated time and again by him and the Taoiseach?

The Deputy has asked a number of questions. To give a context to this debate we should heed what the Governor of the Central Bank had to say. He stated:

Let me make it absolutely clear about Anglo. The management have a plan and broadly I think the plan makes a lot of sense. [Note, he said "broadly"]. I think that is the lowest cost solution for the taxpayer and therefore I am backing that.

He may not have seen it but let us be clear. The Deputy's first question was whether the Government obtained independent advice about these matters. That is an important question. The Government had retained Rothschilds as independent commercial advisers in all these matters. The Government also has the NTMA to advise it on these matters. The Government established an independent statutory body, NAMA, to give a good, honest valuation of the loan book, which we obtained. There were many who argued — the Deputy was not among them, in fairness — that we should simply split each bank in two and let each bank decide the value of its defaulting loan book. We did not do that, and I am not suggesting the Deputy urged it by the way but quite a number of commentators in the NAMA debate did suggest it.

Let us be clear. The Government has independent advice. I am open to suggestions from all parties as to the way the cost can be minimised but it is important that we recognise that the bank must formulate a plan with which I do not interfere. At that stage, I assess and express my views on the plan and engage on it with the Commission. The Central Bank, Financial Regulator and National Treasury Management Agency, NTMA, are available to advise and comment on the plan.

Deputy Bruton's final point relates to Anglo being a going concern, which is important in terms of access to funding for Anglo Irish Bank. This remains the position until final definition is brought to the future of Anglo Irish Bank through approval of an EU restructuring plan. On the restructuring plan, I made clear in the statements on banking in the week prior to Easter that I do not see the prospect of an immediate wind-up, which is earnestly desired by large segments of the population, as being of benefit to the taxpayer.

However, I do accept that a longer-term work out is an option that must be examined. The question raised by the chairman-designate of the bank in regard to the possibility of exposure to the taxpayer being further reduced by carving a good bank, from which further profit can be made, out of the loan book of the bank will also have to be examined.

I have two supplementary questions for the Minister. Did Rothschilds endorse the first Anglo version that assumed its loans transferring to NAMA would be far more valuable? This might give us an idea of the quality of the advice the Minister is getting from Rothschilds. Also, when will the House see legislation for the orderly resolution of a bank that is no longer of systemic importance to this country? We have been waiting for this legislation, without which we cannot have proper options on the table. When will this long promised legislation come before the House?

On the resolution legislation, work on it is under way in my Department. It is complex legislation. The United Kingdom succeeded in drawing up legislation but, in many respects, the implications of it have been found to be unsatisfactory. Other jurisdictions which have attempted to formulate such legislation have failed to date to do so. I am engaged in this operation, as are my officials. However, the House will appreciate that the core priority for me at this stage in regard to the five actual institutions that have been taken into NAMA is to have a credible posture and future planned for them. We have already finalised this in respect of Bank of Ireland. A capital plan in respect of Allied Irish Bank must be submitted by the end of this month. We are making rapid progress in that regard.

I agree with the Deputy that this matter of a resolution device is important for the future. In terms of the institutions, what is needed now is a tailored plan for each of them. Where Anglo Irish bank is concerned that tailored plan must be determined in the context of the discussions with the European Union and the structural plan.