We cannot have a sound economy without small businesses. Three years ago, 800,000 people worked in the small business sector, in tourism, services and manufacturing. That number has declined to 700,000 and on current projections is likely to further decrease to 600,000 next year.

The banking strategy set out by the Government has failed in so far as small businesses are concerned. The Taoiseach said that we will write whatever cheques are necessary. Those cheques have thus far amounted to €74 billion in taxpayers' money. When the guarantee scheme was introduced, the Minister for Finance stated that the Government is deeply embedded in the banking sector and, as such, would bring leverage to it.

The Minister also asserted that NAMA would bring a wall of cash for credit. On 17 December 2009, the Taoiseach stated: "Passing the legislation will cleanse the balance sheets of the Irish banks and so enable them to increase the provision of credit which is their core role in the economy." These words were not true. I reminded him on that occasion that NAMA was a secretive and politically directed work-out for banks, developers and speculators which would do nothing to address the fundamental issue of getting credit flowing. It was the most costly and riskiest solution for the Irish taxpayer and it was deeply unfair.

In light of the comments made in the past few days and again this morning, does the Taoiseach accept that his Government's banking strategy in regard to providing credit on proper terms to small businesses has failed and, as a consequence, the Irish small business sector is facing destruction? The Government can respond to this if it has the courage to do so.

Hear, hear.

I do not agree with the Leader of the Opposition that we can fix the banking system without recapitalising the banks. That intervention has been found to be necessary by every government in the developed world, with the exception of Canada.

It is the way that one does it.

It is important to recognise that the recapitalisation of the banks was an absolute necessity to get credit flowing and return them to their core business of lending to the real economy. This involved cleaning up their balance sheets and providing an outlet to NAMA. I reject the Deputy's suggestion on the motivation for NAMA and consider it an awful slur against the integrity of those who run the agency, including its chairman, the former chairman of the Office of the Revenue Commissioners. The very good outline of NAMA's progress that the chairman gave in a speech he made last week gives the lie to the sort of politically motivated attack which the Deputy repeated. He was inaccurate then and is inaccurate now.

The Taoiseach is the one who is making a slur.

Answer the question.

Allow the Taoiseach to continue without interruption.

To assist small businesses, or any business, we have to get banking back to its core function of providing credit to the real economy. That required recapitalisation of the banks and the provision of credit. The credit review arrangements we have put in place under Mr. Trethowen allow appeals by viable but vulnerable businesses against bank decisions which they feel are unjustified.

What about the foreign banks that are sticking the boot in?

I completely reject the Taoiseach's remark that my party cast a slur on the former chairman of the Revenue Commissioners. When the Minister for Finance contacted me about that gentlemen, I described him as a person of absolute integrity and I have no difficulty with him whatsoever.

Why refer to him as a political operator then?

My point is that NAMA is a secretive organisation which was set up by the Taoiseach. The fees it pays to accountants and lawyers will make the tribunal fees look like chicken feed.

The Taoiseach did not answer my question on whether he accepts that his banking strategy has failed in so far as small businesses are concerned. This morning I listened to the Minister for Enterprise, Trade and Innovation admit that the Fine Gael Party and others were correct to argue over the past 15 months that small businesses throughout the country are unable to get credit from banks. He is like a travelling troubadour who visits every bank to plead with them to give credit to small businesses in the name of God. This is unseemly at best.

The banks are either demanding personal guarantees from small businesses or making it so difficult that they will only lend on the basis of property. They are unwilling to consider loans on the basis of cashflow or volume of turnover. Will the Taoiseach adopt the practical and sensible solution suggested on numerous occasions by Deputy Bruton and set up a national recovery bank employing no more than 50 or 60 people to drive a loan guarantee scheme? This would shift the banks from their obstinate refusal to lend to small businesses under normal conditions to a situation where credit flows again. Similar initiatives are being implemented in other countries at a relatively small cost. I understand the guarantee on bank deposits has earned between €800 million and €900 million. I am aware this money goes into a fund in the Central Bank but it could be used to fund a loan guarantee scheme.

That should be done in the interest of protecting at least 100,000 jobs. It should be done in the interest of the thousands of small businesses that are struggling and listening to the Minister for Enterprise, Trade and Innovation telling them only that if their loan application is turned down, he will tell them how to appeal it. That is no consolation or comfort to small businesses struggling to hold onto employees. Is the Taoiseach prepared to consider a loan guarantee scheme for small businesses throughout the country which would get credit flowing again, protect jobs and strengthen the Irish economy? A fundamental sector of the economy is being destroyed by a bank policy that is concerned only with protecting shareholders and building up reserves.

Hear, hear.

In setting out the recapitalisation plans for the banks, the Minister for Finance gave a statement to the House indicating that he is awaiting sectoral plans from the banking system in respect of those banks that are in the process of recapitalising. Bank of Ireland is doing so currently. It is about making sure the €3 billion per year that the Minister has outlined for this year and next to be provided for lending to business will be enumerated and that it is set out to him and to the regulator how that is intended to be done by the banks. We are in the process of recapitalising the banks and in the process of obtaining those plans in coming weeks. The Government will do everything it can to ensure those targets are met by thebanks.

Will the Taoiseach consider a loan guarantee scheme?