The Irish Independent reports that thousands of motorists will be hit with a €900 road tax hike if they use their work vehicles for family or social journeys.

Environment Minister John Gormley has ordered local authorities to force drivers of commercial 4X4s and small vans to legally declare that they will not use them for any social, domestic or pleasure purposes. The move will come as another blow to small businesses already reeling from a spate of stealth taxes imposed by the cash-strapped Government. And it will impose a crippling penalty on those drivers who have lost their jobs or businesses but rely on their old work vehicles for family or social reasons. The changes were last night branded as "silly and unenforcable" by the Automobile Association (AA).

Business groups described the move as another attack on small firms. Under the changes, owners of all commercial 4X4s will have to sign a new Goods Only Declaration in a garda station. They will have to state the vehicle will not be used "at any time for social, domestic or pleasure purposes".

If they sign the declaration and subsequently get caught by gardai using the vehicle for shopping, going to Mass or dropping children off at school -- or any other private run -- they will face fines and possibly prison.

Alternatively, they will have to pay an average of €1,204 instead of the reduced rate of €288 for commercial motor tax.

In the directive -- issued to local authorities on August 10 last -- motor tax officials are told to insist that all owners of commercial vehicles sign the revised RF111A declaration.

It also states it had come to officials' attention that an increasing number of vehicles had been switched from private to commercial for motor tax.

The councils are told to look for the declaration to be completed and for a more thorough assessment of existing declarations. This requires the owners to provide a tax clearance cert, their VAT registration details, commercial insurance certificate or other business registration detail.

A spokesman for Mr Gormley last night said the directive was issued to local authorities in a bid to close a loophole whereby owners of commercial 4X4s used largely for personal use were paying motor tax at the commercial rate instead of the private rate.

"There has been an increase in people trying to avoid paying motor tax by claiming that the vehicle is used solely for commercial use. People are trying to exploit this tax loophole," the spokesman added.

However, Fine Gael TD Denis Naughten said that the move could be the "final straw" for small businesses that were already "on a tightrope at present".

Chaos

He added: "This overnight change is causing chaos and hardship to people who had not planned for such costs, especially as many families are struggling to meet the enormous costs of going back to school."

Mr Naughten also said he believed it would be impossible to enforce the new directive.

AA spokesman Conor Faughnan agreed and described the directive as "silly".

"This is rather excessive. If a plumber has a van full of tools and uses the same van to go to Mass on Sundays, it is ridiculous to suggest that he pay tax at the higher private rate because he is using it for social purposes," he said.

"If I am stopped in a van with a bag of groceries, am I going to be asked if they are for my home or for my business? This is just pure silly. This will be extremely difficult to enforce and I quite frankly don't see what good it will do."

Irish Small and Medium Enterprise organisation chief executive Mark Fielding said small businesses were already reeling from the recently introduced carbon tax on fuel.

"This is yet another cost on small businesses and that is the bottom line," he said.

The Irish Independent also reports that the National Asset Management Agency (NAMA) is now kingmaker for 35 Irish hotels after a dramatic surge in the level of hotel-linked debt parked with the bad bank.

Figures on the second batch of NAMA transfers also show a surge in non-Irish debt.

Just 50pc of the loans sent over in the second batch were linked to Irish projects, compared with a 66pc contingent in Tranche 1.

Loans for projects in the UK and the Channel Islands accounted for 44pc of the second tranche transfers, significantly up on their 30pc share of the first batch.

A quarter of the entire €11.9bn sent across was secured on 31 hotels, including 22 in Ireland. The picture is in stark contrast to the first tranche of transfers, when just 4pc of the €27.2bn transferred over was secured on hotels.

The latest figures are understood to be inflated by the transfer of a sizable debt relating to a UK hotel group.

The extra 22 Irish hotels brought into NAMA's reach by the latest transfers brings the total number of NAMA-linked hotels to 35, while NAMA also has a claim on 13 non-Irish hotels.

The State's bad bank doesn't own or directly operate the hotels, but it can have a major say in their futures.

Developers will be required to include detailed strategies for the hotels when they present their business plans to NAMA over the coming months.

NAMA will have the power to interrogate aspects of the plans, and can also suggest borrowers sell their hotels to pay debts.

Since the hotels are being used as security for loans, NAMA is also empowered to seize the hotels in the event of developers defaulting on their debts.

In its business plan, NAMA hints that it may close hotels where a "number of NAMA-funded hotels are competing in a location where there is only potential for a single facility".

Optimal

"NAMA will make its decision based on the optimal commercial outcome," the business plan adds.

NAMA's growing influence in the hotels sector comes amid dire warnings from the Irish Hotels Federation (IHF) about the detrimental market-impact of hotels artificially propped up by banks.

The IHF is expected to formally ask the Competition Authority to probe NAMA's position in the market once the bad bank begins seizing hotels.

Yesterday's data on the second tranche of NAMA transfers also revealed that Anglo Irish Bank has taken a worse-than-expected 61.9pc writedown on it debt.

Anglo got securities worth just €2.57bn for the €6.75bn of loans it transferred over, an outcome significantly worse than the 55pc discount on Anglo's Tranche 1 transfers.

The second batch of transfers came in at an average discount of 56.5pc, against the 50pc discount of Tranche 1, largely due to higher discounts at Anglo and Irish Nationwide.

Delayed

Figures for all institutions bar Anglo were released in August, with nationalised Anglo delayed due to the administrative burden of dealing with its massive transfers.

Across sectors, development remained the dominant category in the second batch, with 43pc of all loans secured on developments less than 30pc completed, compared with 52pc in Tranche 1.

The Irish Times reports that current funding of higher education is “unsustainable” and the system requires a major injection of up to €500 million per year, to cope with record demand and meet Government targets for the economy, an expert group has concluded.

With colleges facing a 30 per cent increase in student numbers, the expert group – chaired by economist Dr Colin Hunt – says funding must increase from €1.3 billion to €1.8 billion per year by 2020. It says funding should virtually double to €2.25 billion by 2030 “with additional costs for infrastructural investment maintenance and refurbishment”.

Third-level colleges are already grappling with a deepening financial crisis as they struggle to cope with a forecast additional 55,000 students over the next decade. The Government has identified the universities as a key player in reviving the economy, but doubts have been raised about the sector’s capacity to drive growth, given the current strain on resources.

The report says that there has been “persistent underfunding by international standards” of higher education.

It was drawn up by the National Strategy Group for Higher Education, chaired by Dr Hunt, which was established by the Government last year to set a blueprint for the development of third level education over the next two decades. As previously reported, the group is calling for the return of college fees and the urgent introduction of a student loan scheme.

However, the new details of the extent of the funding gap in the third level sector identified in the report emerged yesterday.

The report, which will be presented to Cabinet shortly, backs a new system of student contribution – notably a student loan or deferred payment scheme – saying the continuing dependence of colleges on the exchequer for funding is no longer feasible.

It recommends arrangements for widening the resource base of higher education institutions and this strategy should include a new form of direct student cost contribution.

The report does not accept the case made by some of the institutes of technology (ITs) – notably Dublin, Cork and Waterford – for university designation. Instead, it holds out the prospect of them being designated as “technology universities” – but only if stringent criteria are met.

The report also backs closer collaboration between universities and the ITs “where this will contribute to ensuring maximum returns from public investment in the system as a whole”. It also backs the concept of regional “clusters”, where colleges work together to provide expertise in specific areas.

The expert group is critical of the low level of provision for mature and part-time learners. It wants greater emphasis on “flexible learning opportunities, part-time provision, work-based learning and short intensive upskilling programmes”.

It backs full parity for part-time learning, giving such students the same access to grants and other supports as full-time students.

Other key recommendations of the report include:

• A smaller number of colleges with greater consolidation and collaboration across the system;
• A review of the grading system and the external examiner system;

Dr Hunt is a former adviser to Taoiseach Brian Cowen in the Department of Finance. Other members of the strategy group include Brigid McManus, secretary general of the Department of Education; Michael Kelly, chairman of the Higher Education Authority; Dr John Hegarty, provost Trinity College Dublin; and Paul Rellis, managing director of Microsoft Ireland

Earlier this year, an internal Higher Education Authority report said an investment of more than €4 billion would be required over the next decade to upgrade facilities.

The report conceded that such investment was “highly unlikely” in the current economic climate.

The Irish Times also reports that the second tranche of assets purchased by the National Asset Management Agency (Nama) from Anglo Irish Bank does not include some of the bank’s loans to developer Paddy McKillen who is challenging the agency in the courts.

Mr McKillen has loans totalling €800 million with Anglo, which were earmarked for transfer in the second tranche. It’s understood that the transfer of most of his loans to Nama are on hold, pending the outcome of his judicial review against their sale.

The case is due to be heard by the Commercial Court in October.

Nama had originally planned to purchase loans with a face value of €8 billion from Anglo in the second tranche, but the agency yesterday said that it had purchased loans with a face value of €6.75 billion from Anglo, paying €2.57 billion or a discount of 61.9 per cent.

Anglo’s loan transfers completed the second tranche, bringing to €27.2 billion the total loans bought from five institutions – Anglo, AIB, Bank of Ireland, Irish Nationwide Building Society and the Educational Building Society. Nama has paid €14.2 billion for 3,518 loans, representing an average discount of 52.3 per cent across the first two tranches.

The agency plans to purchase loans totalling €81 billion, leaving a further €53.7 billion to be purchased before next February.

Due diligence and the valuation of the third tranche of €12 billion in loans is under way and should be completed by the end of next month, Nama said in a statement.

The higher discount applied to Anglo’s second tranche has led to concerns that the discount on later transfers may be higher again, raising fears that the State-owned bank’s capital needs could rise above the €24.3 billion approved by the European Commission.

Anglo has so far received €14.3 billion from the State – €10.3 billion by way of promissory notes and €4 billion in cash.

The bank is finalising its half-year results to the end of June and the next capital injection required to cover the spiralling loan losses.

The figures, which are due to be published next Tuesday, will take account of both losses on the Nama loans and further impairments on Anglo’s non-Nama loans.

Nama paid €130 million less than the current market value of property backing the loans and some €660 million less than the long-term economic value. The price paid was reduced to account for poor documentation and security, and to cover enforcement costs of recovering loans.

Only EBS was paid in excess of both the current market value and the long-term economic value of property securing its loans.

Loans in Northern Ireland were transferred to Nama for the first time in the second tranche. Some 50 per cent of the €11.93 billion in loans in the tranche were in the Republic of Ireland, 44 per cent were in Britain and the Channel Islands, 3 per cent were in Northern Ireland, 2 per cent were in the US and Canada, and 1 per cent in the rest of the world.

Some 23 per cent of loans were on hotels, compared with 4 per cent in the first tranche. Of some 31 loans secured on hotels, 22 are in Ireland, compared with 17 in the first tranche, including 13 here.

The Irish Examiner reports that the Central Bank has warned that banks arelacking clarity and transparency when communicating with customers who switch their mortgage product from a tracker rate to a variable or fixed rate.

The bank is now calling on lenders to include full information on the ‘small print’ consequences to customers of switching loan product, specifically from a tracker mortgage to alternative rate loans.

The calls came following the publication of its examination into switching practices relating to tracker and other mortgage products, based on studies it carried out over the past two years. The bank found that, in numerous cases, communication on the financial implications and consequences of switching weren’t fully transparent to the customer. The Central Bank said: "As a result of this finding, mortgage lenders have been requested to fully disclose the impact of any switch from a tracker mortgage rate in all customer communications, with immediate effect. Customers must be notified that switching from a tracker rate may mean they’ll lose the ability to avail of a tracker rate mortgage in the future."

The Irish Brokers Association has urged anyone feeling pressurised into switching from tracker to other mortgages to seek advice from independent brokers.

"It’s difficult to countenance any reason for consumers to willingly give up a tracker mortgage in favour of a fixed or variable rate," said IBA chief executive Ciaran Phelan.

The Professional Insurance Brokers Association called the report a step in the right direction to gaining greater transparency for customers. It is also recommending people still on tracker mortgages should remain with them.

Separately, a "misclassification" of mortgage customers, by Permanent TSB, has resulted in the bank overcharging consumers by a combined €1.5 million.

Around 300 of the bank’s fixed-rate mortgage customers were overcharged, and had not been offered a tracker mortgage rate when initially applying for their loan.

Those affected will now receive a refund of €5,000, plus interest and the option of switching to a new tracker mortgage at backdated interest rates.

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