Taoiseach Enda Kenny has all but ruled out Labour party proposals to cut the bankruptcy term to one year.

Mr Kenny told the Dáil he was not objecting to the Bill by Labour TD Willie Penrose to reduce the bankruptcy term from three years. But he said an Oireachtas committee should examine the prospect before any decision is made.

“I believe the Oireachtas committee should certainly look at this question,” he said.

“We should take into account all the small and medium-sized enterprises and the credit unions that are owed money.

“They would lose and the taxpayer would have to pay for all of that. It is not as simple as it seems to say that a reduction from three years to one year is a panacea for all these issues.”

Fine Gael is resisting the proposals from Labour to reduce the bankruptcy term and bring it into line with Northern Ireland and the United Kingdom where it is one year.

Mr Kenny confirmed their opposition to the proposals today. He said: “I see certain people applying pressure now to the effect that this Bill should be introduced automatically.

“A well-known and well-publicised case is currently being considered. I understand that there are many millions owed in that case. If bankruptcy applies, then clearly there are serious losses on that scale.

“It is not an answer to everyone’s problem. Perhaps the Oireachtas committee could do a useful exercise in looking at the issues, for example, how they affect small and medium-sized enterprises, credit unions and smaller contractors who are owed money but who will not get it if there is a simplicity factor whereby a debtor can decide to become bankrupt and say ‘tally-ho’.”