HC Deb 18 May 1981 vol 5 cc9-10
12. Mr. John Browne

asked the Secretary of State for Industry what action he is taking to extend facilities for borrowing by small firms from such organisations as the European Investment Bank and the European Coal and Steel Community.

20. Mr. Trippier

asked the Secretary of State for Industry if he will take steps to extend facilities for small organisations to borrow from the European Investment Bank and the European Coal and Steel Community.

Mr. MacGregor

On 30 April I signed a £5 million exchange risk agreement with Midland Bank Industrial Equity Holdings Ltd. which will assist it to make European Investment Bank foreign currency loans available to small firms in the assisted areas of England and Wales. This agreement complements the agreement that I signed recently with Finance for Industry Ltd. and the Government's own EIB agency scheme—both of which cover loans to small firms throughout the assisted areas and in Northern Ireland.

Mr. Browne

I thank my hon. Friend for that reply. What further steps does he envisage taking to encourage United Kingdom banks to extend still further their present help to small businesses?

Mr. MacGregor

One bank has so far applied for the EIB loan. The EIB and the European Coal and Steel Community are discussing similar global loans with a number of other organisations, which might include banks. Applications for exchange risk cover will be considered. Already in the last year or so the banks have introduced a much wider range of financial facilities for small firms. The loan guarantee scheme will be another major addition.

Mr. Trippier

I thank my hon. Friend for his initial reply. Will he seriously consider ways of retaining the facility of loans from the European Investment Bank and extending it to assisted areas, such as my constituency, which is an intermediate area, when it loses that status on 1 August 1982?

Mr. MacGregor

The problem is that the EIB loan finance is for the development of the less-developed regions and assisted areas. The ECSC finance is for coal and steel closure areas. The change in area status in my hon. Friend's constituency will take place in August 1982. The loans are for seven to eight years. Therefore, my hon. Friend's constituents have a year in which to take advantage of the scheme. The loan will last for seven or eight years thereafter.

Mr. Campbell-Savours

Is not the threshold on EIB loans about £100,000? Is not the reason why some companies have not been able to take advantage of the loans the fact that they do not want that level of facility?

Mr. MacGregor

I am grateful to the hon. Gentleman, because he enables me to clear up a misunderstanding. The schemes that I have announced are specifically for small firms. We have arranged them so that there will be the minimum paperwork and so that firms can take advantage of them quickly. The minimum threshold is £15,000, which is the EIB's own minimum. It therefore applies to a wide range of small firms.

Mr. John Page

I welcome my hon. Friend's reply. Is he satisfied with the co-ordination, especially across different Departments, of the whole Government package to help small businesses?

Mr. MacGregor

The Government have undertaken a wide range of measures across the Departments specifically to assist small firms. That shows our determination to help the small business sector, and it shows also that co-ordination is good.