§ Mr. Kenneth Clarke
asked the Secretary of State for Industry what estimate or provison has been made for the possible cost to public funds of the new scheme under Section 7 of the Industry Act 1972 to guarantee borrowers from the European Investment Bank in assisted areas of the United Kingdom against possible foreign exchange losses; and how many applications for cover under the scheme have been made so far.
§ Mr. Cryer
The cost of the scheme will depend on movements of the sterling exchange rate as well as on the number and amount of applications for cover which are agreed. If sterling appreciates between the date of disbursement of an individual loan and the dates of payment of interest and capital, the Government will make a profit. The Government's charge of 1 per cent. per annum on the value of the outstanding loan will cover administration and will also help to offset the cost of the scheme in the event of sterling depreciation. A number of inquiries have been made about the scheme, which was introduced on 1st January. None of these has yet reached the stage of a formal request for cover.