§ Mr. Alfred Morris
asked the Secretary of State for Trade and Industry if he will make a statement on the extent to which his Department's practice in respect of the underwriting of loans to private companies is based on, or comparable with, commercial practice in relation to guarantees or underwriting of loans; and if he will make a statement.
§ Mr. Trippier
The Department of Trade and Industry underwrites loans in accordance with legislation and with Treasury consent in circumstances and on terms which would not normally be available commercially. The main guarantee arrangements currently operative in support of privately owned companies are:
- (a) use of sections 7 and 8 of the Industrial Development Act 1982 to provide guarantees and exchange risk cover on European Community loans, to guarantee bank lending to small firms, and to underwrite financing arrangements in special circumstances to individual undertakings;
- (b) to guarantee lending under the Home Shipbuilding Credit Guarantee Scheme using Section 10 of the Industry Act 1972.
Premiums are usually charged and security taken as appropriate in order to minimise the contingent liability on public funds.