§ Lord O'Haganasked Her Majesty's Government:
What view they take of the European Investment Bank's lending schemes for small businesses; and which areas of the United Kingdom have been most successful in securing loans under the scheme.
§ Lord CockfieldThe Government wish to encourage the take-up of loans from the European Investment Bank by small firms and operate the Exchange Risk Guarantee Scheme, which protects borrowers against potential losses arising from currency fluctuations.
Since 1978, when the Exchange Risk Guarantee Scheme was introduced, until March 1983, European Investment Bank loans to small firms were confined to projects located in the Assisted Areas, but loans are now available throughout the country using funds made available from the New Community Instrument which is also operated by the European Investment Bank.
The breakdown by geographical regions of European Investment Bank loans made since 1978 through the agency operated by the Government is as follows:—
Northern Ireland Wales Scotland North East North West £m £m £m £m £m 2,297 9,557 9,357 21,225 2,715
Yorkshire & Humberside East Midlands West Midlands* South East* South West £m £m £m £m £m 10,942 1,848 0 0 10,057 Details of loans made through other agencies operated by banks and other financial institutions are not readily available. *The West Midlands and South East regions contain no Assisted Areas. Background Notes: 1. Since 1978 the Department of Trade and Industry (with Scottish, Welsh and Northern Ireland Offices) has operated an agency from the European Investment Bank designed to provide small to medium sized firms with loans in the £15,000– £250,000 (originally £2,500,000) range.
2. Because of the relatively poor level of interest in loans at the lower end of the scale, Ministers agreed to provide exchange risk cover to encourage banks and other institutions to take up agencies from the European Investment Bank. These loans are limited to small firms with an upper limit of £250,000 (originally £50,000). In cases where no other selective financial assistance is involved—the great majority—a streamlined appraisal procedure operates which enables departments to respond to applications for exchange risk cover in a matter of days.
3. The following agencies are now in operation:—
680WA Further agencies are under consideration. The Government have indicated their willingness to provide the appropriate exchange risk cover within the overall ceiling on borrowing.
Assisted Areas European Investment Bank Non-Assisted Areas New Community Instrument ICFC ICFC Midland Bank Midland Bank National Westminster Bank National Westminster Bank Scottish Development Agency Barclays Bank Clydesdale Bank Welsh Development Agency Barclays Bank 4. The exchange risk scheme has just been extended until the end of 1984 but its future thereafter is under review. However, there is no question of withdrawing either existing agency facilities or those where a facility has been offered to an agent.