§ Mr. Jim Spicerasked the Secretary of State for Trade if exchange risk cover can be made available on loans granted by the European Investment Bank to United Kingdom companies investing in tourism projects.
§ Mr. NottAt present, total funds available annually for the assistance of tourism projects in the United Kingdom amounts to about £10½ million. Present constraints on public expenditure prevent further Government support. I have therefore been examining ways of increasing the flow of funds into tourism, one of our largest and most successful industries.
The Government have now decided to extend the existing exchange risk guarantee scheme which covers loans from the European Investment Bank to eligible tourism projects in the assisted areas, thereby enabling the tourist industry to benefit from loans at low interest rates. The guarantee will cover borrowings up to a total of £20 million and will be open to loans arranged before 31 December 1981.
879WPreference will be given to smaller firms, with a present minimum limit for loans of £15,000. This lower limit is required by EIB rules but the availability of these funds will release more from existing schemes—for which there is no lower limit. The interest rate on EIB loans is currently around 10 per cent. The premium for exchange risk cover will be 1 per cent. a year in the special development areas, including Northern Ireland, and 2 per cent. a year elsewhere.
This scheme, which will more than double the flow of funds into tourism from EC and public funds, will, I believe, enhance employment prospects in the construction, supply and tourist industry itself and prove very welcome.