§ Mr. Tim SmithTo ask the Secretary of State for Employment what has been the total cost to the Exchequer of the loan guarantee scheme to 31 March; what has been the cost per loan guaranteed; and what assumptions have been made about additionality, displacement and failures in computing the net Exchequer cost of the scheme for persons leaving the unemployment count given to the honourable Member for Surrey, North-West (Mr. Grylls) on 3 May,Official Report, column 639.
§ Mr. EggarThe total net cost to the Exchequer of the loan guarantee scheme to 31 March 1990 was £122 million, and the cost per loan guaranteed was £4,920.
To calculate the net Exchequer cost of the scheme per person leaving the unemployment count, it was assumed from evaluation evidence that additionality is about one third, displacement about two thirds and that slightly less than 30 per cent. of firms taking out a guarantee will fail within the first three years. These assumptions are conservative estimates based on the available information from recent surveys.