Business: Loans
Scotland

Margaret Curran (Glasgow East, Labour)

To ask the Secretary of State for Scotland what assessment he has made of the potential effect of the Funding for Lending Scheme on Scottish businesses.

Michael Moore (Secretary of State, Scotland; Berwickshire, Roxburgh and Selkirk, Liberal Democrat)

The Bank of England and HM Treasury launched the Funding for Lending Scheme (FLS) on 13 July 2012. The scheme is designed to provide strong incentives to banks and building societies to boost lending to households and non-financial businesses across the UK, including in Scotland. The scheme will reduce the funding costs of banks and building societies, which will allow them to make loans cheaper and more easily available. Some banks may offer specific business loans and mortgages linked to the FLS, whereas others may reduce interest rates or change the terms and conditions on existing products.

The scheme is already having a positive effect in Scotland. For example, RBS, one of the two major SME lenders in Scotland, has announced that thanks to FLS it will waive fees for every SME granted a loan and reduce SME borrowing costs by 1% on average and 1.6% for smaller SMEs. The Bank of England will publish data on the usage of the FLS along with lending data from the participants on a quarterly basis.