Business: Credit

Treasury written question – answered on 11th March 2009.

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Photo of Sir David Amess Sir David Amess Conservative, Southend West

To ask the Chancellor of the Exchequer what steps his Department (a) has taken since June 2007 and (b) plans to take in the next 12 months to improve the flow of credit to (i) small and (ii) medium-sized businesses; what discussions (A) he, (B) other Ministers in his Department and (C) departmental officials have had with the Confederation of British Industry about the issue; and if he will make a statement.

Photo of Ian Pearson Ian Pearson Parliamentary Under-Secretary (Economic and Business), Department for Business, Enterprise & Regulatory Reform, Economic Secretary (Economic and Business), HM Treasury

On 19 January, the Government announced measures designed to reinforce the stability of the financial system, to increase confidence and capacity to lend, and in turn to support the recovery of the economy. Further information is available at:

http://www.hm-treasury.gov.uk/press_05_09.htm.

These build on measures announced on 8 October last year.

The Government intend to negotiate with the banks participating in certain facilities lending responsibility agreements that will have specific and quantified lending commitments and that will be binding and externally audited.

The Government are taking specific action to meet the needs of small and medium-sized enterprises. On 14 January 2009, the Government announced a package of support to address the cash flow, credit and capital needs of smaller businesses. This package implements and builds upon the commitments the Government made in the 2008 Pre-Budget Report. Details are available at:

http://www.businesslink.gov.uk/realhelp/finance.

The Government meet with a wide range of stakeholders, including representatives of small and medium-sized enterprises. As announced in the 2008 Pre-Budget Report, the Government have established a new lending panel, which will improve monitoring of lending to households and businesses. The work of this panel is supported by the Small Business Finance Forum, established by the Department for Business, Enterprise and Regulatory Reform in November of last year.

The Government will continue to take all necessary measures to ensure the stability of the financial system, ensure lending to the economy, businesses and homeowners, and limit the depth and duration of the current recession and support the subsequent recovery.

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