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Autumn Statement

House of Lords written question – answered on 14th December 2011.

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Photo of Lord Barnett Lord Barnett Labour

To ask Her Majesty's Government, further to the announcement by the Chancellor of the Exchequer in the autumn Statement that a ceiling of £40 billion had been set as a major programme of credit easing to help small businesses, over how long a period they are expecting the £40 billion to be spent; and how the spending is to be controlled.

Photo of Lord Sassoon Lord Sassoon The Commercial Secretary to the Treasury

The credit easing measures launched at the autumn Statement are initially worth up to £21 billion.

The national loan guarantee scheme will guarantee up to £20 billion of funding to banks over a two-year period to lend to smaller businesses. Smaller businesses will be able to apply for these loans and overdrafts through participating banks in the normal way. Participating banks will make credit assessments and retain full credit risk of the loans they make under the scheme.

The Business Finance Partnership will co-invest up to £1 billion in private sector loan funds over two years that will lend directly to mid-sized businesses. Private sector fund managers will be responsible for making credit judgments of firms that they lend to.

Work will continue to assess further credit-easing options and ideas. An update will be provided at Budget.

Sustainable public finances are a vital precondition for balanced and sustainable economic growth in the medium term. Any additional expenditure on credit easing will be in line with the Government's comprehensive and credible consolidation plan to restore the public finances to balance.

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