asked the Chancellor of the Exchequer what is his policy with respect to commercial lending by trustee savings banks.
Trustee savings banks are now in a transitional stage, during which they are moving towards the status recommended for them by the Page committee. During the transitional period their internal organisation is being strengthened, and their range of services is being expanded. The intention is that at the end of the period the banks would compete on equal terms with the commercial banks and other financial institutions.The Page report suggested that in the early stages of the transitional period at least the banks should not seek to attract commercial accounts, and this recommendation was reflected in the statement by the then Paymaster General in the Second Reading debate on the 1976 Bill when he said that it was not the intention that the banks should make loans to the corporate sector.—[Vol. 905, c. 1209.] It was thought that such loans could involve the banks in risks which their existing expertise could not easily cope with.However, the Page committe accepted that the line between purely private accounts and accounts for small businesses might not be easy to draw, that there might be mutual advantage to the bank and customer in allowing the banks to undertake such business, and that no hard and fast lines should be drawn which would exclude them from profitable business in this area.The banks are now making good progress in strengthening their expertise and developing their services. They have proposed, and the Government have agreed, that they should now undertake a pilot scheme for small-scale commercial lending. Lending would be concentrated on small businesses—sole traders, the self-employed, partnerships and private companies—in the main run by or partly owned by existing customers. The
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Source: OECD Main Economic Indicators.
— Not available.
maximum loan would be £25,000. The results of the pilot scheme will be reviewed with the Government before a decision is taken on whether to extend the scheme.