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Businesses (Financial Support)

Volume 486: debated on Wednesday 14 January 2009

(Urgent Question): To ask the Parliamentary Under-Secretary of State for Business, Enterprise and Regulatory Reform if he will make a statement on the Government’s announcements today about their loan package to help improve business credit.

With permission, I shall give the House details of the business support measures that the Chancellor announced in the pre-Budget report in November, which are going live today.

The crisis in the global economy is above all a credit crisis. Many companies are struggling to finance themselves because of the crisis in the banks. Their business models are not flawed, but the credit crunch has drastically reduced the amount of capital available, and banks have tightened their lending criteria. Today’s package is designed to address the problem directly.

The support package that we are launching today builds on the commitments that we made in November’s pre-Budget report. It addresses the cash-flow, credit and capital needs of businesses. We are offering specific solutions, not a blanket subsidy; we are delivering real help, and targeting real needs. The package will make a real difference to business, while preserving value for money for the taxpayer.

First, the working capital scheme is a direct response to the constraint on bank credit available for lending to ordinary-risk businesses with a turnover of up to £500 million a year. The Government will provide banks with guarantees covering 50 per cent. of the risk on existing and new working capital portfolios worth up to £20 billion. The guarantee will secure £20 billion worth of working capital credit lines for companies, ensuring that they are safe from reduction or withdrawal. In addition, the guarantee will free up capital, which the banks must use for new lending as a condition of this scheme. This is lending that would otherwise not have been provided. No other proposed scheme of this kind would free up such additional capital or create new lending specifically for the use of UK companies. A charge will be made for the Government guarantee and although the risk will be relatively low, the Government will make prudent financial provision of £225 million in case of loan defaults.

Secondly, through a new enterprise finance guarantee we will support up to £1.3 billion of bank loans to companies with a turnover of up to £25 million. These will be smaller viable creditworthy firms that are struggling to access the finance they need because of the additional risk created by the downturn. Under the scheme, businesses will be able to borrow a maximum of £1 million, of which the Government will guarantee 75 per cent., to cover working capital or investment. They will also be able to convert their overdrafts into loans to free up their existing facilities. Banks will have to certify that each loan is additional to what they would otherwise offer. The scheme will operate on a first come, first served basis within the allocated proportion of the sum for each participating bank.

Thirdly, we are establishing a new £75 million fund to help viable small businesses with high levels of existing debt to raise long-term finance. The capital for enterprise fund brings together £50 million of Government funding with £25 million from major banks. Run by professional fund managers, the fund will provide equity investment to companies with viable business models that have exhausted traditional forms of finance. They will be able to use the capital to restructure their balance sheets and invest for growth.

Lastly, the Government want, if possible, to address concerns about the operation of credit insurance, which have emerged since the pre-Budget report. This insures suppliers of goods to other companies against payment default by those companies for the goods provided. As my right hon. Friend the Secretary of State for Business, Enterprise and Regulatory Reform announced, the Government are discussing with trade credit insurance providers a Government scheme to help companies affected by reductions in their credit insurance. There will be a further announcement on this as we progress.

This overall package of measures offers not slogans, but real targeted help from today to those firms that need it most, while ensuring the banks are not insulated from normal commercial risk. It addresses the problem at the heart of the credit crunch: credit for viable businesses.

UK businesses are the backbone of our economy, so it is vital that the Government act now. We are absolutely determined to do everything we can to support viable companies through this global downturn, and I commend this statement to the House.

May I start by asking the Minister to apologise to the House for the way in which his Department has handled this announcement? It was leaked yesterday to a BBC journalist, it was followed up with interviews on the broadcast media this morning, and it was briefed out in a press conference from the Secretary of State, yet he and his Department intended to give only a written statement to the House. That is yet another display of this Government’s total disregard for proper parliamentary procedures, and Parliament will wish to express its displeasure at the contempt for it shown by Lord Mandelson.

We have been arguing for several months now that at the heart of this current recession is the collapse of credit. Companies of all sizes are experiencing significant difficulties, either as a consequence of the actions of the banks in protecting their own balance sheets or because credit insurers are withdrawing from the marketplace and breaking the payment chain. The CBI says that businesses will face the daunting prospect of refinancing £100 billion during this year. What number would the Minister put on the collapse in the volume of credit over the last year, and how does it compare with the figures the Government have announced today?

For the past few weeks the Conservative party has persistently called for the Government to adopt a big, bold and simple scheme which will open new channels of credit to help restore the flow of lending. Our national loans guarantee scheme would guarantee up to £50 billion of new loans to British business. It has been endorsed and supported by numerous commentators and trade bodies, but all the Government could do was rubbish it, yet now, today, they are announcing something based on it.

Can the Minister tell us how the Government will select the small firms that are eligible for the £1 billion of longer-term loan guarantees? Secondly, will the guarantees be available to foreign firms, or just to British companies? Thirdly, on what basis will the Government decide whether to buy the shares of a company? Fourthly, following the report in The Guardian today, will the Minister confirm that the £10 billion of guarantees for working capital will be self-financing, which is what we have argued for? Fifthly, what is there in the package for larger businesses, many of which are also our largest employers?

Today, redundancies have been announced at Jaguar Land Rover, Barclays and other companies, particularly in the retail sector. We are facing an explosion of insolvencies. Is not the package that has been unveiled today too little, too late and too complicated? The Government have spent months grandstanding and designing publicity stunts, during which time they have done absolutely nothing to help the 6,000 small firms that the Federation of Small Businesses says have gone under while we have been waiting for action. Now, they have announced a pale imitation of our proposals, which the National Institute of Economic and Social Research has said

“will look like another of the Government’s half-measures”.

The CBI says that the scale of the problem goes

“well beyond what the Government has announced today”.

How long must we wait for the bigger, bolder and simpler scheme that the Opposition have been proposing for months? Today, we have been given a small bandage for a massive wound to an economy that has been injured beyond measure by the irresponsibility of the Prime Minister.

First, may I say that I am pleased to see that the hon. Gentleman is still in his job? I had heard rumours that the right hon. and learned Member for Rushcliffe (Mr. Clarke) might be taking over from him—[Interruption.]

We have made a written statement to the House today, and I am very happy to answer this urgent question. We shall continue to keep the House informed, through debate and other means, about how we will roll out the proposals that we announced in the pre-Budget report and of other decisions that we make.

It is important to contrast our proposals today—a measured, well thought out package of measures comprising a working capital scheme, an enterprise finance guarantee and a scheme to help companies that need equity injection—with the Opposition’s untargeted and uncosted proposals. Our package of measures will be widely welcomed by small, medium and large firms.

The £1.3 billion package for small firms goes live today and, as I said in my statement, it will be made available on a first come, first served basis. The banks are participating fully in the scheme and have been given allocations. If businesses go to the Business Link website, they will find links that explain in more detail the eligibility criteria and how they can access the funding. That is a step change from the small firms loan guarantee scheme so that firms with a turnover of up to £25 million will be eligible. Companies with up to £500 million annual turnover will be eligible for the Government’s working capital scheme, which will operate on a portfolio basis. We will discuss with the banks the portfolio of assets that will form part of that. It is a crucial point that that turnover of up to £500 million includes a significant number of mid-cap companies. The scheme is not just for small companies.

I can confirm to the hon. Gentleman that the capital for enterprise fund will be run by professional fund managers who will make investment decisions in the normal way. It will be an important scheme for small businesses that need equity.

The measures that we are announcing today are effectively targeted and costed. I can confirm that on a prudential basis we have reached agreement that we will allow for £225 million to be made available in the case of loss. We expect the measures to be run on a break-even basis but we have looked thoroughly at the costs, unlike the Opposition, whose proposals are uncosted and untargeted and are not, we believe, the most effective way forward.

I know that many firms in my constituency will warmly welcome today’s announcement, but will my hon. Friend confirm not only that the help will be available from today but that all banks will be participating, so that we no longer have the spectacle of some fundamentally and absolutely healthy firms finding that their overdrafts are completely withdrawn or that credit lines continue to be made available only at excessive rates of interest, often with no notice at all provided by the banks to which they have been loyal customers?

As always, my right hon. Friend makes some very good points. It is important that all the major banks take part in the various schemes. We have certainly been in discussion with them all on those issues. On the issue of lending to small businesses in particular, she will be aware of some of the decisions that were announced as a result, I believe, of Government pressure back at the end of November and early December about maintaining available lending. It is not just about the banks that take part in the recapitalisation process. The other major banks are making strong attempts to do the right thing by small businesses.

As my right hon. Friend rightly says, there is an issue about the credit economy and about the price of credit, which is why we believe that the working capital scheme is an appropriately and effectively targeted measure that will help many businesses in this country through these difficult times. Over the next few months, businesses will be looking to renew their credit facilities. The fact that there is a Government guarantee for existing and new credit lines will, I am sure, be welcomed by companies and it should be welcomed by this House.

May I begin by saying that, given the scale and complexity of the measures that are being proposed, it would have been far more appropriate if they had been communicated to the House in a statement on the Floor of the House? In future, if the Minister has any further such measures to announce, will he do so in the usual manner of and make a statement to the House?

Is it not the case that the core issue for the economy remains the crisis of confidence in the financial system and the consequent inability of companies to gain credit? The proposals are designed to help alleviate that problem. I would welcome any well designed or thought through proposals, but it is somewhat difficult to know whether these proposals meet that test at this time and my fear is that they do not. The root cause of the problem in the financial system remains the uncertainty about the level of toxic debt in the banking system. It is like a gangrene in the financial body and until that gangrene has been amputated in terms of the loss of a nasty bank that uncertainty will remain. Our concern is that large liabilities will continue to be taken on by the taxpayer without proper quantification or clear strategic thinking. Do the Government not accept that such conflict is inherent in their instructions to the banks to maintain 2007 levels of credit while repairing their balance sheets? Those aims, frankly, are not compatible.

With regard to the working capital scheme, may I ask the Minister how the Government will ensure that those funds go to companies that actually need them—to companies that would not otherwise be funded in the normal way by their banks? Is there not a danger that banks will simply use the funds to lower their risk? How is there to be a proper definition of new lending? Will it simply be new lending to an existing company that would already have had it or will it be to a company that would not have got it, and how will that be quantified?

With regard to the enterprise finance guarantee, how will creditworthiness be rated and what will be the due diligence procedure? How will the Government ensure that finance goes to firms that need it rather than to those that would have received it anyway?

Lastly, I am happy to give a cautious welcome to the capital enterprise fund, as I have long believed that one of the barriers to growth for small companies has been the lack of affordable capital, but how will the capital be made available? The Minister said that it will come by means of equity and that the fund will be run by professional managers, but at the core are the terms under which the equity will be acquired. What is the internal rate of return that the Government will target for those fund managers? What thought have they given to making the funds available in that way?

Although I welcome the sentiment behind the proposals, I am unsure as to their practical effects and whether they will work. May I ask the Minister that at the earliest opportunity the House be given the chance properly to scrutinise what has been put forward and to debate it in a manner other than this?

As a Government, we are always prepared to see proper parliamentary scrutiny of Government decisions and I have no doubt that, subject to issues of commercial confidentiality, we shall want to make full information available.

We believe that today’s announcement is important. We have an effective package of measures that build on the work we have done so far—the recapitalising of the banks, the fiscal stimulus that has been announced and the discussions and negotiations we have had with the banks to make sure that those involved in the recapitalisation process continue to make lending available at 2007 levels, which the hon. Gentleman mentioned. All that is important. If he looks at the recent lending report produced by the Bank of England, he will see that the estimated net flow of lending to businesses for the whole of December actually picked up significantly compared with the previous month, but there are still issues, which is why the measures we have announced today are important.

The hon. Gentleman raised the issue of whether the working capital scheme would be additional. What we are doing, on a portfolio of companies basis, is seeking to agree with the banks a package of existing and new working capital credit lines, which we will guarantee as a Government. In turn, that will free up bank capital, and we have said that as a stipulation of participating in the scheme banks must use that freed-up capital to provide additional lending to businesses. That is something that will not be proposed in the Opposition scheme and is major additionality in the programme, which will, I am sure, be welcomed by the House.

The enterprise finance guarantee is targeted on creditworthy companies and because it is operated by the banks the process is that an individual company will apply for the scheme through its bank. Companies can get guidance from the Business Link website on how to go about the process but it will be up to the banks to apply due diligence in determining access to the scheme. I have already indicated the eligibility criteria in broad terms and more details are available.

Lastly, the hon. Gentleman mentioned capital for enterprise and I appreciate his cautious welcome for the scheme. It is targeted on smaller companies that need an equity injection that they cannot get through other means. It will be up to professional fund managers to determine the internal rates of return they might target and that is obviously a matter to which we shall return.

I welcome the statement made by the Minister. He mentioned fiscal stimulus. Is not that part of the package similar to the €50 billion that the German Government are putting into fiscal stimulus, the €26 billion in France and the $800 billion from President-elect Obama when he takes office? Building on the question put by the Liberal spokesman, is it not appropriate—as he said—to target during a recession so that the recession does not turn into a depression? Will my hon. Friend repeat the commitment that the Government have already given that they will do whatever it takes to avoid this recession turning into something longer and deeper, which apparently seems to be the wish of the Conservative Opposition?

My hon. Friend is absolutely right to point out that all other countries around the world are seeking to stimulate their economies. The fiscal stimulus we announced in the pre-Budget report is a measure that has been adopted by lots of other countries, including, most recently, Germany. The only party I am aware of that does not support fiscal stimulus is the Conservative party, and I have to say that the Conservatives are on the wrong side of the argument—

I think I must give at least one cheer for the package, because I am sure that it represents the first step on the Government’s journey to adopting the more ambitious proposals of my party, when the Minister will be forced to eat the unfortunate words he said about our proposals, which I fear misrepresent those proposals.

May I ask about the targeting of this scheme and existing schemes? Before my Select Committee this morning, the Secretary of State for Business, Enterprise and Regulatory Reform suggested that press reports that the funding would be targeted on specific sectors were wrong and that it would be available to all sectors. As the existing loan guarantee scheme is not available for the farming, transport, pub and post office sectors, for example, can the Minister clarify what the targeting—if any—of the scheme will actually be?

If the Conservative party wants to clarify its proposals I am more than happy to provide further commentary on them. At the moment they look to me to be uncosted, unfocused and poorly targeted and that remains my view, but until we see more detail, it is very difficult to say.

The working capital scheme is open to the non-financial sector and any companies with a turnover of less than £500 million. Details of eligibility for the enterprise finance guarantee scheme are on the Business Link website. It is a broader scheme than the small firms loan guarantee scheme, with which I know the hon. Gentleman is very familiar. I am sure that as Chair of the Select Committee on Business and Enterprise he will appreciate the fact that with the enterprise finance guarantee we are targeting companies with turnover of up to £25 million, which will bring in a lot more companies that badly need that loan assistance at the moment.

Could the Minister clarify when the funds will be available? I think he said that the £1.3 billion working capital scheme would be available from today, but can he tell us how long he expects that money to be available, given the number of firms that are likely to want to take advantage of it? Can he clarify when the enterprise finance guarantee fund will be available to business, and also the trade credit insurance scheme? It has come up in evidence to the Select Committee that many companies are concerned about trade credit insurance.

The enterprise finance guarantee scheme goes live today. We hope the working capital scheme will be up and running by 1 March. What is happening now is a process of detailed negotiation with the banks. They will be submitting portfolios of companies on which we will then provide the 50 per cent. guarantee. It is intended to last until 31 March 2010. We see it as a temporary measure to address the current global credit crisis. Of course, we will continue to monitor the situation and to see whether further measures need to be taken. Let us be very clear: we are providing a major Government intervention in the United Kingdom credit markets, as well as a major upgrade to the UK loan guarantee scheme. I am sure that businesses up and down the country will welcome that, and many will benefit from it.

Given the announcement by Jaguar Land Rover today, and the ongoing problem, will the Minister talk to the Secretary of State, and will they arrange to meet a small delegation to discuss the situation? There is a lot of concern in the west midlands, and in Coventry in particular, where the local newspaper has been running a campaign to give assistance to the Jag.

I am certainly happy to meet a delegation, and I will pass on my hon. Friend’s representations to the Secretary of State, who I know is a strong supporter of the car industry in the United Kingdom, and fully recognises its strategic importance to the UK economy. We have been in discussions with Jaguar Land Rover, and of course the redundancies announced today are regrettable. We see a major problem in the car industry right across Europe, and indeed worldwide. People simply are not buying cars, and that is threatening many car companies, not just Jaguar Land Rover. We need to look at what more we can do sensibly to support our car industry through this difficult economic time. Certainly, the package of measures that we announced today will be of benefit to the supply chain in the automotive industry.

In and around Cambridge, and in my constituency, there are a large number of biotech and high-tech research companies that need several years of up-front investment before a product is fit for the marketplace. That investment is, of course, now drying up—it has been doing so for some months. I am perplexed as to whether anything in the Minister’s package will help those businesses. If it does not, years of research and development, which in many cases could lead to health improvements or even life-saving products, will be completely lost. Will the package help?

I agree with the hon. Gentleman about the importance of the biotech industry to the United Kingdom. It has been going through difficult times. There are specific issues within that industry because of the long lead times before products get to market. Certainly, the biotech industry, along with other sectors of the economy, will be eligible for the working credit guarantee scheme. In addition, small companies that have a turnover of less than £25 million and meet the relevant criteria could benefit from the enterprise finance guarantee; that will obviously have to be decided on a case-by-case basis, after proper assessment. There is no reason why biotech businesses, and indeed businesses in other sectors of the economy, should not be able to take advantage of some of the support that the Government are making available as a result of these announcements.

May I say how much businesses in north Staffordshire will welcome the statement? It is important to get the overall policy, and the detail, right. The Minister says that the help will be given on a first come, first served basis, but will he accept that particular areas of the country, such as north Staffordshire, have a disproportionate number of job losses as a result of the economic downturn? Will he hold an urgent meeting with north Staffordshire MPs, the North Staffordshire chamber of commerce and industry, and the ceramics industry, so we can make sure that we take full advantage of this part of the Government’s overall package of available measures?

I am always happy to meet my hon. Friend and representatives from north Staffordshire. I am certainly aware of the issues affecting what might be called the A50 corridor, given the recent announcement of redundancies at JCB, the issues affecting companies at the other end of the A50 corridor, and the problems at Waterford Wedgwood, which were in the press recently, and in the ceramics industry in general. She will obviously want to advise companies in her constituency to look carefully at what is on offer as a result of the Government guarantees and the loan scheme. I am sure that there are companies in her constituency that would directly benefit from the measures that we are announcing—this is real help for businesses now. We need to get that message across, so that businesses apply for the real help that is available.

Small businesses have heard many fine words from this Government with regard to credit but have seen very little action, and frankly they are beginning to distrust whether anything will ever happen to help them. Will the Minister therefore tell us, in some detail, how he will assess and monitor the schemes, and how he will regularly report back to the House and the sector, to restore a little faith?

We will, of course, make sure that the schemes are fully monitored; the Government do that as a matter of routine, just as we are monitoring the lending of the banks, particularly the recapitalised banks. It is important to recognise that real help is being provided now. We should not forget that. That message needs to go out loud and clear to the business community. We will make sure that we report back to the House in the appropriate ways, through the normal channels, on the effectiveness of the programmes.

When I was the Minister responsible for small businesses, I successfully resisted attempts within Whitehall to wind up the small firms loan guarantee scheme, but I deplore the lack of basic understanding of how the scheme works shown by both Opposition Front-Bench spokespersons today. Will my hon. Friend point out to business and the public that while the extension will be welcome, and will help many companies, some of those companies—even those that, in other circumstances, would be successful—will go to the wall, and it will mean that tens of millions of pounds of Government money will have to underwrite loans when they are defaulted on? Will he ensure that his Department’s budget continues to have that money, and will he warn people that defending his Department’s budget is not one of the four priorities of the Conservative party?

My hon. Friend makes his points very well. Of course, he knows in detail how the small firms loan guarantee scheme works. It has been an effective policy instrument over a number of years. It was retargeted, in better economic times, on particularly small companies in a particular, small part of the market. It is wholly right that we should now focus on companies with a turnover of up to £25million, which significantly increases the number of companies that could benefit from the guarantees. Let there be no mistake: there are companies out there that will welcome the measures, because they need additional loan finance. We need to make sure that the Government get the marketing right, so that we can put those companies that need that finance together with the banks that can provide it, with the guarantees that are available from the banks themselves.

I, too, welcome the statement. The measure may be copied from the Conservative party, but that will not matter a great deal to the people who will benefit from it or to firms that find themselves in trouble because of an inability to borrow. There are three points that companies would make to me. First, any scheme should be simple, and companies should know who is and is not eligible. Secondly, it should be speedily applied when firms find themselves in trouble. Thirdly, it should be targeted at firms that are in genuine need as a result of short-term working capital difficulties.

Will the Minister give us an assurance about the eligibility criteria for the scheme? Will he assure us first, that it will be simple and transparent, and that firms will know when they are eligible; secondly, that it will be available quickly to firms when they find themselves in trouble; and lastly, that banks will not be able to use the scheme simply to replace their lending, rather than extending the money that is freed up to other firms?

The hon. Gentleman offers some good principles about how schemes should be designed. The enterprise finance guarantee and the working capital scheme are simple, transparent and targeted, and we believe that they will be effective policy instruments. It is important that businesses know that there is real help from today from the Government, through the banks, for those that have particular difficulties with access to loans and access to credit in the future.

The Government cannot help all businesses. What we can sensibly do is to consider what interventions we can make when we see major problems in the credit market and how interventions can be effectively targeted and costed. That is exactly what we are doing today. Over time we will see the measures producing significant benefit to many companies. We should not get hung up about where ideas come from. I would say that the Conservative proposals look very similar to the proposals that we announced in our pre-Budget report, but I do not want to play silly, party political games about this. People are interested in whether the measures will help companies and jobs for the future. People who are worried about their jobs and about the future of their business will welcome these steps, rather than get into some puerile debate about who thought up the idea first.

I warmly welcome the announcements that my hon. Friend has made today. My county has a large number of small and medium-sized enterprises. What will my hon. Friend do to ensure even access to and take-up of the schemes across the regions? How will he ensure that companies outside the south-east can get proper information and advice not just through a website but face to face, so that they know how to access schemes and which one is best tailored to suit their individual needs?

That is an important issue. We want to ensure equal access to the schemes right across the regions. It will be up to Business Link and the regional development agencies to help to promote the schemes. Chambers of commerce throughout the country will no doubt want to promote what is on offer, as will the CBI in the regions. Business Link will be one of the key means whereby companies can access information. A portal is available on the Business Link website, and most companies these days have access to the internet and will quickly be able to understand what is on offer. We need to monitor that regionally as well as nationally as we go forward, to ensure that companies that need support throughout the country are able to access it.

We heard mention of the German stimulus package. I have a copy of that document, “Entschlossen in der Krise, stark für den nächsten Aufschwung”, which details a €100 billion loan guarantee scheme, including, crucially, for large businesses. The document states that such a large scheme is possible because a large balance budget was built in the good years, unlike the situation in this country. The Germans really did fix the roof while the sun was shining. Can the Minister explain why his package is so small, compared with that on offer in Germany and compared with that offered by the Opposition?

Order. This may be an opportune time, at the start of the new year, to remind hon. Gentlemen, and hon. Ladies, of course, that brief questions often lead to brief replies. I can then call Members more quickly.

By way of a brief reply, my understanding is that the German scheme has a turnover limit of €500 million. I could be wrong about that, and if so, I apologise, but £500 million sterling for the working credit guarantee scheme covers pretty much 99 per cent. of companies in the United Kingdom that are potentially eligible for the scheme. The hon. Gentleman should welcome it as an important measure.

The Minister rightly recognises the redundancies announced today by Jaguar Land Rover as a result of reduced car sales. The Society of Motor Manufacturers and Traders has said that one of the reasons for the reduction in car sales is the absence of credit with which to buy cars. The announcement appears not to give people any hope that that credit will be available. Will the Government offer people any hope in that regard?

The hon. Gentleman knows that as a fellow west midlands MP, I have tremendous sympathy for those at Jaguar Land Rover who will hear today that they are being made redundant. We need to do all we can as a Government to make sure that they find jobs in the labour market again as quickly as possible. On trade credit insurance more generally or specifically for the motor industry, my right hon. Friend the Secretary of State has been actively involved in discussions about that. Officials are talking to the trade credit insurers and, as I indicated in my original comments, we hope to make a further announcement as things move forward.

Given that a significant proportion of previous lending volumes in 2006-07 was made by foreign banks and by non-bank lenders, how can we judge whether a £10 billion or a £20 billion scheme will be sufficient, when the Minister has not given us his assessment of the lending gap? Can he give us that figure?

The hon. Gentleman makes a key point when he refers to foreign banks and foreign bank lending. One of the significant things that has happened over recent months is that foreign bank lending in the UK has declined significantly. Domestic banks continue to show quite strong figures for lending, but overall there is a credit shortage. The hon. Gentleman will have seen some of the figures published by the Bank of England in its recent lending panel report. I do not need to elaborate as those are a matter of public record. It is important to recognise that this is a key issue. One of the features of our working capital scheme is that by providing bank guarantees as it does, it frees up some capital that will be reinvested in lending, providing additional capital to UK companies in the marketplace. That is important and it is something that the Conservative scheme, to the extent that I understand it, does not do.

Many small businesses in my constituency have always been frustrated by the fact that a lot of public money is being poured into the banks but that does not seem to result in a better credit situation for small businesses. Anything that the Minister can do to monitor what is going on and ensure that the scheme delivers extra money will be welcome. Specifically for the north-east of Scotland, will he work with the Department of Energy and Climate Change and the Treasury to see what else can be done for the North sea, where large investors have relied on the credit market? The Government’s policy is to bring in new entrants who have to borrow to invest in the North sea, and that market is drying up. If the small businesses do not have the custom of the large company, they are in just as much trouble as if they cannot borrow from the bank.

I take the hon. Gentleman’s point entirely. Other parts of Government are aware of the issues and are actively discussing them. If he wishes to talk to officials or other Members about that, I shall be happy to facilitate meetings.

The Minister may know that many hundreds of my constituents work for JCB and Wedgwood. It is therefore a matter of grave concern that the customers of JCB should have credit available in order to buy its superb machinery—the same applies, of course, to companies such as Wedgwood. Will the Minister guarantee—he is offering a lot of guarantees—that that credit will be made available to enable those incredibly good pieces of equipment to be produced and purchased? Will he also give me an assurance that I can come to any meetings that he holds with the Members representing Stoke-on-Trent or any other Members of Parliament whose constituents are equally affected?

I should like to place on the record my belief that JCB is a tremendous, well organised and well run company that is going through difficult economic times at the moment. It has done all it can to maintain employment among its work force, but the demand for its products is not there at the moment. One of the reasons for that has been a lack of credit, and I hope that some of the measures that we have announced today will help the potential purchasers of JCB machines in future.

The Government cannot run businesses; it is up to businesses themselves to make decisions about how they should right-size their business according to the economic conditions and their views about the future. Business people at JCB and in the automotive industry, the construction industry and other sectors of the economy have to make those sorts of decisions. We can, however, provide a sensible framework of support for viable businesses, to help them through difficult times. That is what we are doing today.

When will the Government wise up to the fact that the banking system is simply not working? Very often, larger companies’ deals are reneged on and banks are trying to foreclose on them. I do not know what world the Minister is living in, but it seems to me to be a parallel universe. What leverage do the Government have left over the banks to get them banking and lending properly again?

We are in regular discussions with the banks. The hon. Gentleman will be aware that through UK Financial Investments Ltd we manage an arm’s length interest in the banks that took advantage of the recapitalisation announced on 8 October. We monitor bank lending very regularly, and we have good dialogue and co-operation through the lending panel. He has to accept that the issue is not only about UK banks—banks worldwide have major credit issues. An adjustment is going on in our economy and the global economy. As a Government, we can take sensible measures to help companies and individuals through these difficult economic times—measures such as those announced today and those on home buyer support and other areas, to help people through difficult times.

In recent weeks, hundreds of my constituents have lost their jobs, and many more who work for perfectly good companies fear the same fate, because the businesses for which they work are effectively being throttled by the attitudes and approaches of the banks. In many instances, the basic trust between banks and businesses has broken down. Will the Minister assure us that he will do more than carefully monitor the situation, and actively manage things so that businesses that need the cash, get it?

We are actively intervening, and the measures announced today are major steps forward in providing credit support and loan guarantees to companies. We cannot manage every individual transaction—that would be complete nonsense, and neither the hon. Gentleman nor any other Member would sensibly suggest that. However, we are ensuring that there is a sensible framework of support and that a range of policy instruments is available through the banks to help companies facing problems at the moment. That is what we are doing, and we believe that it is the right policy instrument. However, we will continue to consider the situation and discuss matters with the business community. If more can sensibly be done, we will want to do it.

Bills Presented

Welfare Reform

Presentation and First Reading (Standing Order No. 57)

Secretary Purnell, supported by the Prime Minister, Mr. Chancellor of the Exchequer, Mr. Secretary Straw, Secretary Alan Johnson, Secretary Hazel Blears, Mr. Secretary Hoon, Secretary Ed Balls, Mr. Secretary Denham, Mr. Secretary Paul Murphy and Mr. Secretary Jim Murphy, presented a Bill to amend the law relating to social security; to make provision enabling disabled people to be given greater control over the way in which certain public services are provided for them; to amend the law relating to child support; to make provision about the registration of births; and for connected purposes.

Bill read the First time; to be read a Second time tomorrow, and to be printed (Bill 8) with explanatory notes (Bill 8-EN).

Coroners and Justice

Presentation and First Reading (Standing Order No. 57)

Mr. Secretary Straw, supported by the Prime Minister, Mr. Chancellor of the Exchequer, Secretary Jacqui Smith, Secretary Alan Johnson, Mr. Secretary Woodward, the Solicitor-General and Bridget Prentice, presented a Bill to amend the law relating to coroners and to certification and registration of deaths; to amend the criminal law; to make provision about criminal justice and about dealing with offenders; to make provision about the Commissioner for Victims and Witnesses; to make provision relating to the security of court and other buildings; to make provision about legal aid; to make provision for payments to be made by offenders in respect of benefits derived from the exploitation of material pertaining to offences; to amend the Data Protection Act 1998; and for connected purposes.

Bill read the First time; to be read a Second time tomorrow, and to be printed (Bill 9) with explanatory notes (Bill 9-EN).