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Banks: Government Assistance

Volume 487: debated on Monday 9 February 2009

To ask the Chancellor of the Exchequer what financial sum the Government has allocated for the (a) Special Liquidity Scheme, (b) Credit Guarantee Scheme, (c) Bank Recapitalisation Plan, (d) Homeowner Mortgage Support Scheme, (e) Working Capital Scheme for SMEs, (f) Enterprise Finance Guarantee, (g) Capital for Enterprise Fund and (h) Banking Plan; how much has been spent on each scheme to date; and whether the funding for each scheme will be provided from (a) borrowing and (b) quantitative easing. (250374)

[holding answer 22 January 2009]: The breakdown of the allocations is as follows:

(a) At least £200 billion will be made available to banks in exchange for high quality assets. The Bank of England will disclose the final amount in due course.

(b) Up to £250 billion of bank lending will be guaranteed. These are not funds disbursed by the Government—all guarantees provided under the Credit Guarantee Scheme are contingent liabilities. Participating banks have accessed some £100 billion of funding under the CGS so far.

(c) Up to £50 billion has been made available in the Government’s recapitalisation scheme. The Government have invested £19.97 billion in RBS and £16.96 billion in Lloyds TSB/HBOS.

(d) The Government are still working on the final design of the scheme. £3million has provisionally been allocated for costs in 2008-09, with further allocations yet to be finalised. No funds have been spent on the scheme to date.

(e) The WCS scheme is designed to break even but in the event that additional costs arise, we have given BERR additional flexibility to manage its resources effectively. This will ensure that up to £225 million is available should any costs arise. No funds have been spent on the scheme to date.

(f) £130 million has been allocated to the scheme which has started lending to businesses from reprioritisation within the BERR’s departmental expenditure limit (DEL) and access to the HMT Reserve. No funds have been spent on the scheme to date.

(g) Up to £50 million will be made available from within BERR’s departmental expenditure limit. No funds have been spent on the scheme to date.

(h) Up to £50 billion will be made available under the Bank of England asset purchase facility. With respect to the Asset Protection Scheme, the Government will publish further details by the last week of February.

Overall, the liabilities taken on will be backed by financial assets and fees will be charged for guarantees, safeguarding the taxpayers’ interests.