Skip to main content


Volume 489: debated on Wednesday 18 March 2009

I am in regular contact with Scottish banks and businesses on the economy. Since the start of the year, the Government have introduced a range of measures to help to increase liquidity and to ease credit conditions for business.

Following the announcement by RBS-NatWest on 5 February that it will make a further £250 million available for small and medium-sized enterprises in Scotland, the Secretary of State said:

“I shall be talking to other lenders in Scotland over the coming days to encourage them to follow the example being set today.”

How many has he persuaded and how much brass have they come up with?

I met the chief executive of the Lloyds group last week in Edinburgh, and the hon. Gentleman will be pleased to know that Lloyds has announced the availability of £2 billion under similar terms.

Does my right hon. Friend agree that the decision of two English local authorities to sue RBS in American courts is welcome? Will he encourage Scottish local authorities that have similar concerns to do the same? Will he assure me that the Government will be as accommodating, if necessary, to any future extradition application from America for RBS bankers as they were in the case of the NatWest three?

My hon. Friend will understand why I do not want to comment on any specific impending—or possibly impending—legal process. After centuries of success, the Scottish banks were moments from collapse. Without the intervention of the UK Government and, importantly, the UK taxpayer, the stability that we wish to return to the banks would not be possible. My hon. Friend will understand if I am not tempted to join him in speculating on the other matters that he raised.

The success of the private and public sectors is inextricably linked in the years ahead as we go through the downturn. What assessment have the Government made of their plans to take £1 billion out of the Scottish economy in cuts?

That is tired rhetoric from the Scottish National party. The Scottish Government have more money than ever and, from today onwards, they will have, over the next two years, more than £2.5 billion more. It is the first time in a spending review period that the Scottish Government have £100 billion.

The tiresome obsession with grudge is wearing thin with the people of Scotland. We are in the recession together and we will get out of it together. Scotland is stronger because of the United Kingdom, which is and will remain the most successful union of nations anywhere on the planet.

Does my right hon. Friend agree that banks are the main source of credit to business? That is why he is right to remind hon. Members of the important intervention that the Government made to stabilise the banking system. Does he agree that all the banks, not least RBS and Lloyds-HBOS, now have an obligation to do all they can to support Scottish business and business generally throughout the UK?

I agree with my right hon. Friend, and RBS and the Lloyds group have committed to lending more billions of pounds through the enterprise finance guarantee scheme. Legally binding—that is important—agreements have been made under the asset protection scheme for RBS to lend an additional £25 billion and for Lloyds to lend an additional £14 billion. As he said, it is important for the money to start to flow to Scottish businesses and Scottish mortgage holders so that we can have some return to stability. I think that he appreciates that it was important from October onwards to save the banks from collapse. Our action has helped to ensure that.

The Secretary of State knows that one of the jewels in the Scottish economy’s crown is the exports that have built up on the back of skills learned in the North sea. Does he understand that exploration in the North sea is drying up because of the banks’ failure to lend—the new model relies on bank lending? The Government could step in to ease cash flow by paying early the tax relief that they normally pay when production starts, so that the companies get better cash flow to allow them to continue to explore.

The hon. Gentleman makes an important point. My right hon. Friend the Secretary of State for Energy and Climate Change and I met representatives of Oil & Gas UK to discuss those specific matters and we will talk to them again. I am happy to raise the concerns of the oil and gas industry in Scotland with the banks—that dialogue will continue. I also agree that the export market is crucial for the Scottish economy as we try to recover. I have the honour next week of leading one of the largest ever business delegations from all sectors of the Scottish economy to China. That is also an important initiative.

Does my right hon. Friend agree that, although credit is important to business, so is the ability of Scottish business to get involved in emerging markets? For example, Aspen Solutions in Cumbernauld has won a Department for International Development contract to send IT to Sierra Leone to help to build that country’s infrastructure. What is he prepared to do to assist other such companies?

My hon. Friend is characteristically correct on that matter. I should declare an interest, because I think that Aspen Solutions provides the photocopier for my parliamentary office in East Renfrewshire. For the avoidance of doubt—[Interruption.] It is a very busy photocopier, or it certainly will be in the next few months. The point that my hon. Friend makes is entirely right. Small businesses in particular need to be able to access Government procurement and the contracts and portals that are available. In the past, small companies in particular have had to get through too much bureaucracy, which is why it is important that the UK Government and the Scottish Government find new opportunities to enable small businesses to compete for Government work.