Mr. Speaker, since I came to the House I have much appreciated the friendship and support that you have shown, as one of my neighbouring MPs. I thank you for that.
My right hon. Friend the Secretary of State has regular discussions with the Chancellor on a range of issues. Since the start of the year, the Government have introduced a range of measures to help increase liquidity and ease credit conditions for business.
Like other hon. Members, I have huge amounts of correspondence from constituents with viable small businesses who are desperate to get credit but are being offered loans only on ridiculous terms—anything between 7 and 23 per cent. above base rate. On 15 October, the Leader of the House said:
“One of the main reasons why we have been…buying shares in the banks is to ensure that they start lending again to small businesses at reasonable rates. We will do whatever it takes to back up our small business sector.”—[Official Report, 15 October 2008; Vol. 480, c. 790.]
When will the Government start doing “whatever it takes”?
The hon. Lady should look at the facts. The Government created the enterprise finance guarantee specifically for companies that cannot access commercial lending. To date, more than 187 firms in Scotland have benefited from loans of more than £25 million. In addition, the business support payment scheme from the tax office has helped 9,000 Scottish firms defer £167 million. I have been advised by the Royal Bank of Scotland that in the past year its lending to small and medium-sized enterprises in Scotland has increased by close to £100 million, and that it anticipates lending an additional £250 million to the Scottish SME sector this year alone.
Is my hon. Friend aware that many company owners who come to me complain that the terms and conditions of the enterprise finance guarantee are horrendous, as has been said? Furthermore, they are being asked to put up their family homes as a guarantee for the loans, although they have substantial equity in their own companies. Is it not unacceptable that people should be asked to put forward their family homes as a guarantee for money that, frankly, is being given to them at the behest of the Government, who saved the banks in the first place?
My hon. Friend raises a legitimate concern, although the taking of securities over domestic property by commercial lenders has always been a fairly standard practice over many years. We are ensuring that the banks in which we have a national stake will lend guaranteed amounts—more than £11 billion in the case of Lloyds TSB and more than £16 billion in the case of the Royal Bank of Scotland. We continue to press to ensure that that money gets through to the businesses that need it the most.
The Minister invites my hon. Friend the Member for East Dunbartonshire (Jo Swinson) to look at the facts. The fact is that every week every Member of this House hears from a small or medium-sized enterprise that is not able to grow or is having its existence threatened because of banks’ failures to lend. That failure to lend and to support SMEs must be addressed, because today’s figures demonstrate that, as unemployment in Scotland rises at twice the rate of that in the rest of the United Kingdom, it is having tragic consequences for thousands of Scots every month.
Last year this Government invested £50 billion in Scottish banks—equivalent to £10,000 for every man, woman and child. The first thing we had to do was to stabilise the banking system to allow our businesses to survive. We appreciate that the credit situation has been difficult. However, Iain McMillan, the director of CBI Scotland, recently said:
“In discussion with our members in Scotland, we have found that concerns are easing about access to finance, but there are still some concerns about the cost of credit.”
We are continuing to work very closely with the banks, and we believe that we will see an increase in lending over the next few months.
May I add my voice to all the tributes that have been paid to you, Mr. Speaker? I look forward to bumping into you in my constituency.
Does my hon. Friend share the view that the scale of what has been done to support the banks in the United Kingdom makes a very powerful and persuasive case for the protection of Scotland’s interests within the United Kingdom?
Yes, absolutely. Were it not for the strength of the United Kingdom, Scottish finance by itself would not have been able to provide the £50 billion that was essential to maintain the Scottish banks. As I said, that amounts to £10,000 for every man, woman and child in Scotland, and it shows the benefit of working together in partnership. [Interruption.]