Coming into the recovery, the Government’s focus is on creating the conditions for balanced and sustainable growth in the private sector. In order that UK business can finance this growth, we are seeking to address the challenges and risks faced by businesses in ensuring that they can access the finance they require.
At the heart of these challenges is ensuring stable financial conditions for business. The coalition Government have taken decisive action to tackle the fiscal deficit, which is the first priority for restoring business confidence. But businesses also need sustainable and secure sources of finance for investment. Unless the financial system is reformed it may fail to deliver the finance that is vital to this task.
Today, I am publishing a Command Paper, jointly written with my right hon. Friend the Chancellor. This discussion document sets out lessons learnt from the past and some of the challenges ahead. We would like to encourage businesses, investors and lenders to participate in this consultation as it will inform the Government’s future response to the issues raised.
In “Financing a private sector recovery”, we state that the Government would like more diverse sources of finance available. The paper explores a broad range of options, including trade finance, greater application of the mutual model, more use of equity and a responsible return to securitisation. The paper also addresses the success of existing Government schemes, such as the enterprise finance guarantee, and whether they should be improved or extended.
But it is emphasised that industry and market-led solutions are the preferred response to any market failures. Only where appropriate will Government assist in providing solutions, in conjunction with business.
The paper is being published today on BIS’s website: www.bis.gov.uk/businessfinance. The deadline for responses is 20 September 2010.