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Cost of Credit

Volume 550: debated on Tuesday 11 September 2012

Goodness. Thank you. I feel like Boris Johnson.

The Government and the Bank of England have launched the funding for lending scheme to enable banks to make loans cheaper and more easily available to households and businesses. In addition, 19,000 cheaper loans have been offered to smaller businesses under the national loan guarantee system.

I welcome my right hon. Friend to his new post and wish him every success. Many businesses in South Staffordshire face a great challenge in raising finance to grow and recruit new workers. Will he explain how the measures that he has outlined will help small and medium-sized businesses in my constituency to grow and expand?

I am grateful for my hon. Friend’s question. He knows what he speaks of because he is an ex-manufacturer himself—appropriately enough, as a Staffordshire MP, in the Potteries. One of the early successes of the funding for lending scheme is that banks are now targeting manufacturing firms. Just yesterday, RBS said that the scheme would be used for mid-sized manufacturers. RBS has cut interest rates from 3.45% to 2.75% and is looking to increase lending to mid-sized manufacturing businesses, which have so much potential.

May I push the Minister on this issue and what is happening in the real world? As even Boris would explain to him, the fact of the matter is that we have low interest rates, but people cannot get mortgages to get into the housing market and my constituents, along with people in business across Yorkshire, cannot get decent loans to start businesses or, more importantly, expand their businesses. In the real world, it is not working. What is the Minister going to do about it?

The hon. Gentleman will know, because he has studied the figures, that mortgage lending has actually been increasing. The point of the funding for lending scheme is precisely to make more funds available. When he studies the detail—I am happy to meet him and go through it with him—he will be able to promote the scheme in his constituency, because his constituents, whether they are businesses or households, can benefit from it.