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Small Businesses: Loans Scheme

Volume 492: debated on Thursday 28 January 1988

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3.33 p.m.

My Lords, I beg leave to ask the Question standing in my name on the Order Paper.

The Question was as follows:

To ask Her Majesty's Government what assistance has been provided for small businesses by the loan guarantee scheme since it began.

My Lords, since 1981 the scheme has permitted over 18,800 loans aggregating over £600 million to be made to small businesses. These loans have helped the businesses concerned to start up or expand thus creating wealth and employment.

My Lords, in thanking my noble friend the Secretary of State for that very satisfactory reply, may I ask whether he agrees that the very complicated administrative procedures to do with applying for loans under the scheme are inclined to put off small firms, particularly in regard to small loans?

My Lords, I am very grateful. There is a new simplified administration covering loans up to £15,000 for smaller companies. I believe that those who apply for loans up to £15,000 will find that the procedure now is much more suited to their purpose.

My Lords, could I ask the noble Lord how many women have applied for grants for small businesses? Is he aware that last year alone no less than 2,500 women applied to a voluntary organisation, Women in Enterprise? These women apparently either did not know about, or found it difficult to apply to, the established organisations. Does the noble Lord agree that this is a real growth area to which he should pay attention?

My Lords, I shall of course look into the matter and, if I may, write to the noble Baroness with the information. Many of these loans come to the Government through the banks, because often it is the banks which apply for the guarantees. This is a matter which should perhaps be addressed to the bank managers of the country as well as to the Government. However, I shall certainly make inquiries.

My Lords, would the noble Lord say whether the Government are doing anything to persuade certain local councils to desist from policies that make it practically impossible for small businesses to carry on?

My Lords, there is little doubt that the rating policies of some authorities in the land have made it extremely difficult for small firms to carry on. We have endeavoured to use persuasion. Today, we are engaged in other matters.

My Lords, could the Minister translate for us the global figure which he gave into the number of jobs and the cost per job? Could he also indicate whether it is the Government's intention to carry on with the existing scheme?

My Lords, yes. Surveys by the Department of Employment show that the loan guarantee scheme is one of the most effective of all schemes operated by the department. It operates at a net cost per person on the register of jobs created of about £400 per job. That is an extremely favourable figure. A review of the scheme's effectiveness is being carried out by National Economic Research Associates who report during the course of this year. The present scheme runs until 31st March 1989. I have no doubt that we shall wish to look at the report before deciding on its future.