Further to the statement by my hon. Friend, the Minister for International Trade last week, I have today laid the accompanying departmental minute before Parliament describing a contingent liability arising from the launch of a shipbuilding credit guarantee scheme.
The SCGS is a finance instrument which will provide guarantees to banks in respect of loans made to vessel owners and operators seeking to place orders at UK shipyards. The scheme will guarantee a portion of the value of eligible loans, sharing the risk with lenders to encourage offers of finance to UK vessel owners and operators.
The SCGS is one of a number of targeted interventions being taken as part of over £4 billion of Government investment planned through the Government’s national shipbuilding strategy refresh, to encourage UK ship owners and operators to place new orders and upgrade their existing fleets with world-leading shipyards that are based up and down the UK. HM Treasury has approved the arrangements.
In addition, I hereby give notice of the Export Credits Guarantee Department’s—known as UK Export Finance, UKEF—intention to seek an advance from the contingencies fund. This was made over recess, and I am notifying Parliament at the earliest opportunity. I have previously notified the Chairs of the Public Accounts Committee and the Department for Business and Trade Select Committee. UKEF will act as service provider to DBT. It will manage inquiries and applications under the SCGS and DBT will cover resource and other costs. To have the necessary approvals to undertake this work on behalf of DBT, UKEF must apply for a contingencies fund advance.
Parliamentary approval for additional resources of £105,000 for this new expenditure will be sought in a supplementary estimate for UK Export Finance. Pending that approval, urgent expenditure estimated at £51,000 will be met by repayable cash advances from the contingencies fund.