Start-up Loans

Lord Brooke of Alverthorpe Excerpts

Wednesday 20th November 2013 Lords Chamber

[Lord Popat]

My Lords, we will remove the age limit. The limit on lending is £25,000 for a period of five years, at a 6% interest rate. We will look at this over a period of time once we have looked at the success of the scheme. The scheme is proving to be successful. There are a few examples, which I have in my folder here, of people who have traded very successfully, done well and gone to the clearing banks to borrow more money to make sure that their businesses grow. The people who participate in the Prince’s Trust are actively encouraged and are quite often mentored free of charge to help them set up their own businesses.

[Lord Brooke of Alverthorpe (Lab)]

My Lords, the noble Lord expressed a hope that banks may be persuaded to return to their former glory, when they operated at local level and were very much available for local businesses. Will he tell us what the Government intend to do to make that a reality? The reality is that in many areas the banks have loads of money to shell out. I recently purchased a new kitchen. At the end of the exercise, after having decided how much I was going to spend, I was asked, “But aren’t you going to take the interest-free loan?”. I had no intention of taking the interest-free loan for 12 months, but it was offered to me, so I took it. Therefore, Barclays has stumped up all the cash, which has immediately gone to the German manufacturer that produced the kitchen. There had been no question at all about any difficulty in paying. Interest-free loans are being offered all over the place. Perhaps we should have a look at what is happening with interest-free loans, where the money that comes through interest-free loans goes, who the beneficiaries are, and why the banks are not lending it to our SMEs and to our real start-up people, who we need.

[Lord Popat]

My Lords, it is not under the Government’s control to insist that banks have branch networks or branch managers at branches throughout the country. However, given time, with competition being put in place, this will happen—they will have no choice. If they really want to lend money and understand the local business and local businessmen, they will have to have a local branch network. On interest-free loans, I do not have information in my briefing but I will be very happy to write to the noble Lord on where that money comes from and how someone is able to give interest-free loans. Perhaps the people who sold those goods to the noble Lord are offering the loan themselves from the profit they made from the goods that were sold. However, I will certainly write to the noble Lord.