Oral Answers to Questions

Gordon Banks Excerpts

Thursday 8th December 2011 Commons Chamber

[Greg Clark]

It would be a delight to visit Malvern. I know that my hon. Friend is trying—successfully, given the number of high-tech businesses there—to market Malvern as a cyber-valley. We know that silicon valley has prospered because of the links between existing high-tech firms and new ones, and I know that that is what she wants to achieve.

[Gordon Banks (Ochil and South Perthshire) (Lab)]

What guarantees can the Minister provide that the banks will actually lend to newly formed businesses run by previously unemployed people? They are not lending to existing businesses, so why should they lend to new ones?

[Greg Clark]

As the Minister of State, Department for Business, Innovation and Skills, my hon. Friend the Member for Hertford and Stortford (Mr Prisk), said earlier, the intention is—and the banks are delivering on this—that they increase lending to small businesses year on year. That is part of the loan guarantee scheme announced in the autumn statement, and we are determined to deliver on it.

--- Later in debate ---

[Gordon Banks (Ochil and South Perthshire) (Lab)]

T8. Last week we heard how Project Merlin had failed and was going to be bailed out by credit easing. How many banks have signed up to credit easing, how many small businesses will be helped by that, and will it be more successful than the business growth fund was?

[Vince Cable]

The Merlin project certainly did not succeed in its central objective, which was to achieve growth in gross lending by banks. There has been a contraction in net lending for a variety of reasons, not least the fact that many companies are holding more cash. Credit easing will be commenced soon. The Treasury will maintain a metric of performance by individual banks, and this will lower the cost of capital for many of their customers. The cost of borrowing and covenanting, as much as access, has now become the central concern.