Industry and Exports (Financial Support) Bill

Clause 1 is essential to enable the section 8 power of the Industrial Development Act 1982 to continue to be used to give financial assistance to industry for the purposes specified in that Act. It is necessary to continue to strengthen the provision of support for businesses so that they come through stronger from the current global economic downturn. The Bill seeks to amend the cumulative limit on financial assistance that may be provided under section 8 to an initial ceiling of £12 billion, which can be increased by four orders of up to £1 billion each to make an overall limit of £16 billion. We have proposed the £12 billion limit as it restores the ceiling to more or less the same proportion of GDP as was the case when the original Act came into force. The business support that we now provide is often in the form of loan guarantees or loans. Those can offer better value for money for the taxpayer in the long term, as loans are repaid over time and only a proportion of guarantees will ultimately need to be met. The hon. Members for Hertford and Stortford (Mr. Prisk) and for Solihull (Lorely Burt) recognised and welcomed that. I want to be clear that when we offer loans or loan guarantees, the full amount secured against public funds will count towards the section 8 limit. That is one of the reasons why we need to increase the limit; we debated the issue on Second Reading. We think that £12 billion is a sensible limit at the current time, when it is vital that we maintain sufficient flexibility to respond to the challenges ahead. I want to say something more about flexibility in a moment, because it is relevant to the hon. Gentleman's point about the balance of funds between grant schemes, loans and loan guarantee schemes. However, I also want to be clear that the section 8 financial ceiling does not itself authorise any actual expenditure. The Bill retains the accountability to Parliament contained in the existing legislation, and I can confirm that that is through the need for affirmative orders of the Commons, which would replace the existing limits with new, higher ones, reflecting the need for continuing support for industry when necessary. We have maintained the £10 million limit for the referral of single expenditure schemes back to the House. As the hon. Gentleman said, an annual report will continue to be published in the Commons Library, setting out how single projects are funded. Combined, the measures provide an appropriate balance between accountability and providing the Government with the legal power to respond to business need.