News from Welsh Labour

Force bail-out banks to help Welsh business start-ups says AM

Wrexham’s Labour Assembly Member, Lesley Griffiths, wants to see those UK banks who have been bailed out by the UK Government, compelled to participate in a new EU microfinance fund to tackle unemployment in Wales.

Under the newly unveiled scheme, people who have recently lost their jobs and who are looking for loans to start up their own business, will be able access up to €25,000 via loans and credit guarantees from the European Union. In total, a €100 million will be made available over a four-year period starting from 2010.

According to the European Commission, the microfinance fund will be designed to help people who have lost their jobs, those who wish to start a small business, assistance for microenterprises and people who have difficulty securing finance from traditional banking sources.

The funds, which could ultimately leverage over €500 million of investment, will be dispersed in part through banks. The scheme will be run in partnership with the European Investment Bank (EIB).

However, Lesley Griffiths believes UK banks have a poor track record in engaging in European schemes designed to help Welsh businesses and has pointed to a recent EIB scheme which – due to inaction by the banks – failed to get much needed credit for Welsh companies.

The AM now wants the UK Government to use its large and recently acquired stake in some banks, to compel them to participate in this new EU microfinancing scheme and recently raised the issue in First Minister’s Questions in the National Assembly.

Commenting on the importance of the new fund, Lesley Griffiths AM said:

“In recent months, UK banks failed to help small businesses in Wales access €30 billion which was set aside by the EIB to get credit flowing again. With just a couple of exceptions, our banks did not take advantage of the scheme and as a consequence, Welsh companies were denied much needed credit.

“Given the huge amount of public money that has been pumped into some UK banks over recent months, I believe the UK Government should use its ‘muscle’ to force those particular banks to participate in this latest EU microfinancing scheme. There can be no more excuses from the UK banking sector when it comes to providing this kind assistance to the Welsh economy.

“In recent months, Welsh tax-payers have helped bail out the likes of HBOS, Lloyds TSB and Royal Bank of Scotland. The UK Government now has a huge stake in each of these companies and I want to see that influence brought to bear, in order to help people in Wales to start up their own businesses.

“There can be no excuse on this occasion for UK banks not to get involved in this new EU scheme. The financial risks involved is this new fund are being kept to an absolute minimum by the both the EU and the EIB acting as guarantors.

“This scheme will give newly unemployed people in Wales a great opportunity to access the microfinance they need. It is crucial that every assistance is given for their business ideas to take-off. The economic pay-back for Wales in the long-term, could be much-needed renewal through the creation of new jobs and greater innovation.”