(4 March 2009)

Following Prime Minister's Questions today (4 March 2009), the Conservative Party claims that many, if not most, of the Government's schemes to encourage lending and aid business have yet to be implemented. Among those most heavily criticised were the delayed BERR's £500 million Working Capital Scheme, the £500m DWP recruitment subsidies and the Homeowner Mortgage Support Scheme for those who have been made redundant.

Shadow Chancellor, George Osborne, said "The fact is, they [the Government] have announced so many different schemes, exercised so many about-turns, made so many false claims, broken so many promises, that no one believes a word they say anymore. They are running around like headless chickens trying to save their own necks. And once again, it will be the British taxpayer who pays the huge bill for the mistakes of Labour’s age of irresponsibility.”

Government schemes yet to be implemented

1. DBERR Working Capital Scheme.

This scheme is meant to guarantee credit lines to ordinary-risk businesses with a turnover of up to £500m a year. The Government will provide banks with guarantees covering 50 per cent of the risk on existing and new working capital portfolios worth up to £20bn.

Announced: 14 January 2009

Planned date: 1 March 2009

Cost: £10 billion in guarantees.

Status: Not yet active. The first £1bn tranche of the scheme was meant to be operational by 1 March 2009, supporting around £2bn of loans. The Financial Times reported on 2 March 2009 that this had been delayed. This was confirmed by Harriet Harman today in PMQs.

2. HMT Guarantee Scheme for Asset-Backed Securities.

The Government will provide full or partial guarantees to be attached to eligible triple-A rated asset-backed securities, including mortgages and corporate and consumer debt.

Announced: 19 January 2009

Status: Not yet active. The scheme will commence in April 2009, subject to state aid approval.

3. HMT Asset Protection Scheme.

The Treasury will provide insurance on future credit losses on defined assets to the extent that credit losses exceed a “first loss” amount, to be borne by the institution.

Announced: 19 January 2009

Cost: Insurance for £325 billion of RBS assets.

Status: Not yet fully active. Details announced for RBS. Details for Lloyds have been delayed.

On BBC Today, 27 February 2009, Robert Peston said it was “a shock” that Lloyds had not yet agreed a deal with the Government on insuring a pool of loans and investments. He described it as “quite serious news” and said “investors will be very rattled by it”. He claimed that: “there was a deadline of this morning for agreeing it, as of last night I was talking to both sides it looked to me as though, these things always go the wire in last minute negotiations, but it looked to me as though an agreement had broadly been reached. So it is going to shake investors that it hasn’t happened because there are something like £250 billion of loans and investments where frankly the outlook for losses is very serious indeed.”

‘Lloyds Banking Group, which is also partly state-owned, is expected to do likewise when it reports losses on Friday.’ (Financial Times, Broom poised for toxic sweep, 25 February 2009)

4. DIUS internships scheme.

In an interview with John Denham, the Daily Telegraph reported on the Government’s plans to tackle the difficulties faced by new graduates entering the labour market: ‘Denham’s response is a “national internship scheme”, which he is putting together with leading employers in the private and public sectors. So far Microsoft and Barclays, along with other major firms, have pledged to take graduates who cannot find jobs and train them for short periods of up to three months’ (Daily Telegraph, 10 January 2009).

Announced: 10 January 2009

Status: Not yet active. Digby Jones has said: "No money has been committed to this internship scheme and the idea is frankly vague." (The Observer, 15 February 2009)

5. DWP recruitment subsidies.

A scheme designed to create recruitment subsidies. Eligible customers will attract a £1,000 recruitment subsidy and Train to Gain funding worth on average £1,500.

Cost: £500m

Announced: 12 January 2009

Status: Not yet active. Tony Mcnulty said that “This additional support will be available from April 2009.” (Hansard, 27 Jan 2009, Col. 438W)

6. DCLG Homeowner Mortgage Support Scheme.

A scheme designed to help some households who experience a redundancy, and who will be able to defer a proportion of their interest payments for up to two years.

Announced: 3 December 2008

Status: Margaret Beckett has revealed that the government's flagship scheme for homeowners, announced by Gordon Brown on the day of the Queen's Speech, will only be implemented in April. Margaret Beckett said: "We expect the Homeowners Mortgage Support Scheme to be open for business with the first lenders in April now that the Banking Act, which is the legislative vehicle we have used to enable us to do this, has gained Royal Assent. The draft Master Guarantee is currently with lenders." (Hansard, 2 March 2009, Column 1229W)