New credit easing scheme to 'help struggling businesses'
Thursday, 06 October 2011 12:30
The Chancellor George Osborne has outlined plans to introduce a new multibillion-pound 'credit easing' scheme in a bid to help small businesses gain access to finance.
Speaking at the Conservative party conference, Osborne revealed that the Treasury will purchase companies' corporate bonds, thereby generating much-needed cash for struggling firms.
'Because banks are damaged they won't lend at current low rates,' he told delegates.
'We have got to get credit flowing in our economy. I have set the Treasury to work on ways to inject money directly into parts of the economy that need it such as small business. It is known as credit easing'.
Further details are expected when the Chancellor makes his Autumn Statement at the end of November.
Despite calls to cut the 50p top rate of income tax, Osborne ruled out borrowing money to fund temporary cuts.
'Right now, temporary tax cuts or more spending are two sides of exactly the same coin, a coin that has to be borrowed. More debt that has to be paid off,' he said.
However, the Chancellor did confirm plans to reform the employment tribunal system - a move welcomed by many business groups.
The proposals include doubling the period for unfair dismissal rights from one year to two years and introducing a tribunal fee for anyone applying to make a claim at an employment tribunal.