Legal base	—
Department	Business, Innovation and Skills
Basis of consideration	Minister's letters of 16 July 2009 and 21 November 2009
Previous Committee Report	HC 19-viii (2008-09), chapter 2 (25 February 2009)
To be discussed in Council	No date set
Committee's assessment	Politically important
Committee's decision	Cleared

Background

7.1 According to the Commission, there is in many Member States an active micro-credit sector, providing loans of less than €25,000 to small and medium-sized enterprises (SMEs), but, although a number of actions have been taken at Community level to reinforce the growth of the sector, it believes that more needs to be done. It therefore brought forward in November 2007 this Communication, which proposed action based on two broad "principles". The first would invite Member States to make the adaptations needed to promote the development of micro-credit, including improvements to their legal and institutional environment, and changing the climate in favour of entrepreneurship. The second would involve the establishment of a new dedicated facility to provide technical assistance, information and publicity, guidance to encourage the adoption of best practice, and greater access to finance for selected micro-finance institutions (MFIs).

7.2 When we first considered the Communication on 9 January 2008, we felt that it would be difficult to assess its real significance without an indication of whether (or when) it was likely to be discussed by the Council, or the extent of support among Member States for what had been proposed. Our Chairman therefore wrote to the Government, asking for guidance on these points, and subsequently received a number of replies, one of which from the then Minister for Economic Competitiveness, Small Business and Enterprise at the Department for Business, Innovation and Skills (Baroness Vadera) on 5 February 2009 said that the Communication had still not been put to the Council, and that she did not now anticipate that it would be. She also pointed out that the Commission and EIB had launched in September 2008 a new pilot initiative (JASMINE)[22] to address the fourth aim in the Communication of providing additional financial capital for MFIs, and that she would update us at regular intervals on further developments.

7.3 In drawing this document, and the Minister's comments, to the attention of the House in our Report of 25 February 2009, we said that we had considered carefully whether we should clear it, bearing in mind that much had changed as regards the provision of credit since the document had been prepared. However, given the importance of the subject, we felt it would be premature to do so, and we said that we proposed to keep it under scrutiny, at least for the time being. In the meantime, we noted that the Government supported the Commission's aim of creating an environment which encouraged micro-credit, and believed that the approach suggested would enable the UK to build upon its current domestic provision. At the same time, it was unclear how the Commission intended to develop these initiatives, and whether the action proposed should be a priority area under the Lisbon Strategy, and the Government also intended to seek clarification about the extent to which resources allocated for growth oriented access to finance would be diverted to fund these initiatives, and how they related to proposals on access to finance being developed within the proposed EU Small Business Act.

Minister's letter of 16 July 2009

7.4 We next received from the Minister a letter of 16 July, essentially repeating the information she had provided earlier on JASMINE, and expressing the hope that this would enable us to release the measure from scrutiny. At the same time, she also drew attention to a further proposals[23] to establish a micro-finance facility under the Community Programme for Employment and Social Solidarity (PROGRESS), and to the fact that we would shortly be receiving an Explanatory Memorandum on these. However, as our reasons for holding the earlier Communication under scrutiny had been related not to JASMINE, but to uncertainty over the position regarding its other elements, our acting Chairman replied on 21 July seeking further clarification.

Minister's letter of 21 November 2009

7.5 We have now received a letter of 21 November from the Minister for Trade, Investment and Small business at the Department for Business, Innovation and Skills (Lord Davies of Abersoch) confirming that the JASMINE initiative (and the proposals relating to PROGRESS) effectively supersede the corresponding aspects in the earlier Communication. We also understand that, to the extent any of the other matters covered by that Communication were to be taken forward Brussels, this would now be on the basis of a new document, and that the Communication has therefore effectively been overtaken by events.

Conclusion

7.6 We are grateful to the Minister for this information, in the light of which we are now clearing the document.

23   (30774) 11717/09 and (30784) 11778/09: see HC 19-xxvi (2008-09), chapter 13 (10 September 2009). Back