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Press Release

Incentives for investment must be backed by support for business and consumer lenders

22 April 2009

Today’s Budget recognises that incentives for business and personal investment can help lift the UK out of recession. But many businesses can only access capital allowances via leasing, and the Budget does nothing to make this easier. Similarly, moves to boost car sales are welcome – but still need to be supported by ensuring that finance companies can help those customers who want to buy. Government support for specialist lenders remains key to re-booting much of the economy.

CAPITAL ALLOWANCES

Commenting on increased capital allowances, Stephen Sklaroff, Director General of the Finance & Leasing Association, said,

“Any increase in capital allowances is welcome. But today’s announcement will only help 1 in 20 UK businesses. Many smaller firms need to lease equipment to run their businesses and today’s tax breaks are not available for leased equipment. The Government also needs to help leasing companies by sharing risk and improving the flow of funds.“

HELP FOR HOMEOWNERS

The FLA has welcomed the announcement of additional help via local authorities for those people struggling to meet mortgage payments, and the extension of the mortgage rescue scheme to negative equity cases.

Commenting on new help for homeowners, Stephen Sklaroff said,

“We support the extension of the Mortgage Rescue Scheme to negative equity cases, and the introduction of the new Repossessions Prevention Fund. But the Government needs to extend its funding support to specialist lenders if it really wants a more competitive and active mortgage market.“

CAR MARKET

We hope the car scrappage scheme will increase demand for cars. But if it does, the increased demand for finance – perhaps as much as £1 billion – will reinforce the need for urgent Government action to help the motor finance industry access funds at affordable rates.

Commenting on the car scrappage scheme, Mr Sklaroff said,

“The success of the car scrappage scheme relies on motorists being able to replace their old cars. For that to work, the finance needs to be available. We need Government support now, to ensure motor finance companies can meet that demand.”



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Finance & Leasing Association

Finance & Leasing Association

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