13 Microfinance
| (a) (30784) 11778/09 + ADD 1 COM(09) 333
(b) (30774) 11717/09 COM(09) 340
| Draft Decision establishing a European Microfinance Facility for Employment and Social Inclusion (Progress Microfinance Facility)
Draft Decision amending Decision No 1672/2006/EC establishing a Community Programme for Employment and Social Solidarity (Progress)
|
| Legal base | (a) Article 159EC; co-decision; QMV
(b) Articles 13(2), 129 and 137(2)(a)EC; co-decision; QMV
|
| Documents originated | (Both) 2 July 2009
|
| Deposited in Parliament | (a) 14 July 2009
(b) 10 July 2009
|
| Department | (a) Business, Innovation and Skills
(b) Work and Pensions
|
| Basis of consideration | (a) EM of 29 July 2009
(b) EM of 21 July 2009
|
| Previous Committee Report | None, but see footnotes 41 and 45
|
| To be discussed in Council | Shortly
|
| Committee's assessment | Politically important
|
| Committee's decision | Cleared
|
Background
13.1 Since the start of the current financial crisis, the Commission
has on a number of occasions stressed the economic and social
importance of maintaining employment, upgrading workers skills,
and increasing access to employment, and, as we noted in our Report
of 1 July 2009, this point was highlighted in its Communication
"A shared commitment for employment",[41]
which it brought forward in June 2009, following a reiteration
of these priorities by the spring 2009 European Council. In particular,
that Communication indicated that the Commission would be proposing
a new EU microfinance facility for employment, to develop micro-enterprises
and the social economy.
The current proposals
13.2 That proposal is now set out in the draft Decision at document
(a), which aims to provide €100 million from the Community
budget over the four years 2010-2013 to increase access to micro-credit[42]
for those who have lost their jobs and disadvantaged persons,
including the young. This would involve guarantees and risk-sharing
instruments, debt and financing, and support measures (such as
communication activities, monitoring, control, audit and evaluation)
as appropriate, and would be open to established public and private
bodies providing microfinance in the Member States. The facility
— which would complement other Community intervention, such
as JASMINE[43] —
would be managed by the Commission, and it is intended that it
would conclude operational agreements with relevant international
financial institutions, notably the European Investment Bank (EIB)
and the European Investment Fund (EIF), which the Commission suggests
would leverage more than €500 million.
13.3 In order to find the €100 million envisaged,
the second draft Decision at document (b) proposes that there
should be a corresponding reduction in the current provision for
the PROGRESS programme (which has since January 2007 combined
earlier, separate employment and social spending programmes).[44]
The Commission envisages that this would involve a similar pro
rata reduction for each of the programme's main elements, but
that the existing level of activity can be maintained through
a combination of efficiency savings and transfers to other funding
streams.
The Government's view
13.4 In her Explanatory Memorandum of 29 July 2009,
the Minister of State at the Department for Business, Innovation
and Skills (Baroness Vadera) says that the UK is broadly supportive
of the proposals in document (a), which expand on elements in
an earlier Communication on the development of micro-credit,[45]
and are in line with the Government's Enterprise Strategy set
out on 12 March 2008 in Unlocking The UK's Talent. She
adds that access to finance is important to the success of entrepreneurs
and small business owners, and that it is critical that they should
have the skills and opportunity to access the finance they need
to make their ideas a reality. In particular, she observes that
microfinance is an important element in ensuring that there are
opportunities for those from disadvantaged areas and from disadvantaged
groups to be able to access the finance needed to start a business.
13.5 The Minister says that the Government believes
that UK micro-enterprises should benefit directly from the proposed
new facility, and that it will be working to ensure that the proposals
are flexible, meet UK needs, and bring value to existing mechanisms
to support microfinance.[46]
Officials will therefore be working to ensure
there is appropriate consultation on the mandate which will set
out much of the detail of the agreement between the Commission
and EIF/EIB on how the facility will operate. She adds that this
will be critical if the needs of UK Microfinance organisations
to develop the capacity to meet the disadvantaged groups are to
be met, and that the UK will also be pushing for the proposals
to support social enterprises more generally, and not just those
for whom the objective is provision of employment.
13.6 The Government's view of document (b) is set
out in an Explanatory Memorandum of 21 July 2009 from the Minister
of State at the Department for Work and Pensions (Angela Eagle),
where she says that the UK and other Member States have broadly
supported the need to prioritise the microfinance facility, subject
to agreement on its substance.
Conclusion
13.7 The draft Decision at document (a) would
take forward earlier suggestions concerning the need to improve
the availability of micro-credit for small enterprises and the
disadvantaged, whilst document (b) would provide the proposed
funding from the Community budget by means of a transfer from
another related area of expenditure. Both proposals have broad
UK support, and do not appear to us to raise any major issues
requiring the further consideration of the House. We are therefore
clearing them.
41 (30683) 10628/09: see HC 19-xxii (2008-09), chapter
9 (1 July 2009). Back
42
Defined as loans under €25,000 for enterprises employing
fewer than 10 people and unemployed or inactive people wishing
to go nit self-employment, but who do not have access to traditional
banking services. Back
43
Joint Action to support Microfinance Institutions in Europe. Back
44
Covering employment incentives, social exclusion, working conditions,
anti-discrimination and gender. Back
45
(29180) 10215/1/07: see HC 19-viii (2008-09), chapter 2 (25 February
2009). Back
46
Such as the Enterprise Finance Guarantee, Community Investment
Tax Relief Scheme and direct support from the Regional Development
Agencies Back
|
