Vince Cable attacks government for failing to promote bank lending

Liberal Democrat Treasury spokesman Vince Cable attacked the government this week for failing to promote bank lending.

In an interview with SmallBusiness.co.uk, Cable said: “There are a number of anecdotes and survey evidence to suggest that numerous viable businesses can’t get credit on reasonable terms.”

He continued: “The essence of the problem has been a serious failure to regulate a legally binding agreement with the banks. This is partly the fault of the government for placing regulation on the semi-nationalised banks to build up capital, even through they don’t need it as they are nationalised and so aren’t going to fail. Banks should be providing credit on a commercial basis; now is not the time to tighten the screws on lending.”

Cable’s comments come after data released last month by the Bank of England showed that lending to businesses was down £4.3 billion in December alone and down for the entire fourth quarter.

With banks appearing to be reluctant to help businesses, the Treasury is now examining lending targets for RBS and Lloyds and considering whether or not to take action against them if they fail to meet lending requirements. Together the two state-sponsored banks must lend £27 billion to businesses by the end of March.

However, out of this banking row comes some seemingly good news for small businesses. Figures released this week by the British Banking Association (BBA) revealed that lending to small businesses is increasing – new lending reaching £534 million in January. Furthermore, the BBA said lending to the small business sector has increased by 2% over the last year.

What has your experience been like when it comes to securing lending from banks? Tell us about it below.

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