Cable defends his plan for new British business bank

VINCE Cable yesterday insisted that the government’s proposed business bank will make a difference to small companies, despite fears that it could be little more than a rebranding of existing government lending programmes.

Discussions over the format of the bank, which will target firms who cannot access funds from traditional lenders, are ongoing within the government but Cable hinted that it could be unveiled as part of the Autumn Statement, which is due on 5 December.

Yesterday the business secretary told City A.M. that the bank would not be directly controlled by the government: “I’m not a banker and I have no qualifications to be a banker. Government should not be in the business of making individual decisions of that kind.

“What we are identifying is the areas where there is currently a weakness. One of those is long-term, patient capital, another is indirect funding to challenger banks.”

John Longworth, director general of the British Chambers of Commerce, welcomed the announcement but raised fears that the bank could simply involve unifying ongoing programmes such as Funding for Lending and the Enterprise Finance Guarantee.

“While businesses will be heartened to hear strong support for the establishment of a business bank, this must be more than just a vehicle for existing government schemes,” he said.

Cable insisted that it would be far more substantial than that but said the “scale, scope and timing” have yet to be confirmed. Because the government-backed organisation is unlikely to have its own banking licence it will probably be limited to working through existing lenders.

Speaking at the launch of the government’s new industrial strategy, Cable also said the government would look to increase procurement from UK firms and announced a £67m investment in vocational youth training programmes designed in co-operation with leading companies.

Any new business programme will hope to do better than the regional growth fund, one of the government’s flagship schemes. Yesterday the Public Accounts Committee said just £60m of the £1.4bn fund had reached businesses, creating 2,442 jobs out of the 36,800 expected during the scheme’s lifetime.