Cable plans public bank to offer business loans

BUSINESS secretary Vince Cable will today outline plans for a government-backed corporate lender, as part of his attempt to reignite the coalition’s support for British industry.

Cable will say in a speech at Imperial College that the smaller “challenger banks” such as Co-operative and Aldermore could be employed to operate the new business bank, though the final model and scale is yet to be decided.

He is expected to rail against the current lending landscape for smaller firms, claiming that a third of businesses that applied for a loan in the last year were rejected.

The Lib Dem will also sketch out measures to help the British car, aerospace and life science sectors compete globally – though he has insisted in the past week that his new industrial strategy is not “picking winners”.

He is also expected to give an update on the coalition’s attempts to foster research and development, fund more apprentices and use small companies in government procurement.

Cable’s industry plans come as businesses welcomed his strong words on cutting corporate red tape.

Katja Hall, the CBI’s chief policy director, said the decision to exempt hundreds of thousands of low-risk workplaces from health and safety inspections “makes obvious sense” as they are “disproportionately costly for smaller firms”.

Her claims were echoed in a survey by Zurich Insurance that found 70 per cent of small and medium sized businesses thought cutting red tape was important to their businesses – substantially more than had concerns about accessing finance.

The TUC’s Brendan Barber criticised the move, however, arguing: “Health and safety regulation is not a burden on business, it is a basic protection for workers.”

According to Ben Posford of law firm Prolegal there is also the prospect of a legal challenge to the government’s attempts to fast-track the reforms.

“It is likely to be very difficult for the government to make any major changes without risking a challenge to the European Court of Justice,” he said.