RICHARD Lambert yesterday hit back at Lord Mandelson in a public spat over government plans for a quango that could force banks to lend to small firms.
Mandelson launched a scathing attack on Lambert at the weekend, after the director general of the CBI said the thinking behind the small business credit adjudication service – which would have legal powers to overturn bank lending decisions – was “completely dotty”.
The business secretary accused Lambert of being “completely out of touch” with small businesses while standing up for “bullying banks”.
He added: “Lambert’s indifference to this is shocking and shameful and if he wants to desert small business and side with the banks in this way, he will be alone in doing so.”
Yesterday, Lambert insisted that small firms were “the lifeblood of our economy” and said he understood the pressures facing them. But he refused to back down over his opposition to the credit adjudicator, saying “I warmly welcome workable plans to support small firms – but regrettably this isn’t one of them.”
Lambert described the quango as “pure political rhetoric”, and said it would fall into difficulties if it forced a bank to lend to a firm that subsequently went bust.
The government has enjoyed good relations with Lambert, an ex-Financial Times editor that switched the paper’s support to New Labour in 1997, but Mandelson’s aggressive language is sure to strain relations in the run up to the general election.
Last week, City A.M. revealed that the banking industry was up in arms over the credit adjudication service, which would have statutory powers to overturn the lending decisions of all banks – not just state-owned ones. And we revealed that its head will earn around £500,000 when appointed.