OPENING up the banking sector to new entrants and encouraging firms to switch between different lenders will give manufacturers and the economy a much-needed boost, industry body EEF claimed today, arguing a lack of access to finance is harming growth.
The group called on chancellor George Osborne to reduce barriers to entry in the SME banking sector to encourage new lenders to start up and compete with the established players.
And creating incentives for firms to switch between banks as well as creating a system of full account number portability – the same as mobile phone users enjoy when changing providers – would also help, it said.
“The government needs to develop a plan for increasing competition in business banking which starts to address a longstanding weakness in our finance landscape,” said EEF boss Terry Scuoler, arguing the change could help firms access finance and so expand.
“The government must demonstrate it has the strategy to deliver the stronger economy that will pay down the deficit. This means accelerating action that will deliver public investment in key areas and unlock investment by the private sector.”
The manufacturers’ body also called for the government to give firms more money to train staff, instead of using intermediaries to offer education and vocational courses.
It claims such a shift would ensure training becomes more demand-led, based on the actual skills employers want, rather than those set out by either the government or a training firm.
Finally, the group called for increased infrastructure spending, particularly on improving poor quality local roads and congested motorways.
It suggested reallocating the money unspent by government departments, redirecting it to construction projects.