VINCE Cable, the business secretary, yesterday stepped up his war of words against the banking industry, warning that dividends and bonuses could come under attack if banks don’t lend more to small businesses.
Unveiling a green paper aimed at getting banks to fund a private sector-led recovery,
Cable said: “There clearly is a choice between paying out cash in bonuses and reinvesting it in new lending.”
Cable warned that the government could introduce new lending agreements or a tax on bank profits if the industry fails to get its house in order. However, there was a mismatch between his rhetoric and the contents of the green paper, which made no mention of a tax on bank profits.
“I’m not sure where Cable is coming from. He seems to be arguing against his own
green paper,” said one Whitehall source. An official at the business department said Cable was “floating some ideas off the back of the paper” and insisted that chancellor George Osborne was “very supportive of the approach”.
Angela Knight, chief executive of the British Bankers’ Association, pointed out that the green paper actually admits the situation is already improving.
“Conditions have improved since the financial crisis, and… the majority of businesses can now raise the finance they require,” the green paper states.