The business Secretary, Vince Cable has outlined government plans to create a new business bank to help companies invest in capital and drive their expansion.
Cable discussed the concept in a speech to launch of the Coalition's new industrial strategy. Speaking at London's Imperial College, Cable said the government planned to lift the barrier that poor access to finance puts on growth. He explained that the scale and modus operandi of the business bank are still under discussion, but it could operate through alternative providers such as the new challenger banks and non-bank lenders.
The British Chambers of Commerce (BCC) and the CBI have welcomed the announcement.
John Longworth, director general of the BCC, said: '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. A brand new, fully-fledged business bank is needed to lend to new and growing companies, many of whom report difficulty accessing finance.
'Companies are clear, though, that nothing less than a 'full service' business bank will do - a rebranding exercise for existing government schemes or one that uses existing bank infrastructure is not enough. Businesses need policies that will help over the medium- and long-term, but boost confidence now. The government can do exactly that by addressing the problem of access to finance faced by so many of the UK's firms.'
John Cridland, CBI director-general, said: 'Our small and medium-sized businesses are often those with the greatest potential to grow, but this has been hampered by tougher regulation on banks and lending has been restricted.
'The government has introduced a number of funding schemes to assist smaller businesses, so to help them make best use of these, a business bank that acts as a 'one-stop shop' for these initiatives is a priority.
'While we don't believe a state bank lending directly is necessary, there is a critical need for an aggregation platform which bundles loans to kick-start a bond market for medium-sized businesses and provide new alternatives to traditional bank financing.'
The Labour Party has called for more detail on the government's plans. Chuka Umunna MP, Labour's shadow business secretary, said:
'Ministers need to come clean on whether they are proposing a proper British Investment Bank, which Ed Miliband has led calls for since last year, or merely a rebranding exercise of schemes which already exist and are not doing enough to help business.'
