It has almost had to have been dragged out of the chancellor kicking and screaming as the situation has worsened.
Chris Leslie MP
Chris Leslie the shadow financial secretary has said the government’s business bank initiative “falls short of what is needed”, to increase lending to small businesses.
Leslie made the announcement at a fringe event at Labour conference, hosted by the Association of Chartered Certified Accountants (ACCA).
Although Leslie said the idea for a business bank was first presented by the Labour Party 12 months ago, in terms of the government’s recent announcement he said there are some “significant questions hanging over it”.
One possible problem trailed by Leslie, was that the financing of the bank seems to be “quite reliant on under-spend” by the government.
Ideas like the business bank, Leslie revealed, face significant ideological barriers within the government, due to the chancellor, George Osborne’s “reluctance to admit that there is a role for fiscal policy” in such areas.
“It has almost had to have been dragged out of the chancellor kicking and screaming as the situation has worsened”, he said.
Announced by business secretary Vince Cable last week in his speech to Liberal Democrat conference, the big investment bank will set aside £1bn to help small- and medium-sized enterprises.
The government hope that the £1bn from the state will then be matched by money from the private sector.
Leslie’s colleague shadow business minister Toby Perkins, raised similar scepticism about the likely effectiveness of the bank, due to what he perceived to be relatively unsuccessful schemes to support small businesses from the government, thus far.
One of the schemes Perkins was referring to is the government’s Project Merlin initiative, which is deemed to have failed as rather than increasing lending to small businesses, Bank of England statistics show month by month scaling back of lending.
He noted that the business bank will only work if, “it gives business greater confidence in their relationship with the banks.”
“If this was a German scheme it would be delivered quickly and effectively.
“You would see that the money in a relatively short time frame was out there under the real economy”, he said.
Rosana Mirkovic, head of SME policy at the ACCA said the government is “doing a lot to support small businesses, but that the products available still remain “marginal”.
Mirkovic encouraged any policy introduced going forward to be “long-term”.
“We need to take a very long term approach to the agenda because the future is not bright”, she said.
Mike Cherry, policy chairman at the Federation of Small Businesses said he hoped that “there can be cross-party support for the long-term funding of small businesses going forward”.
As well as encouraging lending to small businesses Cherry said the FSB is also calling for other measures to help support small businesses, such as a National Insurance holiday for all small businesses who want to “take on a new employee or two going forward.”