Cable: ‘Banks must be made to lend’
Mar 11 2010
Vince Cable, Treasury spokesman for the Liberal Democrats
Liberal Democrat Treasury spokesman Vince Cable has slammed the government for its failure to promote bank lending.
Speaking to SmallBusiness.co.uk, Cable said: ‘There are a number of anecdotes and survey evidence to suggest that numerous viable businesses can’t get credit on reasonable terms. High fees and severe demands on credit are undoubtedly checking SME growth.’
The attack comes as figures revealed bank lending to businesses hit an all-time low in December, falling by £4.3 billion compared to the same month the previous year.
He says: ‘The essence of the problem has been a serious failure to regulate a legally binding agreement with the banks. This is partly the fault of the government for placing regulation on the semi-nationalised banks to build up capital, even through they don’t need it as they are nationalised and so aren’t going to fail. Banks should be providing credit on a commercial basis; now is not the time to tighten the screws on lending.’
Cable also accuses the banks of denying the facts when they ‘insist that they are falling over backwards to help their business customers despite all the mass of evidence to the contrary'.
‘There is an issue of a lack of demand, but it is highly disingenuous on the part of the banks to say this is the sole reason for a lack of lending. If the country is to get out of the recession we will need more business investment, which remains difficult to maintain at the moment,’ he adds.
The Treasury is now considering whether to take action against RBS and Lloyds if the banks fail to meet their lending requirements of £27 billion to businesses by the end of March.
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