A NETWORK of regional banks to promote growth by lending to local firms would be set up by a Labour government, Ed Miliband announced yesterday.
The opposition leader told the British Chambers of Commerce (BCC) conference he was determined to end a “banks that like to say ‘no’” culture stifling vital investment.
Claiming a £4.5 billion slump in investment in the final quarter of 2012 was proof that government initiatives were failing, he pledged “radical” reforms of the sector.
In a conference speech less than a week ahead of the Budget he also demanded “urgent action” from George Osborne to kick-start the flagging UK economy.
The Chancellor should deal with “the burden of business rates” on small firms, he said.
A spokesman for the Federation of Small Businesses in Scotland said it welcomed a consensus that the current provision for SMEs wasn’t working but said it would need to see the detail of any proposals.
The regional banks policy was welcomed by the Civitas think-tank which has promoted the German Sparkassen model for the UK. Sparkassen banks grew their lending by 17 per cent between 2006 and 2011 while Germany’s big commercial banks reduced lending by almost 10 per cent, it pointed out.
Civitas director David Green said: “Britain has been too reliant on big commercial banks that are just not doing enough to help small firms grow and fire the economy. A network of regional banks has the potential to dramatically improve the flow of finance to SMEs.”