Businesses warn Cable that new bank must lend to a broad range of firms

VINCE Cable’s proposed “business bank” must lend to a broad range of firms and not just those that “fall into an arbitrary category”, the Federation of Small Businesses last night warned.

Andy Willox, the federation’s Scottish policy convenor, said the Business Secretary’s proposals – which were outlined at the Liberal Democrats’ party conference in Brighton – could help to break the “duopoly” in the banking market north of the Border, which is dominated by Lloyds and Royal Bank of Scotland.

Willox said: “The new state-backed institution must provide real competition to the high street banks – especially in Scotland where only two players currently dominate the marketplace. It cannot be designed to support a handful of firms that fall into an arbitrary category and must operate across the length and breadth of the UK.”

Full details of the business bank – which will use £1 billion of public funding to draw in a further £9bn from the private sector – will be given in Chancellor George Osborne’s autumn statement in December.

Liz Cameron, chief executive of the Scottish Chambers of Commerce, said: “The creation of the business bank is a key intervention from government to support our economic recovery and has the potential, if done properly, to be the single most-important economic boost that government could provide.”

But Paul Aitken, chief executive of small business lender Borro, warned: “So many initiatives have been promised that have failed to meet the objectives set – the UK government will need to put its money where its mouth is.”