Vince Cable is ratcheting up pressure on banks to lend to small businesses by reviving a lending forum set up by his predecessor, Lord Mandelson.
The Small Business Finance Forum, which was established late 2008 when fears about scarce credit were at their height, included senior figures from the UK’s largest banks, such as HSBC, Santander, Lloyds, Barclays and Royal Bank of Scotland.
Representatives from the Institute of Directors, the Federation of Small Businesses (FSB), the Bank of England and the CBI were also regular attendees at the Forum.
An FSB spokesman said: "We want the forum to carry on. The banks were there, and they were open to criticism and liked the praise when we thought things were working. It needs to carry on for the Enterprise Finance Guarantee to prosper."
A staunch critic of the banks during the election campaign, Vince Cable now wants to match his rhetoric with actions to increase the flow of lending to small and medium sized businesses.
We do not expect to see viable businesses deprived of credit or working capital by banks that are largely owned by the taxpayer, or the general beneficiaries of wider public support
Business secretary Vince Cable
Last month the Liberal Democrat Business Secretary said: "I will redouble our efforts to ensure that bank lending agreements from banks that have benefited from taxpayer subsidy are being honoured – especially for small and medium enterprises.
"We do not expect to see viable businesses deprived of credit or working capital by banks that are largely owned by the taxpayer, or the general beneficiaries of wider public support."
Cable gave no credence to the banks’ protests that there was no demand: "That is not right. If the bar is set too high, of course no one is willing to jump. The current risk aversion by banks in the small and medium enterprise sector will stifle recovery and, if it does, will actually rebound on the banks through bad debt."
The Bank of England has already injected £185bn of credit to SMEs under the Special Liquidity Scheme, while the Treasury has backed £125bn worth of loans through the Credit Guarantee Scheme.
