Business leaders call for lending targets to be scrapped

In a letter to the Chancellor, some of the UK's biggest business leaders have suggested it might be more sensible to focus on high-growth businesses, instead...

by Emma Haslett
Last Updated: 06 Nov 2012
Should the Government stop putting pressure on banks to meet lending targets and instead focus on ensuring ‘the 3,000 SMEs that have the scope to create the largest numbers of jobs’ have access to finance? That’s the suggestion by some of the UK’s business leaders (including the likes of Vodafone CEO Vittorio Colao and M&S chairman Robert Swanell) who today signed a letter to the Chancellor outlining five ‘key ideas’ to help revitalise the economy. The implication in the letter is that, for the UK to pull itself out of its ‘anaemic recovery’, the Government is going to have to start getting tough. Although some of the ideas included might just be plain unpopular…

The business leaders in question have all spent the last few days debating how to boost growth at The Times CEO Summit. They agreed that getting to grips with Britain’s skills deficit is one of the most pressing issues. And while there were apparently grumbles that the Coalition’s immigration cap has the potential to seriously hamper competitiveness, the group agreed that the UK must up-skill its workforce by benchmarking standards in maths, science and English ‘against the best nations in the world’.

That’s not all, though: the letter added that one of the crucial elements Britain lacks is attractiveness to outsiders – particularly rich ones. Thus, one of the Government’s main priorities should be coming up with a ‘clear timetable for the reduction of the 50p tax rate’, as well as ‘accelerated reductions in corporation tax’, to help make the UK’s tax rates one of the most competitive in the G8, as well as exemption on Capital Gains Tax for entrepreneurs. Although, given that salary rates are all but frozen while inflation continues to rise, those suggestions are likely to go down like a lead balloon with the majority of taxpayers…

Other suggestions included investing in infrastructure such as that much-maligned airport in the Thames Estuary, fast-tracking big construction projects like power stations and a motorway between Oxford and Cambridge ‘as part of a high-tech corridor’.

To be fair, most of the suggestions in the letter are hardly new: complaints about a lack of skills, for example, have been going on for decades. They may have a point that government-imposed bank lending targets are politically, rather than economically motivated. These alternative proposals may well attract accusations of special pleading, but if they work that shouldn’t really matter. But will they? We may never find out – the government’s interest lies in the whole economy recovering, not just a few hand-picked bits of it.

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