Breedon et al reckon the best way to get the UK’s business lending back in shape is for a single agency to oversee all the Government’s small business support schemes. It also wants big businesses to do more to support their smaller counterparts. Obviously, it couldn’t resist the chance to dust off that old nugget about large companies shortening their payment terms – but, more originally, it also suggested a ‘Business Finance Advice’ network made up of the UK’s largest accountancy firms.
Business secretary Vince Cable seems impressed: ‘We need to reshape the UK’s finance landscape to better serve the needs of ordinary businesses, helping more and more companies find the support they need to start and grow,’ he said. Then again, it was just last week he claimed banks were ‘imperilling’ the economy, and recommended RBS be broken up and part of it turned into a ‘British Business Bank’, so this sort of thing is right up his street.
Then again, perhaps it’s time to do away with banking altogether. At least, that’s the suggestion of Bank of England executive director for financial stability Andy Haldane, who said last night that peer-to-peer lending could replace high-street banks in the not too distant future. Sites like Zopa, which calls itself an ‘online lending and borrowing marketplace’, match up people who want to make a bit of interest on their spare dosh (those wishing to dodge the soon-to-be-downgraded to 45p tax rate, perhaps?) with prospective borrowers.
Haldane said they make a lot of sense: ‘At present, these companies are tiny. But so, a decade and a half ago, was Google. If eBay can solve the lemons problem in the second-hand sales market, it can be done in the market for loans,’ he said. ‘The banking middle men may in time become the surplus links in the chain.’ Well, the market does work in mysterious ways...