Saint Vince seems to be on a bit of a roll at the moment – yesterday a bonfire of red tape for employers, today a scheme for lending to companies across the UK. Well at least, that’s what he seems to be offering. He announced today that a government-backed bank would ‘shake up the market’ by offering a boost in the amount of funding available to businesses.
But, aside from confirming that such a bank will launch, Vince has given us very little else. It is not clear which types of firms it will favour, what the lending conditions will be, and how long it will be in operation. The timing has raised some awkward questions too: today parliament’s Public Accounts Committee slammed the previous attempt to boost business – the Regional Growth Fund – saying it was ‘scandalous’ how few businesses it had reached. The scheme was worth £1.4bn and was supposed to create 35,000 jobs, but the committee says only £60m has actually reached companies since it launched last year.
So can Vince’s latest scheme silence the nay-sayers? In his speech, Cable suggested that the bank could work in tandem with the Co-op and the British part of Handelsbanken, a Swedish lender. But he stopped short of saying that this would actually be the case, leaving it open to speculation that this could just be another guise for the Funding for Lending Scheme.
Cable also took the opportunity to wax lyrical about making sure government contracts with the private sector were more focused on British firms from now on. Those Germans have got it right, he said, even suggesting that the government could flout EU rules on countries favouring their own firms. More PR guff? Sure sounds like it. Likely to cause a sensational economic upturn? We doubt it.
Importantly, the creation of a state bank will only artificially skew the lending market. And who really wants to leave commercial lending decisions in the ‘safe hands’ of memory-stick-losing civil servants, anyway? It's going to take more than that to get Britain growing again.