Chancellor George Osborne and Business Secretary Vince Cable have both announced that their Departments are considering the creation of a new bank to improve the flow of credit to small and medium-sized firms.
This comes as good news to the British Chambers of Commerce (BCC) which has long championed the idea and has now set out a detailed case for the establishment of a state-backed British Business Bank.
This argues that the Bank should be a clear “first port of call” for all viable companies seeking growth finance but should complement, not cannibalise, existing banks and other lenders, with commercial lenders having a “first right of refusal” on all applications received by the Business Bank.
The BCC suggests that its plan would particularly help dynamic and fast-growing companies, many of whom report difficulty accessing finance. It would also address “discouraged demand” among some existing bank customers.
The Chambers’ paper also notes that the Bank could help companies seeking mezzanine, export or supply-chain finance support, which it sees as being key to rebalancing the economy in the years to come.
Director of Policy and External Affairs, Dr Adam Marshall, said: “Our new report addresses many of the obstacles to the creation of a business bank, and shows that a new institution is both realistic and achievable. Ministers have a golden opportunity to pass enabling legislation for a business bank this autumn, and to dedicate their attention to ensuring that it is operational before the end of this Parliament.”
