Lord McFall, former Chairman of the Treasury Committee in the House of Commons, has called on the Government to think again about the idea of a British investment bank, as UK banks continue to fail to lend to small and medium-sized businesses.
Speaking in the House of Lords debate on the Chancellor’s 2012 Budget, John McFall said that “there is stronger case for fiscal stimulus this year than there was last year”, given the lack of economic growth, the lack of prospects for the million unemployed young people in the country, and the widening north-south divide. He noted that two members of the Bank of England’s Monetary Policy Committee, David Miles and Adam Posen, had called for alternative ways for small businesses to access finance, given the continued reluctance of UK banks to lend to them.
“I would have liked to see the Government ask in the Budget, “How can we create our own Mittelstand in this country, where we can support small businesses, rebalance our economy and take a renewed, fresh approach to manufacturing?”. I suggest to the Minister that it is not too late to consider the concept of a British investment bank, espoused by the noble Lord, Lord Skidelsky, and others, because banks do not lend to small and medium-sized enterprises because there is not much money in it for them. That is the basic issue that we must face.”