In the House of Commons today, Jo Swinson MP called on the Government get part-nationalised banks lending to small businesses in East Dunbartonshire.
Questioning the Business Minister in Parliament, Jo Swinson argued that despite promises for state-owned banks to lend more to small businesses, they are failing to reach their targets. Lloyds Group and RBS promised to lend £39 billion to help small businesses grow last year, but independent research by the Institute of Directors has found that the banks bailed out by the taxpayer are falling well short of their targets.
This lack of availability of credit has hit Scottish businesses particularly hard, with many facing bankruptcy unless they take out risky unsecured personal loans or use credit cards to finance their business. The Scottish Government’s own findings reveal that there has been a substantial drop in the amount of people gaining access to credit even since the banks were bailed out in 2008, with HBOS, Lloyds and RBS accounting for 75% of all refusals.
Commenting, Jo Swinson said:
“It is obvious that the Labour Government missed a huge opportunity when it put billions of pounds of our money into the banks. It could have used the leverage it gained to make sure the banks help out taxpayers, the very people who bailed them out and ensured their survival.
”Instead we have a situation where many small businesses in East Dunbartonshire are struggling because banks refuse to give them loans, or impose extortionate interest rates and conditions. The Government must stand up for taxpayers’ interests so that ordinary people get something back from the banks which are indebted to them.”
The text of Jo Swinson’s questions to The Parliamentary Under-Secretary of State for Business, Innovation and Skills, Ian Lucas, appears below:
Jo Swinson: What recent representations he has received on trends in availability to businesses of credit from banks.
Ian Lucas: The Department meets regularly with both banks and business representatives to discuss the availability of business finance. This has included the quarterly meeting of the Small Business Finance Forum and a recent “Going for Growth” seminar, which brought banks and businesses together to look at current issues affecting business bank credit and how they might evolve as the recovery of the economy progresses.
Jo Swinson: The Federation of Small Businesses has found that nearly half of small businesses in Scotland are having to use personal savings, personal loans or personal credit cards as a major source of business finance. The Minister will know that the Public Accounts Committee found that Lloyds and Royal Bank of Scotland fell well short of their promises to lend £39 billion last year. Can the Minister tell the House what he will do this year to get the banks lending and, at the very least, ensure that the part-nationalised banks meet their lending targets for small businesses?
Ian Lucas: The Department has a help for business unit and, if the hon. Lady has individual examples with which she needs assistance, we are happy to take those up and discuss individual cases directly with banks. We are very conscious of the availability of lending and how important it is in taking forward the recovery. There have been signs of progress in the last quarter, but we will continue to engage with both banks and small businesses to ensure that that recovery builds.