Jo has joined Nick Clegg and Vince Cable in calling for the Boards of Directors of publicly owned banks to be sacked if they fail to meet lending targets in the next year.
The calls come after the Bank of England’s quarterly Credit Conditions survey revealed that there is still a severe shortage of credit for small businesses.
Commenting, Jo said:
“It’s outrageous that sound local businesses are still being squeezed by the unwillingness of banks to lend. The Bank of England’s report is further evidence that despite all the Government’s tough talk, small businesses are not getting the credit they need.
“British taxpayers spent trillions on bailing out the banks – now it’s about time we made them play their part in securing recovery from the crash which they have caused.”
Commenting, Liberal Democrat Shadow Chancellor Vince Cable said:
“Unless businesses can get the credit they need to create jobs and growth, there will be no recovery. The Government must take a firm hand with the banks which we own to ensure that they are lending to British businesses and supporting our economy.”
Commenting, Liberal Democrat Leader Nick Clegg, said:
“It’s time to force the banks to help those who helped them – the millions of taxpayers who bailed them out. That’s why I believe the boards of those banks have to be held directly responsible for meeting their lending targets. If they break their promises they should lose their jobs.”
Sound British businesses are being starved of the credit they need to grow. In January alone lending to businesses contracted by £6.5bn, taking business lending to it lowest point in more than a decade. According to the Institute of Directors, six out of 10 businesses seeking credit have been unable to obtain it. Unless businesses can get the credit they need the economy will not be able to recover and millions more jobs will be put at risk.
The Liberal Democrats believe it is vital that the nationalised banks are directed to lend to good British businesses. Although the Government has created lending targets for both the Lloyds banking group and RBS, they have failed to enforce them. In 2009-10, Lloyds and RBS promised to increase lending to businesses by £27bn but instead their business lending actually fell by £41bn, despite failing so abjectly to meet their legally binding lending targets, there has been no consequences for these banks.
To make matters worse, the Chancellor of the Exchequer has chosen to create a gross rather than net lending target for 2010-11. This means that although Lloyds and RBS have promised to lend £94bn, they could meet this target while lending as a whole actually decreases. It is important to remember that RBS and Lloyds are not just two banks, they comprise of RBS, NatWest, Lloyds, The Halifax, The Bank of Scotland and Cheltenham and Gloucester. The actions of these two banking groups alone can have a profound effect on the amount of money available to businesses.
Taxpayers own massive stakes in RBS and Lloyds. The Liberal Democrats will use this stake to ensure that these banks help rather than stifle British businesses.
A Lib Dem Government will immediately set new net lending targets for both Lloyds and RBS for 2010-11, to ensure that amount of money available to British businesses increases in the next 12 months. We will make it clear that these targets are non-negotiable. If at the end of the year the Chancellor of the Exchequer judges that these lending targets have not been met, the Board of Directors of these two banking groups will be held personally responsible and will be dismissed.
This policy is part of the Liberal Democrats view that the priority of the nationalised banks must not be to repair their balance sheets in preparation for a swift reprivatisation but they should be solely focused on supporting the recovery through lending to good British businesses.