Small and Medium-Sized Enterprises: Funding
Debate between Lord Popat and Lord Young of Graffham
Lord Popat
My Lords, the Funding for Lending scheme is working. As I said, we have lent £16.5 billion in the past 12 months. We have also got other banks to join the scheme. Given time, it will prove to be successful. We have £80 billion allocated for that scheme. It is the best scheme available for SMEs. I also said that the banks are risk averse. They do not want to go through the crisis that they went through in 2008. SMEs are partly risk averse too. Not many SMEs are borrowing, which is why there is a little contraction in actual lending.
Lord Young of Graffham
My Lords, does the Minister not agree that the banks scored an own goal not after 2008 but over 20 years ago, when they took the managers out of the branches and that in fact there is nobody for the average SME to relate to but a relationship manager at the end of a telephone, whose only word is no? The real problem we have is to bring back a relationship between the banks and the small firms. The Government are trying to do that—we are introducing growth vouchers and a whole lot of other measures—but unfortunately it is the banks that have let them down rather than anything else.
Lord Popat
My noble friend makes a very important point and I agree with him. In fact, when I was at an SME 20 years ago I had direct contact with my branch manager, and it was the manager who did the lending. Now, most banks have corporate offices and half the decisions are made on their computers rather than by human brains. I agree with my noble friend, but the good news is that we have set up competition within the banking sector and that the new banks—Shawbrook, Aldermore, Metro and Cambridge & Counties—all have branches with branch managers now.