Oral Answers to Questions

Debbie Abrahams Excerpts

Thursday 7th February 2013 Commons Chamber

[Mike Gapes (Ilford South) (Lab/Co-op)]

2. In how many months net lending to businesses has (a) increased and (b) fallen since January 2011.

[Debbie Abrahams (Oldham East and Saddleworth) (Lab)]

12. In how many months net lending to businesses has (a) increased and (b) fallen since January 2011.

[The Secretary of State for Business, Innovation and Skills (Vince Cable)]

Figures from the Bank of England show that between January 2011 and December 2012 lending to businesses by UK banks increased in six months, and decreased in the others. The Government and the Bank of England are working to increase lending across the economy, for example through the funding for lending scheme and the new business bank.

--- Later in debate ---

[Vince Cable]

Certainly, the decline in net lending to SMEs is a serious issue, which I frequently refer to. It is a genuine problem and Government schemes have provided support in a variety of ways, including about £7 billion of net lending and £1 billion alone from the enterprise guarantee scheme.

Before we are lectured on this, we need to go a little further back and remember who was in charge when the banks collapsed and the lending crisis erupted. The hon. Gentleman may recall, given that, like me, he has been a Member of the House for some years, the Cruickshank report of 2000, which pointed out that the banks were overcharging their business customers, providing a poor service and making excess profits. The last Government had an opportunity to reform the banking system then. They did absolutely nothing about it, which is why we are in this mess today.

[Debbie Abrahams]

Small and medium-sized enterprises in Oldham have told me how they are struggling to access finance. We now know from Bank of England data that bank lending fell by £18.6 billion last year. On top of this, SMEs were owed more than £36 billion in late payments in 2011. Will the Secretary of State back an inquiry I am launching as part of my Be Fair—Pay on Time campaign to investigate the issues associated with late payments?

[Vince Cable]

I would like to acknowledge the contribution the hon. Lady has made through debates in the House to this very important issue. The Minister of State, my right hon. Friend the Member for Sevenoaks (Michael Fallon), has launched a significant initiative with business in order to reduce that problem. We also have a trade financing scheme, working with Kingfisher to try to ensure that credit flows through the supply chain. The key point is that credit does not depend solely on banks; it also depends on the big primes, whether in the retail sector or in manufacturing, and we are providing substantial support to small companies caught up in that problem.