Oral Answers to Questions

John Glen Excerpts

Thursday 13th January 2011 Commons Chamber

[Mr Prisk]

That was a very stretched literary metaphor, if I may say so. [Interruption.] No, in spite of the question, the reality is that the Government are working very closely in that area, and as we have demonstrated in the north-east, we are making good progress. I work closely with my colleagues in the Department for Communities and Local Government, as I do with other Ministers, and I am sorry that Opposition Front Benchers have nothing positive to say on this subject.

[John Glen (Salisbury) (Con)]

7. What steps he plans to ensure that small and medium-sized enterprises are able to gain access to finance.

[Christopher Pincher (Tamworth) (Con)]

8. What steps he plans to take to ensure that small and medium-sized enterprises are able to gain access to finance.

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

The Chancellor and I are currently in discussions with the banks and are seeking an agreement for them to lend verifiably more than they were planning to viable businesses, especially SMEs. We want more competition in business banking, which is why we have set up the Independent Commission on Banking and we are supporting alternatives to bank lending, such as the equity-based enterprise capital funds.

[John Glen]

I thank my right hon. Friend for his reply. My constituent Neil Carden recently visited a Department for Business, Innovation and Skills summit. When giving me feedback, he said that despite my right hon. Friend’s efforts to improve SME access to finance through the enterprise finance guarantee scheme, the more important issue of the continuing risk-averse culture among banks remains unchecked. Given my right hon. Friend’s recent comments about the armoury of weapons he has at his disposal, could he set out which ones he is going to use to tackle that culture and get banks to lend more to small businesses?

[Vince Cable]

My hon. Friend successfully ran a family business for some years, I believe, so he understands risk management. Clearly, in the banking sector, in many cases banks took extraordinary risks in commercial and domestic property and derivatives. It is right that they should be conscious of risk, but to some extent they have lurched to the other extreme. That is one of the reasons why the Chancellor and I are discussing how to maintain a steady flow of credit to viable enterprises.