Justin Tomlinson
Main Page: Justin Tomlinson (Conservative - North Swindon)(14 years, 3 months ago)
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Mr Jones
I thank my hon. Friend for that intervention and agree with his sentiments. Later I shall talk about what I think is progress in that direction. I am sure that the Minister, who has had a lot to do, will be heartened by the quite positive comments I want to make.
As to firms in my constituency that have had problems with credit, I have been made aware of firms around the country whose credit facilities have been reviewed by banks at very short notice. Banks often vary overdraft terms without warning and dramatically increase loan rates at short notice, which makes it difficult for small businesses to respond. I have received figures from the Engineering Employers Federation that quantify those concerns. During the first quarter of this year the cost of finance increased for almost 35% of companies, whereas it decreased for only 3%. That is obviously difficult in the current economic climate. I fully understand that the banks are trying to repair their balance sheets, but at a time when we have the lowest interest rates in living memory, that seems counterproductive. It is no wonder that the number of complaints about banks by SMEs has risen in the past year by 119%. I am therefore heartened to see that, in their Green Paper “Financing a private sector recovery”, the Government have started to make the banks reconsider their position slightly. That is after much talk from the previous Government about making banks lend to small business, all of which seems to have had little effect.
Justin Tomlinson (North Swindon) (Con)
My hon. Friend has been making some excellent points, and I am sure that all of us will relate the various issues he has raised to our constituencies and businesses. The holy grail for the banks seems to be to provide customer relationship managers. Does my hon. Friend feel that they will really be given the flexibility and authority to make decisions about lending money? Do they have applied business experience to enable them to make the right decisions?
