Banks: Lending

Lord Harrison Excerpts

Wednesday 5th February 2014 Lords Chamber

[Lord Lawson of Blaby (Con)]

My Lords—

[Lord Harrison (Lab)]

My Lords, given the decline in lending to small businesses—

[Lord Lawson of Blaby]

My Lords, three months ago the Royal Bank of Scotland Group, which is owned by the Government, publicly admitted that it has been treating its SME customers abominably and undertook to change its ways. Can my noble friend tell the House what practical steps have been taken and what the Government are doing to monitor this situation, for which they have a clear and direct responsibility?

[Lord Popat]

My Lords, we are encouraging the Royal Bank of Scotland to lend more money to SMEs. In fact, the bank has lent £58 billion to small businesses. On Thursday last week, the Royal Bank, together with four other banks, launched a campaign to say that they were open to lending money to small businesses and willing to consider applications from SMEs. Therefore, the Royal Bank of Scotland is conducting a proactive campaign to make sure that it lends to small businesses.

[Lord Harrison]

My Lords, given that the Bank of England has tabulated another fall in lending to small businesses in the past couple of months, that the CBI has called for wider ways of funding small businesses and that the WEF has asked for more competition from the banks in lending to small businesses, why does the Minister try to paint so rosy a picture?

[Lord Popat]

My Lords, the Minister is not painting a rosy picture. Let me take the last point made by the noble Lord, relating to competition. We will soon spin out a TSB from Lloyds Bank; we will spin out Williams & Glyn’s Bank from the Royal Bank of Scotland; we have the British Business Bank in place and the large number of private banks that have come into the market: the Metro Bank, the Shawbrook and the Cambridge & Counties Bank. There are therefore several banks coming into the market. Another thing that the regulators have done is that they looked at the regulations to make it easier for new companies to apply for banking licences. We have 20 applications being considered at the moment, so given time, we will have a number of banks in real competition.