Banks: Business Lending

Lord Roberts of Conwy Excerpts

Wednesday 28th July 2010 Lords Chamber

Asked By

[Lord Roberts of Conwy]

To ask Her Majesty’s Government what is the trend in net lending by banks to United Kingdom businesses.

[The Commercial Secretary to the Treasury (Lord Sassoon)]

My Lords, net lending by banks to businesses in the United Kingdom has been on a downward trend since the end of 2008, with debt repayments exceeding new lending. Access to finance is essential if businesses are to invest, grow and make their important contribution to supporting the economic recovery. On 26 July, the Government published a Green Paper on business finance to help to inform and take forward their agenda on credit and other sources of finance for businesses.

[Lord Roberts of Conwy]

I am grateful to my noble friend for that reply. He clearly acknowledges that most British businesses, large or small, need the revived availability of bank lending on reasonable terms to grow and flourish, coupled preferably with a more stable and promising macroeconomic outlook and confidence inspired by the Government’s determination to reduce the deficit and reinvigorate our export trade, as the Prime Minister is doing in India today.

[Noble Lords]

Question!

[Lord Roberts of Conwy]

Does my noble friend agree?

[Lord Sassoon]

My Lords, indeed, I do agree with my noble friend. What a surprise. The Government recognise that access to finance is absolutely critical for businesses to survive and grow and that small and medium-sized companies face particular challenges. We need a recovery led by sustained expansion in the private sector and, in particular, by growth in business investment, seizing the opportunities presented by a recovering global economy, which is at the heart of the Prime Minister’s visit to India this week. The Government agree that we must continue to support British businesses when they are ready to export and will continue to look, in particular, at the services provided by UK Trade & Investment and the Export Credits Guarantee Department, both of which have shown a significant increase in their export support during the past year.