Small and Medium-sized Enterprises: Interest Rates

Lord Sikka Excerpts

Wednesday 13th September 2023 Lords Chamber

[The Earl of Minto (Con)]

The noble Lord makes a very good point. Those are some of the largest international companies in the world, and I am sure that they will provide the Prime Minister with some extremely helpful advice. Having said that, as we all know, in this country the vast majority of businesses are small and medium-sized enterprises. In my role, I communicate with them almost constantly, both individuals and representative bodies. The value they have to add to these sorts of fora should not be underestimated. They are an extremely valuable and successful part of our economy.

[Lord Sikka (Lab)]

My Lords, there is evidence to show that the closure of bank branches leads to lower financial support for local businesses, especially as it also leads to the loss of local economic intelligence networks. What have the Government done to estimate the negative effects of bank branch closures on financial support available for SMEs?

[The Earl of Minto (Con)]

My Lords, it is an extremely good point. If one goes back to before the financial crisis in 2008, when the big five really dominated, there has been nothing short of a revolution in business lending since then. In fact, last year some 55% of all SME borrowing came from challenger banks—at-base banks and specialist SME banks such as OakNorth and Hampshire Trust Bank. The whole structure has changed in the last few years, and my guess is that some of the more traditional banks are feeling the pain in this area.