Oral Answers to Questions

Debate between Mike Kane and Andrea Leadsom

Tuesday 2nd September 2014 Commons Chamber

[Mike Kane (Wythenshawe and Sale East) (Lab)]

13. What recent assessment he has made of the level of bank lending to businesses since May 2010.

[The Economic Secretary to the Treasury (Andrea Leadsom)]

Net bank lending to business in the UK fell sharply following the financial crisis. The Government have acted decisively to stimulate lending, introducing schemes such as funding for lending and the British business bank. Against that backdrop, the picture has now begun to improve and the most recent figures from the Bank of England show that gross lending to small businesses has increased steadily since 2012.

[Mike Kane]

Those were not the figures released last week, which show that net lending to small businesses in Britain fell by £435 million between April and June. That followed a decline of £720 million in the first quarter. Two years on, has not the funding for lending scheme failed Britain’s small businesses?

[Andrea Leadsom]

No. The hon. Gentleman is completely wrong. The funding for lending scheme has undoubtedly made more credit available than would otherwise have been the case. As I have said, gross lending to businesses has improved and the Federation of Small Businesses has said that the outlook for small and medium-sized enterprises is now better than it has been before. I remind the hon. Gentleman that the peak-to-trough drop in GDP between 2008 and 2009 was 7.2%. That is the cause of the disastrous drop in the availability of bank funding to businesses in this country.