Oral Answers to Questions

Pat McFadden Excerpts

Thursday 9th June 2011 Commons Chamber

[Vince Cable]

There is a lot of evidence that some banks are genuinely trying to change their culture of lending. I referred to that point in a productive exchange in the Business, Innovation and Skills Committee yesterday. The banks have come forward with a new code of practice to be operated through the British Bankers Association, which allows, for example, for a banking ombudsman to deal with complaints of the kind to which the hon. Gentleman rightly referred.

[Mr Pat McFadden (Wolverhampton South East) (Lab)]

There is a genuinely difficult problem of trying to get highly over-extended banks to lend to small and medium-sized businesses. The Secretary of State was very critical of the previous Government’s performance on this issue. He said that the banks ran rings around that Government. Given that the first indications on Project Merlin show a £2.2 billion shortfall between what the banks are doing and what the Government agreed they would do, how would he describe the performance of his Government on bank lending?

[Vince Cable]

Of the leading Merlin banks, two have met their targets, which demonstrates that the demand is there for banks that are able and willing to change their culture of lending. Of course, we have taken the previous Government’s arrangements further by bringing private banks that are not owned wholly or partly by the taxpayer into the agreement. They are undoubtedly taking it seriously, and we are making it absolutely clear that we expect the agreement to be delivered and that the volume of lending to SMEs will increase.