Cable unveils state-backed bank to give £10bn to businesses
Business secretary wants to make money available to businesses shut out by high street banks
VINCE CABLE will today announce a scheme to provide $10 billion to businesses shut out of borrowing from the high street banks. The new state-backed bank should be up and running within 18 months.
The Business Secretary will tell the Lib Dem conference in Brighton: "We need a new British business bank with a clean balance sheet and an ability to expand lending rapidly to the manufacturers, exporters and high-growth companies that power our economy.
"Today I can announce we will have one. I am working with the Chancellor to develop a state-backed institution that will combine up to a billion pounds of new government capital with a larger private contribution."
Cable wants the new bank, which will be set up with £1bn of taxpayers' money, to be a "lasting monument" that will serve to underline the need for fundamental reform of the financial system, The Daily Telegraph reports.
Cable wants to encourage entrepreneurs to "make things" rather than basing the economy on the mirage of "property speculation and financial gambling".
The Guardian reports that the Lib Dems have had to fight hard to persuade George Osborne to sign up to the new bank. It will be funded by money left unspent by Whitehall departments.
It is hoped the bank will be able to attract £1bn of private finance to add to the £1bn of taxpayers' money. This will then be leveraged so that £10bn can be lent. While the idea of the business bank is based on similar schemes in the US and Germany, Cable's plans stop short of founding a new institution to distribute the money. Instead, loans will be funneled through existing lenders
The British Chambers of Commerce has welcomed the new bank.
"We are pleased that ministers are heeding our call to create a business bank that goes well beyond a re-badging of existing schemes," said the organisation's director general John Longworth.
"The funding announced by Vince Cable is the first step in a journey toward a British business bank that enables new and growing companies to get access to capital in the same way that they do in Germany, South Korea, and the USA."