By BEN WOODS Business Writer
Friday, March 22, 2013
A new government bank designed to support smaller firms in their quest for finance will have £3.9bn at its disposal, Business Secretary Vince Cable revealed yesterday.
Dr Cable unveiled the finer details surrounding the government’s plan to build a ‘Business Bank’ that will become a single hub for government schemes designed to aid small and medium sized firms.
In a written statement to the Commons, he said that the bank would support the development of finance markets for businesses and increase awareness of available support – with £300m to be invested in the bank by the end of April.
The move has been welcomed by the Confederation of British Industry (CBI) in its attempts to simplify existing support and improve financial access.
But Dr Cable was clear that the bank would not use taxpayer’s money to lend to or invest in businesses.
He wrote: “Inadequate access to finance remains one of the biggest risks to the UK’s economic recovery.
“While the situation has been exacerbated by the financial crisis, there are also underlying structural problems in the financial landscape for small and medium-sized enterprises.
“This government has already put in place £2.9bn of commitments through existing schemes to address problems in the market for SME finance.
“It is now going further by bringing these interventions together in the business bank and deploying an extra £1bn of capital. The business bank therefore will manage the combined £3.9bn of government resources to meet its objectives.
“By bringing together management, budgets, spending authorities and the power to alter or create new schemes into one place this government
will be providing a more coherent and comprehensive package of support for businesses.”
Meanwhile, Katja Hall, chief policy director at the CBI, said: “This should give confidence to businesses that there is now a long-term solution to plug the finance gap for patient capital in the UK.
“Businesses didn’t want a host of new finance initiatives introduced as part of the Business Bank but simplification of existing support. Bringing all government financial support and advice initiatives under one roof will improve access for smaller firms, helping them fulfil their growth potential.”