Ed Miliband in pledge to set up regional banks

Leader of the Labour Party Ed Miliband at the Labour Local Government Conference. Miliband will unve

Leader of the Labour Party Ed Miliband at the Labour Local Government Conference. Miliband will unveil plans for a network of regional banks tasked with boosting business lending to spur local economic growth. PRESS ASSOCIATION Photo. Issue date: Thursday March 14, 2013. See PA story POLITICS Miliband. Photo credit Joe Giddens/PA Wire - Credit: PA

Labour leader Ed Miliband will today pledge to set up a system of government-funded regional banks to help small businesses across the country.

Mr Miliband has already said his party would establish a British Investment Bank (BIB) and under his new pledge the institution would have a series of independent regional partners.

There could be up to 20 of the bodies around the UK that would be able to draw down funds from the BIB to lend at favourable rates, but only to firms in their region and not for profit.

It comes as the government is set to unveil plans to bolster its flagship Funding for Lending scheme by directing efforts at small businesses rather than mortgages in a bid to get banks and building societies to lend more.

Mr Miliband will say: ' We don't just need a single investment bank serving the country. We need a regional banking system, serving each and every region of the country.

'Regional banks, with a mission to serve that region and that region alone. Not banks that like to say 'no,' but banks that know your region and your business. Not banks that you mistrust, but banks you can come to trust.

'I am committed to turning that idea into reality during the next government.'

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A Labour source told the Eastern Daily Press that the exact model of the system had not yet been set in stone and would be subject to a consultation with business leaders which is about to begin.

However, he added that similar bodies existed elsewhere in the world; like community banks in the USA and Sparkassen in Germany, both of which were largely unaffected by the 2008 banking crash.

In the UK, the source said, it was likely that each regional bank would be run by a board possibly of local leaders, from councils or prominent firms perhaps.

Mr Miliband will also explain in his speech that his government would attempt to build a longer term culture in the way businesses are run.

He will say: 'Part of that change of culture we need is to celebrate and nurture firms by addressing the short-term culture imposed on British business.

'We want to make it possible for British business to do more of what it is best at: invent, invest, train and prosper.'