Banking on business is a good start

The past months have seen exciting policy developments for manufacturers. Firstly, the government has recognised that there is an acute credit squeeze within British industry which is hampering businesses' ability to grow and invest in their future. Secondly, it has recognised that to boost competitiveness and lay out a platform for growth, government needs to articulate its vision for the economy and the role that industry will play within that vision. These are views that I, and the Associate Parliamentary Manufacturing Group which I co-chair, have been pushing for some time and I am pleased to see the government recognising the need for new ideas and positive action. The business secretary recently announced that to increase access to credit, the government should get involved directly in the financial system through a state-backed bank. I believe this is the right policy direction and while I believe that a more substantial investment than £1 billion is necessary, we all have to recognise the fiscal constraints the government currently operates within. The main objective of this bank should be to further the government's economic goal of rebalancing the economy. This would mean, in practice, a focus on lending to manufacturing businesses with growth potential, providing investment for new capital equipment and supporting infrastructure projects. For this to work, however, we need manufacturers to have the confidence to want that credit and to use it wisely. This means having a wider government strategy in place that can give manufacturers a greater certainty about the future and a firm commitment from government that the manufacturing agenda is not going to be abandoned once strong economic growth returns. The Associate Parliamentary Manufacturing Group is already working on an industrial policy and we hope that this can feed into the government's work. However, we should not be complacent. A small-state backed bank and rhetoric about industrial policy will not be enough alone to put in place the rebalancing we need. But, it is a good start and I hope that we can build on this in the months ahead.