Setting goals for the business bank

Last December, the Associate Parliamentary Manufacturing Group (APMG) hosted the business secretary, Vince Cable, to discuss the government's proposed state-backed business bank. As regular readers of Works Management may be aware, this is a proposal which I have been campaigning for over the past two years and I am pleased to see that the government has listened to the concerns of manufacturing businesses and the APMG. A consistent message that has been received from industry has been not only the lack of credit for growth but also strained relationships between our banks and businesses. The business secretary has made clear that discussions about the bank are at an early stage but it will have around £1 billion of funding. However there are a number of important questions that need to be settled. What are we aiming to achieve with this new bank? Are we seeking to close the infamous 'Macmillan Gap' where many small and medium-sized businesses find problems accessing long-term investment finance, or is this going to merely be a grouping together of existing government support? Will this bank engage directly with businesses providing advice or support, or will it work through existing banks? How will it operate within our regions? Is this a long-term innovation or a short-term solution to the current credit situation? Over the next few months, these are the questions that businesses and parliamentarians need to help the government find the right answers for. I have been clear, in the past, that I do not believe that the current tight credit conditions are purely a consequence of the financial crisis – this is a problem which requires us to look fundamentally at the structure of our banking system. I believe a state-backed business bank needs to be structured in a way which builds on the strength of our regions, provides support for businesses to grow and access new international markets, and improves relationship management between manufacturers and the banking sector. I hope that the government will take on board the views of manufacturers and parliamentarians in the months ahead so that we create the best possible institution to provide long-term support for British industry.