Mr Cable told Lib Dem delegates that: “For decades British industry has lacked the sort of diverse, long-term finance that is quite normal elsewhere” he said. “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 sector contribution. This will then apply further leverage through guarantees to support up to £10bn of finance to SMEs and mid-sized business a significant portion of all the lending available.
To that end, I believe we need an industrial strategy a positive and ambitious vision, built around long-term investment and innovation, in skills and science. We are so good at so many things in this country but for too long the mirage of growth based on property speculation and financial gambling has hidden the harder virtues of making things productively. We must get behind successful British-based firms in vehicles, aerospace, life sciences and creative industries and our world-class scientists and universities. There are some common threads: understanding that markets fail and that governments can sensibly intervene and support enterprise; and a will to fight the British curse of short-termism both in the corporate world and government.”
However, Shadow Business Secretary Chuka Umunna responded to Vince Cable's announcement by saying that: "Labour has led calls for the creation of a British Investment Bank, but it is far from clear that the business bank Vince Cable envisages is the kind of institution that will get credit to successful firms who can’t currently access the finance they need.Vince Cable will not be able to set up a business bank without the unequivocal backing of George Osborne, and already the Treasury is briefing that this bank is a non-starter.
This is yet another Government policy thrown into uncertainty by bickering in Government before it has even got off the ground. A major problem with the Government’s previous failed schemes to get lending going to businesses, including Project Merlin and credit easing, was that they relied on the banks themselves getting money out of the door, without any real safeguards to ensure this happened. It is far from clear that Vince Cable’s business bank will be immune from these shortcomings".
However aids close to Vince Cable have confirmed that approval from the European Union will be required to ensure that the state intervention rules aren't breached if the "business bank" is put into place. The bank wont be in place for around eighteen months, it it happens at all.
