Government-backed bank plan to aid firms

Vince CableA government-backed bank to increase lending to businesses is to be announced by Vince Cable as he sets out a long-term industrial strategy designed to give companies the confidence to invest.

The new institution will lift the block on growth caused by the shortage of finance for firms that want to expand, the Business Secretary will say. But he will admit that details of its size and how it will work are still being thrashed out.
Mr Cable will also outline the Government's vision for industry to give businesses the "certainty" they need for long-term development.

This will include strategies to support sectors in which Britain is felt to have a competitive advantage - aerospace, automotive and life sciences; higher and further education and professional and business services; and the information economy, construction and energy.

In a speech at Imperial College, London, Mr Cable will announce a business bank to tackle the gap in "long-term, patient capital for businesses", not just by plugging it but by shaking up the market.

"The measure of the institution's success will not be the scale of its own direct interventions, but how far it shakes up the market in business finance and helps to ease constraints for high-growth firms," he will say.

The Business Secretary will acknowledge that "the scale and modus operandi of such a body" is still under discussion, but that it is likely to work through non-bank lenders and so-called challenger banks outside of the big five high street institutions.

"In the UK such a bank could operate through alternative providers such as the new challenger banks like Handelsbanken, The Co-Op and Aldermore and non-bank lenders boosting their lending capacity as well as corralling existing provision such as co-investment and guarantees to support business expansion," Mr Cable will say.

The Business Secretary will also announce that £67 million of funding has been secured by 34 successful bids under the Employee Ownership scheme which enables firms to provide training for staff.

And he will announce the creation of an innovation and knowledge centre in synthetic biology to help the sector develop commercial opportunities arising from its research.

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