Taskforce, Budget, ICB interim report done - What now on access to finance?

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In an ideal world, for access to finance we would like to have seen Budget 2011 deliver:

1. A clear commitment to boost competition in the banking sector;2. Further leaning on banks to improve their services;3. A further contributions to the growth capital gap or ways of eliciting investment from the private sector (ideally debt-based in the deal range £2-10 million);4. A review of the Enterprise Investment Scheme (with a view to extending this to debt);5. Acknowledgement of the manufacturing expertise gap within the financial sector.

What we got was:

• An extension of the generosity, simplicity, and reach of the EIS – but as yet no move to extend the scheme to cover debt based investments.

This is of course on top of the banks 17 Taskforce commitments, the government commitment to retain and expand some schemes (e.g. Enterprise Finance Guarantee), and of course ‘Project Merlin'.

Since the budget we've had the ICB interim report proposed options for improving the safety and sustainability of the banking sector – and for increasing competition in the sector. The ICB proposals to boost banking sector competitiveness were:

o to force Lloyds, which currently has 30% of current accounts, to sell-off more branches than the 600 it already has to (additional number not specified);o Make switching bank accounts easier and more reliable;o Make sure the proposed Financial Conduct Authority has an explicit duty to promote competition.

So where does all this leave us?

We still consider our budget wish-list as still relevant and would like to see the government make progress on this in the coming months, especially following the final ICB report in September. How serious the government is about improving competition in the banking sector will be shown by their response to this report.

But perhaps there's a more general question that needs to be contemplated.

What does success look like on improving access to finance in the UK?

If the government considers its actions to date adequate, how will it judge their success and by when should this success be demonstrated?

And if lending surveys continue to follow the trend of recent results like the Bank of England's lending stats, showing no material improvement, what needs to happen next? This is something we are turning our minds to now.


Media Team 020 7654 1576

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