Warm welcome for new business lender 

Business leaders have responded positively to the proposed formation of a new British Business Bank to boost lending to hard-pressed firms.

Business secretary Vince Cable said the government would pump £1 billion into the venture aimed at helping small- and medium-sized businesses finance their operations. He hoped the money would be matched from private sector sources in a bid “to fight the British curse of short-termism - both in the corporate world and government".

Operating via existing lenders the bank should be up and running within 18 months. The move has received a warm welcome from the British Chambers of Commerce.

“The government has taken a decisive step toward the creation of a British Business Bank by committing real money to get it off the ground,” said BCC director General John Longworth.

“We are pleased that ministers are heeding our call to create a business bank that goes well beyond a re-badging of existing schemes. The funding announced by Vince Cable is the first step in a journey toward a British Business Bank that enables new and growing companies to get access to capital in the same way that they do in Germany, South Korea, and the USA.

“Six in ten Chamber members told us just last week that they would feel more confident in securing finance if Britain had a government-backed business bank. So many companies will be encouraged by today’s news.

“However, there are a number of challenges that need to be addressed to ensure the business bank can support the real economy. At least initially, the business bank will have to work through existing lenders, which could put off some companies who still do not believe that the high-street banks will help them access the capital they need to grow. The funding announced today must be the first, not the last, sum destined to support business lending at this new institution.”

Mr Cable said the scheme would attract a further £10 billion through leverage

“I believe we need an industrial strategy - a positive and ambitious vision, built around long-term investment and innovation, in skills and science,” he added.

"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."