Gordon Browns anger at the stubborn refusal of banks including Northern Ireland banks – to lend to small business at affordable rates after all those billions of public money handed over to recapitalise them, broke surface at Prime Ministers Questions today. His message to frustrated small businesses was this : if youre having trouble getting a bank loan, get your MP to contact me and Ill take it up with the bank myself. Would be borrowers should take the Prime Minister at his word. Heres how the offer emerged. South Glasgow Labour MP Tom Harris quoted the example of a business woman who owns and runs a small manufacturing company in his constituency. She came to see me last week to complain about the attitude of banks in lending to businesses such as hers. Does the Prime Minister understand that public support for the banking bail-out will entirely evaporate unless banks are seen once more to be lending to the small and medium-sized companies on which this economy depends?
The Prime Minister: I would ask my hon. Friends constituent to go back to that bank and ask it to reconsider the situation, and to write to him and then to me. The banks have agreed in the last few weeks that they will sign up to quantitative agreements. That means that £70 billion of additional lending will go into the economy this yearף25 billion from the Royal Bank of Scotland, £14 billion from Lloyds bank, and money voluntary promoted by HSBC. There will be £70 billion of total additional lending. We are the only country in the world that has such a programme, where the banks have signed up legally to supporting additional lending. I believe that in the next few weeks, the flow of money will be increased as a result of that.
South Belfast SDLP MP Alistair McDonnell laid it on thick to Gordon Brown. Is he aware that the banks are ruthlessly pushing many otherwise viable businesses over the edge by refusing reasonable loans to keep liquidity and cash flowing? They are also beginning to charge outrageous interest rates, far above what is reasonable or understandable. Can his Government do anything to pressurise these ruthless banks to free up lending in order to provide better liquidity until the better times come? Otherwise, good businesses are being pushed out of existence.
The Prime Minister: I appreciate what the hon. Gentleman is saying. There is clearly concern in all sections of the House about how banks can better serve the public during this economic recession to help us through it. I shall look at what he says about the bank if he will give me the names of the companies and the bank. The important thing is that in the past few weeks there has been a change of policy, and I hope that that change of policy will have an impact in every region and every part of this country. The change of policy is that for the first timebecause we have given the banks an insurance policy that they pay forthey are now willing to lend extra money and are committed to doing so. The increase of £70 billion for the economy is very substantial indeed, and companies should now be getting the benefit of offers from banks. I urge the hon. Gentleman to go back to those banks and remind them of the quantitative targets that have been agreed, and of the other means by which the Government have offered to help small business, including through the Inland Revenue. I shall certainly look at the case that he has raised, but the important thing is that the banks are now under an obligation to lend.
Local banks dragging their feet on loans can expect a stern prompt from Downing St. If you feel like taking up the offer let us know if Gordon champions your cause and – more to the point with what result.