January 04, 2013 - Rachel Miller
Business secretary Vince Cable has announced the formation of a new business bank advisory group to advise on the establishment and direction of the proposed state-backed business bank. The group is to be chaired by Sir Peter Burt, former chief executive of Bank of Scotland.
The new institution will tackle long-standing market gaps by deploying £1 billion of new funding. The impact and reach of this funding is to be maximised by exploring joint investment opportunities with the private sector and the use of Government guarantees. Further details on how this funding will be made available will be provided at Budget 2013 in March.
The Government's own business finance schemes will be brought together within the new banking institution to be managed as a single portfolio. The aim is to bring Government-backed business advice services closer and to improve accessibility for SMEs.
The institution is expected to operate on a commercial basis within a strategic framework set by ministers. Discussions will begin this month with the European Commission to ensure the proposals for the creation of the bank are in line with state aid rules.
Vince Cable, business secretary, said: "It is important we get the development of the bank right. This is a long term, durable institution, not a quick-fix gimmick, and I'm confident that we are on track to deliver this help."
Sir Peter Burt, chair of the business bank advisory group, said: "There has been a significant long-standing gap in SME finance, so it is welcome news that the Government is taking action to tackle this problem and help provide long term finance solutions for SMEs."
Commenting on the announcement, John Walker, national chairman of the Federation of Small Businesses (FSB), said: "We have said that this bank must be run independently and this is a good first step. The bank must be at arm's length from Government and have an initial tight focus on core activities. It must also improve competition in the banking sector, in particular around non-bank finance."