The Government believe that improving access to finance is vital for small businesses. In response to our formal consultation on access to credit, we received more than 170 representations, and we will respond to them shortly. In addition, yesterday the British Bankers Association published its taskforce report on business lending, which has 17 separate recommendations. The Government welcome the progress made by the taskforce to date.
I thank the Minister for his answer. Many small businesses in my constituency and in the broader black country are still complaining about their inability to get capital to grow their businesses. Does he agree that this is now becoming a vital issue? Will he outline the steps that the Government are going to take to ensure that we get that capital into those businesses, which are absolutely vital to the future of the region and the areas that I represent in generating private sector jobs growth?
My hon. Friend is absolutely right. That is why, right away, within a month, we extended the enterprise finance guarantee by £200 million to help up to 2,000 more businesses. More than that, we have been actively pressing the banks to sort out the lending code, to deal with information so that it is more transparent, and to ensure that businesses have the opportunity to appeal. Yesterday, the taskforce reported back, and we will study its proposals. Let me make it clear, however, that as far as this Government are concerned, the real test now will be for the banks’ words to be matched by their actions.
My hon. Friend is right to raise that issue, which he has discussed with me in the past. This is a particularly acute problem for those in the construction sector. We have sought assurances from the principal insurers in this area that they have now put in place for the coming year a sufficient risk capability, and they have given us those assurances. As with the banks, we will be closely scrutinising this to ensure that what they have said they have done is implemented in the coming months.
I echo my hon. Friends in pointing out that one of the biggest issues that I am facing in my constituency is the lack of lending to small and medium-sized businesses. In addition, Lloyds TSB has announced in the past month that it is closing the only branch in a market town called Meltham. In stressing to the banks that they need to get lending, will the Minister also stress that they need to start serving our communities?
This is something that we have raised with the banks. On Monday, however, I want to go further—that is when we will convene our new small business economic forum with the express intention of bringing Government, businesses and the banks together so that we can deal with these issues and start to ensure that credit is available for all businesses, large and small.
The Secretary of State has rightly commented on the obligations of state-supported banks to do more to help our small businesses in the interests of the national economy. Will the Minister tell us whether the new growth fund set up by the banking taskforce and announced yesterday will have on its board a Government representative in order to influence policy decisions?
We met the banks yesterday and are perfectly willing to engage with them on how that could happen. We may well wish to ensure that the Government have a stake in that role, but as we received the recommendations just yesterday, I am sure the hon. Gentleman and the Committee that he chairs will understand that we want to examine them more closely. The new growth fund is a positive step which will deal with the gap that Rowlands identified in the case of mid-cap businesses. It is a welcome step, and the Government want to work with the banks to make it work effectively.
But does the Minister agree with the Deputy Prime Minister, who said on 27 April on Radio 5 Live about state-owned banks not lending enough to small businesses:
“What we’re saying is that the directors of those banks should be held responsible and if they fail to honour those lending targets they should be sacked”?
I do not believe that the Minister is really focusing his attention on the question. By his own Department’s definition, small enterprises are those with zero to 49 employees, and they have an average turnover of less than £3 million. How will the new business growth fund proposed yesterday by the British Bankers Association help those businesses, given that businesses will have to have a turnover of between £10 million and £100 million to apply and the average turnover of a small business is £3 million?
May I first welcome the hon. Gentleman to his position? Unfortunately, however, his first question confuses two matters. The growth fund is about investing equity into mid-cap businesses, as I described to the hon. Member for West Bromwich West (Mr Bailey). Micro-businesses, which are very important, are an entirely different animal. That is where bank lending is crucial, and that is what we are dealing with. We are particularly keen to ensure that there is a proper lending arrangement for micro-businesses, and we are talking to the banks about how we can get one, but Members should not confuse capital investment and bank lending. They are two different things.