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Yorkshire Bank

Volume 570: debated on Tuesday 5 November 2013

13. What representations he has received on Yorkshire bank and lending to small and medium-sized businesses. (900907)

All meetings between external organisations and Treasury Ministers are published on the Government’s website. However, it is not the Treasury’s practice to provide details of all representations Ministers receive. Lending to small and medium-sized businesses is an important issue, and I can assure my hon. Friend that it receives the Government’s highest attention.

I thank the Financial Secretary for that answer. He might be aware that two years ago the owners of Yorkshire bank announced their intention to downsize in the UK and invest more money in Asia. Since then they have aggressively reduced the size of their UK loan book, despite assurances made to small businesses. That has affected many businesses across the country, including Arley Homes in my constituency, which has been forced into administration, with the loss of many jobs. Is there more we can do to make them behave responsibly?

I know that my hon. Friend raised this issue with my predecessor on behalf of his constituents, and he was absolutely right to do so. The way in which a bank structures its business is a commercial decision, as I am sure he appreciates, so I am unable to comment on it. However, if a bank decides to restructure its business in a certain way, I would expect it to pay due regard to the interests of all its customers and to treat them fairly.

Small businesses in my constituency used to borrow from Yorkshire bank, and many have told me that they never missed a repayment, but now the bank simply will not lend to them, despite excellent credit histories. Why are the banks refusing to lend to small businesses that have a strong history of repayment?

May I give the hon. Gentleman some advice on how he can help small businesses in his constituency and elsewhere? The SME appeals process that the Government set up with the banking sector has been very successful, with 40% of businesses that appeal finding decisions overturned. He can help to advertise that, as the Government will be doing shortly to banks.

The point of capitalism is that people who take risks should be rewarded when they are successful and should lose money when they fail. Yorkshire bank has been among the worst for penalising its good customers to try to make up for its own losses. That is an abuse of capitalism. I hope that the Minister will take steps to ensure that Yorkshire bank treats its customers fairly, because in too many cases it has been treating them terribly unfairly.

My hon. Friend has made a number of representations on this issue, and he is right to do so. As I have said, we want all banks to treat their customers fairly, and the Government are absolutely committed to that.

I agree with the comments made by the hon. Member for Warrington South (David Mowat). Following an article I wrote for the Yorkshire Post, I have received dozens of complaints about Yorkshire bank from small businesses, particularly about being locked into tailored business loans with very high interest rates and very high redemption clauses and payments to get out of them. Will the Minister look at involving the Financial Conduct Authority to see if there could be an investigation into what has been going on?

I believe that my predecessor raised this issue with the FCA, but I would be more than happy to do so again.