BusinessCorporate FinanceSMEs left ‘high and dry’, say Mandelson

SMEs left 'high and dry', say Mandelson

Peter Mandelson says banks are 'not sustaining or maintaining the lending that they could and should do', leaving a lot of companies 'high and dry'

Peter Mandelson

Peter Mandelson

Business secretary Peter Mandelson has launched a broadside against the banks
for their treatment of small business, as complaints continue that the
government’s own strategy to stimulate lending is not working.

Speaking on the BBC’s Panorama on Monday, Mandelson said: ‘Banks are not
sustaining or maintaining the lending that they could and should do in their own
self interest and, as a result, they’re leaving a number of companies high and
dry.’

Sympathising with the position of small business, he added: ‘They are
confronted by new lending decisions being taken and summary judgements, and
either withdrawing facilities or renewing them on more expensive terms without
any proper discussion. That behaviour is frankly unacceptable.’

The government’s Enterprise Finance Scheme, launched to free up £1.3bn in
lending to small business, has faced criticism from accountants who claim banks
new nothing of the scheme and were unprepared to implement it. Accountancy
Age
highlighted the problems at the end of January.

This week the Tories reiterated their own criticism. Mark Prisk, shadow
minister for small business, said: ‘Our problem with this is that it is too
narrow in its scope and it has been very slow in its delivery. Given the scale
of the challenge, it’s just inadequate.’

Kevin Dickens, chairman of the
UK200 Group, said:
‘My enquiries of around 100 UK firms indicate generally a lack of information
and preparedness by all the banks to make use of the EFGS funding.’

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