Banks: Lending
Debate between Lord Harrison and Lord Popat(10 years, 3 months ago)
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Lord Lawson of Blaby
My Lords, three months ago the Royal Bank of Scotland Group, which is owned by the Government, publicly admitted that it has been treating its SME customers abominably and undertook to change its ways. Can my noble friend tell the House what practical steps have been taken and what the Government are doing to monitor this situation, for which they have a clear and direct responsibility?
Lord Popat
My Lords, we are encouraging the Royal Bank of Scotland to lend more money to SMEs. In fact, the bank has lent £58 billion to small businesses. On Thursday last week, the Royal Bank, together with four other banks, launched a campaign to say that they were open to lending money to small businesses and willing to consider applications from SMEs. Therefore, the Royal Bank of Scotland is conducting a proactive campaign to make sure that it lends to small businesses.
Lord Harrison
My Lords, given that the Bank of England has tabulated another fall in lending to small businesses in the past couple of months, that the CBI has called for wider ways of funding small businesses and that the WEF has asked for more competition from the banks in lending to small businesses, why does the Minister try to paint so rosy a picture?
Lord Popat
My Lords, the Minister is not painting a rosy picture. Let me take the last point made by the noble Lord, relating to competition. We will soon spin out a TSB from Lloyds Bank; we will spin out Williams & Glyn’s Bank from the Royal Bank of Scotland; we have the British Business Bank in place and the large number of private banks that have come into the market: the Metro Bank, the Shawbrook and the Cambridge & Counties Bank. There are therefore several banks coming into the market. Another thing that the regulators have done is that they looked at the regulations to make it easier for new companies to apply for banking licences. We have 20 applications being considered at the moment, so given time, we will have a number of banks in real competition.
Small Businesses: Late Payments
Debate between Lord Harrison and Lord Popat
Lord Harrison
To ask Her Majesty’s Government what steps they will take to amend the legislation on late payments to improve the cash flow of small businesses.
Lord Popat
My Lords, the Government take the issue of late payment very seriously. We recently transposed a European directive to combat late payment into UK law. The amended legislation came into effect on 16 March this year and builds on existing UK law. It further strengthens the legal obligation on payment terms, including a statutory obligation on public authorities to pay commercial creditors within 30 days.
Lord Harrison
My Lords, the prompt payment code has been a palpable and egregious failure. Only one in five of Britain’s limited companies and only two out of 42 police authorities have signed up to it, leaving most small businesses £45,000 short in their ability to invest. While it is welcome news that the Government are implementing the March 2013 late payment legislation, failure has occurred so far. Therefore, could the Government put teeth into the legislation prepared by the Labour Government? Secondly, will they consider encouraging credit capital markets to be available to small businesses in the same way as they are in America, to allow small businesses the ability to invest?
Lord Popat
My Lords, 75% of the FTSE 100 companies have signed up to the prompt payment code; something like 1,500 companies are now signing up to it. With regard to the public organisations, including police authorities, we are taking every action possible. My colleague, the Minister Michael Fallon, has written to them, giving them 90 days to ensure that they sign up to the prompt payment code. With regard to funding, the Government have a number of schemes to help SMEs finance their existing cash flow, including funding for lending.
EU: UK Trading Deficit
Debate between Lord Harrison and Lord Popat
Lord Harrison
My Lords, what prospect do we have of securing a successful EU/USA trade deal in the future if we are to absent ourselves from the negotiations with our EU partners? Has the Minister yet made contact with the successor to Pascal Lamy of the World Trade Organisation, Mr Azevedo, to secure the UK’s position in the WTO?
Lord Popat
My Lords, in fact, we are working with the European Union to negotiate a reformed European Union. We have moved on because in a global race we need to ensure that Europe is more competitive with respect to trade.