Lord Barnett
Main Page: Lord Barnett (Labour - Life peer)
Lord Sassoon
My Lords, indeed, I do agree with my noble friend. What a surprise. The Government recognise that access to finance is absolutely critical for businesses to survive and grow and that small and medium-sized companies face particular challenges. We need a recovery led by sustained expansion in the private sector and, in particular, by growth in business investment, seizing the opportunities presented by a recovering global economy, which is at the heart of the Prime Minister’s visit to India this week. The Government agree that we must continue to support British businesses when they are ready to export and will continue to look, in particular, at the services provided by UK Trade & Investment and the Export Credits Guarantee Department, both of which have shown a significant increase in their export support during the past year.
Lord Barnett
My Lords, could the Minister clarify the Government’s policy in this regard? Does he accept that the global banking crisis stemmed from banks lending and creating bad and doubtful debts, which were then packaged up and called derivatives, or toxic debt? The Government now want the banks to start lending more. How are they proposing to do that?
Lord Sassoon
My Lords, the first thing that we have to do is to recognise that the reason why both the Government and the banks were overleveraged, let alone investing in inappropriate products, was at heart a failure of regulation. So the first step that we have taken is to completely overhaul the financial regulatory system to make sure that banks do not get the country into the financial stability crisis that we inherited. The second thing that we have to do is to make sure that banks are enabled to rebuild their capital base so that they can have a secure capital base on which to lend to small and medium-sized businesses in particular. We have set out a range of measures on that, including in the Budget and the Green Paper earlier this week.