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(Photo of Vince Cable captioned: Speaking at the UKTI Asia Task Force Event, Doing Business in Asia)
(...Continued from page 18)
Q. You’ve been vocal on the lack of support from the banking sector. How will you encourage it to lend to SMEs?
A. It wasn’t small firms which led to the banking crisis and credit crunch, yet they are paying the penalty. I characterise the issue with small businesses and banks as the dialogue of the deaf. The small firms say the banks aren’t lending, the banks say they are. The fact is that Bank of England figures show lending to small firms has fallen for eight consecutive quarters. So the Chancellor and I are taking steps to see what we can do about the impasse. Of course, once the banks start lending, companies can grow and that will be good news for the economy – and the banks.
Q. How will you encourage banks to lend at reasonable interest rates? What do you consider ‘reasonable lending’ criteria?
A. Some complain that it is somehow the Government’s fault they are not lending because it has imposed strict rules in terms of capital reserves. There is at least some truth in that. The other argument I hear from the banks is that there simply isn’t demand. Again, that’s not borne out by conversations I have with small business organisations. The truth lies somewhere in the middle.
Q. The UK is often accused of importing too many workers with core skills due to a lack of home-grown talent. What is your view on this issue?
A. The UK produces many thousands of skilled people, be they graduates or those who have taken apprenticeships or other courses. We also help to train or educate many thousands of overseas students who then return home to use the skills they have learned, so I’m not sure I agree. There has been a lack of so-called STEM students, those taking science, technology, engineering and mathematics, but the latest A-level results show a slight increase in the number of students taking maths and economics. There is, however, a need for specialist skilled manpower and immigration may be one answer.
Q. How will you balance the economic demands on UK businesses? And conversely what will you do to encourage major international corporations to base offices, manufacturing plants and jobs in the UK?
A. One of the first acts of the new Coalition Government was to announce the lowering of corporation tax to 24 per cent over the next few years. The UK is already home to some of the best universities in the world, and has great strengths in terms of language, geographic position, its legal and financial networks, not to mention its cultural and creative advantages. This Government’s job is to improve the business climate by delivering financial stability, low taxes for business, reducing the regulatory burden and investing in skills, R&D and education.
Q. Is the banking crisis over, or are the experts right when they say we are heading for another banking disaster as Bank of England funding dries up?
A. We’re certainly not out of the woods yet, although I do think we are through the worst of it. We want to encourage greater competition in the banking sector, get them lending more, and curb some of the worst excesses of before – something the Banking Commission will address, looking at how banks can be broken up.
Q. BP took a bashing in the US over its oil spill disaster. Was it warranted?
A. While there is no doubt the oil spill was an environmental disaster, I thought it unfortunate that some of the criticism focused on BP’s Britishness.
Q. Should the UK have come down harder on the American banks that, the majority believe, were ultimately responsible for the global financial crisis?
A. We need to be clear that the financial crisis was not a result of impropriety in all banks. And it wasn’t simply US banks that made foolish investments. What the crash highlighted was how interconnected banks were. Don’t forget that the UK produced mortgage lenders which failed, such as HBOS, Northern Rock, Bradford & Bingley and RBS.
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