Graeme Morrice: Chancellor must do more to help small businesses

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When I meet with local businesses, the continuing stagnation of the economy is a key topic for discussion.

One of the issues raised the most is the difficulty many small and medium sized enterprises face when trying to borrow from banks.

Several businesses have expressed frustration at the obstacles encountered, as well as the lack of support and direction they receive from banking advisers, despite often having been clients for many years. This problem is inhibiting growth and job creation.

The Government says Project Merlin, the agreement it reached with the banks on lending, should deliver £76 billion in loans to small businesses up to March 2012. But for far too many, this simply does not square with the reality they face at their own branches.

This problem was highlighted nationally by Federation of Small Business research, which found 40 per cent of small businesses that had tried to lend from banks had been unable to do so. Banks should not adopt a “blank cheque” approach to lending but there is clearly an urgent need for a return to high levels of responsible business lending, to help businesses deliver the growth and jobs needed.

I have written to the Chancellor to urge him to use his forthcoming autumn statement to take action. But this alone will not be enough.

Labour’s five-point plan would support the construction industry with a one-year cut in VAT to 5 per cent on home improvements, bringing forward investment projects and a bank bonus tax to fund 25,000 affordable homes. This would help to rebuild the confidence that is so lacking currently.

n Graeme Morrice is Labour MP for Livingston Constituency