Speaking to the British Chambers of Commerce’s annual conference yesterday, Cameron announced a Conservative administration elected in May would develop plans to help firms ‘walk safely through the financial valley of death’.
Under a Help to Grow programme, Cameron said the Treasury would use its balance sheet to guarantee loans by private lenders, or by co-investing public money alongside private money.
This is a similar process to the government’s UK Guarantees programme, which underwrites loans made for capital projects.
‘Our ambition is to help 500 of our fastest growing firms annually – giving entrepreneurs the access to the kind of finance their German equivalent would get,’ Cameron said.
‘TheBusiness Bank I set up has found the finance gap is likely to be up to £1bn per year. We will plug this billion-pound gap by using the government’s balance sheet to guarantee loans by private lenders, or by co-investing public money alongside private money.’
A pilot scheme to underwrite £100m of business loans would be launched at next month’s Budget, he added.
‘This will allow us to get the best possible programme up and running if a Conservative government is formed after the election.’
Responding to the announcement, shadow business secretary Chuka Umunna said the scheme was the latest in a number of initiatives from government, but they had failed to get banks lending.
‘Government scheme after government scheme, from Project Merlin to Funding for Lending has failed, and net lending to small- and medium-sized businesses fell by £1bn in the last quarter,’ he said.
‘Yet the Tories have continued to oppose Labour’s plans for a proper British Investment Bank supported by a regional network.’
In his own speech to the BCC conference, Umunna said Labour’s plan to devolve £30bn of Whitehall funding to local areas would boost local economies.
‘We won’t repeat the mistake this government made, abolishing Regional Development Agencies without having thought through their replacements,’ he stated.
‘But we will ensure that Local Enterprise Partnerships continue, have a clear purpose, and the capabilities, budgets and powers to deliver.’
