The case for a State Bank

On Wednesday, I appeared on BBC Newnight to talk about the green investment bank and supporting  small and medium size enterprises (SME) - companies with 10-250 employees.

You can watch it here.

Recently Vince Cable, The Business Secretary, wrote a letter to Prime Minister where he called for the Royal Bank of Scotland to be turned into a state bank able to get money direct to industry.

On the program I said: ‘One possible solution, and I think we’ll see whether or not it’s a solution by the success or otherwise of the Green Investment Bank, is the possibility of some sort of state infrastructure bank. We’ve obviously got RBS which we own 86% off already and maybe that would be the vehicle for creating a state infrastructure bank but I think we need to see how successful the green investment bank is to see whether or not it will actually make a positive difference.’

Getting investment to business and industry is what will drive the recovery. I talk to and visit SMEs all over South Manchester on a regular basis. What I keep hearing from them is that many are finding it hard to get the banks to lend them the money they need to grow, survive and employ more local people.

Various studies have shown it’s the SMEs that they drive growth and are the big employers of tomorrow.

I’ve always taken a pragmatic approach as to where the state can support business and I see the benefit of some kind of state bank supporting SMEs like the ones I talk to locally.

For those who don’t agree with me I simply point to what the U.S. government did with Silicon Vally, where they invested heavily in the region and championed an industry which has led to some of the world biggest employers such as Google who are changing the way we live our lives.

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