Regional investment bank ‘would solve funding woes’

THE shadow business secretary Chuka Umunna spelled out his support for a German-style regional investment bank to support growing businesses when he visited Manchester yesterday.

Mr Umunna told TheBusinessDesk.com small and medium-sized businesses were still struggling to access growth finance mainly because the Government’s attempts to solve the problem with Funding for Lending and Project Merlin had used the existing High Street banks.

“We’ve said if we’re elected in 2015 that we want to establish a British investment bank alongside a network of regional banks to ensure SME businesses can get the finance they need to start up and grow. We don’t have anything like that. The idea of a regional bank network is inspired by the German Sparkassen network which is mandated to grow local economies.”

He added: “The problem with Project Merlin and Funding for Lending is they use the High Street banks… where the local manager is not empowered to make lending decisions.”

Mr Umunna, the Labour MP for Streatham, south London, visited Manchester packaging manufacturer Duo UK which he said had signed up to a funding scheme organised by the Italian government because it had struggled to secure UK finance.

“There’s an extraordinary situation where you have a fantastic manufacturing firm producing products they’re selling across the country. They’re expanding and employ 120 people. But in order to get the finance they need they’ve gone to Italy to take advantage of a scheme to help businesses access funds. I think that’s an absurd and unacceptable situation.

“We are the only G8 country without a state-backed investment institution to help back small and medium-sized enterprises.”