BBC News - Cable to confirm government plans for a business bank

Vince Cable is to confirm that the government is moving ahead with plans for a government-backed "business bank" to boost lending to UK companies.

 
Vince Cable will say the government is to focus its support on key economic sectors

In a speech later, the business secretary will say that he hopes such a bank would "shake up the market" and help boost overall lending to firms.

Also on Tuesday, a report by MPs criticised one of the government's existing business support schemes.

The Public Accounts Committee called the Regional Growth Fund "scandalous".

The committee said the £1.4bn scheme to help boost the private sector economies of struggling English regions had so far only seen £60m of funds reach businesses.

Details of what form the business bank will take have yet to be revealed. Nor have any details about what firms it will aim to lend to, or the length in years of any loan agreements.

Mr Cable will suggest in his speech that the future business bank could work with commercial banks such as the UK's Co-Op, and the British operation of German lender Handelsbanken.

At the same time, there has been some press speculation that the business bank may, ultimately, simply be an amalgamation of the current range of government-backed financial support schemes for companies, such as Funding for Lending, Enterprise Capital Funds and the Enterprise Finance Guarantee Scheme.

'Growth plan'

Mr Cable will also use his speech to say the government is refocusing its industrial policy on supporting key sectors of the economy, such as aerospace, the car industry and science.

Speaking at the TUC annual conference in Brighton, shadow chancellor Ed Balls said: "The economy has been choked off through lack of demand. And there's nothing in Vince Cable's announcement that will make any difference."

Mr Balls, who is due to speak before the conference later, will accuse the government of damaging the UK economy through its focus on deficit reduction.

Mr Balls will add that there needs to be a "change of course, and a plan for jobs and growth".