Labour’s regional banking plan already dated, suggests Cable

The Business Secretary made clear yesterday he is unconvinced by Ed Miliband’s flagship measure to help local firms access finance more easily, unveiled amid much fanfare last month.

The Labour leader and Doncaster North MP wants about 20 regional banks to be set up across the UK, based loosely on the highly successful Sparkassen model in Germany. Each would be ordered to lend to local firms and given the remit “to serve that region, and that region alone”.

But speaking to the Yorkshire Post, Mr Cable cautioned against importing policies wholesale from the continent - particularly those conceived many decades ago.

“I’ve been to Germany, and it works in Germany,” the Liberal Democrat Minister said. “But we’re not Germany, and we’re not starting 40 years ago – we’re starting where we are now.

“It’s a different world, and increasingly people operate on the internet, so I’m not sure that starting from scratch with a regional banking system works.”

Mr Cable said it was important to support start-up banks such as the much-hyped “Bank of Dave”, and insisted the Coalition’s proposed British Business Bank will help get new lenders up and running. But he was dismissive of the sort of top-down regional system advocated by Labour.

“If it can be made to happen, then good,” Mr Cable said.

“We have got one or two examples – Airdrie in Scotland, and there are these maverick individuals such as Dave in Burnley, and that’s good if you can get them off the ground.

“But I don’t think you can build a model from scratch based on regions any more. The world has moved on.”