Business bank to handle £3.9bn fund

Business Secretary Vince Cable said the aim was to provide a comprehensive package of support by bringing together different schemes.

Many of the measures will require European Commission approval, but the Minister set out a timetable for the rest of the year, which included trials of new finance products.

He said £300m of investment will be committed by the end of the current financial year.

A new company will be set up in 2014 to house the bank’s programme and appoint a chairman and board.

Mr Cable said: “This institution will bring together £1bn of new Government capital and £2.9bn of existing capital which will work alongside private sector contributions with the potential to be enhanced by guarantees.

“Inadequate access to finance for small and medium sized enterprises is one of the biggest risks to economic recovery. We need bold action to fix what has always been a weakness of the UK economy, and since the financial crisis has become an urgent problem.

“Whilst we are making great strides to reform the banking system in the UK, more needs to be done to ensure that it sufficiently serves the manufacturers, exporters and high growth firms that drive economic growth.”