Prime Minister's question asked in the House of Commons, by Lord Cameron of Chipping Norton (Conservative). It was answered on Wednesday, 19 November 2008 on behalf of the Prime Minister.

Engagements

Question: I am grateful for what the Prime Minister says about the tragic case in Haringey and the need for proper accountability and responsibility, and there will be all-party support for that. On the issue of talking to the banks, let me give the Prime Minister two specific cases that we have been in touch about this morning. First, a manufacturer in Lancashire, employing 120 people, is now being charged £16,000 for a modest overdraft facility. Even more dramatically, a small business in Leicestershire wrote to us saying that it had never breached its banking covenants and never exceeded its overdraft limit, yet its overdraft facility had been withdrawn and cheques have bounced. Do not such cases show that what has been done so far, which we support, has not yet worked properly, and that we need to do more on the credit side to ensure that such small businesses are not strangled?

Answer: I have said all along that the banks have got to accept their responsibilities. We have done what we can; they have to accept their responsibilities to act in a responsible and fair manner. I shall be happy to look at the individual cases to which the right hon. Gentleman has referred, but I have to say that we have expanded the small firms loan guarantee system to small businesses, that we have drawn on a European facility that could be worth up to £4 billion to help small businesses, that we already monitor what the banks are actually doing in every individual area, and that we will continue to monitor their work very closely. I have to say also that despite the Opposition’s predictions, the Bank of England has also reduced interest rates, and that must flow through to small businesses, as it has to home owners.

Secondary information