Views
Loans vital for small firms - for The Inverness Courier
LAST week's big rise in unemployment is forecast to be repeated many times over in the next few months as the financial crisis turns into a slowdown. Locally we have already seen big job losses in the construction industry. Thankfully local retailers are still reporting that trading conditions are reasonably good and hopefully that will continue.
But some businesses, especially small businesses, are struggling as banks tighten the conditions for overdrafts or simply withdraw loans overnight. Given the huge stake we all now have in the largest banks, the government should be telling bankers that withdrawing finance from viable businesses is simply unacceptable. That Mr Darling is not able to commit to doing that forcibly is deeply disappointing.
I was delighted when Lib Dem leader Nick Clegg appointed my Highland colleague John Thurso as shadow business secretary. John has already set out some practical things government should be doing right now to help struggling firms and their employees.
The small firms loan guarantee scheme should be extended dramatically to underwrite 90 per cent of bank loans to small companies, up to a much higher limit. Together with the cash already injected, that would help restore confidence in necessary lending.
I would like to see local bodies such as Highlands and Islands Enterpise get back into providing loans to viable but stretched firms too — something it used to do. That would be much easier if the Scottish government could simply admit it made a mistake in cutting 50 million from its budget. With a recession now with us, that cut will hit the local economy. Interest rates are still far too high. The Bank of England needs to cut rates by at least 2 per cent as soon as possible.
An independent Bank of England is absolutely right, but if a short-term change of remit is necessary to get it to do the right thing in an emergency, that is what should be done. Interest rate cuts should benefit businesses and homeowners.
Businesses would benefit most if their customers had a wee bit more money in their pockets of course. The government should be dramatically cutting taxes for people on low and middle incomes, as Nick Clegg said at Prime Minister's questions again last week. The very wealthiest should be paying a bit more so that real help can be given to ordinary families.
Post Office account
We are still waiting for the government to announce whether it has decided to award the contract for the post office card account to the Post Office or not.
The card account is important because it is the way used by 4.5 million pensioners and other benefit recipients to receive their weekly payments in their communities. The announcement was due to be made a few months ago but is still being delayed.
The new card account should be given to the Post Office because it is uniquely trusted and has unrivalled geographical reach.
Its rivals simply do not have the reach — especially into the small communities in which the local Post Office is so important.
If these places lose their post offices, which many would if the income they get from the card account was removed, communities would lose their local shops, lose the only source of pensions and cash and lose vital support for vulnerable people.
Taking the card account away would be a betrayal of these communities. That is no doubt why more than 1000 people signed postcards on this subject which I presented to Gordon Brown in the summer.
When I raised this in parliament last week, the response was simply more delay and dithering — fuelling fears that the wrong decision is about to be made. The government must listen to the voices of people from across the country who want and need the card account for the future.
Posted on: 04/11/2008
