Following the introduction of a Credit Adjudicator in the Budget the executive task force has now been unveiled, led by Alan Sugar.
The adjudicator will fast-track complaints by smaller enterprises that feel they have been unfairly turned down for credit by banks and examine lending decisions. It will have legal powers to enforce judgements if it believes credit has been wrongly denied.
Confederation of British Industry director-general Richard Lambert has called the plan unworkable and pure political rhetoric. But business secretary Peter Mandelson has defended it, saying Lambert should get his priorities right.
Whose view is more credible? Lambert’s, of course.
If the proposal survives the election and becomes a reality it will be just another layer of bureaucracy. Banks cannot be coerced into lending to businesses and will find legitimate ways to get round the Credit Adjudicator’s decisions.
No government can politicise the lending mandate and the only way to exercise control is to nationalise lenders, which is not going to happen.
I applaud the Treasury for trying to free up credit but the adjudicator system won’t work. The new government must stimulate the securitisation market so firms can access new sources of credit and competition can return.
Competition will do more to drive lending than any government initiative.