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Business bank: Further details unveiled

Business secretary Vince Cable has unveiled further plans for a £1 billion Government-backed business bank to help small and medium sized businesses access finance.

It hopes that the backing will attract additional private sector capital funding which could support up to £10 billion in new lending to businesses that have struggled in difficult lending conditions since the 2008 recession.

The new single institution will aim to bring together the numerous existing state-backed finance support schemes for businesses, and create a single port of call for information and advice.

Making the announcement, Vince Cable said: "For decades British industry has lacked the sort of diverse, long-term finance that is quite normal elsewhere. We need a British business bank with a clean balance sheet and a mandate to expand lending rapidly and we are now going to get it."

It will aim to boost the market through lending to high growth companies and those that particularly require support such as manufacturers and exporters.

The long term-lending - the BBC speculated it will provide loans with around a 10 year maturity - will operate via existing banks and institutions and aim to be open for business within 18 months.

Director general for the British Chambers of Commerce (BCC), John Longworth, welcomed the announcement, saying the bank could be a 'key pillar of UK competitiveness in the years to come.'

"While a £1bn commitment is an important first step, Whitehall must ensure that the business bank gets off the ground with an independent mandate and a mission to support growing companies," he said.

The plans to 'shake up the lending market' were initially announced earlier in the month when Chancellor George Osborne told the BBC's Andrew Marr Show that 'weakness' in the banking system was one of the UK's biggest problems.

Business groups had initially been sceptical of the plans which came less than two months after the announcement of another initiative, the Funding for Lending Scheme, which had already replaced the National Loan Guarantee scheme unveiled in March.

Further details regarding the business bank are expected to be included in the Government's Autumn Statement on 5 December.