James Moore: Vince Cable's £300m is a drop in the ocean

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The Independent Online

Outlook A starving man will jump at anything resembling food, and so it's no wonder that the business community was cheering the £300m that Vince Cable's business department is making available for business lending.

The under-supply of credit, to small businesses in particular, is undoubtedly acting as a brake on Britain's economic recovery, which is already struggling on the back of a consumer squeeze and the Government's austerity measures. Too many firms with perfectly viable businesses simply can't get their hands on financing, despite the big banks' protestations that they are "open for business".

That's before those firms have even thought about exporting, and the CBI has put out some depressing figures on how few British firms are involved in that key activity when compared to similarly sized European businesses. To coincide with news of Britain's widening trade deficit.

Against that backdrop, anything that can improve the situation is welcome. But in reality, £300m amounts to a rather small drop in a vast ocean.

There are also concerns about the time it might take, and the bureaucracy involved, in getting the cash through to organisations looking to lend; non-traditional banks, peer-to-peer lenders and the like which the Government would like to see established as alternate sources of finance.

They will be invited to put forward proposals, and to co-invest. It's the first phase in Mr Cable's ambition to create a business bank, which is a laudable aim, but may take a long time to come to fruition.

There's a B plus grade for effort here (because there's more money to come), but no grade on execution until there's more evidence that the money is getting out there.