Nick Goodway: Bankers have right plan to get economy moving

Outlook Today sees the British Bankers' Association's usual submission to the Chancellor ahead of his Budget on what he should do to help the banks through these troubled times.

The immediate reaction, of course, is what right do the people who got us into this mess in the first place have to tell the Chancellor what to do?

Well, if they had been asking for a reduction in specific taxes, levies and charges on banks and their employees, absolutely none.

But actually this time around the BBA looks to have got it right. It emphasises the increasing need for serious infrastructure projects which will be funded by banks and long-term investors such as insurance companies who want in but need to be encouraged by government.

It wants the Funding for Lending scheme to be improved and streamlined. Because although it appears to working for mortgages thus far, it has had little beneficial effect on the SME loans market.

Part of the reason for this is that it is difficult to convince the Bank of England that most other classes of asset other than mortgages can be used as surety against the cheap money it is lending under the scheme. So big banks and building societies can fill their boots, but smaller banks who specifically service the small business market find it much harder.

The BBA is also calling for a much broader approach to Isas. Not surprisingly, it wants the limit on cash ISAs raised to the same as that for equity Isas at £11,520. Smacks a bit of self-interest, that one. In this case the Chancellor should continue to plough his own furrow and ensure that equity Isas are expanded to cover a far greater range of public companies, including AIM-listed stocks.

Indeed, he should listen to the London Stock Exchange for once and remove stamp duty from dealing in shares which are traded on AIM and other growth company markets. That duty produces less than £50m a year for the Treasury, but impinges on small businesses looking for long-term equity funding. Scrap it.

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