Naomi Long (Belfast East, Alliance)
It would certainly appear from the brief analysis that I have undertaken of banks that service my constituency, and indeed service Northern Ireland, that there has not been a significant increase in lending to small business. That should concern us all.
To return to my point, if a business with a loan of £90,000 borrowed an additional £10,000, the entire £100,000 loan would be captured by that bank’s system as new lending. That is perhaps an extreme example, but it shows the potentially significant distortion to new lending figures that might occur, depending on what is captured by the bank’s internal systems. Given that most new lending is to existing customers, that factor could be very significant. The effect may be offset somewhat by comparing new-lending figures with a bank’s stock of lending—that is, the outstanding loans to be repaid—but there is a lack of transparency and consistency in what is measured, and indeed publicised, by banks, particularly as they most frequently use the new-lending figures to defend themselves against criticism that they are making it difficult for SMEs to access lending.
While the UK Government clearly recognise the importance of access to borrowing for UK households and businesses, there needs to be increased monitoring of the impact and a tailoring of initiatives to Northern Ireland markets, where the banking sector is distinct and different from that in other parts of the UK. The matter is not devolved, and proactive consideration of it in this place is crucial.
Furthermore, in the interests of transparency, there needs to be a clearer and more consistent definition across the banking sector of what constitutes new lending, and of the methods of measuring and reporting on banks’ lending activity generally, so that when such figures are quoted in isolation they remain meaningful and a useful tool to measure the impact of Government lending initiatives where that matters most—in the businesses across my constituency and the constituencies of other Members.