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James Moore: No guarantees a state lender would do it better

James Moore
Monday 17 September 2012 21:13 BST
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Outlook If figures from the Federation of Small Businesses are anything to go by, the creation of a state-backed small business bank is an idea whose time has come.

Despite the Government showering banks with cheap money they are still extremely reluctant to lend it out. According to the FSB a third of businesses which applied for credit over the past three months were refused. For whatever reason, the private sector is failing, and that's bad news for the economy. Time for the state to step in?

It's a seductive idea to many, but they should have a care. First, the questions of who should run it, and, much more importantly, how it should be kept accountable, badly need answering.

As the Hillsborough report showed, the destructive culture of secrecy at the heart of the British state is endemic. Marry that to a bank that lends money to people and consider how badly wrong the private sector's banks went when economic conditions went against them, and the phrase "be careful what you wish for" comes to mind.

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