'Play fair' with small businesses, banks told: New victory for Daily Mail campaign as

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Bank chiefs will be ordered to 'play fair' with small businesses at an emergency summit with Alistair Darling and Peter Mandelson on Thursday.

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'Play fair' with small businesses, banks told: New victory for Daily Mail campaign as Ministers warn the lenders


By Michael Lea and Becky Barrow
Last updated at 12:29 AM on 22nd October 2008

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Bank chiefs will be ordered to 'play fair' with small businesses at an emergency summit with Alistair Darling and Peter Mandelson on Thursday.

In another victory for the Daily Mail's Fair Deal For Small Firms campaign, the Chancellor and Business Secretary will take up our call for banks to rein in charges and offer competitive loans.

After only two days, our campaign can claim victory on three key points of our eight-point charter.





Summit: Bank chiefs will attend an emergency summit with Alistair Darling and Peter Mandelson and asked to 'play fair' with small businesses

Since its launch on Monday, hundreds of entrepreneurs have contacted us to attack
the ruthless tactics employed by the big banks.

One compared them to 'crooks in suits', while others said they are being crippled by sudden rises in interest rates, slashing of overdraft limits and refusal of crucial loans.
Lord Mandelson used an appearance before a Commons select committee to criticise the way some firms are being choked to death by the banks. He said he is 'very concerned' at some of the banking problems faced by small businesses, which many rate as their number one obstruction to success.



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As the issue moved towards the top of the political agenda, he also pledged to:

• Review red tape to help small businesses secure more Government contracts. Many are put off tendering by the overwhelming bureaucracy they face.

• Call on HM Revenue and Customs to show greater 'flexibility' after reports of heavy-handed treatment from tax officials.

• Exhort large companies to follow the Government's lead and pay bills promptly, ideally within ten days, to ensure that cashflow does not dry up.

Lord Mandelson said he was concerned by the 'double whammy' of banks suddenly changing business terms and conditions, and charging higher fees as a result.

Mr Darling will host the Treasury summit with the chief executives of HBOS, owner of Halifax, Barclays, Lloyds TSB, HSBC, Royal Bank of Scotland and one building society, Nationwide.

Stephen Alambritis, of the Federation of Small Businesses, said: 'We hope a very clear message is sent to the banks and the Nationwide - taxpayers rescued some of you, not just for your own benefit but so you can help small firms.

'Now get over the fact that your pride has been dented and get on with lending in a responsible way to good British businesses.'

The banks being propped up with taxpayers' money - HBOS, RBS and Lloyds TSB - are being ordered to lend on 2007 terms.

Some of the money provided by the Government's £37billion rescue must be used to offer help for small businesses in the downturn.

Branch managers at 'ground level' must also treat the companies with 'far greater understanding'.

But Mr Alambritis fears the banking bosses will not pass on the message to branch managers.

The Federation of Small Businesses wants the banks to be forced to pass on the full benefit of every future rate cut if the Bank of England drops the base rate, currently 4.5 per cent.

Despite falling rates, around 40 per cent of small businesses say their banking costs have increased in the past year, according to a poll by the business lobby group.

There are around 4.7million small and medium- sized businesses (SMEs) in Britain, accounting for nearly 60 per cent of all private sector employment.

The Tories have called for a sixmonth VAT holiday and 1p cut in payroll taxes for firms with fewer than five employees, but Lord Mandelson dismissed this.

The banks continued to insist that they remain 'open for business' to small businessmen.

But David Coates, chief executive of Davenham Group, which lends money to small businesses, said the banks had 'almost entirely stopped additional lending', raising the risk of large numbers of good small and medium businesses failing.