Ed Miliband's speech on banking this morning received little media attention, largely since the main points were previewed in his Mail on Sunday interview. But one story that few have noticed is that the Labour leader has come out in support of a National Investment Bank.
In an interview with the New Statesman last September, Miliband said: "It's an interesting idea. It's something Ed [Balls] and I have talked about. It's definitely an idea worth exploring." He went on to commission Nick Tott, a former partner of Herbert Smith LLP, to examine the case for such an institution. Toot's report has now been published and has concluded that "there is a strong case for a British Investment Bank." In his speech, Miliband said:
Partly because it’s always cheaper for banks to lend to big companies than small ones.
We don’t believe the banks we already have will be equal to the task of lending enough to small businesses.
That’s why we believe there is a case for a British Investment Bank.
Government recognising its role to guarantee lending to small business to provide the long-term finance it needs.
It was a similar institution in the United States which gave a young entrepreneur a loan in the early eighties when nobody else understood his sector.
His name was Steve Jobs.
And he founded Apple.
Every other major country understands that government needs to act to tackle this problem of financing.
It’s time that British business stopped having to compete with one hand tied behind its back.
As Robert Skidelsky argued in our special "plan B" issue last year, a National Investment Bank, with the power to borrow [unlike the coalition's Green Bank], and a mandate to invest in infrastructure, would both stimulate recovery and support long-term growth.
Miliband's decision to support the proposal is also smart politics. Vince Cable, who called for part of RBS to be converted into a National Investment Bank in a private letter to David Cameron, is growing increasingly frustrated with the coalition's failure to stimulate growth. In his interview with Andrew Marr yesterday, he accused the banks of "throttling the recovery" through their obsession with obsession with "short-term trading profits". It is precisely this problem that a National Investment Bank is designed to address. But the constraints of the coalition mean Cable is unable to say so. In coming out for an Investment Bank, Miliband is reminding the Lib Dems that they are, in many respects, closer to Labour on economic policy than the Tories.