BRITISH Prime Minister David Cameron will this week attempt to inject life into Britain’s stagnant economy and fend off growing Tory criticism of his leadership, with measures to boost business lending, support new housing and streamline the planning system.
Chancellor George Osborne gave a taste of the package on Sunday when he revealed plans for a small-business bank sponsored by the government — the Treasury would also offer guarantees designed to support £10bn on new homes.
Mr Cameron’s flurry of growth initiatives will be accompanied by his first major ministerial reshuffle since the 2010 election, as he attempts to reassert his authority at the start of the new Westminster term.
Amid growing Tory calls for Mr Cameron and Mr Osborne to apply right-wing shock therapy to the flatlining economy, the prime minister will give details of a growth package in which the state plays a key role.
The chancellor risked a clash with traditional Tory supporters in the shires by announcing another round of planning reforms to "up the tempo" of development, including cutting the length of planning inquiries and judicial reviews.
Mr Osborne is under fire from some in his party for failing to act decisively to stimulate growth, with David Davis — a flag-bearer for the Tory right — calling for "an alternative economic policy" of big cuts in public spending and lower taxes.
But Mr Osborne continues to enjoy Mr Cameron’s backing and will stay as chancellor when the prime minister conducts his reshuffle, expected today. Although the chancellor insisted that the economy was "healing" he told the BBC’s Andrew Marr that there were many obstacles ahead. "There is no easy route to a magical recovery," he said.
A central part of the plan will be the creation of a state-backed small business bank, modelled on operations in Germany, Ireland and the US intended to counter the weakness of the retail banking sector.
The bank would not compete with retail banks and would initially have no high street presence, acting as an arms-length operation to administer public funds. But Mr Osborne left open the possibility that the bank could evolve and take on "additional powers", possibly working with retail banks and acquiring a limited network. Business groups welcomed the plan but Chuka Umunna, Labour business spokesman, said his party had proposed the idea a year ago and it suggested that other government schemes to support business lending were not working.
Mr Osborne’s plan includes a planning bill. Although he insisted there would be no change to rules on building on the greenbelt, conservation groups are already on alert.
Financial Times
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