Business Secretary Vince Cable.
Business Secretary Vince Cable. Photo: Tim Ireland/PA Wire/Press Association Images

What do we know?

The Business Secretary wants to set up a 'bank' to try to crack the problem that has become very acute for many firms - access to finance.

Some business groups have been lobbying for this for a long time and it has been a Lib Dem priority.

In theory the 'bank' will pull together the existing maze of government cash that is already available to companies but hard to find or sometimes complicated to access.

The Coalition is pumping £1 billion into a new 'business bank' in a bid to kick-start lending to small and medium sized British firms.
The Coalition is pumping £1 billion into a new 'business bank' in a bid to kick-start lending to small and medium sized British firms. Credit: Gareth Fuller/PA Wire/Press Association Images

Crucially the 'bank' will not directly lend to anyone. It will use existing lenders.

What we do not know:

How the mechanism will actually work.

When it will start its work, although it is hoped within 18 months.

Where will the billion pounds come from that Dr Cable is promising to top up existing cash that is available for loans and grants (we won't know that until December.)

Where the private sector money will come from that the Government hopes will be attracted to the fund.

The Business Secretary will speak today at the Liberal Democrats Annual Conference in Brighton.
The Business Secretary will speak today at the Liberal Democrats Annual Conference in Brighton. Credit: Chris Radburn/PA Archive/Press Association Images

Whether it will stimulate demand for cash from companies, many of whom are hesitant to borrow as the economy is so uncertain.

Some banks are making big efforts to make cash cheap already, slashing or removing fees, but demand for money is weak.

For some companies, their relationship with their existing bank is so broken that they say they would not even bother approaching them for finance.

The hope is that Government backing of the 'bank' may change their minds.

It has been welcomed by many business groups, particularly those who speak for Small and Medium Enterprises (SMEs).

But while this may be an idea whose time has come, we still have to wait for many more details. Cable may fill in some of the gaps later today, but the blueprint is not yet final.