Banks are wielding an “unhealthy” influence on coalition ministers, who have been struggling to force them to lend to businesses, coalition adviser Lawrence Tomlinson warned.
Speaking to the Huffington Post UK, Tomlinson, a serial entrepreneur with interests ranging from race-cars to care-homes, attacked the “huge lobbying element” in the British Bankers’ Association (BBA), the financial services industry body.
“There's a huge lobbying element in the BBA, and I think it's unhealthy in terms of the amount of pressure they can put on [politicians] and the amount of influence they seem to have.”
Tomlinson, who was brought into the business department as an “entrepreneur-in-residence”, questioned why the BBA needed “60 people working full-time lobbying” when the government owned majority stakes in two of the banks, Lloyds and the Royal Bank of Scotland.
“We already own the banks. Why are Lloyds and RBS paying the BBA to lobby us? They can just get lost!” he said. “It’s amazing we let RBS spend tens of millions advertising its services with 80% of our money”.
Tomlinson claimed that businesses had been getting less money lent out by banks, despite the BBA figures.
“The BBA has been telling us that individual banks have lent more, but look at the numbers! They have in my view lent less. It’s more difficult to get access to finance than it was four years ago.”
The government owns a 39% stake in Lloyds and a 81% share of RBS, with ministers announcing that they would sell an initial 6% part of their Lloyds share.
Lloyds’ return into profit [in July] led to chief executive Antonio Horta-Osorio welcoming that the bank was “ready to be sold”. Tomlinson told HuffPostUK that this was an example of the "tail wagging a dog"
“The government should be doing what is right for the people rather than what is right for the banks,” he said.
Tomlinson who previously told HuffPostUK that the coalition should break the banks into smaller units if they don’t boost business lending, said that ministers were being “ignored” by banks when they ask them to lend more.
‘Banks Are Killing Off Small Firms’
Tomlinson, head of the LNT Group, launched a fierce attack on the big banks for “killing off” firms by loading businesses struggling to pay back their debts with punitive charges in providing various types of financial support.
The entrepreneur published a report documenting abuses that suggested firms were “crucifying” small firms through alleged abusive procedures, leaving many businesses afraid to speak up. Business secretary Vince Cable said the case studies documented by Tomlinson were “worrying”.
Tomlinson told HuffPostUK that the banking “oligopoly” meant that “profitable businesses are being destroyed and people’s lives are being taken under for no reason than the banks taking back capital.”
The millionaire entrepreneur, head of the LNT Group, told HuffPostUK that banks’ restructuring programmes, which aim to help firms under financial distress, were driving them out of business.
“They’re just taking the business and putting it into or a business support unit, where the business just goes downhill, meanwhile the banks pile on fines, increased rates and monitoring charges and a large accountancy firm to manage it all.”
“Business are being killed off by banks and the reason is because they are easy meat. Meanwhile, they have been using these programmes to systematically and institutionally go around destroying businesses by extracting maximum value for the bank, and it's on an industrial scale”
According to Tomlinson, the abusive use of business support programmes could equal or surpass financial corruption scandals like the mis-selling of payment protection insurance.
“Nothing has changed since 2006, Lloyds is actually bigger, RBS is the same size and the same people are in the same jobs, they've had to make some sacrificial lambs, no one has gone to prison, no one has really lost their pension.”
”“They're using businesses as a way to meet their income targets rather than helping businesses grow. They'll see you as a sack of cash and see how many times they can stab you to get that cash out.”
“Twenty percent of our GDP is manufacturing and its shrinking all the time. The banks are pursuing anti-recovery tactics and are acting deviously.
“They were the guys mis-selling PPI. Why are we sacrificing growth and lending to business to pay for those errors?
‘Boom Britain? It’s A Bloody Joke!’
Tomlinson dismissed positive reports of Britain experiencing an economic boom as a “bloody joke”.
He told HuffPost UK that “things are just flat”, despite recent “rosy” stats.
“Things are just flat. In china they're upset they're not growing at 10%. What is the base we’re at? It’s from a much reduced GDP from where we were in 2007.
Tomlinson, who was named the Institute of Directors’ “overall director of the year” last year, said: “It's just a bloody joke to talk about “boom Britain”. Let's hope they're right and that's correct though.”