Why isn't the CBI tougher on banks for failing to support small and medium businesses who provide the bulk of UK employment?

Big industry has an inglorious track record of celebrating missed targets, and rewarding the missers with garlands of cash. In its press release the Confederation of British Industry (CBI) celebrated the efforts of the banks missing the Project Merlin targets, which had been agreed with the government for lending to small and medium enterprises (SMEs). The CBI blamed increased regulation for the shortfall. Are they suggesting that if only banks were less regulated it would be so much better?

When Evan Davis, presenter of Radio 4's Today Programme on 31st August 2011, wondering about the CBI's single minded opposition to changes in bank regulation, suggested to the CBI director general, John Cridland, that he is a paid spokesman for the banks, Cridland responded:

“I am a paid spokesman for business, I’m not a paid spokesman for the banks on their own….There is no division in our membership [on opposing reform at this time]….”

Cridland's claim that there was "no division" among his over 240,000 members on opposing bank reform should be taken liberally salted. "No division" only happens in societies which ignore part of their membership.

So, does the CBI ignore part of its membership?  Small and Medium businesses  employ 58.8% of all private sector workers, and generate 48.8% of all private sector turnover. In spite of their major part in British Industry SMEs only have  10% of the seats reserved in the CBI's Chairmen's Committee  which sets CBI policy, including its approach to banks.

Perhaps this is why the CBI behaves like the golem of the FTSE100, backing gouging financial, energy, and other mega companies regardless of the rip-off effects on even the CBI's own business members let alone us ordinary ripped-off Britons. As Sir Roger Carr, CBI President, said in his article in the Sunday Telegraph, "Let's end the executive greed debate and focus on growth." Oblivious to, or overlooking, the fact that executive greed is one of the greatest drivers of rip-offs that hamstring prosperity and growth for British businesses and for ordinary Britons.

SMEs are the Cinderellas of the CBI, with the big FTSE companies playing the ugly sisters. The  average pay of SME directors  is a tiny fraction of the average for their  FTSE100 brethren , as they prefer to plough profit back into their companies rather than extract it for themselves. Perhaps CBI luminaries would rather have the executives of large international companies sitting round the table when  their own salaries are set ? Better than having to chow down with directors of SMEs?

Even the British Bankers' Association's own figures show that lending to small businesses was lower in every month of 2011 compared to the equivalent month in the previous two years. The BBA decided to stop publishing the figures in June 2011, perhaps because they were too revealing. 

The FSB (Federation of Small Businesses),  in a survey from February 2010, reported that in spite of record low base rates, 32% of its members saw the cost of their business loans rise. 

Another Federation of Small Businesses' survey, taken in November 2011, showed that 60% of its members surveyed resorted to other sources of finance to grow their businesses, including credit cards, friends, personal savings and inheritances.

And nothing but a hearty hoorah for the banks from the CBI.

Something the Chancellor should bear in mind as he takes advice on presenting his back to the knife-wielding banks for his Credit Easing 'big idea'. This involves the government providing the banks with a subsidy, in the form of loan guarantees, which the government trusts the banks to pass on in lower costs to SMEs.

When will chancellors past and present ever learn?