The Bank of England has been accused of harming the prospects of budding entrepreneurs by closing its small firms department.
The Forum of Private Business (FPB) has attacked the move, claiming that it sends out a negative message to small businesses and reduces the chances of under-represented startup groups, such as women and those from deprived backgrounds, gaining funding.
The Bank said that startup finance was now covered sufficiently by the government’s Small Business Service (SBS). But the FPB insisted that the Bank’s presence was needed to monitor the startup market.
Andrew Mowlah, head of research at the FPB, said: “What are small businesses to make of the fact that the UK’s national bank is no longer prepared to consider how Monetary Policy Committee decisions impact on a sector that employs almost half of UK employees and contributes 37 per cent of UK turnover.
“The Bank is of the opinion that access to finance is no longer a problem, yet our research indicates that women, graduates, people from deprived backgrounds and those aiming to start a business still have difficulties attracting the necessary finance.
“The small firms division played a key role in monitoring the sector and was instrumental in providing intelligence for the Cruikshank report that discovered that small firms were being overcharged to the tune of £750 million by high street banks.
“As a result of the closure, who will now be in a position to ensure that a similar occurrence will not happen in the future?”
Nigel Jenkinson, of the Bank of England, said that in recent years there has been a major expansion in government resources devoted to small firms.
“Given the substantial improvement in information flows over the past ten years and the growing importance of the SBS in addressing access to finance…there is no longer a need for the Bank to be involved in these issues,” he said.
