New £1bn small business fund 'blocked by banks'

High street banks including HSBC and Barclays have failed to back a new £1bn fund for small businesses, press reports claim.

Announced by Gordon Brown at the Labour Party conference in September, the National Investment Corporation (NIC) was intended to be modelled on the Industrial and Commercial Finance Corporation, set up after the Second World War to assist small companies, which later became private equity firm 3i.

But according to The Times, although Lloyds and Bank of Scotland, both part owned by the taxpayer, have committed £100m each, HSBC and Barclays have so far failed to back the initiative due to concerns over its structure. The two banks are understood to be worried that the fund will end up being state-owned with its resources simply poured into marginal constituencies before the General Election.