The high-profile bank set up by Essex CC in 2009 to help support local firms through the recession has so far helped 10 businesses, early figures show.
Conservative-led Essex set up Banking on Essex in April 2009 with £30m of equity. The bank, the first major municipal banking scheme to be created since 1915, was singled out by David Cameron as a beacon of good practice in Conservative-led local government.
Since the bank’s launch last November, it has received 233 inquiries but has approved only 10 loan applications totalling £290,000, while a further 14 are awaiting decisions.
Tom Smith-Hughes, leader of the council’s Liberal Democrat group, said the performance was “disappointing”. He said the set-up costs for the bank had been £387,000, which was more than it had discharged in loans.
“After all the hype, I was hoping this scheme would have provided much needed help for local businesses, but that doesn’t seem to be the case,” he said.
Cllr Smith-Hughes said local businesses were being driven away by the insistence by Santander - which has backed the bank - that businesses wanting a loan through Banking on Essex must transfer all their banking facilities to Santander.
Kevin Bentley (Con), Essex CC’s business champion, said the bank was only a “few months” into its operation and had successfully helped 10 businesses to “stay afloat”.
“They are local businesses that would not now be here if it wasn’t for the bank, so in that sense it’s doing exactly what it was set up to do,” he said.