A new report has accused Britain's top banks of being biased against small firms.

Research funded by the Economic and Social Research Council said that the lending practices of commercial banks in the UK stood in "stark contrast" to the operations of regional banks in France, Germany and Italy, which support small firms and promote local economies.

This deficiency has had a damaging impact on the potential for regional economic regeneration and improved national economic competitiveness, the study found.

The Economic and Social Research Council asked ePolitix.com Forum members to set out their views on the report.

Forum Response: ESRC

Francesca Carnevali, author of the ESRC report, said: "At a time when one of the most pressing policy issues facing the government is how to promote regional economic regeneration, these findings raise critical issues about the long-term failure of Britain's banks to support the small businesses at the heart of local growth."

Forum Response: Barclays

A spokesman for Barclays told ePolitix.com: "The research is interesting from a historic perspective looking, as it does, at the 1950s, 1960s and early 1970s. This does mean however that it misses out on the changes in the financial services sector created by deregulation in the 1980s.

"In contrast, the Cruickshank Review, published in 2000, found that 95 per cent of small firms wanting finance got it. The review also found that, of those who had been rejected, 40 per cent had been declined on the basis of a bad business plan or excessive outstanding debt.

"As an organisation, Barclays provides banking services to more than 500,000 of the UK's small and medium-sized firms and is actively engaged in addressing specific funding needs in areas of England and Wales requiring regeneration."

Forum Response: Institute of Directors

Richard Wilson, business policy executive at the IoD, told ePolitix.com: "It is difficult to see how the banks are working against the interests of small businesses. The vast majority of businesses that look for finance from a bank are successful. Eighty five per cent of businesses in a survey of IoD members conducted in December 2002 reported that they had never had a request for bank finance rejected. This is true of other non-IoD business too.

"Moreover, most start-up enterprises that approach banks for capital are not required to provide collateral. This may help to explain why 69 per cent of IoD members describe their relationship with their bank as 'good'.

"Access to bank finance is not a problem for the vast majority of small businesses. In fact, small businesses are probably more concerned about the state of the general economic environment, European Union and government regulation and the rising tax burden."